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Click here for the full text of this decision FACTS:The appellant, Carlos Pacheco, filed this suit against Norman Mineta, the secretary of the U.S. Department of Transportation, pursuant to Title VII of the Civil Rights Act of 1964, section 717(c), 42 U.S.C. � 2000e-16(c). Pacheco alleged both disparate-treatment and disparate-impact discrimination. The district court entered summary judgment against Pacheco on his disparate-treatment claim, dismissing that claim with prejudice. The court dismissed Pacheco’s disparate-impact claim for lack of subject-matter jurisdiction, pursuant to Federal Rule of Civil Procedure 12(b)(1), citing his failure to exhaust his administrative remedies. Pacheco appeals only the second ruling, challenging the district court’s dismissal for failure to exhaust administrative remedies. The government cross appeals the district court’s failure to award it costs pursuant to Rule 54(d)(1). HOLDING:The decision is affirmed in all respects except as to costs; the district court’s ruling as to costs is vacated, and the cause is remanded to the district court solely for a redetermination, not inconsistent herewith, of whether (or to what extent) costs should be awarded to the prevailing party. On its face, Pacheco’s administrative charge alleges none of the elements of disparate impact. Instead, it is facially a disparate-treatment claim, alleging that he was singled out for intentional discrimination because of his race. Pacheco complained that he was passed over for promotion in favor of a “good old boy.” As the district court below noted, this complaint “clearly supports claims for unfair and intentional discrimination, but does not even suggest claims under a disparate impact theory.” In particular, the court notes that Pacheco’s administrative charge fails to identify any neutral employment policy that would form the basis of a disparate-impact claim. A neutral employment policy is the cornerstone of any EEO disparate-impact investigation, since the EEO must evaluate both the policy’s effects on protected classes and any business justifications for the policy. The court notes that the three incidents mentioned in Pacheco’s administrative charge are examples of disparate-treatment discrimination. The DOT argues that, as a matter of law, the good faith of the plaintiff is, by itself, an insufficient reason to defeat the cost-shifting provision in Rule 54(d). This question is a matter of first impression in this court, but all circuits that have expressly considered the question agree with the DOT’s position, the court states. All federal litigants, including this plaintiff, have an obligation to bring suit in good faith. As the 9th U.S. Circuit Court of Appeals said in National Information Services Inc. v. TRW Inc., 51 F.3d 1470 (9th Cir. 1995), “It follows that noble intentions alone do not relieve an unsuccessful litigant of the obligation under Rule 54(d) to compensate his opponent for reasonable costs.”If the awarding of costs could be thwarted every time the unsuccessful party is a normal, average party and not a knave, Rule 54(d)(1) would have little substance remaining.’” The district court abused its discretion in denying costs to the prevailing party on the basis of plaintiff’s good faith alone. OPINION:Garwood, J.; Garwood, Prado and Owen, J.J.

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