First Circuit Remands Attorney's Fees for Recalculation - Injury & Tort Law - U.S. First Circuit
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First Circuit Remands Attorney's Fees for Recalculation

After obtaining a $7,650 jury verdict in an age discrimination lawsuit, Carmen Diaz went after Jiten Hotel Management for the big bucks: attorney’s fees and costs. Diaz asked the court for $139,622 in attorney’s fees and $13,389.34 in costs.

The district court awarded $25,000 in fees and $9,434.74 in costs. This week, the First Circuit Court of Appeals concluded that the district court’s numbers needed a bit of tinkering.

The initial estimate of a reasonable attorney’s fee is the lodestar calculation: hours reasonably expended times a reasonable hourly rate. Diaz, however, prevailed on only one of the six claims she initially raised in her complaint, so the court had to decide whether the unsuccessful claims were unrelated or based on a “common core of facts” or “related legal theories.”

Here, the district court found that two of the claims, which went to trial, were interrelated and based on the same core facts, and the other four were unrelated. The district court therefore applied a two-thirds reduction to the lodestar “as an approximation for the number of hours spent working on the four claims that were not viable.”

The court explained that it would ideally make a more specific reduction by the exact hours worked on those claims, but that invoices did not provide enough detail for the court to do so.

The appellate court found that the lower court did not abuse its discretion by making this proportionate reduction under these circumstances; the further reduction of fees from $44,766 to $25,000 — because of an undue emphasis on Diaz’s rejection of a pre-trial $75,000 settlement offer — was another matter.

The First Circuit observed that the district court seemed concerned “that there was a perverse incentive for attorneys to encourage clients to reject reasonable offers and proceed to trial to earn more in fees.” The appellate court remanded the reduction for recalculation, reasoning that such fears are unfounded in a civil rights case for three reasons:

  1. A contingent fee arrangement in a civil rights case does not impose a ceiling on the amount an attorney can recover under fee-shifting statutes. Rather, the rules surrounding fee-shifting in civil rights cases are based on full compensation for the work performed, rather than on the particular agreement between the plaintiff and her attorney.
  2. Civil rights attorneys already have incentives to encourage their clients to take reasonable settlement offers: They can only recover fees if their client is the “prevailing party.”
  3. The Federal Rules of Civil Procedure provide a safeguard: Under Rule 68, a party who rejects a formal Rule 68 offer and then fails to obtain greater relief cannot recover any fees and costs which accrue after the date of rejection.

If you think a district court unreasonably reduced attorney’s fees in one of your civil rights cases, it might be time for an appeal.

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