No. 03-6542 _________________________________________ IN THE UNITED STATES COURT OF APPEALS FOR THE SIXTH CIRCUIT _________________________________________ EQUAL EMPLOYMENT OPPORTUNITY COMMISSION, Plaintiff-Appellant, v. ROBERTSON-CHEATHAM FARMERS COOPERATIVE, Defendant-Appellee. ______________________________________________ On Appeal from the United States District Court for the Middle District of Tennessee Hon. Thomas A. Wiseman, Jr., Presiding ______________________________________________ BRIEF OF THE EQUAL EMPLOYMENT OPPORTUNITY COMMISSION AS APPELLANT _______________________________________________ ERIC S. DREIBAND GAIL S. COLEMAN General Counsel Attorney CAROLYN L. WHEELER EQUAL EMPLOYMENT Acting Associate General Counsel OPPORTUNITY COMMISSION Office of General Counsel 1801 L Street, N.W., Room 7034 Washington, D.C. 20507 (202) 663-4055 TABLE OF CONTENTS Page TITLE VII FACT SHEET . . . . . . . . . . . . . . . . . . . . .iii STATEMENT REGARDING ORAL ARGUMENT. . . . . . . . . . . . . . . iv TABLE OF AUTHORITIES . . . . . . . . . . . . . . . . . . . . . .v STATEMENT OF JURISDICTION. . . . . . . . . . . . . . . . . . . .1 STATEMENT OF THE ISSUE . . . . . . . . . . . . . . . . . . . . .2 STATEMENT OF THE CASE. . . . . . . . . . . . . . . . . . . . . .3 A. Course of Proceedings. . . . . . . . . . . . . . . . .3 B. Statement of Facts . . . . . . . . . . . . . . . . . .4 C. District Court Opinion . . . . . . . . . . . . . . . .6 SUMMARY OF ARGUMENT. . . . . . . . . . . . . . . . . . . . . . .7 ARGUMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . .8 A. Standard of Review . . . . . . . . . . . . . . . . . .8 B. Because Robertson-Cheatham Has Provided No Evidence That It Will Be Able to Satisfy the Judgment Against It Following Appeal, the District Court Abused Its Discretion By Staying Execution of the Judgment Without Requiring Robertson-Cheatham to Post a Supersedeas Bond . . . . . . . . . . . . . . . . . . . . . . . . .8 CONCLUSION . . . . . . . . . . . . . . . . . . . . . . . . . . 13 ADDENDUM: Designation of Appendix Contents CERTIFICATE OF SERVICE UNITED STATES COURT OF APPEALS, SIXTH CIRCUIT FACT SHEET FOR TITLE VII APPEALS Despite the fact that the district court and the Court of Appeals have coded this case as a Title VII matter, the case arises solely under the Age Discrimination in Employment Act, 29 U.S.C. 621 et seq. (See R.1, Complaint at 1, App. at 12.) Accordingly, the Sixth Circuit rules do not require either party to file a Title VII fact sheet. See 6th Cir. R. 28(c). STATEMENT REGARDING ORAL ARGUMENT The Equal Employment Opportunity Commission ("EEOC") requests oral argument so that it can address any questions this Court may have regarding the district court's failure to require a supersedeas bond. Oral argument will help to demonstrate that the district court abused its discretion in concluding that Robertson-Cheatham had proved its ability to pay the judgment following appeal despite having introduced no evidence regarding its financial status. TABLE OF AUTHORITIES No. 03-6542 _________________________________________ IN THE UNITED STATES COURT OF APPEALS FOR THE SIXTH CIRCUIT _________________________________________ EQUAL EMPLOYMENT OPPORTUNITY COMMISSION, Plaintiff-Appellant, v. ROBERTSON-CHEATHAM FARMERS COOPERATIVE, Defendant-Appellee. ______________________________________________ On Appeal from the United States District Court for the Middle District of Tennessee Hon. Thomas A. Wiseman, Jr., Presiding ______________________________________________ BRIEF OF THE EQUAL EMPLOYMENT OPPORTUNITY COMMISSION AS APPELLANT _______________________________________________ STATEMENT OF JURISDICTION The district court had jurisdiction over this age discrimination case under 28 U.S.C. 1331 and 29 U.S.C. 626(b). Based on the jury's verdict for the EEOC, the district court entered final judgment awarding the EEOC $37,043.36 in backpay (R. 104, Judgment, App. at 18) and $3,890.52 in costs (R. 114, Costs, App. at 23). On October 17, 2003, the district court stayed execution of the judgment pending appeal without requiring Robertson-Cheatham to post a supersedeas bond. (R. 124, Order, App. at 44.) Pursuant to Rule 4(a)(1)(B) of the Federal Rules of Appellate Procedure, the EEOC filed a timely notice of appeal from this order. (R. 126, Notice of Appeal, App. at 45.) This Court has jurisdiction over the EEOC's appeal because the issue of a supersedeas bond is a collateral order, appealable separately from an appeal on the merits. See Olympia Equip. Leasing Co. v. W. Union Tel. Co., 786 F.2d 794, 796 (7th Cir. 1986) (citing Cohen v. Beneficial Indus. Loan Corp., 337 U.S. 541 (1949)); see also Miami Int'l Realty Co. v. Paynter, 807 F.2d 871, 871 (10th Cir. 1986) (considering appeal from supersedeas bond separately from appeal on merits); Poplar Grove Planting & Ref. Co. v. Bache Halsey Stuart, Inc., 600 F.2d 1189, 1190 (5th Cir. 1979) (same). STATEMENT OF THE ISSUE Did the district court abuse its discretion in staying execution of the judgment without requiring a supersedeas bond where Robertson-Cheatham produced no evidence that it would be able to pay the judgment following appeal? STATEMENT OF THE CASE This is an appeal from an order of the district court granting Robertson- Cheatham a stay of execution of the judgment pending appeal without requiring the posting of a supersedeas bond. A. Course of Proceedings The EEOC filed an enforcement action under the Age Discrimination in Employment Act on March 29, 2001. (R. 1, Complaint, App. at 12.) Following trial, a jury awarded the EEOC $37,043.36 in backpay. (R. 103, Verdict.) The district court entered judgment on the jury's award, (R. 104, Judgment, App. at 18), and it denied Robertson-Cheatham's post-trial motions for judgment as a matter of law, new trial, and remittitur. (R. 116, Order.) The district court awarded the EEOC $3,890.52 in costs. (R. 114, Costs, App. at 23.) Robertson- Cheatham filed a timely notice of appeal, (R. 117, Notice of Appeal, App. at 37), and its appeal on the merits is pending. EEOC v. Robertson Cheatham Farmers Coop., No. 03-6338 (6th Cir.). Robertson-Cheatham moved under Rule 62(d) of the Federal Rules of Civil Procedure to stay the execution of judgment pending appeal. (R. 119, Motion, App. at 38.) The EEOC opposed this motion. (R. 120, Response.) On October 17, 2003, the district court granted the stay of execution of judgment without requiring Robertson-Cheatham to post a supersedeas bond. (R. 124, Order, App. at 44.) The EEOC filed the instant appeal. (R.126, Notice of Appeal, App. at 45.) B. Statement of Facts The EEOC obtained a judgment of $37,043.36 in an age discrimination lawsuit against Robertson-Cheatham, plus $3,890.52 in costs. (R.104, Judgment, App. at 18; R.114, Costs, App. at 23.) When it filed its notice of appeal on the merits, (R. 117, Notice of Appeal, App. at 37), Robertson-Cheatham also moved for a stay of execution of judgment pending appeal. (R. 119, Motion, App. at 38.) The EEOC opposed this motion. (R.120, Response.) Robertson-Cheatham had stressed at trial that it is only a small farmers' cooperative, that it had lost its major client, and that it had needed to reduce staff. (Robertson-Cheatham's Opening Arg., Tr. Vol. I at 35, App. at 46.) Outside the presence of the jury, Robertson-Cheatham had put its financial health into question. (Bench Conf., Tr. Vol. II at 2-3, App. at 47-48.) While conceding that it had assets which could be sold, Robertson-Cheatham had told the Court nothing about the value of its assets or the extent of its liabilities. (Bench Conf., Tr. Vol. III at 194, 201-02, App. at 49-51.) The EEOC argued that Robertson-Cheatham should not obtain a stay of execution of judgment because it had not shown that it has adequate resources to pay the judgment, costs, and interest after appeal, and had neither filed nor indicated an intent to file a supersedeas bond. (R. 120, Response at 1-2.) In response to the EEOC, Robertson-Cheatham filed an unsworn letter from its insurance carrier stating that it had a $100,000.00 policy covering the age discrimination lawsuit, of which Robertson-Cheatham was required to pay the first $15,000.00. Of the remaining $85,000.00, the carrier had already paid $43,296.78 for legal services. (R. 121, Notice, App. at 39.) The balance of the coverage, as of August 2003, was $41,703.22. Robertson-Cheatham asserted that because this amount was "in excess of the judgment and award of discretionary costs, . . . the judgment and discretionary costs are fully indemnified." (Id.) The EEOC disagreed with this assessment, arguing that the $41,703.22 remaining on the insurance policy was insufficient to cover the $37,043.36 judgment, $3,890.52 costs, and accruing interest. (R. 122, Response at 1.) The judgment and costs alone amount to $40,933.88, leaving only $769.34 in the policy. Noting that Robertson-Cheatham's trial expenses had been paid from the insurance policy, and that Robertson-Cheatham had not indicated that appellate expenses would come from a different source, the EEOC argued that the costs of appeal would diminish the insurance coverage available to satisfy the judgment. Accordingly, the EEOC argued, Robertson-Cheatham should post a supersedeas bond in order to protect the EEOC's interests. (Id. at 2-3.) Robertson-Cheatham responded to this argument by filing an unsworn letter from its general manager claiming that it would assume responsibility for any amount due in this case above the $41,703.22 remaining in the insurance policy. (R. 123, Notice, App. at 42.) Robertson-Cheatham offered no evidence of its financial ability to pay. Its letter stated in full: According to our records, funds remaining available for damages in the age discrimination case from Agricultural Risk Insurance Company are $41,703.22. Beyond this total, Robertson Cheatham Farmers Cooperative assumes the responsibility once again. Rest assured that Robertson Cheatham Farmers Cooperative has every intent to pay any debt in a timely fashion. We will pay for any damages beyond the above mentioned dollar amount warranted after the appeals process is exhausted. (Id. at 43.) C. District Court Opinion The district court granted Robertson-Cheatham's motion to stay execution of the judgment pending appeal. (R. 124, Order, App. at 44.) It did not require Robertson-Cheatham to post a supersedeas bond. The court's sole explanation for its decision was as follows: "Because Defendant has provided the Court with adequate proof of insurance and ability to pay the judgment, costs, and interest, Defendant's Motion for Stay is GRANTED." (Id.) SUMMARY OF ARGUMENT The district court abused its discretion in departing from the ordinary rule requiring the posting of a supersedeas bond in order to stay the execution of judgment pending appeal. The Federal Rules of Civil Procedure require the district court to protect the judgment creditor's interests before issuing a stay. In rare circumstances, including when the judgment debtor proves that it has sufficient assets such that payment is assured and the cost of a bond would be a waste of money, the district court may waive the bond requirement. Here, however, no special circumstances justify such a waiver. Robertson-Cheatham provided no proof of its ability to pay the judgment following appeal. Although it presented evidence of $41,703.22 remaining in an insurance policy, it showed that it had used the policy to pay legal expenses at trial and did not preclude the possibility of using the remaining funds to pay legal expenses on appeal. Robertson-Cheatham introduced no financial statements or other evidence of ability to pay debts exceeding its insurance coverage. To the contrary, it suggested that its finances were weak. The district court was apparently swayed by a letter from the company's general manager saying that Robertson-Cheatham "has every intent to pay any debt in a timely fashion." Robertson-Cheatham's good intentions, however, are not the guarantee of security that the Federal Rules require. ARGUMENT A. Standard of Review This Court reviews a district court's decision not to require the posting of a supersedeas bond for abuse of discretion. See Arban v. W. Publ'g Corp., 345 F.3d 390, 409 (6th Cir. 2003). B. Because Robertson-Cheatham Has Provided No Evidence That It Will Be Able to Satisfy the Judgment Against It Following Appeal, the District Court Abused Its Discretion By Staying Execution of the Judgment Without Requiring Robertson-Cheatham to Post a Supersedeas Bond. The purpose of a supersedeas bond is to protect the appellee from the possibility that the appellant will be unable to satisfy the judgment after the appeal. See Miami Int'l Realty Co., 807 F.2d at 873; Lightfoot v. Walker, 797 F.2d 505, 506-07 (7th Cir. 1986); Fed. Prescription Serv., Inc. v. Am. Pharm. Ass'n, 636 F.2d 755, 760 (D.C. Cir. 1980). Posting a bond in lieu of immediate payment also protects the appellant, who might find that restitution is impossible following reversal on appeal. See Poplar Grove Planting & Ref. Co., 600 F.2d at 1191. An appellant who posts a supersedeas bond is automatically entitled to a stay of execution of judgment pending appeal. See Fed. R. Civ. P. 62(d). Courts have interpreted Rule 62(d) also to authorize discretionary stays without a bond. See Arban, 345 F.3d at 409; Olympia Equip. Leasing Co., 786 F.2d at 796. Such stays, however, are the exception to the general rule. See Miami Int'l Realty Co., 807 F.2d at 873 ("a full supersedeas bond should be the requirement in normal circumstances"). The Supreme Court has noted that the Federal Rules of Civil Procedure "require the district court to ensure that the judgment creditor's position is secured, ordinarily by a supersedeas bond." Peacock v. Thomas, 516 U.S. 349, 359 (1996). Waiver of a bond, therefore, "is appropriate only if the appellant has a clearly demonstrated ability to satisfy the judgment in the event the appeal is unsuccessful and there is no other concern that the appellee's rights will be compromised by a failure adequately to secure the judgment." In re Carlson, 224 F.3d 716, 719 (7th Cir. 2000). In setting the amount of a supersedeas bond, if any, "'courts seek to protect judgment creditors as fully as possible without irreparably injuring judgment debtors.'" Miami Int'l Realty Co., 807 F.2d at 873 (citation omitted). Thus, a court may consider five factors in determining whether to waive a bond. Those factors are: "(1) the complexity of the collection process; (2) the amount of time required to obtain a judgment after it is affirmed on appeal; (3) the degree of confidence that the district court has in the availability of funds to pay the judgment; (4) whether 'the [appellant's] ability to pay the judgment is so plain that the cost of a bond would be a waste of money'; and (5) whether the [appellant] is in such a precarious financial situation that the requirement to post a bond would place other creditors of the [appellant] in an insecure position." Dillon v. City of Chicago, 866 F.2d 902, 904-05 (7th Cir. 1989) (citations omitted); see also Arban, 345 F.3d at 409 (relying on fourth factor of this test). The district court in this case appears to have relied on the third factor, stating that Robertson-Cheatham had provided it with "adequate proof of insurance and ability to pay the judgment, costs, and interest." (R. 124, Order, App. at 44.) The district court was wrong in concluding that Robertson-Cheatham had provided it with adequate proof of its ability to pay. In seeking an exception to the normal rule requiring a supersedeas bond, Robertson-Cheatham had the burden of "objectively demonstrat[ing]" that a bond was unnecessary. Poplar Grove Planting & Ref. Co., 600 F.2d at 1191. Debtors have successfully met this burden by providing evidence of their financial status. See Arban, 345 F.3d at 409 (no bond required "in light of the vast disparity between the amount of the judgment in this case [$119,000] and the annual revenue of the group of which West is a part [$2.5 billion]"); Fed. Presciption Serv., 636 F.2d at 761 (no bond required where debtor's "documented net worth" was 47 times the amount of the damage award). Where debtors do not provide such evidence, however, the normal rule requiring a supersedeas bond remains in force. See Poplar Grove Planting & Ref. Co., 600 F.2d at 1191 (where record contained no evidence to show that debtor could respond to the judgment now or in the future, district court erred by waiving the full bond requirement). Like the debtor in Poplar Grove Planting & Refining Co., Robertson- Cheatham has not met its burden. To the contrary, it has offered no evidence at all of its financial status. The district court's confidence in Robertson-Cheatham's ability to pay rests solely on an unsworn letter from its insurance carrier saying that it had $41,703.22 in remaining coverage as of August 2003, and an unsworn letter from Robertson-Cheatham saying that it intends to pay any additional amount due in the case. Robertson-Cheatham has offered no assurance, let alone any supporting evidence, that funds currently exist and will exist in the future to pay such a debt. Thus, Robertson-Cheatham is not in the same position as the debtor in Arban, in which this Court upheld the granting of a stay without a bond to a debtor whose annual revenue "vast[ly]" exceeded the amount of its debt. See Arban, 345 F.3d at 409. Robertson-Cheatham emphasized at trial that it is only a small farmers' co- operative, that it has lost its major client, and that it has had to reduce its staff. (Robertson-Cheatham's Opening Arg., Tr. Vol. I at 35, App. at 46.) Its attorney even suggested that Robertson-Cheatham's tax returns would demonstrate an inability to pay liquidated damages. (Bench Conf., Tr. Vol. II at 2-3, App. at 47-48. Although the insurance policy would currently cover the judgment, Robertson-Cheatham's ability to pay after appeal is in doubt. It is precisely this uncertainty that a supersedeas bond is intended to address. See Poplar Grove Planting & Ref. Co., 600 F.2d at 1191 (judgment debtor seeking to be excused from necessity of posting supersedeas bond must demonstrate either "a financially secure plan" for paying judgment following appeal or that the posting of a bond would impose an undue financial burden). CONCLUSION Robertson-Cheatham has not satisfied its burden of proving that a supersedeas bond is unnecessary to protect the EEOC's interest as a judgment creditor. For the reasons stated above, the EEOC respectfully requests that this Court reverse the district court's order granting a stay of execution of the judgment without requiring the posting of a supersedeas bond. Respectfully submitted, ERIC S. DREIBAND General Counsel CAROLYN L. WHEELER Acting Associate General Counsel ___________________________ GAIL S. COLEMAN Attorney EQUAL EMPLOYMENT OPPORTUNITY COMMISSION Office of General Counsel 1801 L Street, N.W., Room 7034 Washington, D.C. 20507 (202) 663-4055 April 21, 2004 ADDENDUM DESIGNATION OF APPENDIX CONTENTS Appellant, pursuant to Sixth Circuit Rule 28(d), hereby designates the following filings in the district court's record as items to be included in the joint appendix: Description of Item Date Filed in District Court Record Entry Number District Court Docket Sheet n/a n/a Complaint 3/29/01 1 Judgment 7/21/03 104 Award of Costs 8/22/03 114 Robertson-Cheatham's Notice of Appeal 9/19/03 117 Motion for Stay of Execution of Judgment Pending Appeal 9/19/03 119 Robertson-Cheatham's Proof of Insurance 10/7/03 121 Robertson-Cheatham's Letter of Intent to Pay Judgment 10/14/03 123 Order Staying Execution of Judgment Without Supersedeas Bond 10/16/03 124 EEOC's Notice of Appeal 11/21/03 126 Description of Proceeding Date Filed in District Court Transcript Page Numbers Trial held 7/15/03-7/18/03 Robertson- Cheatham's Opening Argument Bench Conference 7/16/03 Bench Conference 7/17/03 1/6/04 7/25/03 1/6/04 Vol. I at 35 Vol. II at 2-3 Vol. III at 194, 201-02 CERTIFICATE OF SERVICE I hereby declare that I filed the original plus six copies of the foregoing, signed brief with the Court this 21st day of April, 2004, by first-class mail, postage pre-paid. I further declare that I served two copies of the foregoing brief this 21st day of April, 2004, by first-class mail, postage pre-paid, to the following counsel of record: Charles R. Ray 211 Third Avenue, North Nashville, TN 37219 ___________________________ GAIL S. COLEMAN Attorney EQUAL EMPLOYMENT OPPORTUNITY COMMISSION Office of General Counsel 1801 L Street, N.W., Room 7034 Washington, D.C. 20507 (202) 663-4055 TABLE OF AUTHORITIES Cases Arban v. W. Publ'g Corp., 345 F.3d 390 (6th Cir. 2003) . . . 8-11 In re Carlson, 224 F.3d 716 (7th Cir. 2000) . . . . . . . . . . . . . . 9 Dillon v. City of Chicago, 866 F.2d 902 (7th Cir. 1989) . . . . . . . .10 EEOC v. Robertson Cheatham Farmers Coop., No. 03-6338 (6th Cir.) (pending) . . . . . . . . . . . . . . . .3 Fed. Prescription Serv., Inc. v. Am. Pharm. Ass'n, 636 F.2d 755 (D.C. Cir. 1980) . . . . . . . . . . . . . . . . . . . 8, 10 Lightfoot v. Walker, 797 F.2d 505 (7th Cir. 1986) . . . . . . . . . . . 8 Miami Int'l Realty Co. v. Paynter, 807 F.2d 871 (10th Cir. 1986) . . . . . . 2, 8, 9 Olympia Equip. Leasing Co. v. W. Union Tel. Co., 786 F.2d 794 (7th Cir. 1986) . . . . . . . . . . . . . . . . . . . . .2, 9 Peacock v. Thomas, 516 U.S. 349 (1996) . . . . . . . . . . . . . . . . . 9 Poplar Grove Planting & Ref. Co. v. Bache Halsey Stuart, Inc., 600 F.2d 1189 (5th Cir. 1979) . . . . . . . . . . . . . . . . 2, 8, 10-12 Statutes 28 U.S.C. 1331 . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 Age Discrimination in Employment Act, 29 U.S.C. 621 et seq. . iii, 1, 3 Rules Fed. R. Civ. P. 62(d) . . . . . . . . . . . . . . . . . . . . . . . . 8-9 Fed. R. App. P. 4(a)(1)(B) . . . . . . . . . . . . . . . . . . .2 6th Cir. R. 28(c) . . . . . . . . . . . . . . . . . . . . . .iii