Shannon Balmer v. Hca, Inc. Health Care Indemnity, Inc.

Citations: 423 F.3d 606; 2005 U.S. App. LEXIS 19755; 86 Empl. Prac. Dec. (CCH) 42,097; 96 Fair Empl. Prac. Cas. (BNA) 737; 2005 WL 2218414Docket: 04-5688, 04-6199

Court: Court of Appeals for the Sixth Circuit; September 14, 2005; Federal Appellate Court

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Shannon Balmer appealed the granting of summary judgment and the award of attorneys' fees to Health Care Indemnity, Inc. (HCI) in her employment discrimination case under Title VII, the Equal Pay Act, and the Tennessee Human Rights Act. The United States Court of Appeals for the Sixth Circuit affirmed the summary judgment but reversed the attorneys' fees award. 

HCI, a subsidiary of HCA, Inc., primarily handles claims related to medical malpractice and offers limited insurance coverage to hospitals. Balmer was hired as a claims supervisor in April 1999 with a salary of $39,500, despite having only two and a half years of experience, which fell short of the three to seven years required. A male counterpart, Frank Halliburton, was hired the same day with a higher salary of $50,800. Balmer was informed that her starting salary was non-negotiable, even after inquiring about a potential raise. 

Following a positive performance review in February 2000, Balmer received a six percent salary increase, which was proportionally greater than that of her peers, and a "Star Award" with gift certificates worth $2,331. Nonetheless, she continued to voice concerns about her pay. Upon discovering Halliburton's salary, she was told he had negotiated his pay due to his greater experience, which included an extensive background in the insurance industry relevant to the role. Halliburton's prior salary had been higher than his starting salary at HCI, while Balmer's starting salary was an increase from her previous position.

In July 2002, HCI promoted six claims supervisors, including four women, leading Balmer to contend that she would have received a promotion but for her sex. She raised concerns about a pay disparity with Halliburton, which Gerelick acknowledged but attributed to Halliburton's greater experience, noting that budget constraints would delay any rectification until 2001. Balmer informed Gentile of her intent to file a gender discrimination suit against HCI in September 2000. Balmer alleges Gentile expressed concerns about her health and warned her of potential retaliation from HCI, claiming that she faced difficulties in communication with Gentile afterward. 

In October 2000, while Balmer was away, Gentile accessed her work mail and discovered invoices from Thompson, Miller, a law firm involved in employment issues, leading him to suspect personal disputes rather than legitimate business. Gentile's inquiries resulted in receiving legal memoranda pertinent to Balmer's lawsuit. Gerelick, upon reviewing the situation, concluded that Balmer misused company funds and offered her a choice between termination or resignation, which Balmer chose. After resigning, she filed a charge with the Equal Employment Opportunity Commission.

Balmer initially filed a lawsuit in Tennessee state court under the Tennessee Human Rights Act, which was later removed to federal court due to federal law claims. An Agreed Protective Order was established for confidential documents. In November 2003, Balmer submitted a First Amended Complaint alleging violations of the Equal Pay Act, Title VII of the Civil Rights Act, and the THRA, seeking class certification but failed to meet the court-imposed deadline for filing a motion for class certification or requesting an extension.

On November 25, 2003, Balmer's counsel filed a motion to withdraw, which the district court approved on December 5, 2003. Subsequently, the appellees filed a motion for summary judgment on December 9, 2003. The district court granted this motion in a Memorandum Opinion and Order on April 30, 2004. Balmer timely appealed the summary judgment and also contested the award of attorneys' fees to the appellees. The appellees, designated as "prevailing parties" under Title VII, initially sought over $91,000 in fees, but the district court found only certain claims to be frivolous, allowing an award based on those findings. Following a July 8, 2004, order, HCI resubmitted its claim for $8,270.20 in fees relating to recoverable allegations, with an additional $4,166.89 sought for defense against frivolous claims. Balmer opposed this amount, but the district court ultimately awarded the full amount requested on August 24, 2004. The final taxation of costs was recorded on September 13, 2004, and Balmer appealed both the fee award and the taxation on September 22, 2004. The appeal of the summary judgment is subject to de novo review, with the requirement that evidence be viewed in favor of the non-moving party. Summary judgment is warranted when no genuine issue of material fact exists. In attorney fee cases, the standard of review is an abuse of discretion. Balmer's claims included gender-based wage discrimination under the Equal Pay Act, Title VII, and the THRA, establishing a prima facie case under the Equal Pay Act by demonstrating that the employer paid different wages to a counterpart of the opposite sex for substantially equal work. However, not all wage disparities constitute violations of the Equal Pay Act.

After a plaintiff establishes a prima facie case of discrimination under the Equal Pay Act, the defendant must demonstrate one of four affirmative defenses to justify the pay disparity: 1) a seniority system, 2) a merit system, 3) a system measuring earnings by production quality or quantity, or 4) any factor other than sex. The burden of proof is on the defendant to show that the pay difference is not attributable to sex, requiring evidence that sex is not a factor in the wage differential. The appellees claim that the wage difference between Balmer and Halliburton is due to relevant work experience, prior salary history, and requested salary, which qualifies as a legitimate business reason under the Equal Pay Act. Factors such as education and experience can be legitimate reasons for pay differences, provided they are not pretexts for gender discrimination. Prior salary can justify pay disparities if not the sole basis for such differences. Balmer contends that the district court incorrectly shifted the burden back to him to prove the justification for the wage difference was a pretext. He argues that HCI did not adequately establish experience as a legitimate factor since the relevant experience was lacking and claims that HCI's use of experience was inconsistent. Balmer asserts that HCI must demonstrate how Halliburton's additional experience directly impacted his job performance, and he argues that Halliburton's performance following a year indicates the limited importance of that experience.

Defendants provided substantial evidence showing that the salary difference between Plaintiff and Halliburton was based on factors other than sex, including Halliburton's request for a higher salary, a better salary history, and greater relevant industry experience as determined by HCI's decision maker. The court concluded that no genuine factual dispute exists regarding the pay differential being due to sex, thus affirming Defendants' affirmative defense under the Equal Pay Act.

Once Defendants met their burden, the court stated that Plaintiff must now produce evidence to create a triable issue regarding the legitimacy of Defendants' reasons. In Equal Pay Act cases, the burden of proof initially lies with the defendant to establish the true basis for pay differences, while the plaintiff must only demonstrate pretext if a reasonable jury could solely support the defendant's position.

The court also assessed Plaintiff's claims about pay disparities among other employees but found them unconvincing due to reliance on a small sample size, inappropriate comparisons between long-term female and recently hired male employees, and failure to consider overall qualifications. This evidence did not lead to a reasonable conclusion that the salary difference between Plaintiff and Halliburton was based on sex.

To establish a prima facie case of retaliation, a plaintiff must demonstrate: engagement in protected activity, defendant's awareness of this activity, an adverse employment action taken by the defendant, and a causal link between the two. If established, the defendant can counter by providing a legitimate non-discriminatory reason for its actions. The plaintiff must then show by a preponderance of the evidence that this reason is pretextual, allowing the jury to infer intentional discrimination if they reasonably reject the defendant's explanation. Evidence must indicate that the employer did not "honestly believe" in its stated non-discriminatory rationale.

The court evaluates the defendant's "honest belief" by determining if the employer had "reasonable reliance" on the facts available at the time of the adverse employment decision. If an employer demonstrates a "reasonably informed and considered decision" reflecting an "honest belief" in its rationale for the adverse action, the case may be dismissed, as no reasonable juror could find the action pretextual. 

Balmer's retaliation claim was summarized by the district court, highlighting her allegations of veiled threats from Mr. Gentile after she indicated her intent to file a lawsuit, as well as increased workload and lack of support from him and Ms. Gerelick. However, the court noted that Balmer's claims were not fully substantiated by evidence. For instance, she admitted to having a variable workload compared to peers and failed to prove that either Gentile or Gerelick impeded her ability to secure new employment after her resignation. 

The court emphasized that not all alleged retaliatory acts amounted to adverse employment actions, clarifying that a "materially adverse change" must significantly disrupt employment rather than merely inconvenience. Balmer's only potential adverse action was her constructive discharge claim. 

Although she argued that the timing of her complaint about wage discrimination and her resignation established a causal link for retaliation, the court concluded that temporal proximity alone does not suffice to prove retaliation. Furthermore, even if she could establish such a connection, the employer's legitimate, non-discriminatory reason for her termination—allegations of misusing company funds—would still undermine her claim. The court affirmed that Balmer did not present evidence to suggest that Gerelick, who made the termination decision, lacked an "honest belief" in the alleged misconduct.

Balmer's assertion that Gentile authorized the legal research conducted by Thompson and Miller does not substantiate her claim that Gerelick lacked a genuine belief regarding Balmer's misuse of HCI funds. The district court concluded that Balmer failed to provide material evidence showing that Gerelick did not make a "reasonably informed and considered decision" or that she did not "honestly believe" Balmer misused company funds when terminating her employment. Consequently, Balmer's argument that the termination was pretextual is unsubstantiated, leading to the failure of her retaliation claims under Title VII and the THRA.

Title VII permits a prevailing defendant-employer to recover reasonable attorneys' fees in discrimination suits. The standard for awarding fees to employers is more stringent compared to that for employees. Fees may be granted if the plaintiff's claim is deemed "frivolous, unreasonable, or without foundation," especially if the plaintiff continued litigation after recognizing the claim's lack of merit. Factors considered in determining attorneys' fees include whether the plaintiff presented sufficient evidence for a prima facie case, if the defendant proposed a settlement, and whether the case was dismissed before trial or underwent a full trial.

The district court determined that HCI was entitled to recover attorneys' fees for defending against some of Balmer's claims. The court noted Balmer's sophistication, given her law degree and extensive experience in claims supervision, which provided her insight into the costs of defending against employment discrimination lawsuits. It emphasized Balmer's persistence in seeking class certification despite evidence contradicting her theories, as well as her pursuit of a sexual harassment claim she admitted was unfounded, and an unreasonable failure to promote claim.

HCI notified Balmer of its intent to seek attorneys' fees if it prevailed and offered to waive fees if Balmer dismissed her case, which she declined. Subsequently, Balmer's counsel withdrew, with the court indicating that prior attorneys may have left due to Balmer pursuing potentially untenable claims. Although the district court denied HCI's request for fees related to Balmer's gender-based wage discrimination and retaliation claims, it awarded HCI $12,437.09 for fees associated with Balmer's sexual harassment and gender discrimination claims under Title VII, as well as for class certification issues. Balmer contends that since not all of her claims were deemed frivolous, the court abused its discretion in awarding any fees. Previous cases, such as Haynie and Tarter, support this argument, indicating that fees should not be shifted to a plaintiff if any part of their claims has merit. HCI attempts to distinguish these cases by arguing that in Haynie, a fee award was appropriate for frivolous claims, and asserts that Balmer's claims were adequately analyzed individually by the district court, unlike in Tarter.

The district court found Balmer's claims of failure to promote and sexual harassment to be meritless and "frivolous, unreasonable, or without foundation." However, the court's award of attorney's fees to HCI was reversed. In this circuit, fees cannot be awarded to defendants if the plaintiff has presented at least one non-frivolous claim. The district court's summary judgment in favor of HCI is affirmed, while the attorney's fees awarded to HCI are reversed. Additional notes highlight Gentile's belief regarding Balmer's legal work invoice, her lack of relevant supervisory experience in certain claims, and her argument that Halliburton's experience in unrelated claims cannot be used to rebut liability under Griggs v. Duke Power Co. and Johnson v. Uncle Ben's Inc.