No. 87-047 

IN THE SUPREME COURT OF THE STATE OF MONTANA 

1987 

JEANNE CLOSE WAGNER, 

EMPIRE DEVELOPMENT CORPORATION d/b/a 

BILLINGS NEON SIGN CO., 

APPEAL FROM: District Court of the Thirteenth Judicial District 

In and for the County of Yellowstone 

The Honorable Diane G. Barz, Judge Presiding 

COUNSEL OF RECORD: 

For Appellant: 

BOSCHERT and BOSCHERT; Rosemary C. Boschert, 

Billings, Montana, 

BABICH, BENNETT and NICHERSON; Mark W. Bennett, 

Des Moines, Iowa 

For Respondent : 

BROWN, KALECZYC, BERRY and HOVEN; Oliver H. Goe, 

Helena, Montana 

Amicus Curiae: 

Steven B. Ungar, ACLU, Bozeman, Montana 

Janice Frankino Doggett, MHRC, Helena, Montana 

Submitted on Briefs: June 25, 1987 

Decided: September 15, 1987 

Filed: SEP I 5 1987 
Mr. Justice John Conway Harrison delivered the Opinion of the 

Court. 

This case is before the Court on appeal from an order 

of the District Court of the Thirteenth Judicial District in 

and for Yellowstone County, Montana. The District Court 

denied plaintiff's request for attorney's fees and costs 

because of a contingency fee agreement. Plaintiff's motion 

to alter or amend judgment also was denied. We affirm. 

The facts are undisputed. Plaintiff/appellant Jeanne 

Wagner filed an employment discrimination charge against 

defendant/respondent Empire Development d/b/a Billings Neon 

Sign Company claiming Billings Neon had failed to pay her 

equal pay for equal work. Because Wagner failed to comply 

with orders of the hearing examiner appointed by the Human 

Rights Commission, a hearing scheduled for January 14, 1983, 

was not held until November 28, 1983, two years and three 

months after the charge was filed. Nearly one year after the 

hearing, the Human Rights Commission issued its final order 

awarding Wagner $45,749.43 back pay, benefits, and interest. 

By stipulation of the parties, a petition by Billings Neon 

for review of the final order was dismissed and the final 

settlement provided that Billings Neon would pay $48,990.20 

to Wagner in two installments. These payments were timely 

made. 

Pursuant to the Commission's order, Wagner was the 

prevailing party. A contingent fee agreement with her 

attorney, Rosemary Boschert, provided that Boschert was to 

receive 33 1/3% of any award received from Billings Neon. 

Wagner tendered $16,329.10 to Boschert pursuant to this 

agreement. Subsequently, Wagner requested attorney's fees 

provided for in 5 49-2-505(4), MCA, part of the Montana Human 
Rights Act. An evidentiary hearing was held and the court 

denied the request. Wagner appeals. 

The issue is whether it was error for the District 

Court not to award attorney's fees. Section 49-2-505 (4) , 

MCA, provides that "[tlhe prevailing party in a hearing [in a 

contested hearing case] may bring an action in District Court 

for attorney's fees. The court in its discretion may allow 

the prevailing party reasonable attorneys1 fees." This 

statute is similar to the federal statute found at 42 U.S.C. 

S 1988 which provides that, "the court, in its discretion, 

may allow the prevailing party . . . a reasonable attorney's 

fee as part of its costs [,I " in a proceeding to enforce 

certain sections of Title 42, U.S.C., and Title 20 U.S.C. 

The purpose of awarding attorney's fees to prevailing 

parties in civil rights litigation is to ensure "effective 

access to the judicial process. I' Hensley v. Eckerhart 

(1983), 461 U.S. 424, 429, n.2, 103 S.Ct. 1933, 1937, n.2, 76 

L.Ed.2d 40, 48, n. 2. Generally there is agreement that 

without an attorney's fee award for successful litigants, 

meritorious civil rights litigation often would not be 

brought. A delicate balance must be struck between awarding 

the attorney who is successful full compensation for her 

efforts, and awards that are unreasonably high. 

We have not previously interpreted S 49-2-505(4), MCA, 

and thus are free to adopt or ignore the standard applied by 

federal courts when awarding attorney's fees under 42 U.S.C. 

S 1988. The Ninth Circuit applies abuse of discretion to 

cases arising under 42 U.S.C. S 1988. Smiddy v. Varney (9th 

Cir. 1981), 665 F. 2d 261, 268; Sethy v. Alameda County Water 

District (9th Cir. 1979), 602 F.2d 894, 897. Although this 

is not a 5 1988 action, there is no reason not to apply this 

standard in our analysis. 
In determining whether the trial court 

abused its discretion, the question is 

not whether the reviewing court agrees 

with the trial court, but, rather, did 

the trial court in the exercise of its 

discretion act arbitrarily without the 

employment of conscientious judgment or 

exceed the bounds of reason, in view of 

all the circumstances, ignoring 

recognized principles resulting in 

substantial injustice. 

Carkeek v. Ayer (1980), 188 Mont. 345, 348, 613 P.2d 1013, 

The circuit courts are not in agreement on the issue of 

contingent fee agreements vis-a-vis statutory awards as it 

relates to adequate and reasonable compensation. We reject 

the argument that a contingent fee agreement automatically 

precludes award of the statutory fees. " [A] prevailing 

plaintiff should ordinarily recover an attorney's fee unless 

special circumstances would render such an award unjust." 

Hensley v. Eckerhard, supra at 429, 103 S.Ct. at 1937, 76 

L.Ed.2d at 48. "A private fee agreement is not itself 

'special circumstances' which would render an award of fees 

unjust. Sargeant v. Sharp (1st Cir. 1978), 579 F.2d 645, 

649." Hammer v. Rios (9th Cir. 1985), 769 ~.2d 1404, 1408. 

Such a limitation can result in an overemphasis of the 

importance of damages and exert an upward pressure on 

attorney's fees, thus reducing the litigant's opportunity for 

full compensation for his civil rights injury. See Cooper v. 

Singer (10th Cir. 1983), (en banc), 719 F.2d 1496, 1503. The 

Cooper Court said that while a contingent fee agreement does 

not preclude award of attorney's fees, "the actual fee 

obligation must reside within the confines of the term 

'reasonableness.'" Cooper, at 1504. Additionally, the Ninth 

Circuit has said that "fee awards should be the rule rather 

than the exception." Teitelbaum v. Sorenson (9th Cir. 19811, 
648 F.2d 1248, 1251; Ackerley Communications v. City of 

Salem, Or. (9th Cir. 1985), 752 F.2d 1394, 1396. 

The Tenth Circuit requires a lawyer to reduce his 

contingency fee if it is greater than the statutory fee. 

Cooper, supra. The Eleventh Circuit does not treat the 

statutory fee as a ceiling. Pharr v. Housing Authority (11th 

Cir. 1983) 704 F.2d 1216, 1218. It appears the defendant in 

Pharr was required to pay the difference between the 

statutory fee and the contingency fee. The Third Circuit 

allows counsel to receive the greater of the statutory fee or 

the contingency fee. If the contingency fee is greater, 

however, plaintiff must pay the difference between the two 

fees. Sullivan v. Crown Paper Board Co. (3rd. Cir. 19831, 

719 F.2d 667, 668-69. The Fifth Circuit does not permit 

plaintiff's counsel to receive a fee award in excess of the 

contingency fee arrangement. Johnson v. Georgia Highway 

Express (5th Cir. 1974), 488 F.2d 714, 718. The Second 

Circuit holds that a claim for services rendered under a 

contingency fee agreement must be deemed satisfied to the 

extent counsel receives an award under S 1988. The court 

reasoned this result allows "citizens the opportunity to 

recover what it costs them to vindicate [their] rights in 

court." Wheatley v. Ford (2nd Cir. 1982), 679 F.2d 1037, 

1041. 

In the instant case, counsel has received payment for 

her services under the contingency fee agreement with Wagner. 

Although the contingency fee per se is not a special 

circumstance warranting denial of the statutory fee, Wagner 

freely contracted with her counsel for an amount each party 

considered to be a reasonable figure. Further, it appears 

Wagner recovered the cost of vindicating her rights in court. 

The circumstances in this case indicate that to grant 

Boschert more than that for which she contracted would be a 
grave injustice to Billings Neon, resulting in a windfall to 

Boschert . " [Tlhe civil rights statues should not be 

construed to provide windfall recoveries for successful 

attorneys." Wheatley v. Ford, supra, at 1041. 

The District Court found that Boschert caused a hearing 

continuance from January 14, 1983 until March 4, 1983 by her 

failure to provide discovery documents relating to damages 

and wages claimed by Wagner. The hearing was continued again 

because of the Human Rights Commission's budget difficulties. 

The matter ultimately came on for hearing November 28, 1983, 

and subsequently the Human Rights Commission ordered Billings 

Neon to pay to Wagner $45,749.43 in back pay, benefits, and 

interest for the period of February 18, 1981 though Nov. 28, 

1983. Had the hearing been held January 14, 1983, damages 

awarded to Wagner would have been $28,005.31. Thus Wagner 

realized more than $17,000 because of the delay, and her 

attorney benefited to the extent of $7,000. Boschert would 

benefit further by receiving one-third of the statutory fee. 

There is no evidence to support Boschert's claim for 

additional attorney's fees. She did not present competent 

evidence as to the hours she spent in pursuit of the claim. 

She did not provide guidance to the court as to proper fee 

calculation from which a fee could be determined. Boschert 

did not testify as to the exact nature of the work performed. 

The logical starting point for any trier of fact in 

determining a reasonable attorney's fee is "the amount and 

character of the services rendered" and "the labor, time and 

trouble involved." Talmage v. Gruss (1983), 202 Mont. 410, 

412, 658 P.2d 419, 421; Johnson v. Tindall (1981), 195 Mont. 

165, 168, 635 P.2d 266, 268; and First Security Bank of 

Bozeman v. Tholkes (1976), 169 Mont. 422, 429, 547 P.2d 1328, 

1332. 
Other factors to be considered by the court in 

establishing a reasonable fee include: 

[tlhe character and importance of the 

litigation in which the services were 

rendered, the amount of money or the 

value of the property to be affected, the 

professional skill and experience called 

for, the character and standing in their 

profession of the attorneys . . . The 

result secured by the services of the 

attorneys may be considered as an 

important element in determining their 

value. 

Johnson v. Tindall, supra at 168, 635 P.2d at 268. 

Although the court is required to look at all these 

factors "within these guidelines, the amount fixed as 

attorney fees is largely discretionary with the District 

Court." Carkeek v. Ayer, supra at 347, 613 P.2d at 1015. 

Section 49-2-505(4), MCA, clearly gives the District 

Court discretion to award attorney's fees. There is 

sufficient evidence Wagner's counsel was adequately and 

reasonably compensated for her efforts, whether or not 

reference is made to federal fee shifting statutes. We do 

not find the District Court abused its discretion in failing 

to award statutory attorney's fees. 

The order of the District Court is affirmed. 
Justices 
I dissent. 

Wagner's counsel has been adequately and reasonably 

compensated for her efforts. Who has not been reimbursed for 

her reasonable attorney fees is Wagner. She is the loser by 

the majority opinion. 

No one disputes that Wagner is the prevailing party in 

the discrimination action. Wagner has brought this separate 

action for her attorney fees pursuant to 5 49-2-505(4), MCA, 

of the Montana Human Rights Act. Such section allows the 

prevailing party (Wagner) reasonable attorney fees in the 

District Court's discretion payable by the other party. The 

question here is, did the District Court, in not awarding any 

reimbursement for attorney fees, simply abuse its discretion? 

It did, and its order should be reversed and the cause 

remanded. 

The District Court's main reason in its order for not 

awarding fees is that Wagner was adequately compensated in 

the settlement amount and not entitled to additional fees. 

This is, in effect, a determination that Wagner received 

enough in the settlement to cover her actual damages and 

attorney fees. It must be remembered the settlement of the 

discrimination action was voluntarily stipulated to by the 

parties after negotiations and the action dismissed with 

prejudice pursuant thereto. Wagner gave Empire a release of 

all her damages in consideration of the money. The parties 

determined what all the damages were worth; past, present and 

future. They specifically excluded from the settlement 

Wagner' s claim for attorney fees. The order of the District 

Court arbitrarily included such fees back in the settlement. 

I am aware that the agreement between Wagner and her 

attorney was a contingent fee agreement and Wagner has paid 

her attorney on the basis of that agreement, but the 

attorney-client agreement should have no bearing in this case 
as to whether or not Wagner should recover reasonable fees 

from Empire. It might under certain circumstances be relevant to determine the amount of such fees or what amount is 

reasonable. 

What Wagner has asked for here is reimbursement for a 

reasonable amount of hours expended by her attorney multiplied by a reasonable hourly compensation rate which is less 

than she, Wagner, paid under the contingent fee agreement. 

Great import is made by the Court and Empire of the 

fact that Wagner's attorney did not supply to Empire's attorney a statement of damages and wages lost, prior to an administrative hearing in its discrimination action. Such failure 

to supply allegedly postponed the hearing and thereby increased the damages. Empire stipulated to the settlement and 

agreed to the amount of damages as negotiated. It should not 

be allowed to reargue such amount in this action for fees. 

If this failure on the part of Wagner's attorney to supply 

such information had an effect on the amount of time spent by 

her in the discrimination case, it can be considered, but not 

otherwise. 

Fee awards in these types of cases should be the rule 

and not the exception. Failure to award attorney fees to the 

prevailing party, Wagner, on the basis of the reasons given 

is unjust and an abuse of discretion. 

Justice William E. Hunt and Justice John C. Sheehy concur in 

the foregoing dissent. fc\ 

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/ / Justice //