Unpublished Disposition, 881 F.2d 1084 (9th Cir. 1989)

MEMORANDUM^* 

Andrew Karamanos appeals from the judgment entered against him in his employment action under 42 U.S.C. § 2000e-16, charging the Internal Revenue Service with unlawful retaliatory action. The district court entered summary judgment against Karamanos on his claim that the IRS threatened to terminate his employment in retaliation for opposing unlawful employment practices, and entered judgment against him after trial on his claim that he was suspended for three days without pay for similar retaliatory reasons. We affirm.

BACKGROUND

The facts are undisputed. Karamanos is a criminal investigator for the IRS, Portland District. Between 1982 and 1986, he filed a series of EEO complaints and grievances concerning his job classification, performance ratings and nonselection for promotion.

In connection with a lawsuit against his supervisors, Karamanos released certain IRS documents to his attorney, after first undertaking to "sanitize" these documents by deleting confidential taxpayer information from them. The IRS Internal Security Division commenced an investigation into whether Karamanos had made any unlawful disclosures. In response to this investigation, Karamanos produced some 200 documents, but did not indicate which of these he had actually given his attorney. An examination of all 200 documents suggested several had not been properly sanitized. Based on this investigation, Chief of Personnel Carl Teitelbaum prepared a letter of proposed termination, charging that Karamanos had violated the disclosure provisions of the Internal Revenue Code and the Internal Revenue Manual. In accordance with IRS procedures, Karamanos was permitted to reply to the charges. He then revealed that he had given only twenty of the 200 documents to his attorney. These twenty contained two sanitizing errors. As a result, the IRS withdrew its proposed termination, and instead suspended Karamanos for three days without pay.

Karamanos maintains that suspension was an unduly harsh remedy for his inadvertant disclosures, and that in reality, both the proposed termination and the actual suspension were retaliatory measures for his use of the grievance procedure. He seeks attorneys' fees incurred in contesting the proposed removal and disciplinary suspension.

The district court held that a proposed termination, subsequently withdrawn in light of additional information, could not constitute adverse employment action, a necessary element to the successful establishment of a prima facie title VII case. The court also held Karamanos was not entitled to attorneys' fees because the remedies provision of title VII, 42 U.S.C. § 2000e-5(g), provides only for equitable relief and not damages, and Karamanos was not a prevailing party as required by the fees provision in 42 U.S.C. § 2000e-5(k). The district court denied summary judgment to the government on the claim that the suspension constituted unlawful retaliation, and ordered the parties to trial on that issue. After trial, the court entered judgment for the government. Although Karamanos had established a prima facie case of unlawful retaliation, the court found the government had carried its burden of articulating a legitimate business reason for the suspension, and Karamanos had failed to carry his burden of showing the alleged explanation to be a pretext for retaliation.

DISCUSSION

A plaintiff may establish a prima facie case of unlawful retaliation under title VII by showing that (1) he engaged in activity protected by the statute, (2) the employer subjected him to an adverse employment decision, and (3) a causal link exists between the protected activity and the employer's action. Yartzoff v. Thomas, 809 F.2d 1371, 1375 (9th Cir. 1987). If the plaintiff is successful, the burden of production shifts to the employer to articulate a legitimate, nonretaliatory explanation for its action. Id. at 1376. The ultimate burden of persuasion, however, remains with the plaintiff. Id. If the employer carries its burden successfully, plaintiff may succeed directly by persuading the court that a discriminatory reason more likely motivated the employer or indirectly by showing the employer's proffered explanation lacks credibility. Id. at 1377.

Karamanos claims that because the letter threatened adverse action, it constituted a form of harassment. A routine procedure following an incident, however, is not harassment. The letter constituted only the standard initial step in the IRS' adverse action procedure. It contained the Director's reasons for the proposed termination. Pursuant to IRS procedures, the letter advised Karamanos that he could respond orally and in writing to its charges. There is no allegation that the charges made were false. They were based on the IRS' knowledge at that time. Further, there is no allegation that the IRS excessively supervised Karamanos solely to find a charge on which to base a letter of proposed action. Given these facts, we decline to find that the letter constituted harassment sufficient to support a prima facie claim of retaliation. See Berger v. Iron Workers, 843 F.2d 1395, 1424 (D.C. Cir.) (two threatening statements probative of retaliatory animus, but because they had no adverse effect, were "ill-advised but essentially harmless"), on reh'g, 852 F.2d 619 (D.C. Cir. 1988), cert. denied, 109 S. Ct. 3155 (1989).

Karamanos also claims the letter of proposed termination constituted adverse employment action because he incurred legal expenses defending himself against its charges. No authority, however, supports the proposition that this economic effect constitutes adverse employment action. Having failed to establish that the issuance of the letter constituted adverse action, Karamanos cannot point to the adverse consequence of having to hire an attorney to establish the adverse employment action.

The trial court found that Karamanos had made out a prima facie case of retaliatory suspension because he had filed EEO complaints, had been suspended without pay, and had put forth sufficient evidence of a causal connection between his use of the EEO process and the suspension. The court found, however, that the IRS had carried its burden of articulating a legitimate reason for the suspension by demonstrating that Karamanos was disciplined because (1) he made two unauthorized disclosures of tax return information in violation of 26 U.S.C. § 6301, and (2) he failed to follow IRS procedures for disclosing tax return information to parties outside the IRS. Finally, the court concluded that Karamanos had failed to carry his burden of establishing this reason as a pretext for retaliation.

This court reviews the district court's factual findings and its ultimate finding of no retaliation for clear error. Fed. R. Civ. P. 52(a); see Kimbrough v. Secretary of United States Air Force, 764 F.2d 1279, 1281 (9th Cir. 1985). A finding of fact is not clearly erroneous if it represents a plausible account of the evidence. Anderson v. City of Bessemer City, 470 U.S. 564, 573-74 (1985). When a finding is based on the credibility of a witness, Rule 52(a) demands even greater deference to the trial court because only that court has observed the demeanor of the witness. Id. at 575.

Two facts prevent us from finding the district court's conclusion to be clearly erroneous. First, Karamanos concedes that he made two sanitizing errors, though unintentionally, when he released twenty documents to his attorney. In releasing taxpayer information, he assumed any risk inherent in his chosen course of conduct. Second, the district court relied heavily upon the testimony of Director Leonard, the individual responsible for imposing the suspension. She testified that she held no bias or malice towards Karamanos, and that she was unaware that Karamanos had had difficulties with his supervisors, assertions made even more credible by the fact she was relatively new to her position. She also testified that she had been concerned with setting an appropriate precedent for improper disclosures by employees.

Karamanos attempts to discredit Leonard's testimony by pointing to minor inconsistencies in it, and thereby prevent application of the rule that a finding based on coherent testimony, uncontradicted by extrinsic evidence, is virtually never clear error, see Anderson, 470 U.S. at 575. The record does show a minor inconsistency as to when the decision to suspend Karamanos was made, as opposed to the decision to propose suspension, but this inconsistency does not affect that part of Leonard's testimony on which the district court so heavily relied, and, given our deference to the weight given testimonial evidence, hardly seems a basis for discrediting all of Leonard's testimony. Also, Karamanos claims Leonard's testimony denying any knowledge of management's attitude toward Karamanos' use of the grievance process conflicts with depositions of other officials suggesting she had been told about Karamanos. However, Leonard also testified that had Karamanos' managers tried to tell her about Karamanos' difficulties with his supervisors, she "would not have listened." Thus the apparent inconsistency is really no inconsistency at all.

Karamanos also argues that in reaching her decision to impose the suspension, Leonard admitted that she considered memoranda prepared by Division Chief Blackorby and Personnel Chief Teitelbaum. Teitelbaum admitted having discussed ways of stopping Karamanos from filing further complaints but having concluded no legitimate means existed for doing so. Thus, the argument goes, Leonard's decision was tainted by the animus of other supervisory officers. Again, given the admitted disclosure, and Leonard's purported concern for setting an appropriate example for other employees, this fact is insufficient to find clear error.

Finally, Karamanos argues that suspension was an unduly harsh remedy in this case. He points to a single example of an IRS agent who failed to safeguard some material and had it stolen from his car, but received only a letter of reprimand. On its face, the incident is distinguishable. Karamanos took upon himself to disclose documents he had sanitized, and made two errors in the process. Rather than assume that he could sanitize the documents himself, he could have requested the assistance of a disclosure officer, and office policy encouraged him to do so.

Finally, because Karamanos has failed to sustain his title VII claim, he is ineligible for any equitable relief. Thus we need not address his claim that 42 U.S.C. § 2000e-5(g) encompasses restitution of legal fees incurred to defend himself against the proposed termination and the ultimate suspension.

AFFIRMED.