Styla Carter v. Hickory Healthcare Inc. , 905 F.3d 963 ( 2018 )

RECOMMENDED FOR FULL-TEXT PUBLICATION
Pursuant to Sixth Circuit I.O.P. 32.1(b)
File Name: 18a0219p.06
UNITED STATES COURT OF APPEALS
FOR THE SIXTH CIRCUIT
STYLA Y. CARTER, ┐
Plaintiff-Appellant, │
│
> No. 17-4199
EDWARD L. GILBERT, │
Appellant, │
│
│
v. │
│
HICKORY HEALTHCARE INC.; HICKORY RIDGE NURSING │
AND REHABILITATION CENTER, │
│
Defendants-Appellees.
│
┘
Appeal from the United States District Court
for the Northern District of Ohio at Akron.
No. 5:14-cv-02691; Kathleen B. Burke, Magistrate Judge; Sara E. Lioi, District Judge.
Decided and Filed: September 27, 2018
Before: SUTTON, McKEAGUE, and KETHLEDGE, Circuit Judges.
_________________
COUNSEL
ON BRIEF: Edward L. Gilbert, EDWARD L. GILBERT CO., LPA, Akron, Ohio, for
Appellants. Scott Salsbury, Laura Kramer Rubadue, SALSBURY & SALSBURY, LPA,
Hudson, Ohio, for Appellee Hickory Healthcare, Inc.
_________________
OPINION
_________________
SUTTON, Circuit Judge. After Hickory Healthcare fired Styla Carter from her job as a
nursing assistant, she sued the company for discrimination. The district court ruled that she had
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filed her lawsuit too late and could not proceed. It then sanctioned her lawyer, Edward Gilbert,
because he had advanced a claim that was clearly time barred. Because the district court did not
abuse its discretion in imposing sanctions, we affirm.
I.
Styla Carter has asthma and cannot be around cigarette smoke. When she began working
for Hickory Healthcare, the nursing home took note of her medical condition and exempted her
from monitoring patients’ smoke breaks. In July 2007, a new supervisor changed course and
told Carter to work the smoke breaks. Carter refused, and Hickory fired her for insubordination.
That same month, Carter filed an unlawful discrimination claim with the Ohio Civil
Rights Commission. The state agency informed Carter that it had filed a parallel charge with its
federal counterpart, the Equal Employment Opportunity Commission, under the Americans with
Disabilities Act. The state agency told Carter that, “[w]hen one agency completes its
investigation, it will share the information it has gathered with the other agency. When the case
is resolved, it will be considered closed with both” agencies. R. 103-2 at 5.
For the next six years, the complaint inched its way through the state system. In
November 2013, the Ohio Commission ruled for Carter, ordering Hickory to reinstate her and to
pay her lost wages. Soon after, Carter asked the federal agency for a right-to-sue letter. Because
Carter had moved to a new location without notifying the federal agency, it mailed the right-to-
sue letter to her old address. Over the next few months, Carter’s attorney, Edward Gilbert,
contacted the federal agency, learned that the letter had been sent to her old address, and in
November 2014 procured a copy of the letter dated February 20, 2014. Carter filed her lawsuit
in federal district court on December 9, 2014.
The court concluded that Carter’s claim was time barred because she filed her lawsuit
more than 90 days after the date on her right-to-sue letter. The court also granted Hickory
Healthcare’s motion to sanction Gilbert for “unreasonably and vexatiously” maintaining Carter’s
“clearly time-barred action.” R. 130 at 3; see 28 U.S.C. § 1927.
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Gilbert appealed. We dismissed the appeal because the sanctions order was not yet final.
No. 16-4233, 2017 WL 5185358 (6th Cir. Jan. 6, 2017).
On remand, the court entered a final sanctions order in the amount of $25,995.32.
II.
Before considering the merits, we must check our jurisdiction to hear this case.
That digression requires a bit more background about the interaction between the district
court judge’s and magistrate judge’s rulings. After the district court granted Hickory’s motion
for sanctions, it referred the matter to a magistrate judge to compute the amount. The magistrate
judge determined that Gilbert should pay $25,995.32. Instead of reviewing the magistrate’s
computation with fresh eyes, the district court judge reviewed the decision for clear error. That
was a misstep—though one that neither party raised in front of the district court.
The Federal Magistrates Act tells magistrate judges which matters they can hear on their
own and which ones they cannot—and what kind of review the former receive from the district
court. Among other actions, the Act empowers magistrates “to hear and determine any pretrial
matter” subject to clear error review by the district court judge. 28 U.S.C. § 636(b)(1)(A). The
statute provides a non-exhaustive list of exceptions that require closer review by the district
court, including motions to dismiss for failure to state a claim, for an injunction, or for summary
judgment. Id. Because these matters are “dispositive of a claim or defense,” the magistrate
writes a report and recommendation, which the district court judge reviews de novo. Fed. R.
Civ. P. 72(b)(1); Vogel v. U.S. Office Prods. Co., 258 F.3d 509, 514–15 (6th Cir. 2001).
Another provision, § 636(b)(3), provides a catchall grant of authority: The district court
may assign a magistrate “such additional duties as are not inconsistent with the Constitution and
laws of the United States.” To determine the standard of review the district court applies in these
situations, we compare the matter to the matters listed in § 636(b)(1). See 12 Charles A. Wright
et al., Federal Practice and Procedure § 3068.2 (2d ed. 2018). If the matter disposes of a claim,
it gets a fresh look. If the matter is not dispositive, it gets a deferential gaze.
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Sanctions under 28 U.S.C. § 1927 count as dispositive matters, requiring fresh review.
Such sanctions constitute a claim against an opposing attorney and result in a final, appealable
judgment. Just as we treat Rule 11 sanctions as dispositive for that reason, see Bennett v. Gen.
Caster Serv. of N. Gordon Co., 976 F.2d 995, 998 (6th Cir. 1992) (per curiam), we should treat
§ 1927 sanctions as dispositive for that reason. The Federal Rules of Civil Procedure bolster this
conclusion. Rule 54(d)(2)(D) allows the court to “refer a motion for attorney’s fees to a
magistrate judge . . . as if it were a dispositive pretrial matter,” offering another example of a fee-
and-cost sanction that receives fresh review by the district court.
All of this means that the district court should not have reviewed the magistrate’s
sanctions award for clear error.
But what does that mistake have to do with our appellate jurisdiction? Nothing, one
might have thought. Except that one of our decisions issued a quarter century ago construed the
Magistrates Act to mean that an error by the district court in applying the standard of review to a
magistrate judge’s decision deprived the court of appeals of appellate jurisdiction. Massey v.
City of Ferndale, 7 F.3d 506, 508–11 (6th Cir. 1993).
Time has not been kind to Massey. Since then, case after case has clarified the nature of
jurisdictional limits—a set of clarifications that leaves no room for the Massey approach.
Starting with Arbaugh v. Y&H Corp. and in many cases since, the U.S. Supreme Court
has drawn a helpful line between mandatory jurisdictional requirements and mandatory
procedural rules. 546 U.S. 500 (2006). The distinction matters. Parties may not waive or forfeit
jurisdictional objections. But they may waive or forfeit non-jurisdictional objections. Id. at 514.
Attempting to bring clarity to the area, the Court has said that a mandatory procedure does not
divest a court of jurisdiction unless Congress gives a “clear indication” that it “wanted the rule to
be jurisdictional.” Henderson ex rel. Henderson v. Shinseki, 562 U.S. 428, 436 (2011)
(quotation omitted).
That approach shows that neither the Magistrates Act nor any other statute precludes us
from hearing this appeal. Congress empowered us to review final orders of district courts. See
28 U.S.C. § 1291. The district court entered a final order. And we thus may review it.
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It makes no difference that the court issued that order after examining the magistrate’s
computations too deferentially. No part of the Magistrates Act says, or even hints, that the
standard of review procedure—or more precisely the failure to adhere to it—creates a
jurisdictional impediment to review in the court of appeals. See Shinseki, 562 U.S. at 436. No
such jurisdiction-limiting language appears in that part of the statute. And it is no surprise that,
when the D.C. Circuit recently contemplated what to do when a district court reviews sanctions
under the wrong standard, its opinion did not speak in jurisdictional terms. See Baylor v.
Mitchell Rubenstein & Assocs., P.C., 857 F.3d 939 (D.C. Cir. 2017); see also Birch v. Polaris
Indus., Inc., 812 F.3d 1238, 1247 (10th Cir. 2015) (holding that parties can forfeit or waive “their
right to argue for de novo review”).
As fortune would have it, Massey was announced before Arbaugh and before the U.S.
Supreme Court tightened the screws on jurisdictional limits and told courts to accord “no
precedential effect” to “drive-by jurisdictional rulings.” Arbaugh, 546 U.S. at 511 (quotation
omitted). That is not the first time this has happened in our court. See, e.g., Brentwood at
Hobart v. NLRB, 675 F.3d 999, 1004 (6th Cir. 2012); Hoogerheide v. IRS, 637 F.3d 634, 636
(6th Cir. 2011). Just as we corrected those drive-by jurisdictional rulings, we must correct
Massey.
Because the standard of review requirement creates a mandatory, but not a jurisdictional,
rule, the parties may forfeit (or waive) it. That’s what happened here. Neither Gilbert nor
Hickory pointed out that the district court used the incorrect standard of review, not in the lower
court and not in their briefs on appeal. That amounts to a forfeiture.
III.
Turning to the merits, a judge may impose sanctions under § 1927 when a lawyer
objectively “falls short of the obligations owed by a member of the bar to the court.” Red Carpet
Studios Div. of Source Advantage, Ltd. v. Sater, 465 F.3d 642, 646 (6th Cir. 2006) (quotation
omitted). The lawyer need not have “subjective bad faith” but must act with “something more
than negligence or incompetence.” Id. A court may impose the sanction if an attorney “abuses
the judicial process or knowingly disregards the risk” that he will needlessly multiply the
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proceedings. Id. Maintaining a clearly time-barred lawsuit constitutes a classic example of
conduct that warrants a sanction. See, e.g., Davis v. Bowron, 30 F. App’x 373, 376 (6th Cir.
2002).
Carter’s claim against Hickory Healthcare expired long before Gilbert filed this lawsuit.
A plaintiff who wants to sue under the Americans with Disabilities Act must do so “within
ninety days” after the Equal Employment Opportunity Commission notifies the plaintiff via a
right-to-sue letter that the Commission will not pursue action against the employer. 42 U.S.C.
§ 2000e-5(f)(1); see id. § 12117(a) (applying § 2000e-5 to the Americans with Disabilities Act).
The clock begins to run “on the fifth day” after the Commission mails the letter to the plaintiff’s
address. Graham-Humphreys v. Memphis Brooks Museum of Art, Inc., 209 F.3d 552, 557
(6th Cir. 2000). A claimant must inform the Commission of any change in her address. See
29 C.F.R. § 1601.7(b).
Carter’s right-to-sue letter carries the date of February 20, 2014. That gave Gilbert until
May 26, 2014, to initiate her lawsuit. But he filed her complaint on December 9, 2014, almost
200 days late, and maintained the lawsuit all the way through summary judgment. Before
moving for summary judgment and sanctions, the defendants informed Gilbert of the statute of
limitations and provided him with case law definitively barring Carter’s claim. Carter pressed on
anyway. On this record, the court did not abuse its discretion in awarding sanctions. See Red
Carpet Studios, 465 F.3d at 644.
Gilbert raises several counterarguments, all unconvincing. He first maintains that he
reasonably believed Carter could qualify for equitable tolling. But these arguments were leaky at
best, frivolous at worst. That a regulation required the Commission to send some types of
attorneys a copy of the right-to-sue letter does not justify equitable tolling. The regulation
applies only to public sector claims, not private sector ones like Carter’s. See 29 C.F.R.
§§ 1614.103(b), 1614.605(d). It thus is not true that “a failure by the EEOC to copy counsel on a
right-to-sue letter prevents the ninety-day period from running.” Ball v. Abbott Advert., Inc.,
864 F.2d 419, 421 (6th Cir. 1988).
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Gilbert thought that Carter could rely on the assumption that the Ohio agency (which she
told about her new address) would inform its federal counterpart about her move. Precedent says
otherwise. See id. Nor did either commission mislead Carter into thinking that she did not need
to update the federal agency about her address change. True, the two agencies told Carter about
their cooperation agreement, perhaps making her mistake an honest one. But that doesn’t qualify
as misleading. The relevant regulations still required Carter to “provide the Commission with
notice of any change in address.” 29 C.F.R. § 1601.7(b).
In the district court, Gilbert argued that Carter had a shot at escaping the statute of
limitations because “courts determine equitable tolling on a case-by-case basis.” R. 114-6. Yes,
that’s so. But that does not license courts to toll a statute whenever they please. They must
“draw upon decisions made in other similar cases for guidance”—the principle that undermines
Carter’s case. Holland v. Florida, 560 U.S. 631, 650 (2010).
Gilbert adds that the district court erred when it sanctioned him punitively. But these
sanctions are meant to be “punitive.” Red Carpet Studios, 465 F.3d at 647.
Nor does it matter that Hickory Healthcare failed to file a motion to dismiss and instead
waited until summary judgment to raise the statute of limitations. True, the party seeking
sanctions under § 1927 must mitigate damages. See Riddle v. Egensperger, 266 F.3d 542, 555
(6th Cir. 2001). But the defendants did just that. They contacted Gilbert and informed him of
the flaws in his case. The court awarded fees and costs incurred only after that time.
Gilbert claims that the judge erred by not requiring all of the defense attorneys to submit
individual affidavits attesting to their time billed. Not true. One affidavit from the lead attorney
attesting to their collective time suffices. Carter likewise claims that attorneys must prove the
reasonableness of their proposed rates with expert testimony. But the decision on which he relies
says no such thing; it says that the court may look to a variety of sources to determine a rate’s
reasonableness. See Ne. Ohio Coal. for the Homeless v. Husted, 831 F.3d 686, 716 (6th Cir.
2016). Expert testimony may help in some cases but is not required in all of them.
Gilbert concludes with a grab bag of objections to the court’s calculations. None of the
alleged errors sinks to an abuse of discretion. For example, it does not matter that defense
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counsel did not submit a retainer agreement proving that they would have charged these rates
and this number of hours. When calculating attorney’s fees, courts often look to the prevailing
market rates, not necessarily to the actual expenses a client incurs. See Johnson v. City of
Clarksville, 256 F. App’x 782, 784 (6th Cir. 2007). Nor did the magistrate improperly include
block billing in the fee award. The judge fairly concluded that the entries contained enough
detail to avoid that pitfall.
Gilbert claims that the magistrate erred in reducing the fee award by just 1% to account
for clerical tasks that lawyers performed, insisting that the magistrate should have conducted a
line-by-line approach to identify each instance of non-legal work. But we have long permitted
the “arbitrary but essentially fair approach of simply deducting a small percentage of the total
hours.” Northcross v. Bd. of Educ. of Memphis City Schs., 611 F.2d 624, 636–37 (6th Cir. 1979).
“Trial courts need not, and indeed should not, become green-eyeshade accountants.” Fox v.
Vice, 563 U.S. 826, 838 (2011). They “do rough justice, not . . . auditing perfection.” Id.
Gilbert maintains that the magistrate should have reduced the award by more than 30% to
account for defense counsel’s excessive billing. But if abuse of discretion review means
anything, it must mean that we cannot readjust this type of judgment call absent a good
explanation. Gilbert provides none. He likewise provides no evidence to support his claim that
defense counsel received payment for unnecessary and duplicative work.
Gilbert maintains that he should not have to pay for time the defendants spent drafting a
Rule 11 motion that the court denied. But the magistrate reduced the award for just that reason.
The targeted entries seem to relate to both Rule 11 sanctions and other types of sanctions,
including the § 1927 sanctions that the defendants ultimately won.
We affirm.