Court Opinion

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Opinions of the United
2001 Decisions                                                                                                             States Court of Appeals
                                                                                                                              for the Third Circuit

7-30-2001

Lanni v. State of NJ
Precedential or Non-Precedential:

Docket 00-1945

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Recommended Citation
"Lanni v. State of NJ" (2001). 2001 Decisions. Paper 168.
http://digitalcommons.law.villanova.edu/thirdcircuit_2001/168

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Filed June 5, 2001

UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT

NOS. 00-1945 and 00-5020

PHILIP J. LANNI,
Appellant

v.

STATE OF NEW JERSEY; DEPARTMENT OF
ENVIRONMENTAL PROTECTION; ROBERT C. SCHINN;
MICHAEL BOYLE; MARTIN MORALES; BRIAN
HERRIGHTY; JOHN HEDDEN; MARK DOBLEBOWER;
GREGORY HOLJAK; ROBERT WINKEL; CAROL LAKE,
Individually And In Their Official Capacities, Jointly And
Severally.

On Appeal From the United States District Court
For the District of New Jersey
(D.C. Civil Action No. 96-cv-03116)
District Judge: Honorable Anne E. Thompson

Argued February 5, 2001

Before: BECKER, Chief Judge, AMBRO and STAPLETON,
Circuit Judges

(Filed: June 5, 2001)
       Linda Wong
       Daniel C. Fleming (Argued)
       Wong & Fleming
       2035 Lincoln Highway, Suite 1050
       P.O. Box 985
       Edison, NJ 08818

        Attorneys for Appellant

       Allison E. Accurso (Argued)
       Mary C. Jacobson
       Steven L. Scher
       Barbara Berreski
       Office of Attorney General of
        New Jersey
       Richard J. Hughes Justice Complex
       Trenton, NJ 08625

        Attorneys for Appellees

OPINION OF THE COURT

STAPLETON, Circuit Judge:

This appeal involves a dispute over attorney's fees
awarded in a suit brought under the Americans with
Disabilities Act ("ADA") and the New Jersey Law Against
Discrimination ("LAD"). Phillip Lanni prevailed below, but
argues on appeal that the District Court erred in its
calculation of his attorney's fees. Lanni also takes issue
with the District Court's order quashing a writ of execution
against the State of New Jersey.

I.

Phillip Lanni has a number of learning disabilities that
inhibit his ability to solve problems and to process and
understand spoken and written language. Lanni was
employed, beginning in October of 1990, by the New Jersey
Department of Environmental Protection ("the DEP").
Beginning in 1991, Lanni worked as a radio dispatcher at
the DEP. Lanni claims that, during his employment in this
capacity, supervisors and co-employees made him the butt

                                  2
of jokes, verbally abused him, and mistreated him because
of his disabilities.

In 1995, Lanni signed a contract with Linda Wong of the
law firm Wong Fleming, P.C., procuring her representation
in an action against the DEP. Lanni agreed that, if he
entered into litigation, he would maintain a "partial
contingency fee arrangement" with Wong Fleming under
which he would pay "the greater of: (1) $125 dollars
multiplied by the amount of hours expended on [the] case,
(2) a fee awarded by a Court, or (3) a contingency fee
including any attorneys fees already paid." The agreement
also provided that, in the alternative, Lanni had the right to
pay Wong Fleming "the reasonable value of [its] services"
which it placed at "an hourly rate of $175 per hour" for the
services of Linda Wong and "an equal or lower billable rate"
for the services of the other members and employees of the
firm.

In 1996, Wong Fleming represented Lanni by filing a ten-
count complaint against the DEP and nine defendants
employed there. The complaint alleged disability
discrimination, a hostile workplace, a failure to
accommodate, retaliation, and various other claims under
the ADA, the LAD, the Conscientious Employee Protection
Act, and the New Jersey Tort Claims Act. In October, 1997,
the District Court dismissed the majority of these claims on
summary judgment, leaving only one count against three
individual defendants and the DEP.

The case was tried during the months of December,
1998, and January, 1999 by Ms. Wong and Daniel Fleming,
the named partners of Wong Fleming. After nineteen days
of testimony, the jury returned a verdict finding violations
of the ADA and LAD by two defendants and the DEP and
finding no liability on the part of the third individual
defendant. Lanni was awarded $70,930.00 in economic
damages and $156,100.00 in non-economic damages. No
punitive damages were assessed.

Pursuant to the ADA and the LAD, Lanni was permitted
to recover reasonable attorney's fees as a result of
prevailing in his law suit. Six months after the verdict,
Lanni filed an application that claimed his lawyers were

                               3
entitled to $1,165,444.88 in attorney's fees and $49,412.75
in costs, for a total fee of $1,214,857.63. Six months later,
following hearings and the submission of briefs on the issue
of fees, the District Court awarded Lanni $277,723.50 in
fees and $24,706.00 in costs. The correctness of the
process by which the District Court calculated this award
is the primary matter disputed.

II.

We review the District Court's decision to award
attorney's fees under an abuse of discretion standard. See
Silberman v. Bogle, 683 F.2d 62, 64-65 (3d Cir. 1982) ("We
can find an abuse of discretion if no reasonable man would
adopt the district court's view."). Whether the correct
standards were applied by the District Court in determining
the allowable fee is a question of law subject to plenary
review. See Rode v. Dellarciprete, 892 F.2d 1177, 1182 (3d
Cir. 1990). The District Court's factual findings will be
disturbed only if they are clearly erroneous. Id. at 1182-83.

As the prevailing party on an ADA claim, Lanni is
permitted to recover an award of attorney's fees. 42 U.S.C.
S 12205 ("the court or agency, in its discretion, may allow
the prevailing party [in a discrimination case] . . . a
reasonable attorney's fee, including litigation expenses, and
costs . . ."). The LAD has a similar provision. N.J.S.A. 10:5-
27.1 ("the prevailing party may be awarded a reasonable
attorney's fee. . .").

The jury's damage award in this case was made under
both the ADA and LAD. Accordingly, to the extent the
applicable standards for an award of attorney's fees and
costs differ under the two statutes and an appropriate
award under one exceeds an appropriate award under the
other, Lanni is entitled to elect to receive the higher award.
As we discuss hereafter, an award under the LAD may
reflect any risk of nonpayment of a fee assumed by counsel.
An award under the ADA may not reflect that risk. In other
respects, the ADA and LAD law applicable here does not
materially differ.

Under both ADA and LAD law, a "lodestar" amount
provides the starting point for determining reasonable

                               4
attorney's fees. See Rode, 892 F.2d at 1183. The lodestar is
obtained by multiplying the number of hours reasonably
expended on the litigation by a reasonable hourly rate. See
id. A District Court has substantial discretion in
determining what constitutes a reasonable rate and
reasonable hours, but once the lodestar is determined, it is
presumed to be the reasonable fee. See id. Following a
determination of the lodestar, either party may seek
adjustment. If that party meets the burden of proving that
an adjustment is appropriate, the lodestar amount may be
increased or reduced at the discretion of the District Court.
See id.

Wong Fleming utilized an electronic billing system that
tracked time spent by each employee of the firm to the
tenth of an hour. Both Ms. Wong and Mr. Fleming alleged
that they currently charge $325 an hour for their services.
Wong Fleming asserted that its associates were due fees in
the $180 an hour range (depending upon experience), while
its paralegals and other firm staff were due payment at a
lesser rate, but not below $70 an hour. Multiplying these
rates by the hours recorded in their billing system, Wong
Fleming calculated its lodestar. Wong Fleming then argued
that a multiplier of 75% was warranted in this case due to
the substantially contingent nature of the compensation
structure and the legal risk associated with taking the case.
In this way, Wong Fleming arrived at its total requested
attorney's fees of $1,165,444.88. Costs and expenses were
claimed at $49,412.75.

While accepting that Lanni, as a prevailing party, was
entitled to his reasonable attorney's fees, the District Court
did not accept Wong Fleming's calculations. Lanni raises
five challenges to the District Court's decision regarding
costs and fees.

A.

First, Lanni contends that the District Court erred in its
determination of reasonable hourly market rates for Wong
Fleming's services. The District Court rejected Wong
Fleming's asserted rate of $325 an hour for Linda Wong
and Daniel Fleming. The District Court instead concluded

                               5
that the reasonable hourly rates of Wong and Fleming
should be calculated on a graduated scale, varying
according to the time period during which the services were
performed.

The party seeking fees bears the burden of producing
sufficient evidence of what constitutes a reasonable market
rate for the essential character and complexity of the legal
services rendered in order to make out a prima facie case.
Smith v. Philadelphia Hous. Auth., 107 F.3d 223, 225 (3d
Cir. 1997). If the prima facie case has been made, the
opposing party bears the burden of producing record
evidence that will contest this rate. Id. If reasonable market
rates are in dispute, a hearing must be conducted. Id.

When attorney's fees are awarded, the current market
rate must be used. See Rode, 892 F.2d at 1183; Rendine v.
Pantzer, 661 A.2d 1202, 1127 (N.J. 1995). The current
market rate is the rate at the time of the fee petition, not
the rate at the time the services were performed. See Rode,
892 F.2d at 1188-89 (describing petition based on current
rates as premised on a theory of "delay compensation")
Rendine, 661 A.2d at 1127 (To take into account delay in
payment, the hourly rate at which compensation is to be
awarded should be based on current rates rather than
those in effect when the services were performed.").

The District Court was apparently well aware of these
rules, and stated that it was using a "current market rate"
to determine the proper attorney's fees due to appellant. It
then inexplicably calculated the fees on a graduated scale
roughly tracking the actual historic rates of Linda Wong.1
The District Court observed that the "method of applying
current rates is flexible within the discretion of the Court"
_________________________________________________________________

1. The District Court arrived at the following partner rates for the
following time periods: from November, 1995, to November, 1996, $175
per hour; from December, 1996, to November, 1997, $185 per hour;
from December, 1997, to November, 1998, $195 per hour; from
December, 1998, to the present, $205 per hour.

Though the earlier rates seem to roughly approximate Ms. Wong's
historic rates as evidenced by the record, Ms. Wong's fee petition alleged
her current rate during 1999 to be $325 per hour, $120 per hour above
the rate awarded by the court.

                               6
and then concluded that calculating rates on a graduated
scale would be "consistent with the rationale behind
calculating a reasonable hourly rate" because it would
"offset the costs of the delay in payment to plaintiff's
counsel, while still avoiding a `windfall' to counsel beyond
their reasonable rate." We are uncertain how the District
Court believed its professed use of the current market rate
could be harmonized with a graduated scale that awarded
historic rates. A current market rate is exactly that -- a
reasonable rate based on the currently prevailing rates in
the community for comparable legal services. It is not a
graduated schedule of past rates. We conclude that the
District Court's use of an historical graduated scale to
calculate a current market rate for partners at Wong
Fleming was a misapplication of the appropriate legal
standard.

The District Court also concluded that Wong Fleming's
alleged rates for associates and paralegals were
unreasonable. The District Court stated that because the
highest hourly rate it granted on its graduated scale for the
named partners was $205 an hour, constituting 63% of
Wong Fleming's alleged rate, Wong Fleming's asserted rates
for associates and paralegals should be multiplied by 63%
to arrive at a reasonable rate. This method of calculation
seems less oriented towards making a proper determination
of a reasonable current rate than towards punishing
overreaching. Again, we conclude that the District Court
failed to follow the applicable legal standards for the
calculation of a current market rate.

While we agree with the appellant that the testimony of
appellee's expert contains very little in the way of probative
"contradictory evidence" of currently prevailing market rates
and agree that in some instances, a district court may be
justified in awarding rates similar to those requested by
Wong Fleming, see, e.g., Blakey v. Continental Airlines, Inc.,
2 F. Supp. 2d 598, 603-04 & n.5 (D.N.J. 1998) (awarding
$300 per hour though noting that, under the facts of that
case, such a rate was "suspect"), we conclude defendants
met their burden of coming forward with sufficient other
evidence to support a finding that the market rate in this
situation was well below the rates claimed by Wong

                               7
Fleming. On remand, the District Court should determine
the currently prevailing rates in the community for
comparable legal services at the time the fee petition was
filed.

B.

Second, Lanni claims the District Court erred when it
found that the presence of both named partners of Wong
Fleming at trial was excessive and determined that
allowance of the claimed hours for the presence of a second
partner would be unreasonable. The District Court
accordingly disallowed the 138.7 hours spent by Mr.
Fleming at trial. Wong Fleming asserts that this case was
unusually challenging and novel and required the time of
two attorneys.

Rendine admonishes that "[t]rial courts should not accept
passively the submission of counsel to support the lodestar
amount. . . . For example, where three attorneys are
present at a hearing when one would suffice, compensation
should be denied for the excess time." Rendine, 661 A.2d at
12264 (quoting Copeland v. Marshall, 641 F.2d 880, 891
(D.C. Cir. 1980)). It is therefore clearly permissible as a
general matter under the LAD for a court to find the
presence of two named partners during a trial to constitute
an excessive and unreasonable expenditure of hours.

The District Court did not abuse its discretion. Given
Wong's professed expertise in this area, it would have not
been unreasonable to expect her to conduct the trial alone
or with the help of an associate. While we believe awarding
fees for Fleming's time multiplied by an associate's rate
may have been justifiable here, it is not our role under an
abuse of discretion standard to substitute our inclinations
for those of the District Court. See In re Tutu Wells
Contamination Litig., 120 F.3d 368, 387 (3d Cir. 1997) ("An
abuse of discretion is a clear error of judgment, and not
simply a different result which can arguably be obtained
when applying the law to the facts of the case.") (citations
and internal quotations omitted). Accordingly, the District
Court's disallowance of Fleming's trial time will stand.

                                8
C.

Third, Lanni claims the District Court erred by deducting
25% from the lodestar because Lanni did not prevail on all
of his claims. The District Court's downward adjustment
was made under the rubric of Hensley v. Eckerhart, 461
U.S. 424, 433-35 (1983), which teaches that where a
plaintiff prevails on one or more claims but not on others,
fees shall not be awarded for time that would not have been
spent had the unsuccessful claims not been pursued. The
Hensley Court termed this a downward adjustment for
"limited success." Id. at 436-37.

The District Court noted that only two of the original ten
claims had succeeded and that only the DEP and two of the
original nine individual defendants had been found liable.
Wong Fleming has failed to persuade us that the time spent
pursuing the unsuccessful claims contributed in any way
to Lanni's success on his remaining claims. Accordingly, we
find no abuse of discretion in connection with the Hensley
reduction of the lodestar for limited success.

D.

Fourth, Lanni claims the District Court erred by denying
its request for a multiplier enhancing the lodestar by 75%
based on the risk of counsel's being inadequately
compensated. The law of the ADA and LAD diverge on the
question of the availability of multiplier enhancements for
contingency of compensation. While there is no basis for
such enhancements under the ADA, they are permissible
under the LAD. Compare City of Burlington v. Dague, 505
U.S. 557, 563 (1992) (finding, under a comparable federal
fees provision that contingency fees would "amount[ ] to
double counting") with Rendine v. Pantzer, 661 A.2d at1202
(N.J. 1995) (rejecting Dague and approving of contingency
enhancements under the LAD).

Where plaintiffs have prevailed on LAD claims in federal
court, we have approved of Rendine enhancements and
required District Courts to consider their possible
application. See Failla v. City of Passaic, 146 F.3d 149, 160
& n.15 (3d Cir. 1998); Coleman v. Kaye, 87 F.3d 1491,
1511 (3d Cir. 1996).

                               9
LAD cases have not required "pure" contingency in order
to warrant an enhancement, but instead have awarded
multipliers in cases where fees were "substantially" or
"predominantly" contingent. Rendine, 661 A.2d at 1216-17.
The agreement in this case was hardly a straightforward
contingency arrangement. Lanni paid $32,000 to Wong
Fleming during the course of the litigation and was
required by contract to pay Wong Fleming a minimum of
$125 per hour, whether he won or lost at trial. Lanni points
out, however, that the $125 an hour rate was a reduced
"partial contingency" rate below Wong Fleming's normal
rate (which was $175 for Linda Wong, at least initially).
Wong Fleming also represents that it took Lanni's case
knowing that he was considering filing for bankruptcy in
order to prevent a foreclosure on his home.

The District Court stated: "The Court has considered
plaintiff's entitlement to an enhancement under the LAD.
While plaintiff's attorneys in this case were competent and
the case was well argued, the Court concludes that
counsel's performance does not warrant an enhancement in
this case." Wong Fleming argues that the District Court
misperceived the claim it was making. Wong Fleming
makes no argument that Lanni is entitled to an
enhancement based on the quality of its performance.
Rather, it argues for a contingency enhancement under
Rendine, 661 A.2d at 1228 ("We hold that the trial court,
after having carefully established the amount of the
lodestar fee, should consider whether to increase that fee to
reflect the risk of nonpayment in all cases in which the
attorney's compensation entirely or substantially is
contingent on a successful outcome.").

The District Court failed to address the Rendine
argument. On remand, the District Court must consider
whether this is a "substantially contingent" case under the
Rendine analysis, and if so, whether a contingency
enhancement is warranted.

E.

Fifth, Lanni contends that the District Court erred by
reducing all of its costs by 50% based solely on the finding

                               10
that Wong Fleming had charged what the Court thought to
be unreasonable rates for photocopies and faxes. Wong
Fleming charged twenty-five cents per page for photocopies
and a dollar per page for faxes. The defendants offered
evidence tending to show that copies could be purchased
for two to six cents per page and faxes should have cost
closer to fifty cents per page. The District Court concluded
that the costs and expenses requested by Wong Fleming
were "excessive and extreme" and awarded only half the
requested amount.

Like Lanni, we read the District Court's opinion as
offering the disparity between faxing and photocopying
costs and the actual costs of those services as the sole
justification for the Court's fifty percent reduction. We can
understand the District Court's indignation at what it
understandably perceived to be overreaching with respect
to faxing and photocopying, and we acknowledge that
district courts have broad discretion in the imposition of
costs. See In re Paoli R.R. Yard PCB Litig., 221 F.3d 449,
454 (3d Cir. 2000). Nevertheless, without more explanation
than we have been given,2 we can only characterize the
Court's fifty percent reduction as arbitrary. This is not a
case in which the District Court has found a pattern of
overreaching and has made a reasoned estimate of the
overcharges. Here, we find ourselves simply unable to tell
from whence the District Court's fifty percent figure came.
On remand, the District Court will re-assess the costs and
expenses.
_________________________________________________________________

2. The appellees offer an explanation which purports to justify the
District Court's fifty percent solution. The District Court's opinion,
however, bears little relation to the appellees' analysis.

We believe the District Court was justifiably concerned that the fee
application of over one million dollars was excessive and overreaching
under the circumstances, as was the reimbursement sought for costs.
However, while our jurisprudence affords great latitude to a District
Court's decision on attorney's fees, it also constrains such decisions by
requiring particularized findings or statements of reasons for significant
reductions in costs and fees.

                               11
III.

Also in dispute is a writ of execution, issued against the
State of New Jersey seeking satisfaction of the fee award.
The District Court entered judgment awarding quantified
attorney's fees to Lanni on December 2, 1999. As we have
noted, he appealed this judgment. In April of 2000, Wong
Fleming had the United States Marshal serve on the
Treasurer of the State of New Jersey a writ of execution
pursuant to Fed. R. Civ. P. 69 seeking satisfaction of the
attorney's fees judgment.3 In May of 2000, the District
Court granted a motion from the State of New Jersey to
quash the writ of execution. Thereafter, on June 14, 2000,
the appellees, believing that Wong Fleming might no longer
be representing Lanni, moved for permission to deposit the
amount of the fee judgment with the District Court. 4 This
motion was granted, and the funds remain on deposit with
the clerk. Lanni appeals the order quashing the writ of
execution and also filed a motion seeking a writ of
mandamus from this court to compel the District Court to
vacate its order quashing the writ and to direct the District
Court to transfer the lodged funds. We denied this motion
on August 23, 2000.

In its order granting the defendants' motion to quash the
writ of execution, the District Court noted that interest was
accruing on the fee judgment, that the defendants were
"not in danger of becoming insolvent," and that "therefore
plaintiff's counsel will not suffer prejudice if fees are not
paid immediately." App. at 20.

There can be no dispute that Lanni will at some point be
able to execute on the fee judgment and receive interest
from the date a judgment was entered quantifying the
award of fees and cost. See Eaves v. County of Cape May,
_________________________________________________________________

3. The writ also sought satisfaction of the merits judgment, which was
being processed at the time by the New Jersey Treasury and had been
partially paid. The full merits judgment was paid in full by the State
Treasurer on April 17, 2000.

4. On June 1, 2000, Ms. Wong filed a certification representing that
Lanni had discharged her firm on May 31, 2000. Subsequently, it was
represented to the Court that Lanni and his counsel had resolved their
dispute.

                               12
239 F.3d 527, 542 (3d Cir. 2001). Moreover, he currently
has security for the payment of that judgment in the form
of a cash deposit with the Clerk of the District Court. He
insists, however, that he is entitled to immediate
disbursement of those funds to him. Appellees respond that
comity gave the District Court discretion to stay execution
on the judgment, and it did not abuse its discretion by
doing so.

We find no record support for the proposition that the
District Court's decision to quash the writ of execution was
based on considerations of comity. Moreover, we agree with
Lanni that the fact that a judgment will earn collectible
interest is not alone a sufficient basis for quashing a writ
of execution. At the same time, we recognize that Fed. R.
Civ. P. 69(a) makes the issuance of a writ of execution
discretionary, and we acknowledge that there may be some
circumstances in which considerations of comity will
warrant the exercise of that discretion in favor of a state
defendant.

Our mandate will reverse the judgment of the District
Court and remand for further proceedings consistent with
this opinion. Execution during the brief period before a new
judgment is entered would therefore be inappropriate. If
Lanni and his counsel are unwilling to wait until the end of
that period, however, they are free to move for
disbursement of the funds held by the Court. If the District
Court believes that comity counsels against granting that
relief, it should explain its view of the matter. 5
_________________________________________________________________

5. We note that the parties did not call to our attention or to the
attention of the District Court a circuit split on the issue of whether an
appeal by a judgment holder automatically stays the judgment. Compare
TVA v. Atlas Machine, 803 F.2d 794, 797 (4th Cir. 1986) (an appeal by
the prevailing party operates as a stay of execution), with Trustmark Ins.
Co. v. Galluci, 193 F.3d 558, 559 (1st Cir. 1999) (an appeal by the
prevailing party does not operate as a stay of execution unless there is
inconsistency between the appeal and execution on the judgment); BASF
Corp. v. Old World Trading Co., 979 F.2d 615, 617 (7th Cir. 1992) (same);
Enserch Corporation v. Shand Morahand Co., Inc., 918 F.2d 462, 464 &
n.3 (5th Cir. 1990) (same). Because this appeal is now terminated, this
issue is moot and we express no opinion thereon.

                               13
CONCLUSION

We will vacate the District Court's award of attorney's
fees and remand for further proceedings consistent with
this opinion.

A True Copy:
Teste:

       Clerk of the United States Court of Appeals
       for the Third Circuit

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