CHRISTIANSBURG GARMENT CO. v. EEOC

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Argument of William W. Sturges

Chief Justice Warren E. Burger: We will hear arguments next in 1383, Christiansburg Garment Co. against Equal Employment Opportunity Commission.

Mr. Sturges you may proceed when you are ready.

Mr. William W. Sturges: Mr. Chief Justice and may it please the Court.

This case arises out of Title VII of the Civil Rights Act in 1964.

This particular action began or had its genesis in the charge that was filed with the EEOC in 1968.

This charge was processed and disposed of by a 'right to sue' letter issued by that agency in July 1970.

In January 1974, the Commission filed a suit in the District Court for the Western District of Virginia.

On that charge on the basis of purported authority contained in the 1972 amendments to the Act.

The EEOC Commission lost.

Some time after that the prevailing defendant pursuant to Section 706 (k) of Title VII, which states, "The Court in its discretion may allow the prevailing party a reasonable attorney’s fee, filed a motion in the District Court for attorney’s fees in the case."

The District Court held that the prevailing defendant was not entitled to attorney’s fees because the EEOC had exercised good faith in bringing and maintaining the suit.

Christiansburg appealed to the Fourth Circuit.

At this time the Fourth Circuit had followed the decision of this Court in Newman versus Piggie Park Enterprises to the effect that prevailing plaintiffs should be awarded attorney’s fees in the ordinary cases unless there are some special compelling circumstances that they should not be.

Despite this rule, it was followed in the Fourth Circuit in the case of prevailing plaintiffs.

The Fourth Circuit in a two to one decision, ruled in favor of the EEOC.

So we are now before this Court with the issue before the Court fairly simple in the sense.

The issue being whether prevailing defendants and plaintiffs are to be treated equally in the awarding of attorney’s fees under the statute.

As of this time, some of the Circuit Courts follow a double standard in which they award attorney’s fees to defendants only in bad faith cases while other Circuit Courts most recently panels of the Sixth and the Fifth Circuit are ruled that defendants are entitled to attorney’s fees on the same basis as the plaintiffs.

We of course argue that equality of treatment should prevail.

In our brief, we have argued that the plain meaning of Section 706 should control that the statute says simply the Court may allow the prevailing party a reasonable attorney’s fees.

Justice John Paul Stevens: Mr. Sturges?

Mr. William W. Sturges: Yes your Honor.

Justice John Paul Stevens: I know you do in this Court take the possession that the same rule should apply to both parties.

The Court of Appeals’ opinion suggests that you took a different position in that Court.

That there you argued there was a difference between the plaintiff and defendant, and that the standard would be reasonable as opposed to good faith with the defendant.

Is that correct or did you take it differently?

Mr. William W. Sturges: Your Honor that is what we argued in our brief to the Court of Appeals and in our oral argument it was directed to, the rule should be the same for the prevailing plaintiffs and defendants.

Justice John Paul Stevens: You mean you changed from your brief to the oral argument in the Court of Appeals?

Mr. William W. Sturges: Yes, we did Your Honor.

Justice John Paul Stevens: I See.

Mr. William W. Sturges: Indeed as we point out in this brief here, if the rule is not to be the same for prevailing defendants and prevailing plaintiffs, what is it to be?

We suggest it is not to be the bad faith rule for the prevailing defendant and the ordinary rule for the prevailing plaintiff which is the Court of Appeals’ rule, if it is not to be that then a new rule from whole clause, if you will, has to be construed whatever that may be.

Frankly in the Circuit Court we suggest that some rule or reason, but that was very difficult, if you will, to apply, and secondly there was really no statutory basis for that.

If I may add this by the time we arrived in the Court of Appeals in the Fourth Circuit, the tied was running pretty latch against the position that we now has supposed in this Court.

In terms of the plain meaning of the statute, respondent and the amici who support respondent do not seem to take much issue.

They suggest rather that the legislative history or perhaps policy considerations overwrite what the plain meaning of the statute suggests.

In respect to the legislative history, there is no question that the first bill that was introduced into the House of Representatives provided only that prevailing plaintiffs would be entitled to the Award of Attorney’s Fees.

Our concept was subsequently changed to prevailing party.

Two Senators commented in the debates and very similar language under Title II that if the plaintiffs lost attorney's fees could be awarded against them, indeed one of those senators replied to a statement by Senator Irvin of North Carolina that the Act might encourage ambulant chasing, and the reply was no it would not encourage ambulant chasing because the attorney’s fees could be awarded against the plaintiff.

Now it is arguable that the legislative history is inconclusive, but what is not inconclusive is there is no legislative history, suggesting that a different standard applied to defendants then applied to plaintiffs.

There is just nothing then the legislative history that deals without particular subject matter.

In view of that which concluded that the legislative history is inconclusive, then we suggest all them more reason.

The plain meaning of the statute should apply and the rule let so provides.

Justice Potter Stewart: Mr. Sturges, you keep talking by the plain meaning of the statute.

The statute says that the Trial Court may exercise its discretion to assess attorney’s fees either against the plaintiff or against the defendant.

It does not say that that it shall -- it did not say a word about it is applying the same criteria, may be on its discretionary the -- plain meaning of the language is that it need not and should not use the same criteria.

It talks about the Trial Court’s discretion.

But there was -- what is there in the plain meaning of the statute in other words that leads an elective way to conclusion that the criteria have to be identical?

Mr. William W. Sturges: There is nothing in the statute that says a different standard should apply to the plaintiff.

Justice Potter Stewart: There is nothing in the plain meaning of the statute.

Is there that requires identity of criteria?

Mr. William W. Sturges: Only that the statute suggest that both the plaintiffs and defendants are first of all entitled to the attorney’s fee.

Justice Potter Stewart: And everybody agrees with that --

Mr. William W. Sturges: And everybody agrees with that.

Justice Potter Stewart: And that is what the statute said that sometimes attorney’s fees can be assessed against plaintiffs and everybody agrees that sometimes they can.

Mr. William W. Sturges: Right.

Now, in passing the statute if the Congress had intended that different statutes or different standards would apply, it could, for example, have just said, only prevailing plaintiffs will be entitled to attorney’s fees, and then in that event, the only time the defendants would be entitled to attorney’s fees if they prevail would be if the plaintiff had acted in bad faith.

Justice Potter Stewart: Well, I wonder if they would ever be if the Congress had said only prevailing plaintiffs shall be entitled to attorney’s fees.

Mr. William W. Sturges: Well, we --

Justice Potter Stewart: We think it would be pretty clear that prevailing defendants would then under such enactment never be entitled to attorney’s fees.

Mr. William W. Sturges: Well, this Court has indicated in both the Alyeska Cases and in the Newman versus Piggie Park that the courts have the inherent jurisdiction to award attorney’s fees to either a plaintiff for defendant if the others has acted in bad faith.

Justice Potter Stewart: If there is no congressional enactment to the contrary.

Mr. William W. Sturges: Well, perhaps my choice that the word only plaintiffs are entitled to attorney’s fees was unfortunate.

I Perhaps should have said prevailing plaintiffs.

Justice Thurgood Marshall: Perhaps, Congress has used the word discretion is unfortunate for you too.

Mr. William W. Sturges: Well, your Honor, the Congress certainly did not define discretion, but this Court did.

Justice Thurgood Marshall: No, we do not know what discretion means, do not you?

Mr. William W. Sturges: Well, I read the decuisions of this Court --

Justice Potter Stewart: It is a chanslash foot (ph).

Mr. William W. Sturges: Chanslash foot (ph).

This Court in the Newman Case said, "Here is how the discretion is to be applied.

Here is how the District Courts are to apply the discretion."

And this happened to be a plaintiff’s case and then it said, it should be applied in the ordinary case.

Attorney’s fees should be granted.

Now all we are saying to this Court is that standard should be the same for the defendant if some other standard should not prevail or if this Court thinks some other standard should be imposed under the Act.

Fine just it should be the same for the plaintiff as for the defendant and there is nothing in the history that suggest otherwise.

Justice William H. Rehnquist: But you have to go that far in order to support discretionary treatment that they cannot be manifestly different, so as to produce different results simply because one is the plaintiff and one is the defendant, but leaving otherwise a wide discretion in the trial judge, is in fact as far as you need to go?

Mr. William W. Sturges: Your Honor, I think all I need to go is that whatever discretion is exercised and for either party, it should be the same.

Arguments that have been made in the briefs for the amici, the respondent's amici, suggest that if this Court were to rule as the petitioner argues that plaintiffs would be chilled in bringing actions under the Act.

We suggest to this Court that, that has not happened up to this point and this statute has plaintiffs -- attorneys have been aware of the statute since 1964, and indeed there has been a plethora of litigation under Title VII.

So we do not conceive if this Court rules that the statute means the same kind of discretion is to be exercised for both parties that this will chill any litigation that it has not chilled so far.

At most the legislative history suggests that the purpose in passing the statute was both to encourage litigation and discourage litigation.

To encourage litigation that would be meritorious and to discourage litigation that would be unmeritorious.

The statute suggests that the determinant is who prevails, whether it is the plaintiff or the defendant, and that prevailer is the one that is entitled to the attorney’s fees.

I guess, I can best sum up, if you will, stating what the dissent said in the Court of Appeals.

Then that result we end up with as a result of the majority opinion under statute which says the Court may allow an attorney’s fees in its discretion to the prevailing party, it is that a prevailing plaintiff is unallowed and attorney’s fees absent exceptional circumstances, while a prevailing defendant under the same statute is not allowed an attorney’s fee unless the plaintiff has prosecuted his action in bad faith.

I suggest this is not the level floor the court house demands.

We would reserve the rest of our time.

Chief Justice Warren E. Burger: Very well.

Mr. Martin.

Argument of Thomas S. Martin

Mr. Thomas S. Martin: Mr. Chief Justice and may it please the Court.

The attorney’s fees provisions of Title II and VII of the 1964 Civil Rights Act are by their terms permissive grants that the Court in its discretion may allow prevailing party a reasonable attorney’s fee.

In Newman versus Piggie Park Enterprises, this Court established standards to inform that discretion with respect to plaintiffs' awards under Title II, and before the Court today are similar standards for defendants also based upon the proposition that statutory discretion is not a license for arbitrary action, and the question here as it was a Newman, is whether the standards properly effectuate the congressional purpose.

Now, these standards which are now followed by six Courts of Appeals, state that the indicia associated with fee awards to defendants are vexatiousness, meritless litigation, abusive conduct, frivolous litigation, or an attempt to harass or embarrass.

We think that the so called good faith test is what Congress intended because –

1. It tracks the purpose statements in the legislative history of the 1964 Act.

2. It was relied upon by Congress in enacting parallel civil rights legislation.

3. It preserved the enforcement incentive provided by Section 706 (k).

Justice William H. Rehnquist: What if one of the EEOC’s motives in brining an action against a defendant one of several motives was the feeling that they had a lot more legal resourced that they recommend then the defendant did, and therefore he would be likely to cave them and rather than fight the thing.

Would that meet the bad faith test?

Mr. Thomas S. Martin: Mr. Justice Rehnquist, I think the practical answer to your question is that the courts in applying the bad faith test look to objective criteria.

No one deposes the EEOC to decide what their motives were.

They look to whether they had made sense whether there was a reasonable ground, whether there was in fact some evidence of discrimination.

They look to the fact that the EEOC has a burden, a responsibility to advance Title VII’s purposes.

This test is applied in objective fashion rather than a subjective fashion.

Justice William H. Rehnquist: Well then why do you call it a good faith test?

Good faith speaks to me in terms of subjective intention.

Mr. Thomas S. Martin: I think in some ways it is a misnomer.

It is a short form for the set of indices that the courts look to.

These are just references.

The courts have a discretionary grant from Congress, and I look to these indices to see if something like this has occurred.

Now, if the EEOC brought litigation that was, let's say had a reasonable legal ground, or let's say private plaintiff, but litigation had a reasonable legal ground.

This is a Carrion Case in the Second Circuit, but had brought that same litigation already in another form and lost.

The Court said, well, although this is reasonable, there is a bad intent here, so there can not be bad intent cases, but most of the time they are looking for really objective purpose.

Chief Justice Warren E. Burger: Are you suggesting that all the thousands of lawyers that have employed in government at one level or another there are never can be some occasion when government proceedings have brought vindictively and in bad faith.

Mr. Thomas S. Martin: I think that there can be that and if that occurred that the courts could award attorney's fees under this good faith standard.

I am just suggesting to you that --

Justice William H. Rehnquist: You have just restored some another substantial meaning to the content of the good faith.

Mr. Thomas S. Martin: I think there is bad faith element in it.

I am suggesting that it is not just that.

In other words, it is not just a subjective test.

It does not require for an award of attorney’s fees that we proved that the EEOC had a bad motive.

The EEOC brought an outrageous frivolous litigation.

Fees will be awarded against the regardless of its good motive, but it if brought litigation with a bad motive, fees will also be awarded against it.

So it had both aspects.

Justice Lewis F. Powell: Mr. Martin, I take it from what you have said and what you also have said in your brief that you would apply different standards depending on whether you have with the defendant prevailing or the plaintiff prevailing.

Mr. Thomas S. Martin: Absolutely.

Justice Lewis F. Powell: Do you find any justification in the language of the statute for different standards?

Mr. Thomas S. Martin: I find the justification, Mr. Justice Powell, in the legislative history which I would like to turn to now.

Justice Lewis F. Powell: But my question was in the language --

Mr. Thomas S. Martin: In the language, all the language says is that the award should be in the discretion of the District Court.

Justice Lewis F. Powell: Well, I am familiar with the language.

Mr. Thomas S. Martin: And it points out no distinction between plaintiffs and defendants.

Justice Lewis F. Powell: None whatever.

Mr. Thomas S. Martin: None whatever.

Justice Lewis F. Powell: And so you fall back solely on policy.

Mr. Thomas S. Martin: Not on policy Mr. Justice Powell.

We fall back on a teaching of automobile and I think what is implicit in Newman is that when you have a discretionary standard, it is not license for arbitrary action.

Discretion has to be exercised in conformity with the purposes of Title VII with the statutory scheme, with whatever there was in the legislative history --

Justice Lewis F. Powell: Is there any legislative history that would confine recovery of defendant to a situation involving bad faith?

Mr. Thomas S. Martin: I think there is and I would like to turn to it if I could, the legislative history as you know is a slain legislative history, but we think the statementq with respect of awards, the defendants have a uniform theme and those are the --

Justice Lewis F. Powell: Does (Inaudible) indicate, why Congress did not make that explicit?

Mr. Thomas S. Martin: No it does not indicate why it did not make it explicit.

I think it is fair to assume that Congress was enacting a new statute, it was difficult to conceive of all the possible situations that might arise, so what did it grant a discretionary power and through the legislative history gave a guidance to the court in how that discretionary power might be interpreted, and I think that was not a successful effort I think to deal with kinds of problems which might come up rather than straightjacket in the courts into some particular standard.

They gave them a broad grant of discretion and through legislative history informed that discretion.

Justice Lewis F. Powell: A bad faith standard is quite a straightjacket.

Mr. Thomas S. Martin: I do not think it is Mr. Justice Powell, unless you interpreted as a totally subjective standard which is not and has never been.

If it includes award of fees in cases of frivolousness, harassing litigation, vexatious litigation, the Courts of Appeals in Carrion include unreasonable litigation and new Eighth Circuit case includes unreasonable litigation.

I think that is a broad standard and permits the District Court the discretion to respond to what Congress was concerned about, and what Congress was concerned about is demonstrated by the statements by Senators Humphrey, and Senators Lausche, and Senators Pastore.

And they said that the purpose of these fee awards to defendants was to prevent harassment suits, to prevent unjustified suits, to prevent suits without foundation, and to prevent frivolous suits.

That is exactly we thank what the good faith standard does.

It almost tracks to the language used by Congress.

Justice Lewis F. Powell: Do you happen to know how many EEOC claims are now pending at the Commission level?

Mr. Thomas S. Martin: Are we talking about litigation or --

Justice Lewis F. Powell: We are talking about pending claims, I think I have read in a press few months ago that over 120,000 claims are pending.

Mr. Thomas S. Martin: That would be correct Justice Powell.

Let me give you some perspective on that.

Each year the Commission gets something in the nature of 100,000 claims, out of all those claims the Commission selects out only about 300 cases in which to sue.

So the perspective that one might get from the briefs of some of the parties that the Commission is running wild all over the country suing people, I think it is inaccurate, and selecting 300 out of 100,000 cases Commission sued by statute only after investigation, only after conciliation, only after approval by procedure, only after approval by the General Counsel’s Office and the Commissioner itself.

Justice Potter Stewart: But all of those remaining out of the 100,000 are free to sue once they get a right to sue letter.

Mr. Thomas S. Martin: Absolutely.

Justice Potter Stewart: That is 100,000 potential plaintiffs.

Mr. Thomas S. Martin: And in actuality that turns into as the statistics, I believe it is in the Lawyers’ Committee brief state that there are about 5,000 suits last year on employment discrimination nature.

Justice Potter Stewart: And all are entitled -- and all of them are entitled to attorney’s fees under the --

Mr. Thomas S. Martin: If they prevail --

Justice Potter Stewart: Presently under the Newman --

Mr. Thomas S. Martin: Absolutely, and if those suits turn out to be unreasonable, frivolous, meritless, outrageous, abusive all then will be, all the defendants are also entitled to test.

Justice Potter Stewart: They have all been given right to sue letters by the Commissioner.

Mr. Thomas S. Martin: Obviously.

Justice Potter Stewart: That is hypothesis.

Mr. Thomas S. Martin: Correct.

Justice John Paul Stevens: Mr. Martin do you think the Ninth Circuit case which allowed fees which was cited in the cert petition was correctly decided?

Mr. Thomas S. Martin: I think that is a difficult case.

I think it is on the line and probably suggest the breadth of discretion that permitted the courts under the standard there the EEOC pursued an appeal from a denial of an intervention order, it was not totally denied, it was partially denied, and the Ninth Circuit apparently felt that the precedent was so clear against the EEOC’s action.

That it was in nature of a frivolous or harassment suit and awarded fees against the EEOC.

Justice John Paul Stevens: Well, I know what the Ninth Circuit felt, I am wondering, what the Government’s position is?

Was that a proper case for the amendments of fee when that fits (Voice Overlap)?

Mr. Thomas S. Martin: Well, we thought it was not a frivolous action?

We thought it was not abusive and fees ought not to have been awarded, but we did not seek certiorari.

But then Hommerson (ph) in case in the Ninth Circuit --

Justice Byron R. White: Was it decided a cert petition it sounds like, thank you.

Justice Lewis F. Powell: (Inaudible).

Justice Byron R. White: So you do not think the standard should be awarding fees to a defendant that if a judge thinks the EEOC or the plaintiff should have known he is going to lose the case.

Mr. Thomas S. Martin: I do not think it should be something.

I think that is a standard which would be so difficult to apply, and a standard might so discourage private enforcement or EEOC enforcement is not be a good standard.

I think the trust of what Congress was suggesting that fee should be awarded in something like abusive conduct, not just the fact that the District Court says well, this is obviously wrong, but that really looks like inabusive.

Justice Byron R. White: So you really are talking about subjective and subjecting bad faith.

Mr. Thomas S. Martin: I do not think so.

I think that the Court looks to one kind of case for example this case where was a case of first impression.

In the Court that is a Court of first impression, you know this does not look like abusive conduct to us.

Now if this case, if the EEOC had brought a kind of action and had lost in Ninth Courts of Appeals, and the Supreme Court and tried again, the Court would say, well, regardless of the great motives of the EEOC fees could be awarded.

It is not totally a subjective test.

Justice William H. Rehnquist: How much of discouragement factor, do you think awarding of attorney’s fees the defendant has with plaintiffs.

So far as the EEOC is concerned, they get their money from the public treasury, and so far as the private plaintiffs are concerned, most of them are judgment proof anywhere I think.

Chief Justice Warren E. Burger: We will resume there --

Mr. Thomas S. Martin: I will answer the question tomorrow.

Chief Justice Warren E. Burger: -- in the morning.

Mr. Thomas S. Martin: Thank you.

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Argument of Thomas S. Martin

Chief Justice Warren E. Burger: We will resume arguments in 1383.

Mr. Martin you may proceed.

Mr. Thomas S. Martin: Thank you Mr. Chief Justice and may it please the Court.

When we closed yesterday Justice Rehnquist had questioned whether fee awards against sometimes indigent, Title VII plaintiffs would really deter enforcement, and some Title VII plaintiffs are undoubtedly indigent and perhaps judgment proof, many more are not.

Title VII claims are brought not only by incumbents and unsuccessful applicants and not only by blue collar workers, but by executives.

We think that the thread of fee awards against their personal property, however, modest would be a substantial deterrent, and more importantly Congress throught that it had this deterrent effect because Congress authorized fee awards was to deter frivolous, or abusive conduct.

This is also the same basis that this Court has used to uphold the American Rule.

This Court set in Fleishman that if plaintiffs were forced to paying not only their own fees, but the fees of their opponents when the lost, the poor might be unjustly discouraged from bringing actions to vindicate their rights.

We think this is not in abstract concern, the Lawyers' Committee for Civil Rights, the NAACP based upon their experience and their briefs, they conclude that in ordinary award of attorney's fees against unsuccessful defendants would have the substantial adverse effect upon Title VII enforcement.

Justice Mr. Justice Rehnquist : We can make it against unsuccessful plaintiffs.

Mr. Thomas S. Martin: Against unsuccessful plaintiffs.

This is surely inconsistent with Newman and we do not think it is impossible -- we think it is impossible but Congress could have intended that.

Especially since Congress was concerned that these plaintiffs would be unable to pay their own fees and that is why they passed the statute, Senator Humphrey said, "The purpose of the statute is to help poor plaintiffs bring meritorious litigation."

Justice Lewis F. Powell: Mr. Martin.

Mr. Thomas S. Martin: Yes, Justice Powell.

Justice Lewis F. Powell: Could a District Court, in exercise of its discretion, consider the fact that the prevailing defendant was said charitable corporation, nonprofit corporation?

Mr. Thomas S. Martin: I think the District Court could consider that.

The District Court has a grant of discretion, it is a wide grant, and the courts have considered those kinds of factors in the cases where the good faith standard has been implied.

I do not think it is a straightjacket for a District Court consideration.

They would also have to consider it though Mr. Justice Powell.

The status of the plaintiff and the facts of the plaintiff for example might be the EEOC which has an obligation to advance Title VII law might be a poor plaintiff, and it has to consider the fact that awarding an attorney's fee might deter future Title VII litigation.

So it has discretion and it can consider that factor, but it has to consider within the whole scope of the purpose of Title VII to eliminate discriminations, country and employment.

Justice Lewis F. Powell: In your view, could the District Court also consider the size and financial condition of many of these defendants are quite small almost nonemployed businesses?

Mr. Thomas S. Martin: I think that District Court could consider that Mr. Justice Powell, but it should also consider these factors that before Congress was an amendment to eliminate fee awards against small businesses that was in 1972 and it is set forth in our brief and Congress rejected that amendment before Congress would many amendments to eliminate the coverage of Title VII from small businesses, and nevertheless, Congress refused to withdraw Title VII coverage from small businesses.

If we had a course of dealing, in which District Courts consistently refused to award fees in cases brought against small businesses, it might effectively insulate those small businesses from Title VII coverage and therefore reverse the two decisions made by the Congress - one to cover them; and two, not to allow mandatory fees in such cases.

And let me also mention that in this case, Christiansburg was a company in 1970 which had 230 employees, and that was almost ten times that minimal amount that was needed for a Title VII coverage, so it would not be dispositive in this case regardless.

In answer to your questions I think the District Court has discretion to consider these factors, but it has to measure all this against Title VII's purposes.

Justice Potter Stewart: Mr. Martin, your answer somewhat confuses me.

I thought it was your position that a District Court should exercise its discretion to impose attorney's fees upon plaintiffs only upon a finding that the action had been brought in bad faith or vexatiously.

And I should think the identity of the defendant would have nothing whatsoever to do with that criteria.

Mr. Thomas S. Martin: Well, the indicia associated with the fee award or bad faith, vexatiousness etc.

So I think in normal case, as a normal rule, fee should not be awarded in absent those indicia.

What the Congress meant to preclude the Court from even considering the fact that in exercise of its discretionary grant that the employer was a small employer.

It does not appear from the legislative history except to the extent that Congress decided to cover those employers and rejected amendments that would have given the mandatory awards.

Justice Potter Stewart: Well then --

Mr. Thomas S. Martin: I think it is unlikely that it should not be dispositive.

Justice Potter Stewart: Well, should it be any element in the District Court's decision in whether or not to exercise its discretion that says attorney's fees -- certainly whether or not a claim was brought in bad faith or vexatiously has really nothing to do.

Mr. Thomas S. Martin: That is right and that is --

Justice Potter Stewart: How rich or how small, you have to be familiar.

Mr. Thomas S. Martin: That is exactly what I was saying, and that should be then I think that should be the normal rule.

All I am suggesting is that the rule seems to be in the nature of a guideline at least as articulated by the Courts of Appeals.

The Courts of Appeals have not articulated whether in fact the consideration in which Mr. Justice Powell suggests, should be excluded.

They have not said it should be excluded and therefore I do not think to affirm this case which just says that the indicia associated with the award of bad faith and vexatiousness, we need it necessarily to deal with that problem whether that is a --

Justice Potter Stewart: But you answre is tied that if not it either it should be or in any event it could permissibly be included which is inconsistent with what you are saying your brief as I read your brief.

Mr. Thomas S. Martin: Well, I think that the Courts of Appeals' decision which we cited in our brief suggests that United States' deal, I suggest the possibility of taking to consideration economic factors for example, and that is how the standard has been applied.

As I say Mr. Justice Stewart in the normal case you are absolutely right, fees should be --

Justice Potter Stewart: No, I am not --

Mr. Thomas S. Martin: Well, I mean I think in the normal case, fee should be denied in the absence of these indicia of bad faith or frivolousness.

Justice Potter Stewart: And that you say should be the sole test; that is the submission in your brief as I understand it at least.

Mr. Thomas S. Martin: That should be the sole test, but again the grant of the statute is discretionary fee awards.

Okay, and the indicia are guidelines associated with that, are these tests that we have --

Justice Potter Stewart: So you do now concede that in addition to, whether or not the action was brought in bad faith, or vexatiously, the Court might permissibly consider other elements in deciding whether or not it (Inaudible)

Mr. Thomas S. Martin: I think it is hard to look at the legislative history, and that language of statute and say they can exclude it.

I think it should never be dispositive.

Justice Potter Stewart: Well, if things are inequipoise except for that element then it is going to be dispositive.

Mr. Thomas S. Martin: I think it would be -- there could be a case Mr. Justice Stewart and what I am saying is looking at the legislative history, I cannot exclude the possibility that the Court could take that into consideration, and I think that the normal, the indicia associated with the award of attorney's fee should be vexatiousness and frivolousness normally.

That is the best answer that I think I can give to the question.

Justice Potter Stewart: Well, it is a somewhat different position than the position taken in your brief.

I understand it, am I wrong in my understanding of your brief?

Mr. Thomas S. Martin: Well, the brief's position is that the good faith standard should be applied as it is applied by Courts of Appeals now, and if you look to those decisions, I am suggesting to you that they do not say, they have not reached the question of excluding this kind of concern altogether.

And I am suggesting that what they have reached is that the normal indicia associated with the fee award should be those criteria, that is all that is necessary to resolve this case and that is the point that we have made in our brief that in this kind of case and the normal case the vexatious, frivolous rules should be dispositive.

Justice Potter Stewart: Well, we are not a police court here to decide each case on sort of non hope basis.

One of our functions, perhaps primary the functions as to give some guidance to the courts and lawyers of this country and in this area it is quite important that seems to me that what we are asked to do is to set the meets and bounds of the area within which the District Courts should exercise its discretion.

Mr. Thomas S. Martin: My answer is -- let me say that my answer in the (Inaudible)

I do not think it should ever be dispositive, and I think that criteria should be the vexatious rule.

Justice Potter Stewart: Then if it should never be dispositive then it is an impermissible element, and you would agree, wouldn't you?

Mr. Thomas S. Martin: Well, then I would agree with you.

Chief Justice Warren E. Burger: Do you think your responses to Mr. Justice Powell and subsequently to Mr. Justice Stewart fall within the framework of the Fourth Circuit opinion in this case?

Mr. Thomas S. Martin: I think it does Mr. Chief Justice.

The Fourth Circuit rejected a rule that would depend upon an ordinary fee award to plaintiffs or that would depend upon the reasonableness alone, and looked to the United States Steel Rule which was dependence upon the indicia of frivolousness, and meritlessness, and vexatiousness.

Chief Justice Warren E. Burger: Now, does the statute talks in terms of prevailing party, does it not?

Mr. Thomas S. Martin: It does.

Chief Justice Warren E. Burger: Now, the Senator Humphrey and the others, debating this matter on the floor, have no difficulty on singling out plaintiff, defendant.

What conclusions should be drawn from the fact that Congress used the term 'party' rather than plaintiff or prevailing plaintiff?

Mr. Thomas S. Martin: I think the conclusion that should be drawn is that Congress did not want to exclude prevailing defendants from ever receiving an attorney's fee award, and in order to not to exclude them and to provide for disincentive for frivolous litigation it included the prevailing party language.

Mr. Justice Powell asked me yesterday, whether Congress would ever use this language and nevertheless mean that there should be two different standards, but in fact Congress has repeatedly done exactly that in the statutes which are pointed out in the Lawyers' Committee brief for example ranging from consumer protection to marine pollution, Congress used exactly this prevailing language and nevertheless meant to imply two different standards - one for the plaintiffs and one for the defendants.

And more importantly Congress relied upon this interpretation in the 76 Civil Rights Attorney's Fees Act that was comprehensive legislation intended to parallel the 1964 Act, Congress tracked the language of 706 (k) and explicitly stated that fee should only be awarded where the plaintiffs' suit was frivolous, vexatious or brought for harassment purposes.

Justice Mr. Justice Rehnquist : You say Congress exclusively stated that.

Did you mean that literally?

Mr. Thomas S. Martin: I mean, in both the House and Senate reports which are set out in the brief, not in the statute, they use the same language in the statute as they did in 706 (k), but they made clear in the legislative history as explicitly as one could, that the intended fees only to be awarded on the standard.

Justice John Paul Stevens: Mr. Martin when you answered Mr. Justice Powell's questions about the character of a corporate defendant, a charity, or a small business, were you answering with the reference to fee awards against the plaintiff or fee awards against the defendant?

Mr. Thomas S. Martin: Fee awards ordinarily be made in favor of a successful plaintiff according to Newman versus Piggie Park.

Justice John Paul Stevens: In a plaintiff's claim for fees, in a successful plaintiff's claim for fees, the Court might deny them on the ground that the defendant --

Mr. Thomas S. Martin: No, fee awards are ordinarily -- under the Newman rule that were ordinarily made.

Justice John Paul Stevens: What was your answer to Mr. Justice Powell?

Mr. Thomas S. Martin: Well, Mr. Justice Powell asked I think whether Court in its discretion could ever take into consideration these other factors.

Justice Lewis F. Powell: When the defendant had prevailed, that was in my question.

Mr. Thomas S. Martin: When the defendant had prevailed?

Right, I suppose and I thought you just asked me what does the plaintiff prevail?

Justice John Paul Stevens: I was just not clear whether you asked me in the context the defendant or plaintiff prevailing?

Mr. Thomas S. Martin: No.

Justice John Paul Stevens: And you are saying that and when the defendant prevails, a factor that would tend to justify a fee would be that the defendant was a charitable corporation or small business.

Mr. Thomas S. Martin: May be this way, you know if -- I think this is part of it.

Justice John Paul Stevens: Did you depart from any answer away?

Mr. Thomas S. Martin: The EEOC brings what the criteria might be, whether it is unreasonable action okay, by the EEOC.

And some court might in deciding whether the EEOC was unreasonable in bringing the suit.

Look at the question whether, besides of this defendant.

As Mr. Justice Stewart said, that would be inconsistent with the whole thrust of what these fee awards are supposed to do, but that -- it has been done and that is really what I was saying.

Justice Lewis F. Powell: Mr. Martin, you have been subjected to very skillful cross examinations by --

Mr. Thomas S. Martin: I have not Mr. Justice Powell.

Justice Thurgood Marshall: -- my brothers, what I want to ask you now is whether we were to understand the answers you gave me still stand. [Laughter].

Mr. Thomas S. Martin: I think Mr. Justice Stewart has skillfully brought me to the point where I have to say that if a court took into consideration the attorney, the size, as I was trying to state generally, the size of the company, it would be inconsistent with what the Congress did in covering the company and refusing a normal award of attorney's fees.

Justice Lewis F. Powell: Is it your view that the Court acts in its function as a court of equity when it makes its judgment?

Mr. Thomas S. Martin: It acts as a -- according to Title VII it is an equitable statute in general.

Justice Lewis F. Powell: That is right.

And are you now saying that a court of equity cannot consider the size or characters of the defendant who has prevailed in a Title VII case?

Mr. Thomas S. Martin: Well, I think Mr. Justice Powell --

Justice Lewis F. Powell: If so what in the statute gives you any basis for making that argument?

Mr. Thomas S. Martin: I said that the only that -- and I think this is what Mr. Justice Stewart said -- is that if the indices that were associated with the fee award when Congress articulated, what its purposes were?

Were - indices of bad faith and frivolousness, and Congress did not include in that small businesses and other kinds of concerns.

There is discretionary fee award language, courts have appeals, in applying this rule have looked to the other language to these other concerns, but to the extent that they would upset a case in equipoise then I think that would be inconsistent with Congress' purposes.

I think that is what Mr. Justice Stewart has suggested here.

The double standard that the Court found to be, the Dissenting Judge found to be unfair, we think is not unfair because this statute has a particular purpose.

It is to implement Title VII's policies, and plaintiffs and defendants are it differently situated with respect to those policies, and while our plaintiffs are having enforcement rules, defendants do not have that enforcement rule.

Therefore Congress could have precluded prevailing defendants from ever obtaining a fee award, but made a different choice, and decided that in cases one justified abusive frivolous litigation, fee awards could be made, and that is the bounds that Congress struck and that is the bounds that we think should be sustained.

Justice Thurgood Marshall: You are saying that disparage the adversary systems somewhat in that response to Mr. Martin, isn't that the function of the advocates on both sides to present their positions vigorously to see that ultimately the intent of Congress is carried out?

Mr. Thomas S. Martin: It certainly is.

Chief Justice Warren E. Burger: Now, it is the defense then, it is the defendant company prevents an inexperienced or ill-advised or indolent charge from going too far off the beaten path hasn't he performed a function consistent with the administration of the Act?

Mr. Thomas S. Martin: I think he has, but what our problem is it is not deciding what would be a good rule, but what Congress was thinking about when it passed the 1964 Act, its concern was providing incentive for plaintiffs.

It had raised no concern of providing an incentive to defendants; it probably presumes that defendants have the enough incentive to defend against Title VII litigation.

So interpreting what Congress said as apposed to what might be considered to be a good rule, Congress seemed to intend the good faith standard.

Justice Mr. Justice Rehnquist : But if your last answer is correct, they simply would have given attorney's fees to prevailing plaintiffs period, wouldn't they?

Mr. Thomas S. Martin: Except it, all they had another concern and that was to prevent frivolous and abusive litigation; they want this process to be abused and that is why they have provided prevailing parties for awards.

They have done this as I say in numerous other statutes including the parallel legislation of the 1976 Act.

They had to do this for another reason Mr. Justice Rehnquist because cost would not be allowed against the United States in the absence because of 28 U. S. C. 2412, cost would not be allowed against the United States under the equitable rules, so to provide against, to stop frivolous actions, to provide fees against the United States they had to pass the prevailing party language.

Justice Mr. Justice Rehnquist : Well, they certainly could have awarded it so their costs would be allowed against the United States, but not attorney's fees.

Mr. Thomas S. Martin: But they intended to allow attorney's fees against the United States.

They needed the prevailing party --

Justice Mr. Justice Rehnquist : Well, that is what I suggest that your answer to the Chief Justice's question is not wholly satisfactory.

Mr. Thomas S. Martin: In what sense Mr. Justice Rehnquist I am not sure I understand you.

Justice Mr. Justice Rehnquist : Well, that Congress was seeking to encourage private litigants to prosecute but not to encourage to the same extent meritorious defense is to be made.

Mr. Thomas S. Martin: All I can say is that in the legislative history there are only about four statements - one is Senator Humphrey's statement saying that we want to encourage private litigation and that was made when he introduced the amendment to the bill.

Justice Mr. Justice Rehnquist : How would you read the statute if they are without referring to these various remarks on the floor?

Mr. Thomas S. Martin: If there was no legislative history, I would then look to the purposes of Title VII, and the statutory scheme, and the legislative history would seem to be to encourage the elimination of discrimination.

I think what we have is some remarks on the floor, a legislative scheme which was designed as this Court said in Newman to encourage private enforcement.

We have subsequent parallel legislation in the 1976 Act.

We have the same use of similar language in other statutes by Congress, all those indicate as we think point in the same direction and that is that the Court and that the Congress intended when it used this language to set up one rule for prevailing plaintiffs and the good faith rule for prevailing defendants.

That is our best estimate of what Congress intended based upon all these legislative indicators.

Thank you.

Chief Justice Warren E. Burger: Mr. Sturges do you have anything further?

Argument of William W. Sturges

Mr. William W. Sturges: Mr. Chief Justice and may it please the Court.

I do, a few remarks.

First of all, in respect to considering the financial ability of the loser to pay, we think that is a matter that a District Court can properly consider, and if the plaintiff is judgment proof or if the defendant is judgment proof, certainly in that kind of a case the Court should exercise its discretion not to award attorney's fees to the winning party.

In respect to the question asked by Mr. Justice Powell in respect to a nonprofit corporation, that is a matter again we would submit in the District Court's jurisdiction and discretion and undoubtedly a variety of facts would have to be taken into consideration as to whether an award should be made.

Secondly, the law as it existed, before Title VII or the 1964 Act was passed, provided attorney's fees to a party if that party was subjected to a vexatious or bad faith suit or defense.

Justice Potter Stewart: That was in the absence of any legislation qualify.

Mr. William W. Sturges: That was in the absence of any legislation.

Yes, Your Honor that was the inherent equitable power of the Federal Court.

Now, there are some 40 or 50 statutes that the Congress has passed in respect to attorney's fees and they provide attorney's fees in a variety of cases - sometimes to the prevailing party, sometimes to the injured party, sometimes to the prevailing plaintiff, sometimes in exceptional cases, sometimes otherwise.

We submit that there is no holding by this Court or by any court that when Congress passes a statute allowing attorney's fees to the prevailing party, that if the either party had acted in bad faith they would have been precluded from receiving attorney's fees absent a provision in the statute which would allow.

Indeed this Court in Newman v. Piggie Park Enterprises in its Footnote 4 stated, "If Congress' objective had been to authorize the assessment of attorney's fees against defendants who made completely groundless contention for purposes of delay, no new statutory provision would have been necessary."

For it has long been held that a Federal Court may award counsel fees to a successful plaintiff where a defense has been maintained "in bad faith, vexatiously, wantonly, or for oppressive reasons.

And the Court again adopted this same language in its Alyeska Pipeline Service Company case, in which it said the Court, in referring to the same footnote in Newman where it stated, the Court reasoned that if Congress had intended to authorize fees only on the basis of bad faith, no new legislation would have been required in view of the history of the bad faith exception.

So we say to the Court and argued that it was not necessary for the Congress to pass all the statute allowing, including prevailing parties in the statute in order to award attorney's fees for bad faith either to the plaintiff, or the defendant.

Justice John Paul Stevens: Mr. Sturges can I interrupt, for just a moment?

I was reflecting on your argument last time and you said that your position now is that the same rule should apply to both sides whether the plaintiff or the defendant prevails, is that correct?

Mr. William W. Sturges: That is correct Mr. Justice.

Justice John Paul Stevens: Now, does that mean that which of two positions do you therefore take that the rule of Piggie Park has been changed for successful plaintiffs or that whenever a defendant wins, the defendant should routinely give fees from the plaintiff?

Mr. William W. Sturges: Are you saying that the rule annunciated in Piggie Park should apply to defendants as well as the plaintiffs?

Justice John Paul Stevens: So that in the normal case if the defendant wins, he automatically gets fees unless there is some exceptional reason for denying a fee.

Mr. William W. Sturges: That is our position Mr. Justice.

Now, in respect to public policy in the Newman case this Court analogized the successful plaintiff, as carrying the burden of a private Attorney General -- and that was based in part on the statutory history, what little areas to in encourage such litigation.

As we have pointed out that statutory history also discourages unmeritorious litigation and we would submit to the Court, the analogy that the successful plaintiff, if you will, is similar to the private defendant.

Lastly we would suggest to the Court that the legislative history of the 1976 Attorney's Fees Act is, in no way, irrelevant to what the Congress in 1964 intended in respect to the provision under consideration here and we submit I believe it is Footnote 36 in the Teamster v. Time (ph) case as a further support for that position.

Thank you.

Chief Justice Warren E. Burger: Thank you gentleman.

The case is submitted.