District Court Erred When Reducing a Prevailing Party’s Attorney Fee Award

Last week, the Seventh Circuit addressed some of the issues that come into play when a statute authorizes the award of attorney’s fees in Johnson v. GDF, Inc., ___ F.3d ___ (7th Cir. 2012), Case No. 11-1934. This case is particularly helpful on these issues because it found that the district court abused its discretion on these issues.

Johnson was the named plaintiff who brought a class action in state court against his employer for overtime wage violations. Class certification in that case was ultimately denied and the matter proceeded towards trial. Meanwhile, Johnson filed a lawsuit in federal court, which asserted that he was fired in retaliation for filing the state court action.

While the state court action was proceeding towards trial, the employer offered to settle both lawsuits for $25,000. Johnson rejected the offer. The state suit was resolved by a consent judgment a month later and the employer paid Johnson $4,328.77 in overtime wages plus interest and attorney’s fees.

Meanwhile, the federal lawsuit continued without any additional settlement talks. Moreover, the employer did not make a Rule 68(a) offer of judgment, not even one limited to the issue of liability. The case proceeded to a three-day trial, after which the jury returned a verdict for Johnson, which awarded both compensatory and punitive damages. After the district court denied post-trial motions by both parties, both parties appealed. The parties then mediated their dispute and, after the employer agreed to pay Johnson more money, the appeals were dismissed.

As the prevailing party, Johnson was entitled to attorney’s fees, so his counsel made a fee application for $112,566.87. The employer disputed the amount of these fees for multiple reasons. A magistrate judge heard the fee dispute and recommended a total award of fees and costs in the amount of $1.864.20. The district court accepted the recommendation and Johnson appealed.

On appeal, the Court found that the district court abused its discretion when it concluded that all but 4 of 190 billed hours were unnecessary. When concluding that the district court erred, the Court found that both the fact that the employer did not admit liability and that the case went to trial were of critical importance.

GDF knew (approximately) what it was up against and proceeded to trial, without an offer of judgment or any concession of liability. GDF tested its luck and lost. Now it must pay for the attorney hours reasonably required to see the case through trial, to appeal, and for the collection of fees.

The Court also criticized the district court’s decision to reduce the hourly rate charged by Johnson’s attorney to the maximum rate that this attorney had been awarded in a case in which his hourly rate had been challenged.

In considering the next best evidence [of a reasonable hourly rate], the district court disregarded Rossiello’s third-party affidavits because the affiants declared that they do not bill at different rates for FLSA and Title VII cases. The district court decided that billing rates for FLSA and Title VII cases must be diffe rent-—other Northern District of Illinois judges have said that FLSA cases are less complex than Title VII cases and we’ve mentioned this observation too. Small v. Richard Wolf Med. Instruments Corp., 264 F.3d 702, 707-08 (7th Cir. 2001). Rossiello, however, is entitled to the prevailing market rate for his services. It was an abuse of discretion for the district court to decide that the market must distinguish between FLSA and Title VII cases. Either it does or it doesn’t, but it is not the court’s job to say that it should. If the market does distinguish FLSA and Title VII retaliation cases, then, presumably, defendants could submit affidavits saying so. It is not enough to say that courts have distinguished these types of cases (much less, straight overtime cases like Small) and, therefore, any affidavits to the contrary will be unpersuasive.

Once the affidavits were set aside, the district court considered evidence of Rossiello’s fee awards in similar cases. The court concluded that Rossiello did not establish “that he was ever awarded a $600 rate in any FLSA case where his fee was challenged.” The highest challenged rate he had recovered was $375, so the court decided that was reasonable and what he should receive in this case. But as we reemphasized in Pickett (another case involving Rossiello, incidentally), “[n]othing in the case law requires that a party show that the hourly rate they have requested has previously been disputed and upheld . … Indeed, a previous attorneys’ fee award is useful for establishing a reasonable market rate for similar work whether it is disputed or not.” It was therefore an abuse of discretion for the district court to set Rossiello’s rate by considering only cases where his fees were challenged.

Finally, the district court erred by not awarding Johnson his trial costs.

Ultimately, this case shows that when defending against a claim for attorney’s fees, the wisest course of action will me to amass evidence regarding the prevailing market rate, rather than focusing your factfinding on the particular counsel requesting fees. The employer in this case appears to have made a strategic error by amassing evidence regarding Johnson’s counsel, why ignoring other issue, such as whether there is a different market rate for FLSA and Title VII retaliation claims.

Lessons:

  1. A court should not reduce an attorney fee application merely because it believes a case should have been settled.
  2. A court cannot assume without evidence that the market must distinguish between the market rate for two different types of litigation.
Brad A. Catlin
Price Waicukauski & Riley, LLC
Learn more about Brad and contact us
This entry was posted in Attorney's Fees and tagged , , . Bookmark the permalink.

Comments are closed.