Equal Employment Opportunity Commission v. Peoplemark, Inc. (732 F.3d 584, 2013)

McKEAGUE, J., delivered the opinion of the court, in which BOGGS, J., joined. CARR, D.J. (pp. 595-628), delivered a separate dissenting opinion.

OPINION

McKEAGUE, Circuit Judge.

The Equal Employment Opportunity Commission (“Commission”) filed a complaint against Peoplemark, alleging that Peoplemark had a blanket, companywide policy of denying employment opportunities to persons with felony records and that this companywide policy had a disparate impact on African Americans. As it turned out, the alleged companywide policy did not exist. Eventually, the Commission dismissed its claim through joint motion of the parties. Peoplemark moved for costs and attorney’s and expert fees. The district court awarded Peoplemark fees and costs totaling $751,942.48. This award included attorney’s fees from October 1, 2009, through the end of the litigation, finding that as of October 1 the Commission’s claim was unreasonable to maintain. The award also included all of People-mark’s expert fees. The Commission appeals the district court decision and argues that the district court abused its discretion when it imposed attorney’s and expert fees. Alternatively, the Commission argues the fees were excessive.

We affirm the district court’s decision.

FACTS

Defendant-appellee Peoplemark is a temporary-employment agency with offices in Michigan, Tennessee, Kentucky, and Florida. Peoplemark uses an application form that asks applicants whether they have a felony record. Peoplemark also conducts an independent investigation into the criminal records of all applicants.

In 2005, Sherri Scott, an African American with a felony conviction, submitted an application to Peoplemark’s Grand Rapids office. Peoplemark did not refer Scott for employment. Because of this refusal, Scott filed a charge of discrimination with the Commission. She alleged that People-mark denied her application because of her race and felony record.

The Commission launched an investigation in light of Scott’s allegations. As part of the investigation, the Commission communicated -with Judd F. Osten, Peoplemark’s Vice President and Associate General Counsel. Osten informed the Commission that Peoplemark had a companywide policy of rejecting felon applicants. Osten indicated that Peoplemark’s policy was not the result of a request from its clients. However, he did state that Peoplemark’s clients knew of the policy and that some had told Peoplemark not to refer felons.

As part of the investigation, the Commission also subpoenaed, and Peoplemark provided, more than 18,000 documents. According to Peoplemark, the documents proved that Peoplemark did not have a companywide policy of rejecting felon applicants because the documents showed that Peoplemark had referred felons to job opportunities.

In September 2007, based upon the investigation, the Commission sent a letter to Peoplemark stating that the Commission had reason to believe that Peoplemark had violated Title VII. The Commission relied on the statements of Osten and its belief that Peoplemark had a blanket, companywide policy of rejecting felon applicants, a policy which the Commission argued had a disparate impact on African Americans. The parties’ attempts to conciliate failed, and on September 29, 2008, the Commission filed the current action on behalf of Scott and a class of similarly-situated persons. The complaint alleged that

[s]inee at least May 2005, Defendant Employer has engaged in unlawful employment practices at all of its facilities in violation of Section 703(a) of Title VII, 42 U.S.C. § 2000e-2(a). The Defendant’s unlawful employment practices include maintaining a policy which prohibits the hiring of any person with a criminal record. Such policy has had and continues to have a disparate impact on African American applicants.

R. 1, Compl. at 2, Page ID # 2.

The district court held a scheduling conference in January 2009. The subsequent case management order required the Commission to disclose its experts by the end of June 2009, and to submit its expert reports by the end of August 2009.

The Commission eventually identified 286 individual class members. The records provided by Peoplemark to the Commission indicated, however, that some of the class members did not have felony convictions and others who had felony convictions obtained employment through Peoplemark despite their criminal records.

In April 2009, Peoplemark formally informed the Commission for that first time that Peoplemark denied having a eompanywide policy of rejecting felon applicants.

The Commission asked for two extensions to the expert deadlines, one each in June and July 2009. Peoplemark opposed both motions. In response to the first request, the court extended both the date to name experts and the report deadline, though the court did not grant as long an extension as the Commission had requested. The court denied the second motion to extend.

In July 2009, Peoplemark provided the Commission with a copy of its e-database. The database again indicated that People-mark did not have a companywide policy of rejecting all felon applicants.

By the end of August 2009, Peoplemark had produced over 176,000 documents. In September, Peoplemark produced about two thousand previously unknown documents.

In September 2009, the Commission yet again filed a motion to extend the time to file expert reports. The Commission claimed that its statistical expert would be unable to finalize her report by the deadline and requested that the court extend the deadline to February 2010. The court ordered additional argument about whether the Commission’s statistical expert’s testimony was even necessary to determine if Peoplemark employed a categorical, companywide policy of refusing to refer felons.

On October 23, 2009, the Commission filed a supplemental brief, which responded to the court’s request for additional argument on the issue of whether the Commission’s statistical expert’s report was even necessary. The brief disavowed the theory of the case that Peoplemark had a discriminatory categorical company-wide policy. The Commission argued that the case hinged on the possibility that Peoplemark’s consideration of felony convictions when assessing applications had a disparate impact on African Americans. To determine if the case was viable, the Commission, through its expert, would need to analyze flow data and current work force data and conduct an adverse-impact analysis. This, the Commission contended, could establish that People-mark’s actual policy had a disparate impact on African Americans.

The magistrate judge eventually granted in part and denied in part the Commission’s third motion for extension of time to file expert reports. The judge found that the Commission was dilatory in prosecuting the case. The magistrate judge extended the deadline for filing expert reports to December 31, 2009. The district judge affirmed.

Peoplemark timely filed its expert report in February 2010.

Though Peoplemark brought a motion for summary judgment on February 25, 2010, the parties agreed to voluntarily dismiss the case with prejudice on March 24, 2010. The dismissal provided that People-mark would be the prevailing party for purposes of determining who was entitled to fees under § 706(k) of Title VII, as amended at 42 U.S.C. § 2000e-5(k). The court granted the joint motion and dismissed the action on March 29, 2010.

Peoplemark thereafter moved for attorney’s fees, expert fees, sanctions, and costs.

PROCEDURAL HISTORY

A. Magistrate Judge’s Report and Recommendation

On March 31, 2011, the magistrate judge recommended that Peoplemark be awarded fees in the amount of $751,942.48, which included $219,350.70 in attorney’s fees, $526,172.00 in expert witness fees, and $6,419.78 in other expenses.

The magistrate judge found that “the complaint turned out to be without foundation from the beginning.” The magistrate judge recommended that the Commission should be held to the gravamen of its complaint — that Peoplemark had a blanket, companywide policy of refusing to refer felons to employment opportunities and that this policy had a disparate impact on African Americans. The magistrate judge then sought to determine when the Commission should have known that the case as pleaded was groundless.

The magistrate judge recommended that the Commission should have known the case was groundless as of October 1, 2009. The magistrate judge chose this date because it provided the Commission a little over a month to have reviewed the vast majority of the documents produced by Peoplemark. The magistrate judge found that “[i]t was certainly unreasonable to continue this burdensome litigation” after October 1 because the Commission should have known that the claim was groundless by that date. The magistrate judge also added that it was unreasonable for the Commission to maintain the litigation after the Commission knew it could no longer present an expert report.

The magistrate judge then went on to recommend that Peoplemark be awarded all of its expert witness fees, after finding that they were the kind of “out-of-pocket expenses normally charged to clients by attorneys which are recoverable as part of the statutory award of attorneys’ fees under Title VII.” The magistrate judge stated that Peoplemark’s expert was necessary — Peoplemark needed an expert to rebut the Commission’s experts. The magistrate judge also noted that People-mark had already paid its expert’s fee of $526,172.00, and that Peoplemark’s expert had conducted an extensive analysis including a determination of how many of the 286 alleged victims had been hired. In light of these findings, the magistrate judge recommended that the Commission be assessed all of Peoplemark’s expert fees, even those that accrued before October 1, 2009. The Commission tried to refute the charges by relying on its expert’s declaration that she was astounded by Peoplemark’s expert’s fee. However, the magistrate judge stated that comparing the two experts’ work was like “comparing apples to oranges” because People-mark’s expert had produced a report and the Commission’s had not; because the Commission’s expert had only spent 23.26 hours on her work, whereas Peoplemark’s expert had spent 123.55 hours; and because Peoplemark’s expert had done all of his analysis work in-house, which substantially increased costs, whereas the Commission’s expert had used an outside data-management company.

The Commission filed objections to the report and recommendation.

B. District Judge’s Opinion and Order

After reviewing the report and recommendation and the Commission’s objections, the district judge adopted the magistrate judge’s report and recommendation. The court rejected the Commission’s objection that the Commission could prove its case as pleaded without showing a blanket, companywide policy of refusing to refer felons. The court rejected the Commission’s argument that the proper date for assessing all fees was January 29, 2010, and its argument that Peoplemark’s expert fees were not sufficiently documented. The court found that all of Peoplemark’s expert fees should be awarded because they were out-of-pocket expenses normally charged to clients, were directly related to the disparate-impact theory, and “were an integral part of Peoplemark’s defense.”

The Commission now appeals this decision and argues that an award of any fees was inappropriate under the circumstances of this case. In the alternative, the Commission argues that the district court abused its discretion when it fixed an October 1, 2009, award date for attorney’s fees; when it imposed the entirety of the expert fees and not just those incurred on or after October 1; when it failed to find People-mark’s expert’s documentation inadequate; and when it failed to find Peoplemark’s expert fees excessive. Before turning to the Commission’s arguments we detail the standard of review.

ANALYSIS

A. Standard of Review

This court reviews a district court’s award of fees for abuse of discretion. Adcock-Ladd v. Sec. of Treasury, 227 F.3d 343, 348-49 (6th Cir.2000). “[T]he trial judge’s exercise of discretion ... is entitled to substantial deference, especially when the rationale for the award was predominantly fact-driven.” Id. at 349. “Abuse of discretion is defined as a definite and firm conviction that the trial court committed a clear error of judgment.” Logan v. Dayton Hudson Corp., 865 F.2d 789, 790 (6th Cir.1989). The district court abuses its discretion when it applies an erroneous legal standard, misapplies the proper legal standard, or relies on clearly erroneous facts. Adcock-Ladd, 227 F.3d at 349.

B. Underlying Legal Principles

Under 42 U.S.C. § 2000e-5(k), a court may award the prevailing party in a Title VII action “a reasonable attorney’s fee (including expert fees).” The Supreme Court annunciated the relevant standard for assessing attorney’s fees and other costs in Christiansburg Garment Co. v. E.E.O.C., 434 U.S. 412, 98 S.Ct. 694, 54 L.Ed.2d 648 (1978). In Christiansburg, the Court explained that a court may award a prevailing defendant in a Title VII action attorney’s fees under certain limited circumstances:

[A] plaintiff should not be assessed his opponent’s attorney’s fees unless a court finds that his claim was frivolous, unreasonable, or groundless, or that the plaintiff continued to litigate after it clearly became so. And, needless to say, if a plaintiff is found to have brought or continued such a claim in bad faith, there will be an even stronger basis for charging him with the attorney’s fees incurred by the defense.

Id. at 422, 98 S.Ct. 694. We apply the same standard against the Commission as against other litigants. Id. at 422 n. 20, 98 S.Ct. 694.

In assessing whether a district court abused its discretion when it granted attorney’s fees to a defendant, this court has previously considered factors including: “(1) whether plaintiff presented sufficient evidence to establish a prima facie case; (2) whether defendant offered to settle the case; and (3) whether the trial court dismissed the case prior to trial.... ” Balmer v. HCA, Inc., 423 F.3d 606, 615-16 (6th Cir.2005), overruled on other grounds by Fox v. Vice, — U.S. —, 131 S.Ct. 2205, 180 L.Ed.2d 45 (2011). A plaintiff establishes a prima facie case of disparate impact when “(1) plaintiff identifies a specific employment practice to be challenged; and (2) through relevant statistical analysis proves that the challenged practice has an adverse impact on a protected group.” Johnson v. U.S. Dep’t of Health and Human Servs., 30 F.3d 45, 48 (6th Cir.1994). We now turn to the Commission’s arguments.

C. Attorney’s Fees

The district court did not abuse its discretion when it found that the Commission could not prove its case as pleaded. As the Supreme Court explained in Christiansburg, a prevailing defendant in a Title VII action may be awarded attorney fees if the plaintiffs claim was “frivolous, unreasonable, or groundless, or ... the plaintiff continued to litigate after it clearly became so.” Christiansburg, 434 U.S. at 422, 98 S.Ct. 694. A party alleging a disparate-impact theory must allege a specific employment practice in the complaint. See Johnson, 30 F.3d at 48; see also Josey v. John R. Hollingsworth Corp., 996 F.2d 632, 642 (3d Cir.1993) (requiring plaintiff to plead specific employment practice in complaint); Kulkarni v. City Univ. of N.Y., No. 01 CIV. 10628(DLC), 2002 WL 1315596, at *2 (S.D.N.Y. June 14, 2002) (“Swierkiewicz does not, however, relieve plaintiff of the obligation to identify in his pleadings a specific employment practice that is the cause of the disparate impact.”); cf. Seasonwein v. First Montauk Sec. Corp., 189 Fed.Appx. 106, 111 (3d Cir.2006) (requiring in an ADEA case that the plaintiffs plead a specific employment practice to be challenged when alleging a disparate-impact claim). A specific employment practice is a necessary component of a plaintiffs claim. As is required, the Commission pleaded a specific employment practice — -a companywide policy of denying employment opportunities to felons. That policy did not exist, and the claim the Commission pleaded could not be proved.

To be sure, the Commission’s case was not groundless when filed. Osten’s incorrect statements that there was a company-wide policy gave the Commission a basis to file the complaint. However, the district court did not abuse its discretion by finding that the Commission could only rely on these statements up to a point. When discovery clearly indicated Osten’s statements belied the facts, the Commission should have reassessed its claim. From that point forward, it was unreasonable to continue to litigate the Commission’s pleaded claim because the claim was based on a companywide policy that did not exist.

We are not focused on the Commission’s theory of the case, but rather, whether the claim was frivolous, unreasonable, or groundless, or whether the Commission continued to litigate after it clearly became so. As the Commission admits in its brief, it “pled a blanket policy.” The only employment practice it pleaded — and as a direct result, the only claim it pleaded— could not be proved. The dissent seeks to focus the reader’s attention on the claims that the EEOC could have brought. These questions serve only to distract us from the instruction in Christiansburg, which directs us to ask whether the claim that was alleged was frivolous, unreasonable, or groundless. It was.

Additionally, the factors addressed in Balmer also suggest that fees were permissible: The Commission could not prove a prima facie case of its claim because the claim was groundless; there is no indication that Peoplemark offered to settle the case; and the court dismissed the case upon the joint motion of the parties, a motion in which the Commission agreed that Peoplemark was the prevailing party for purposes of attorney’s fees. See Balmer, 423 F.3d at 615-16. The district court, therefore, did not abuse its discretion when it found that it was unreasonable for the Commission to continue to litigate the claim beyond October 1, 2009. Having determined that the award of attorney’s fees was proper, we next consider whether expert fees were also permissible under these circumstances.

D. Expert Fees

Section 2000e-5(k) permits a court to award the prevailing party in a Title VII action “a reasonable attorney’s fee (including expert fees).” A plain reading of the statute confirms that expert fees are included within, or a subset of, attorney’s fees. Because the district court did not abuse its discretion when it imposed attorney’s fees under Christiansburg, the district court likewise did not abuse its discretion when it imposed expert fees. The inquiry does not end here, however. We must also consider whether the district court abused its discretion when it awarded attorney’s fees from October 1, 2009,'to the end of the litigation, and when it awarded expert fees incurred before October 1, 2009.

E. October 1 Award Date

The district court did not abuse its discretion when it awarded attorney’s fees from October 1 to the end of the litigation. By October 1,178,000 discovery documents had been provided. The Commission does not dispute that by October 1 it should have known that Peoplemark did not have a blanket, companywide policy and that it thus could not prove its claim based on that policy. As previously discussed, the Commission could rely on Osten’s statements only to a point. Once discovery established that no companywide policy existed, the Commission could no longer rely on Osten’s statements to proceed on its claim. In addition, in April 2009, People-mark informed the Commission that no companywide policy existed, and in July 2009, Peoplemark provided the Commission with a copy of an e-database that revealed that no companywide policy existed. The district court did not clearly err in finding these facts, and it did not abuse its discretion when it concluded that as of October 1 the Commission should have known it could not prove its claim as pleaded.

The Commission’s arguments to the contrary do not undermine the district court’s findings. First, the Commission alleges that the district judge abused his discretion by considering the Commission’s failure to file an expert report and argues that if the court relied on the failure to obtain an expert report, then the district court should have awarded fees from January 29, 2010, onward. Second, the Commission alleges that the district court erred in considering the statement of Mr. Donovan, the Commission’s in-house expert, who stated that it might be possible for an expert report to be completed within three months. Donovan’s estimate was based on discovery of an estimated 50,000 documents, and when the volume of discovery increased to 178,000 documents, the time frame should have been lengthened. Third, the Commission contends that it could have amended its complaint to state a viable claim.

The first two arguments are fatally flawed. The district court discussed the Commission’s failure to file an expert report and Mr. Donovan’s estimate after having already concluded that a fee award was appropriate. The discussion of the Commission’s failure to file an expert report does not undermine the district court’s prior conclusion that an award of attorney’s fees was appropriate under Christiansburg.

The Commission’s third argument is similarly flawed. That the Commission could have amended its complaint is beside the point. The Commission could not prove a case based on the complaint as filed, and the Commission never attempted to amend its complaint.

The Commission’s arguments being unpersuasive, the district court did not abuse its discretion when it awarded Peoplemark expert and attorney’s fees incurred after October 1, 2009. We must next consider whether the district court abused its discretion when it awarded Peoplemark its expert fees that predated October 1, 2009.

F. Pre-October 1 Expert Fees

This question raises the issue of whether an award of expert fees must cover only the same time as attorney’s fees. It would be tempting to hold that a court may only award expert fees temporally concurrent with awarded attorney’s fees. While it may well be reasonable in some cases for a district judge to award expert fees — as a subset of attorney’s fees — for the same time period that attorney’s fees are awarded, this does not mean that awarding expert fees incurred during a different period is always unreasonable.

The benchmark for awarding expert fees under the statute is reasonableness — a court may award “a reasonable attorney’s fee (including expert fees).” 42 U.S.C. § 2000e-5(k). The district court is given a considerable amount of discretion to consider what award of fees is appropriate under the facts of the case. In fact, there is nothing in the statute as written that requires temporal concurrence between expert and attorney’s fees.

Our holding that temporal concurrence is not required is confirmed by the fact that experts may proceed on a schedule distinct from that if the attorneys on the case. As required by Federal Rule of Civil Procedure 26(a)(2), a testifying expert must prepare a report that contains

(i) a complete statement of all opinions the witness will express and the basis and reasons for them;

(ii) the facts or data considered by the witness in forming them;

(in) any exhibits that will be used to summarize or support them;

(iv) the witness’s qualifications, including a list of all publications authored in the previous 10 years;

(v) a list of all other cases in which, during the previous 4 years, the witness testified as an expert at trial or by deposition; and

(vi) a statement of the compensation to be paid for the study and testimony in the case.

Fed.R.Civ.P. 26(a)(2)(B). Preparing an expert report will often require a considerable amount of time. Once an expert report deadline is set, an expert must promptly begin her work in order to complete the required report by the deadline, particularly in a complex case with stringent deadlines. An expert often works independently of the attorney to gather, convert into a reviewable format, and review the documents and other materials considered in forming the opinion that will underlie her opinion.

Because a failure to timely complete the report will prevent the expert from testifying at trial, which may be fatal to a party’s claim, experts cannot wait and see if a disposition motion is granted or if a case becomes frivolous before beginning their work. Until the court dismisses the case or the parties agree to a voluntary dismissal, all of the testifying expert’s work is necessary to the formulation of the expert’s opinion and the preparation of the expert’s report. In our view, so long as the prevailing party acted reasonably in hiring the expert, the fees incurred were reasonable, the work conducted was reasonable, and the standard from Christiansburg permits an award of expert fees, a court should be permitted to award a prevailing party’s expert fees independent of limitations on the award of attorney’s fees.

Accordingly, we hold that the district court did not abuse its discretion when it awarded the entirety of the expert fees incurred by Peoplemark. The district court concluded that Peoplemark’s expert was necessary to Peoplemark’s defense. The district court reviewed the expert fees incurred by Peoplemark and found that they were reasonable. Having already found that the court was permitted to award expert fees under Christiansburg, the court was within its discretion to award the entirety of Peoplemark’s expert fees.

G. Documentation of the Expert Fees

The Commission also argues that the district court abused its discretion because there was inadequate documentation of Peoplemark’s expert fees. We agree with the Commission that the party seeking fees must document the expert fees incurred and the work done. The statute requires that the expert fees be reasonable, and if the moving party did not present the court with adequate documentation, there would be no basis for the court to decide whether the fee was reasonable.

We disagree with the Commission, however, that the documentation of People-mark’s expert fees was inadequate. The expert’s declaration in the motion for attorney’s fees contained the entirety of his bill, including entries for the data analysis by his firm. In total, the bill filled twenty-four pages and listed over 600 entries. Each entry itemized the work done and the time expended on the task. While the entries listed the work performed in a single word or short phrase — such as “research,” “document preparation,” and “telephone conference and review” — in the context of the entire bill, these general descriptions are enough for us to conclude that the district court did not abuse its discretion when it found that the fees were sufficiently documented.

H. Excessiveness of the Expert Fees

The Commission’s final argument is similarly unpersuasive. The Commission argues that the expert fees were excessive because the Commission’s expert found Peoplemark’s expert fees “astounding” and because, in her opinion, she would have charged hundreds of thousands of dollars less to do the same work. However, we cannot say that the district court abused its discretion when it concluded that the difference in cost between experts was reasonable in light of the facts that Peoplemark’s expert filed a timely report, whereas the Commission’s expert never completed a report; that the Commission’s expert had spent only 23.26 hours on her work, whereas Peoplemark’s expert had spent 123.55 hours; and that Peoplemark’s expert had done all of his work in-house, whereas the Commission’s expert had used an outside data management company. For these reasons, the district court did not abuse its discretion.

CONCLUSION

For the foregoing reasons, we AFFIRM the decision of the district comb.

. The complaint alleges that Peoplemark had a policy that prohibits hiring any person with a criminal record. The parties and the court below focused on whether Peoplemark had a policy that prohibits hiring any person with a felony record. We therefore review the case as decided by the district court and argued by the parties.

. Peoplemark was billed by its expert on a monthly basis.

. The Commission does not contest that it knew or should have known by October 1 that a companywide policy did not exist.

. The dissent also argues that the district court’s consideration of the Commission's presuit investigation is grounds for reversal. However, the district court did not base its decision to award attorney's fees on the presuit investigation. Instead, it based its award on the fact that, by October 1, the Commission should have known that its claim was groundless, a finding the Commission does not contest. The fact that the district court believed that the Commission should have known much earlier that its claim was groundless was irrelevant to its final determination to award attorney’s fees.

. The dissent faults our approach and argues that we are imposing a heightened pleading standard. Not so. The Supreme Court in Swierkiewicz v. Sorema N.A., 534 U.S. 506, 122 S.Ct. 992, 152 L.Ed.2d 1 (2002), held that a court cannot impose a heightened pleading requirement in employment-discrimination claims. We are not holding that the Commission needed to plead additional facts or do anything more than "create an inference that an employment decision was based on a discriminatory criterion illegal under the Act” at the pleading stage. Serrano v. Cintas Corp., 699 F.3d 884, 895 (6th Cir.2012) (internal quotation marks omitted). Our decision does not rest on the plausibility of the Commission's claims in its complaint — as pleaded, the claim was arguably plausible. But without a specific employment practice the pleading does not give fair notice of the plaintiff's claim, let alone state a plausible claim to relief. Ashcroft v. Iqbal, 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009). If the Commission had not pleaded a specific employment practice in its complaint, the claim would have been dismissed on defendant's motion.

CARR, District Judge,

dissenting.

After reviewing the record and decision of the district court, I am left with a “definite and firm conviction that the trial court committed a clear error of judgment” in awarding fees and costs to Peoplemark. Logan v. Dayton Hudson Corp., 865 F.2d 789, 790 (6th Cir.1989). A district court abuses its discretion when it “applies an erroneous legal standard, misapplies the proper legal standard, or relies on clearly erroneous facts.” Id.

In Christiansburg Garment Co. v. Commission, 434 U.S. 412, 422, 98 S.Ct. 694, 54 L.Ed.2d 648 (1978), the Supreme Court held, a court should not assess attorney’s fees against a plaintiff unless the court finds that his or her claim was frivolous, unreasonable, or groundless, or that the plaintiff continued to litigate after it clearly became so. After a thorough review of the record, I find it was clearly erroneous for the trial court to conclude both that the Equal Employment Opportunity Commission’s (EEOC) case was meritless from the outset and that the EEOC should have known that its case was meritless as of October 1, 2009. I also find clearly erroneous, the court’s conclusion that the EEOC’s prosecution of the case was so unreasonable as to justify an award of fees. For these reasons, addressed in more detail below, I respectfully dissent.

To fairly assess both the reasonableness of the EEOC’s prosecution of the case and the merit of the case itself, it is necessary to lay out the proceedings in the lower court in considerable detail. One cannot fairly assess the propriety of a fee award in this case without a close reading of the documents filed with the court. Only through a thorough review of the documents can one understand the variety and content of the employment application materials that Peoplemark provided to the EEOC during discovery. On must also thoroughly review the documents to understand the EEOC’s considerable task of processing and analyzing Peoplemark’s employment application documents. As such, and at the risk of retracing a few of the steps the majority discusses, I begin with a rather lengthy description of the presuit investigation and lower court proceedings.

I. Factual Background

A. Investigation

Peoplemark is a temporary employment agency, which refers individuals for placement with client-employers. The company primarily provides workers for light industrial jobs, such as packaging, warehousing, assembly, and some machine operations. It also assigns people to some receptionist and clerical positions. Peoplemark currently has four offices: Grand Rapids, Michigan, Memphis, Tennessee, Owensboro, Kentucky, and Orlando, Florida. Until 2006, it also had an additional office in Livonia, Michigan.

1. Charge and Statement of Position

In May, 2005, Sherri Scott filed a charge of discrimination against Peoplemark with the EEOC. Scott alleged that after she applied at the Peoplemark office in Grand Rapids, Michigan, Peoplemark’s interviewer told her she would not be hired because she had a felony conviction. Scott alleged that Peoplemark rejected her application because of her race and felony conviction.

From 2005 to 2007 the EEOC investigated the charge.

At the outset of the investigation, Peoplemark provided the EEOC with a written statement of position conceding that it uniformly rejects felon candidates. Peoplemark confirmed that its interviewer told Scott that she could not continue in the application process because she had prior convictions. Peoplemark also informed the EEOC that it handled similarly all candidates with convictions. People-mark argued that its client’s refusal to hire felons for “security, safety, and other legitimate business reasons” provided the company with an appropriate business justification for rejecting felon candidates.

a. Letters from Chief Counsel

Throughout the EEOC’s investigation, Judd Osten (Osten), Vice President and Chief Counsel for Peoplemark, continued to assert that Peoplemark did not hire felons. Osten sent letters to the EEOC on October 31, 2005 as well as June 12 and December 1, 2006, expressly stating that Peoplemark rejects all felon applicants.

In his first letter, Osten provided information specific to the Grand Rapids office. He stated that the office uses a bifurcated application process to screen out felon applicants. It did so, he stated, because Peoplemark’s client-employers refuse to employ felons.

The first step in the process involves an information sheet, on which an applicant indicates only his or her name and whether he or she has an existing or pending felony charge or conviction. After the applicant fills out the information sheet, a staff member searches the public record to confirm the accuracy of the applicant’s disclosures. Applicants without a felony conviction proceed to the second step — filling out an employment application.

In his second letter, Osten stated that Peoplemark, Inc., never hires felons. Os-ten did not state explicitly whether he was referring to all Peoplemark offices:

It is the practice of Respondent not to accept applications for placement in temporary assignments of individuals with felony conviction records because they pose too great a risk to Respondent and its clients ... Respondent’s clients are generally aware that it does criminal background checks on all of its candidates for temporary placement, but [Respondent] has made no independent inquiry of its clients as to which, if any, would accept personnel with a felony conviction record. It has received no request from any client for the assignment of an employee with a felony conviction record. The following [four] clients have orally advised Respondent that they do not wish to have anyone with a felony conviction assigned to their accounts: Pridgeon & Clay; Zondervan; Team Industries; and Adac Automotive.

In his third and final letter during the investigation, Osten stated explicitly that Peoplemark had a company-wide practice of rejecting felon candidates: Peoplemark will “stipulate that the practice of screening out applicants with felony conviction records, which is at the core of this matter, is used in all of our offices throughout the country.”

Based on Scott’s charge, Osten’s statements, and 18,000 cover sheets covering one year of applicants in the Grand Rapids office, the EEOC attempted to conciliate the dispute. The EEOC was ultimately unable to conciliate the matter. It issued a cause letter of determination on September 10, 2007.

B. Filing Suit and Initial Case Management Order Deadlines

On September 29, 2008, the EEOC filed suit in the United States District Court for the Western District of Michigan on behalf of Scott and similarly situated African Americans.

The EEOC alleged:

Since at least May 2005, Defendant Employer has engaged in unlawful employment practices at all of its facilities in violation of Section 703(a) of Title VII, 42 U.S.C. § 2000e-2(a). The Defendant’s unlawful employment practices include maintaining a policy which prohibits the hiring of any person with a criminal record. Such policy has had and continues to have a disparate impact on African American applicants.

The effect of the practices complained of in paragraph 7, above, has been to deprive Scott and similarly situated African Americans of equal employment opportunities and otherwise adversely affect their status as applicants for employment.

On January 9, 2009, a Magistrate Judge held a case management conference. The parties set deadlines:

1) identify experts: 6/30/2009

2) produce expert reports: 8/31/2009

3) close of discovery: 12/31/2009

4) bench trial: 7/16/2010

C. Discovery Disputes and Electronic Document Production

Had discovery proceeded without incident and attended delays, the original deadlines would have given the EEOC seven and a half months to gather information and produce its expert reports.

Unfortunately, discovery was not uneventful. Two discovery disputes consumed approximately five of the seven and a half months the EEOC expected to have for gathering factual information and preparing its expert reports. Various discovery related motions, conferences, and hearings occupied the parties from February to early August, 2009.

1. Discovery Dispute # 1: Peoplemark’s Demand for a Complete Class List

The first discovery dispute arose because the EEOC could not provide People-mark with a complete class list at the outset of discovery. On February 4, 2009, Peoplemark filed a single interrogatory asking for a class list, including contact information, of all black candidates that had been denied placement because of their felony convictions. The EEOC responded that it previously provided Peoplemark with the name and contact information of Sherri Scott and it was too early to identify the rest of the class.

At the time of Peoplemark’s interrogatory, the only company records the EEOC possessed were the 18,000 initial information sheets applicants had completed in the Grand Rapids office during a one year period. The sheets contained only the applicants’ names and whether they disclosed a felony conviction. The sheets did not contain the race of applicants, or any other personal identification information from which the EEOC could identify race with any reasonable degree of accuracy. The sheets also did not indicate whether Peoplemark had actually placed any of the applicants who had noted a felony conviction on the information sheets.

a. Peoplemark’s Motion to Compel and the EEOC’s Response

Unsatisfied with the EEOC’s answer to its interrogatory, Peoplemark filed a motion to compel. The Magistrate Judge granted the motion and sanctioned the EEOC for failing to produce a class list in response to Peoplemark’s interrogatory. The judge ordered the EEOC to produce a class list by May 1, 2009.

In response to the motion to compel and the Magistrate Judge’s order, the EEOC explained that it was impossible to produce a complete or accurate class list without all of Peoplemark’s application records for the relevant time period. The EEOC had no record of which applicants Peoplemark had placed, nor did it have the applicants’ personal identification information — it could not identify accurately the race of applicants without their personal information.

In a word, the Magistrate Judge had, early on in the case, placed the EEOC in a classic Catch-22 situation — from which the EEOC was never able to extricate itself.

To resolve the discovery dispute, the EEOC provided its best guess as to a list of 286 persons with individual claims for relief. On providing the list of potential victims, the EEOC reiterated its position, stated previously in its answer to People-mark’s interrogatory, that this was only a potential list of some possible victims, not a class list. The EEOC stated, inter alia:

Although the investigation uncovered a number of applicants with criminal records believed to be African American, the Commission has not yet determined the magnitude of the class and is in the process of gathering additional information from Defendant in discovery so that it may identify the definitive class for purposes of this litigation.

On March 5, 2009, the EEOC timely served its Answer to Peoplemark’s first Interrogatory:

INTERROGATORY NO. 1: Identify by name and address each and every individual whom you maintain has been discriminated against by the alleged employment policy/practice which is the subject of this lawsuit.

ANSWER: Plaintiff previously identified Sherri Scott, 718 Broadway, Apt. 2G, Niles, MI 49120. To the extent this interrogatory seeks the identities of individuals other than Ms. Scott, this request is pre-mature because discovery has recently commenced and is on-going. Plaintiff will develop the class of victims during discovery and supplement this response at a later time.

[I]n an effort to resolve this discovery dispute, the EEOC is willing to provide you with information regarding applicants believed to be African American and who had disclosed criminal convictions on their application with Peoplemark. Based on Defendant’s representation that no individual with a felony conviction was hired, we believe that these individuals may form part of the class in the instant case. However, please be advised that the EEOC makes no representation that this list is all inclusive as it is based upon the limited scope of information Peoplemark provided during the administrative investigation. Consequently, we anticipate that individuals may be removed from and added to the list as discovery progresses. Until substantial discovery is completed, the magnitude of the class cannot be determined.

Peoplemark argues that because it produced a large volume of employment applications and other documents, during what it describes as an “extensive” administrative investigation, the Commission should have established the class during its investigation ... Defendant is incorrect in its argument for several reasons. First, the administrative investigation was not as over broad as Defendant attempts to suggest. In fact, the Commission made several compromises regarding the scope of its documentary information requested by limiting the time frame to March 2004 through November 2006, and seeking only the first page of each employment application instead of all documents related to the application process. Second, there was nothing in the documents Peoplemark produced which revealed the race of applicants. Consequently, and as a required part of its investigation, the Commission took further investigative measures to identify applicants by race to the extent possible. In light of People-mark’s no-felony-conviction policy, all applicants with felony convictions identified during the investigation as African American were treated as the putative group of victims harmed by Peoplemark’s policy. Accordingly, the Commission attempted to conciliate this matter based on this putative group of victims who it believed were harmed by Defendant’s policy. Regardless, now that the parties are in litigation, the Commission is required to define the class with more precision and has served Peoplemark with written discovery requests (which include requests for all previously incomplete application materials and all applicant information to the present) in an effort to obtain information needed to determine the scope and identities of the class.

(Emphasis added).

2. Discovery Dispute # 2: The EEOC’s First Set of Interrogatories and Requests for Document Production

Prior to sending its own interrogatories on March 4, 2009, the EEOC underwent a comprehensive drafting process with its electronic document experts. While still working to resolve the first discovery dispute the EEOC served its first set of fifteen interrogatories and document requests on Peoplemark. Unfortunately, the format of the EEOC’s interrogatories gave rise to a second time consuming discovery dispute.

For approximately eighty days, People-mark refused to answer the EEOC’s interrogatories. Peoplemark made a numerosity argument: subparts of questions counted as additional questions, and thus, the EEOC had really served seventy interrogatories, instead of the limit of twenty-five stated in the case management order. After repeated attempts to obtain answers to its interrogatories, the EEOC contacted the case manager to clarify the local rule on subparts. The case manager told the EEOC that subparts were allowed and Peoplemark should answer the interrogatories.

On May 21, 2009, Peoplemark finally agreed to answer all the interrogatories. However, Peoplemark still refused to produce the requested employment applications and information sheets.

On May 22, 2009, the EEOC filed a motion to compel production of the applications and information sheets.

On June 2, 2009, the EEOC received a supplemental correspondence from People-mark stating that it would make the documents available for copying and inspection at a mutually agreeable time and-place at its offices in Michigan, Tennessee, Florida, and Kentucky. In response, the EEOC withdrew its motion to compel

Well into July, Peoplemark had still failed to provide specific dates when the documents would actually be available to the EEOC at the company’s various locations.

Nearly ninety days passed between the time the EEOC served the document requests and when Peoplemark agreed to produce the documents.

3. The EEOC’s Request for Electronic Document Production

After a lengthy fight to gather information about what types of electronic records Peoplemark maintained, the EEOC asked Peoplemark to produce its e-documents.

On June 22, 2009, Peoplemark served its answers to the EEOC’s request for production of electronic applicant data. Peoplemark agreed to provide the data at a time that was mutually convenient to both parties. In mid-July Peoplemark produced its first version of an e-database with limited applicant information. The database contained applicant placement information for three of the five offices, but, according to the EEOC, the agency was unable to access much of the information because Peoplemark failed to provide the agency with necessary passcodes. The EEOC alleges that Peoplemark did not provide a fully searchable database until mid-September 2009.

D. Motions to Extend/Amend Case Management Order and People-mark’s Document Production

1. First Motion to Extend:

June 29, 2009

On June 16, 2009, Peoplemark’s attorney phoned the EEOC to propose a two month extension of the deadline to name experts. The extensive discovery disputes had consumed the first five months of the discovery period. Under the original case management order the EEOC had only two months remaining to collect, copy, scan, streamline, code, statistically analyze, and report on four years of applicant data located in four different states.

The EEOC concurred with People-mark’s request and added that an extension for producing expert reports was also necessary. The EEOC stated that it would need considerable time to obtain the documents, process the data, and produce an expert analysis.

On June 23, 2009, the EEOC followed up with Peoplemark regarding extending the deadlines in the case management order. The agency provided Peoplemark with its proposed amended deadlines. Over the next week the EEOC tried unsuccessfully to reach Peoplemark’s attorney numerous times.

On June 29, 2009, one day before the initial deadline for disclosing experts, Peoplemark’s attorney abruptly reversed course and informed the EEOC that the company was no longer willing to stipulate to revised deadlines which Peoplemark had initially proposed. The same day, immediately after learning that People-mark refused to proceed as planned, the EEOC filed its first request to amend the case management order.

In its first motion to amend the case management order, the EEOC explained that two discovery disputes had consumed more than five months of discovery time, and that the EEOC had tried unsuccessfully to reach an agreement for amended case management deadlines with People-mark. The EEOC proposed new deadlines:

1) identify experts: 9/4/2009

2) produce expert reports: 2/5/2010

3) close of discovery: 6/30/2010

The EEOC’s proposed amended case management order allowed the agency a little over seven months to: 1) copy and scan information at Peoplemark’s offices in four different states; 2) send the raw applications, information sheets, and other employee documents to a document processor to create an e-database; and 4) send the e-database to its statistical expert to code, run statistical formulas, and write an expert analysis.

On July 6, 2009, Peoplemark filed a motion to dismiss, which the court denied the next day.

On July 16, 2009, the Court granted a thirty day extension for both the identification of experts and the production of expert reports. The court also allowed the parties an additional fourteen days of discovery. This de minimis extension gave the EEOC only two months to collect, copy, scan, process, code, and analyze the applicant information contained in People-mark’s records.

The EEOC immediately informed the court that it would be unable to meet the first amended case management order. The court responded that the parties were free to file motions and be heard by the court on the issue of further extensions.

2. Second/Renewed Motion to Extend: July 23, 2009

Accordingly, on July 23, 2009, the EEOC filed a renewed motion requesting the same extended deadlines it had asked for in its June 29, motion to amend the case management order.

In addition to reiterating the substantial amount of time the discovery disputes had consumed, the EEOC explained why the agency had failed to start copying and scanning the paper records in People-mark’s offices in Michigan, Tennessee, Florida, and Kentucky.

The EEOC stated that although, on June 2, Peoplemark had agreed to make the documents available at a mutually convenient time, Peoplemark had not yet provided a formal date when the EEOC would be allowed access to the documents at the four locations.

In addition, the EEOC explained that it was required by federal law to use a bidding process for hiring outside vendors and expert witnesses. The EEOC described the numerous steps that it had taken in the month and a half since Peoplemark agreed to make the documents available: 1) the EEOC consulted, as required, with the EEOC’s Research and Analytical Services Division, which determines the number of vendors and experts likely to be needed for a case; 2) the EEOC attorneys initiated, a bidding process, as required, to hire a document processor and two expert witnesses; 3) the EEOC attorneys obtained approval of the document processor contract on July 21, 2009; and 4) the EEOC attorneys recommended two experts for formal approval.

The EEOC acknowledged that it was still awaiting formal approval of the expert contracts and did not expect them to be approved in the week remaining before expert identification deadline. The EEOC further stated that the court’s suggestion in the July 16, 2009, status conference that the EEOC use its small in house research staff to complete the data analysis was not feasible.

Although the EEOC’s experts had not been formally approved within the court’s expert identification deadline, the EEOC attorneys were ultimately able to obtain exceptional approval from the government to identify two experts on July 31, 2009, to meet the court’s deadline.

The agency identified expert sociologist, Dr. Devah Pager, and expert labor economist/statistician, Dr Janice Madden.

a. Hearing on Second/Renewed Motion to Extend

On August 6, 2009, after the EEOC identified its experts, the court held a hearing on the EEOC’s second/renewed motion to amend the case management order. The transcript of the hearing reveals the district court’s misunderstanding of the nature and extent of the EEOC’s: 1) task of preparing an expert statistical report, and 2) presuit investigation process-the statistical proof the EEOC was required to gather before filing suit. I discuss the hearing at length because I believe the lower court’s flawed understanding is highly relevant to both the merits inquiry and procedural abuse analysis that the lower court performed before assessing fees.

The court began by stating that it applied a “good cause” standard to granting motions to amend. Under this standard, the court required a party to show that it acted diligently but was still unable to meet the established deadlines. The court expressed its concern that the EEOC acted dilatorily when it failed immediately, or at least more quickly, to obtain its experts.

The EEOC responded that it had acted diligently, but it was still unable to produce its expert reports on time. The EEOC stated that it began the process of researching, writing, and revising expert contracts in December 2008 or January 2009 at the latest (less than one month after filing the case). The agency also explained that federal regulations required it to follow a bidding process for hiring vendors and experts, and the EEOC attorneys could not legally circumvent the internal agency protocols.

In response to the EEOC’s explanation of its efforts the court stated that “protocols within the agency can’t govern the civil procedure process, and [the agency had] to have good faith at the start.”

The court went on to express concern that the EEOC waited sixty days to serve its first set of interrogatories, to which the EEOC responded that during that time the agency was working diligently with its electronic document experts to craft its interrogatories for Peoplemark. The agency stated that it needed to see what Peoplemark produced in its Rule 26 disclosures before it could begin drafting its first set of interrogatories.

The EEOC explained that after receiving Peoplemark’s Rule 26 disclosures, the agency’s attorneys and experts underwent an extensive joint drafting process. This was necessary, according to the EEOC, because the first set of interrogatories sought information regarding electronic storage systems and formats of electronically stored documents. For this reason, the EEOC attorneys could not simply draft the interrogatories themselves — they were not computer experts.

The EEOC also clarified for the court that it could not simply modify an existing interrogatory template. Rather, based on documents provided in Peoplemark’s Rule 26 disclosures, the EEOC needed to craft interrogatories specific to the electronic programs they believed were in use at Peoplemark’s offices.

The court replied that the EEOC could have limited the number of Peoplemark’s offices that it included in the suit if it was concerned about meeting deadlines. The court also stated that it had been generous with scheduling and never had such issues with a government litigant.

In the court’s opinion, “[P]art of coming to court is having the court put reasonable limits on and see which parties make it through that process and which parties don’t, and that’s part of the way we drive to a result.”

The EEOC responded that although the government’s internal protocols contributed to some delay in the EEOC’s ability to physically go out and start copying and scanning documents, the government’s protocols were not the sole or even the main reason the EEOC was unable to meet the court’s deadlines.

The EEOC reiterated the discovery disputes laid out in both its first and second motions to amend the case management order. The EEOC argued that if People-mark had not waited over two months to answer the EEOC’s first set of interrogatories and over ninety days to agree to produce documents, then, despite delays caused by government regulations, the EEOC likely would have been able to request and secure someone to gather the documents much sooner. Furthermore, during the time the EEOC was processing those documents it could have finalized the contract for its statistical expert who, up to that point in the process, would have been totally unnecessary.

The court’s response was:

Well, the documents part addresses whether you make the expert report deadline, and we don’t know that. I mean, when we talked in July, you didn’t think you’d make the [expert identification] disclosure deadline, and you did ... And if you have a report deadline that’s still, what, 60 days away, even though that seems impossible now, maybe you’ll make that too ... Or maybe you’ll come close or make it in part. Or maybe having the deadline will mean that you’d get a lot closer to it than you would if the deadline were extended. I mean, the reality of the deadline is it marshals resources that we didn’t even know we had. That’s just what a deadline does.

The court proceeded to reprimand the EEOC for not filing a motion to compel after Peoplemark stalled in setting a date for production. The EEOC responded that it was hesitant given the court’s resolution of its first motion to compel and the court’s earlier award of sanctions.

Throughout the remainder of the hearing, the court continued to speculate, in the face of Dr. Madden’s affidavit, that it might be possible for the EEOC to copy, scan, create an e-database, code, analyze, and produce a report in the next sixty days. The EEOC firmly maintained that it was absolutely impossible for it to do so. The EEOC stated that it was able to identify experts only because it obtained exceptional approval, but it was physically impossible to do the work necessary to produce the expert reports in sixty days.

In response to the EEOC’s firm statement that it was absolutely impossible to complete all the steps required to produce an expert report in sixty days, the court retorted, “I’m suspecting in September [the deadline for producing expert reports] you may have another vision of how powerful and effective you really are.”

After the lengthy dialogue between the court and EEOC, Peoplemark announced that it had asked all of its offices to send the documents requested by the EEOC to Memphis. Peoplemark stated that it had already scanned all of the documents from the Grand Rapids office. The company stated that it had put the information onto two discs and the day before sent the discs to the EEOC. Peoplemark stated that it would do the same for the remaining offices.

The EEOC responded with surprise to Peoplemark’s decision immediately to scan and produce all of the documents. The agency stated that the company’s offer came as quite a shock in light of its previous refusal to provide the documents and its reluctant agreement, after a ninety day wait, to provide the documents only after the court issued a protective order. The EEOC told the court that, assuming the discs were