$100,000 in Attorneys' Fees on $7,650 Damages Award OK: 1st Cir. - U.S. First Circuit
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$100,000 in Attorneys' Fees on $7,650 Damages Award OK: 1st Cir.

When opposing counsel turn a deaf ear to your settlement desires, pointing them to Diaz v. Jiten Hotel Management Inc. might help: an employer had to pay more than 10 times the damages award in attorney's fees.

The case is a good way to reinvigorate one's litigation sticker shock.

More specifically, the First Circuit's decision serves as an excellent reminder that a seemingly rinky-dink discrimination case can add up to a major expenditure of resources and staggering attorneys' fees for the loser.

$104,626 in Attorneys' Fees

Following her discharge from a Holiday Inn in Dorchester, Massachusetts, Carmen Diaz filed six claims against Jiten Hotel Management, Inc., the operator of the hotel. She voluntarily dropped four of the claims, but the remaining two went to trial.

She obtained a $7,650 jury award on her state age discrimination claim, but the drama was about the $104,626 she was seeking in attorney's fees and costs.

On appeal, Jiten claimed the attorneys' fees award was impermissibly disproportionate to the damages award. Jiten argued that proportionality was a good thing because "there is little social benefit to encouraging attorneys to spend resources ... that are disproportionate to the results of the litigation."

The First Circuit panel remanded the case for recalculation after determining the district court unreasonably reduced the amount. The panel didn't buy Jiten's argument this time around and affirmed the district court's recalculation.

Proportionality Doesn't Matter

To the contrary, society benefits when proportionality is not considered in cases like this, the First Circuit ruled.

"The rules surrounding fee-shifting in civil rights cases are designed to encourage attorneys to take these types of cases and are based on full compensation for the work performed," the court wrote.

Lest you forget the law in Massachusetts, awarding attorneys' fees is mandatory. In addition, the court duly noted that fee-shifting provisions "are designed to encourage suits that are not likely to pay for themselves, but are nevertheless desirable because they vindicate important rights."

So what's the lesson here? There seem to be at least three:

  1. Don't expect the First Circuit to cap disproportionately high attorney fee awards;
  2. Courts might be especially unwilling to cap attorney fees in cases that are worthy, but entail insufficient damages (such as discrimination cases); and finally
  3. Think long and hard about prolonging litigation, even in simple cases because if you're on the losing end, the attorneys' fees alone could cost you quite a pretty penny.

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