Opinion ID: 5288715
Heading Depth: 2
Heading Rank: 1

Heading: Time Spent on Settlement Negotiations.

Text: The district court disallowed 13.75 hours that counsel claims to have spent in negotiating the settlement. The court explained that [t]he weight of authority cautions courts against awarding fees for time engaged in settlement negotiations, lest it disincentivize defendants from participating in such discussions. In support, the court relied on two cases: Janney Montgomery Scott LLC v. Tobin, 692 F. Supp. 2d 192 (D. Mass. 2010) and Osorio v. Municipality of Loiza, No. 13-1352, 2016 WL 3264122 (D.P.R. June 14, 2016). As relevant here, those cases stand for two closely aligned propositions: that [s]ettlement negotiations are not normally considered in the lodestar calculation and that the institutional policy favoring settlement requires deducting settlement time from the fee award so as not to discourage parties from engaging in such negotiations. Janney, 692 F. Supp. 2d at 198; accord Osorio, 2016 WL 3264122, at . These decisions do not represent the weight of authority, and we reject the propositions for which they stand. The justification for paying an attorney for time reasonably spent in settlement negotiations is strong. In civil - 11 - rights cases, Congress wanted a prevailing plaintiff's attorney to be compensated for all time reasonably expended on a matter. Blanchard v. Bergeron, 489 U.S. 87, 91 (1989) (quoting S. Rep. No. 94-1011, at 6 (1976)). Because civil rights may be vindicated equally as well by efficacious settlement as by dogged litigation, see Maher v. Gagne, 448 U.S. 122, 129 (1980), appropriate exploration of settlement is time well spent and, therefore, compensable. We hold that a court should include time reasonably expended in settlement negotiations within the lodestar when calculating attorneys' fees. This holding does not break any ground: many other courts have so held. See, e.g., Ngena Found. v. F&R Crous Found., No. 20-793, 2021 WL 1546457, at  (D.D.C. Apr. 20, 2021) (citing cases); Estiverne v. Esernio-Jenssen, 908 F. Supp. 2d 305, 310 (E.D.N.Y. 2012); Trainor v. HEI Hosp. LLC, No. 09-10349, 2012 WL 119597, at  (D. Mass. Jan. 13, 2012), aff'd in part, vacated in part on other grounds, 699 F.3d 19 (1st Cir. 2012). Indeed, in Lindy Brothers Builders, Inc. of Philadelphia v. American Radiator & Standard Sanitary Corp. — the seminal case that pioneered the lodestar approach, Perdue, 559 U.S. at 551 — the Third Circuit included settlement negotiations among the classes of compensable work. 487 F.2d 161, 167 (3d Cir. 1973). - 12 - To be sure, fee-shifting statutes should not be read to darken prospects for settlement. Evans v. Jeff D., 475 U.S. 717, 735 (1986).2 Even so, the district court's forecast that settlements will be frustrated by allowing compensation for time reasonably expended in settlement negotiations is unduly pessimistic. We think it is unrealistic to assume that the marginal cost of counsel's work on settlement will scare off defendants in a substantial number of cases. Litigants settle cases because doing so is cheaper and less risky than fighting tooth and nail to the bitter end. The extra expense of compensating time reasonably spent in settlement negotiations scarcely alters this calculus. Nor will attorneys be tempted to drag out talks unnecessarily because the court will later trim away time wasted as unreasonably expended. In sum, time reasonably spent in pursuit of settlement is worthwhile and, therefore, generally fit for inclusion in a fee award. Speculative concerns about misguided incentives do not sap the force of this conclusion. Because the district court erred as 2 In Evans, the Supreme Court's holding that settlements sometimes may entail a negotiated waiver of attorney's fees rested in part on the fear that parties to a significant number of civil rights cases will refuse to settle if liability for attorney's fees remains open. 475 U.S. at 732, 736. Although Evans referred to a distinct statute, 42 U.S.C. § 1988, the Court's reasoning applies four-square to Title VII's analogous feeshifting provision. See Indep. Fed'n of Flight Attendants v. Zipes, 491 U.S. 754, 758 n.2 (1989). - 13 - a matter of law in categorically excluding time spent on settlement negotiations from the lodestar calculation, we reverse its ruling. On remand, the district court should augment the fee award by allowing credit for all time reasonably spent by the plaintiff's counsel during the course of settlement negotiations.