The Ninth Circuit Court of Appeals Approved $700,000 in Attorneys Fees Even Though Plaintiff’s Damages Were Only $27,000

On December 5, 2013, the US Court of Appeals for the Ninth Circuit held that the trial court did not abuse its discretion in awarding the Plaintiff close to $700,000 in attorneys’ fees, even though the Plaintiff’s damages recovery was only $27,000 and the defendant defeated the majority of Plaintiff’s claims prior to trial. The panel held that although there was a clear disparity between the damages recovered and the fees awarded, California law did not require the district court to reduce the disparity.

In this case, the Plaintiff alleged in its complaint that she suffered adverse employment action because of her two-level demotion from Division Manager to Supervisor–and alleged alternative “discriminatory motives” for Defendant’s action in separate claims for retaliation, gender discrimination and age discrimination. Most of the Plaintiff’s claims were dismissed on summary judgment and the case went to trial only on claims of gender/sex-based employment discrimination. Defendant UPS argued that the Plaintiff was an example of the “Peter Principle”, meaning that she had been promoted to her level of incompetence (plaintiff was given a performance improvement plan but based on unsatisfactory performance, she was demoted). Defendant argued that this was a way for the Plaintiff’s manager (who is an individual Defendant in the case) to persuade the senior management to demote Plaintiff to a position consistent with her limitations. However, the jury disagreed and sided with the Plaintiff. The Court found that: “Plaintiff’s gender motivated Defendant to demote her, it was a substantial factor in causing her harm and Defendant would not have demoted her for a non-discriminatory reason.” Thus, awarding $27,280 to the Plaintiff.

When considering the Plaintiff’s attorneys’ fees, the court based its decision upon review of the record, the submissions of the parties, the fees awarded in other cases in the same district. Initially, the Plaintiff sought to recover about $1.9 million in attorneys’ fees, including a claimed lodestar (number of hours expended times hourly rates) of $1.3 million (including time spent litigating dismissed claims) and a requested 1.5 upward enhancement. The trial court denied the requested 1.5 multiplier and limited its analysis to the reasonableness of the $1.3 lodestar. When assessing the attorneys’ fees, the court reduced the requested fees of three lawyers out of four lawyers who worked on the case because they were deemed unreasonable. However, the trial court only reduced the overall attorneys’ fees by ten percent to reflect the Plaintiff’s limited success (having recovered $27,280) and her disproportionate attorneys fees’ request of $1.9 million. The Defendant appealed to the Ninth Circuit, arguing primarily that the fee award should have been reduced by more than 10 percent to account for Plaintiff’s limited success. The Ninth Circuit disagreed and explained that:
“In general, California courts, like their federal counterparts, utilize the lodestar (or “touchstone”) approach to determine a proper fee award to a prevailing plaintiff in a civil rights lawsuit. Each attorney’s reasonable hourly rate is determined, and then that rate is multiplied by the hours reasonably spent in achieving plaintiff’s victory. The result is the lodestar, which may be adjusted up or down to determine an appropriate award in the individual case. In the absence of special circumstances which would make the adjusted lodestar amount unjust, it should be awarded to a prevailing plaintiff’s attorneys.”

If you are an employee and you believe you have been discriminated against by your employer, please contact the Harman Firm, LLP.