Court Opinion

ID: 2996477
Source: CourtListenerOpinion
Date Created: 2015-09-24 19:29:05.668715+00
Date Added: 2024-06-11T12:22:20.293679
License: Public Domain

In the
 United States Court of Appeals
               For the Seventh Circuit
                          ____________

No. 02-3839
SUSAN SHOTT,
                                                 Plaintiff-Appellee,
                                 v.

RUSH-PRESBYTERIAN-ST. LUKE’S MEDICAL CENTER,
                                            Defendant-Appellant.
                          ____________
            Appeal from the United States District Court
       for the Northern District of Illinois, Eastern Division.
            No. 94 C 6783—Joan B. Gottschall, Judge.
                          ____________
      ARGUED APRIL 9, 2003—DECIDED AUGUST 1, 2003
                      ____________

 Before FLAUM, Chief Judge, POSNER and KANNE, Circuit
Judges.
  KANNE, Circuit Judge. In this appeal, Rush-Presbyterian-
St. Luke’s Medical Center (“Rush”) challenges the amount
of attorney’s fees and prejudgment interest awarded to the
plaintiff, Dr. Susan Shott, after she prevailed on a disability
discrimination claim against Rush. The district court
awarded plaintiff roughly 66% of the amount of attorney’s
fees she sought and awarded all the prejudgment interest
she requested. Rush argues that the attorney’s fees award
should be reduced (i) because Shott pursued an unrea-
sonable strategy in the first trial that led to that verdict
2                                                No. 02-3839

being set aside and (ii) because Shott rejected a substan-
tial settlement offer early in the litigation. Rush also
maintains that no prejudgment interest should be awarded.
We affirm in part, reverse in part, and remand for fur-
ther proceedings consistent with this opinion.

                         I. History
  Dr. Susan Shott, who holds a Ph.D. in statistics, began
work at Rush in June 1982. In 1986, she was diagnosed
with rheumatoid arthritis, though she did not inform
Rush of her medical condition until 1994. In January
1993, Dr. Harvey Preisler, head of the Rush Cancer Insti-
tute, named Shott as the Director of the Biostatistics Unit
of the Institute.
   Shott alleges that troubles with Preisler began on March
23, 1994, when she informed him that she was an Orthodox
Jew and advised him that she would not be able to work on
Passover. Shott alleges that following her request Preisler
became hostile toward her and began greatly increasing her
work load by requiring her to do excessive computer work
and refusing to hire an assistant for her. Further, she
claimed that Preisler began scheduling meetings that con-
flicted with her religious observances.
   On May 27, 1994, some three months after the trouble
began, Shott first informed Preisler, via a letter from her
physician, that she had rheumatoid arthritis. This letter did
not specifically request an accommodation for arthritis, but
it did note that Shott generally tries to work from 5:30 a.m.
to 2:30 p.m. to avoid having to sit in rush hour traffic for an
extended period of time, which aggravated her arthritis.
  Between May 27 and July 22, 1994, Shott and Preisler did
not discuss her disability, but they did exchange correspon-
dence about Shott’s requests not to work on Jewish holi-
days. Also during this period, Shott filed a charge of
No. 02-3839                                                   3

religious and disability discrimination against Preisler with
the Chicago Commission on Human Relations.
   On July 22, Shott gave Preisler a letter in which, for the
first time, she informed him that because he had not hired
an assistant for her, she was having to do a large amount of
data entry on the computer, which greatly aggravated her
arthritis. On July 27, Preisler assured Shott that he would
hire an assistant, but it appears he never did so. Over the
next few months, Shott and Preisler exchanged a series of
hostile letters related to Shott’s need for accommodation of
her disability and her religious observances.
  On November 14, 1994, Shott filed this lawsuit against
Rush. In her Third Amended Complaint, Shott alleged: (i)
disability discrimination by failure to reasonably accommo-
date her disability in violation of the Americans with
Disabilities Act (“ADA”), 42 U.S.C. § 12101 et seq.; (ii)
retaliation in violation of the ADA; (iii) religious discrimina-
tion in violation of Title VII of the Civil Right Act of 1964,
42 U.S.C. § 2000e et seq.; and (iv) retaliation in violation
of Title VII.
  In January 1995, at the district court’s urging, the parties
began settlement negotiations. In March 1995, while Shott
still worked at the Cancer Institute, Rush made a settle-
ment offer, whereby Shott would be transferred to a new
position in the Department of Neurosurgery with no change
in salary for the current academic year. The settlement
offer did not include payment for damages, attorney’s fees,
or costs, and it required Shott to sign a letter that, among
other things, stated that she retracted all allegations in her
complaint. Shott refused the offer.
  On July 11, 1995, Rush transferred Shott from her
position in the Cancer Institute and placed her in the
previously offered position in the Department of Neurosur-
gery at a pay cut of roughly 22%. After the transfer, Shott
added the retaliation claims to her complaint.
4                                              No. 02-3839

  The case went to trial, and the jury found for Rush on the
religious-discrimination claim and on both retaliation
claims. The jury, however, held for Shott on the disability-
discrimination claim, awarding her $250,000 in compensa-
tory damages and $1,000,000 in punitive damages. The
district judge, however, on Rush’s motion, set aside this
verdict and ordered a new trial.
  According to the district court’s order, a new trial was
warranted because the verdict on the ADA claim was
against the weight of the evidence and because the plaintiff
had presented her case to the jury in an unreasonable
manner that likely confused the jury and prejudiced Rush.
Specifically, the district court was concerned that the jury
may have found Rush liable on the disability claim based on
certain events that occurred before Shott ever requested an
accommodation.
  At the second trial, which was limited to the disability
discrimination claim, the jury again returned a verdict for
the plaintiff; this time awarding her only $60,000 in
compensatory damages and no punitive damages.
  Following the second trial, Shott filed a petition for
attorney’s fees under 42 U.S.C. § 12205, in the amount
of $513,388.25. Rush opposed the petition on several
grounds, claiming that Shott was entitled to only 25% of the
amount sought. The district court found that based on the
degree of success Shott achieved in the litigation the award
should be reduced by 33% to $343,970.13. Shott later filed
petitions for further attorney’s fees incurred and for
prejudgment interest, which were granted, making the final
award $412,679.63 for attorney’s fees, $120,801.37 for
prejudgment interest, and $21,191.21 in costs; for a total
of $554,672.21.
No. 02-3839                                                 5

                       II. Analysis
  The parties do not dispute that Shott is a “prevailing
party” in this litigation and therefore is entitled to “a
reasonable attorney’s fee” under the ADA. 42 U.S.C.
§ 12205 (2003). We note that Rush does not challenge the
district court’s determination that Shott’s unsuccessful
claims (ADA retaliation, Title VII discrimination, and Title
VII retaliation) were related to her successful claim or that,
because they were related, Shott could receive at least
partial attorney’s fees for the work done on these unsuc-
cessful claims. See Hensley v. Eckerhart, 461 U.S. 424, 434-
35 (1983) (holding that courts may award compensation
for time spent pursuing unsuccessful claims that related
to the successful claims).
  Rush does, however, challenge the reasonableness of the
fees awarded on three fronts, arguing (i) that Shott should
not receive attorney’s fees for the first trial because she
engaged in an unreasonable trial strategy that caused the
verdict to be set aside; (ii) that the attorney’s fee award
should be reduced based on Shott’s rejection of a substantial
settlement offer very early in the litigation; and (iii) that
Shott should not receive prejudgment interest.

  A. Award of Attorney’s Fees for First Trial
  We review a district court’s refusal to reduce an award of
attorney’s fees for abuse of discretion. Jaffee v. Redmond,
142 F.3d 409, 412 (7th Cir. 1998). It is true, of course, that
a prevailing party under the ADA is entitled to “an award
of fees for all time reasonably expended in pursuit of the
ultimate result achieved.” Id. at 416 (quoting Hensley, 461
U.S. at 431). Therefore, when two trials are required to
achieve the “ultimate result,” a plaintiff should be compen-
sated for both trials, so long as the time spent at both was
“reasonably expended.” Rush argues, however, that when a
plaintiff’s unreasonable arguments at the first trial force
6                                                No. 02-3839

the parties to participate in a second proceeding, the plain-
tiff should not be allowed compensation for both proceed-
ings.
   To establish this principle, Rush relies heavily on our
second decision in Jaffee v. Redmond. 142 F.3d 409, 411
(7th Cir. 1998) [hereinafter Jaffee II]. The Jaffee case
involved two trials and two appeals. In the appeal from the
first trial, Jaffee v. Redmond, 51 F.3d 1346 (7th Cir. 1995)
[hereinafter Jaffee I], we held that the district court had
erroneously ruled, at the plaintiff’s urging, that there was
no federal patient-psychotherapist privilege. Id. at 1356-58.
The plaintiff appealed to the Supreme Court, which af-
firmed our decision and resolved a circuit split by recogniz-
ing a federal evidentiary privilege for patient-psychothera-
pist communications. Jaffee v. Redmond, 518 U.S. 1, 18
(1996). The case was remanded for a new trial, and at the
second trial, plaintiff again prevailed. See Jaffee II, 142
F.3d at 411. On plaintiff’s motion for attorney’s fees the
district court held that given the split in authority, it was
reasonable for the plaintiff to argue against the privilege in
the first trial; however, the court awarded no fees for the
second trial, reasoning that if the plaintiff had not argued
incorrectly at the first trial there would have been no need
for the second. See id. The plaintiff appealed, and in Jaffee
II, we reversed the district court, noting that “[w]hile an
unreasonable argument that necessitates further proceed-
ings may justify denying compensation for those proceed-
ings, the district court in this case found that Jaffee acted
reasonably in arguing against the privilege. . . . [A] fee
award is not automatically precluded because the second
trial was ‘necessitated by’ a reasonable but unsuccessful
argument.” Id. at 416.
  Other circuits have also observed that so long as a
plaintiff’s actions are not responsible for the need for a
second trial, the plaintiff may be compensated for time
spent on both proceedings. See O’Rourke v. City of Provi-
No. 02-3839                                                   7

dence, 235 F.3d 713, 737 (1st Cir. 2001); Gierlinger v.
Gleason, 160 F.3d 858, 878-81 (2d Cir. 1998).
  Gierlinger, a § 1983 case against a New York State Police
Officer, involved three trials. The first trial ended in a jury
verdict for the plaintiff, but the Second Circuit reversed and
remanded that case for a new trial because it was “not
possible to determine from the [jury] instructions whether
the jury found [the defendant] liable on the theory of
respondeat superior, which is not available in a § 1983
claim.” Gierlinger v. N.Y. St. Police, 15 F.3d 32, 34 (2d Cir.
1994). The second trial, for reasons discussed below, ended
in a mistrial. And the third trial ended with a verdict for
the plaintiff. In its ruling on attorney’s fees following the
third trial, the district court denied the plaintiff attorney’s
fees for the first two trials, reasoning that the plaintiff bore
significant responsibility for the errors that voided those
trials.
  The Second Circuit reversed, awarding plaintiff attorney’s
fees for all the trials. Gierlinger, 160 F.3d at 881. A close
analysis of the Second Circuit’s reasoning, however,
suggests that had the plaintiff been responsible for the
errors that voided the first two trials, compensation for
attorney’s fees for those trials would not have been appro-
priate. For instance, in its ruling as to the award of fees for
the first trial, the Second Circuit, focusing on the reason-
ableness of the plaintiff’s actions in that trial, noted that
    if [the plaintiff] had proposed erroneous jury instruc-
    tions, or if she had opposed correct instructions . . .
    there would be a strong basis for denying her fees for
    some, if not all, of the hours her attorney expended on
    [the first trial]. But the record shows just the opposite
    . . . when the court asked whether [the plaintiff] ob-
    jected to the addition of a specific instruction that there
    could be no liability on a respondeat superior theory,
    her attorney answered in the negative . . .
8                                                 No. 02-3839

Gierlinger, 160 F.3d at 881. Similar reasoning is evident in
the court’s ruling that the plaintiff could receive fees for the
second trial. The district court had ruled that the plaintiff
should not receive attorney’s fees for the second trial
because the plaintiff had caused the mistrial when she,
along with her attorney, gave an interview about the case
to a reporter. In reversing this ruling, the Second Circuit
found that “the record belies the district court’s rationale
that [plaintiff’s attorney] bore significant responsibility for
the mistrial.” Id. at 878. Rather, the Second Circuit noted
that the district court in granting the mistrial had specifi-
cally stated on the record that “the publicity in and of itself
wouldn’t justify declaring a mistrial,” but other problems,
not attributable to the plaintiff, did warrant a mistrial. Id.
(quoting the district judge at the second trial).
  Therefore, the Second Circuit reasoned that the plaintiff
could receive attorney’s fees for both the first and second
trial because the plaintiff had not been responsible for the
errors that voided those trials. Id. at 881. The First Circuit
has agreed with the Second Circuit, finding that when a
plaintiff prevails at a second trial, he or she may receive
attorney’s fees for both trials so long as the mistake that
made the second trial necessary is not attributable to the
plaintiff. O’Rourke, 235 F.3d at 737.
  In the case at bar, the district court, in its ruling on
attorney’s fees, held that Shott was not responsible for the
errors of the first trial and therefore could receive attorney’s
fees for that trial. In that ruling (on attorney’s fees), the
district court stated that it had granted a new trial because
the verdict was against the weight of the evidence, not
because of any errors committed by the plaintiff. We find
that the record does not support this ruling.
  First, and most importantly, the district court, in its order
granting a new trial, stated that Shott pursued an unrea-
sonable strategy that prejudiced Rush such that the ver-
dict had to be set aside:
No. 02-3839                                                     9

    While the court believes that there is some evidence in
    the record that could support the jury’s verdict on the
    disability claim, it concludes that Rush was prejudiced
    by the way this case was tried and is entitled to a new
    trial. Plaintiff’s strategy was to throw at the jury
    approximately 18 months of alleged misconduct by Dr.
    Preisler and leave it to the jury to sort out his motiva-
    tion. Under some circumstances this would be a reason-
    able strategy, but in this case, because Dr. Shott
    brought her need for an accommodation to Dr. Preisler’s
    attention so late in the sequence of events, there is
    substantial likelihood that the jury considered against
    Rush on the disability claim conduct that preceded any
    attempt at the good faith interactive process the law
    requires.
(R. 150 at 20.) From this statement, it appears that the
district court actually was unsure that the verdict was
against the weight of the evidence (“there is some evidence
in the record that could support the jury’s verdict”), but was
sure that Rush was prejudiced by Shott’s presentation of
her case—a presentation that the district court found
unreasonable. So, in contrast to the situation we faced in
Jaffee II—where we held that the district court erred
because it refused to award attorney’s fees for the first trial
even though it had found the plaintiff’s strategy at that
trial to be reasonable, see Jaffee II, 142 F.3d at 411—here
the district court awarded attorney’s fees even though it
had found the plaintiff’s strategy at the first trial to be
unreasonable.
  Second, Shott opposed jury instructions that may well
have alleviated the errors of the first trial. In the first trial,
the district court was concerned that the jury would hold
Rush responsible for failing to accommodate Shott’s disabil-
ity based on events that occurred before Shott ever re-
quested an accommodation. Rush had requested an instruc-
tion (Jury Instruction No. 23) that addressed this concern:
10                                                No. 02-3839

     For purposes of Dr. Shott’s disability claims, you are
     directed to focus on events that occurred after May 27,
     1994, the date she first requested an accommodation for
     her disability.
  In its attorney’s fee ruling, in finding that Shott had not
been responsible for the failure to instruct the jury on this
point, the district court laid blame upon itself for “not
adequately guid[ing] the jury’s consideration of the tempo-
rally overlapping discrimination claims in light of the
requirement that defendant’s duty to accommodate did not
arise until plaintiff brought her need for an accommodation
to the defendant’s attention.” (R. 216 at 4.) In its new trial
order, however, the district court stated that its failure to
instruct the jury properly was in fact the result of Shott’s
arguments against such instruction:
     The court rejected [Instruction 23] based on plaintiff’s
     argument that her disability was obvious to everyone
     prior to [the day on which Dr. Preisler was advised of
     Shott’s disability]. But reviewing all the evidence, it is
     clear that while her disability may have been obvious,
     her need for an accommodation was not obvious.
(R. 150 at 21.) Again, the reasons given by the district court
for granting a new trial in the attorney’s fee ruling do not
follow the reasons given in its new trial order. Furthermore,
we note that this situation, where a plaintiff unreasonably
opposed a proper jury instruction that might have cured the
errors of the trial, is almost identical to the situation that
the Second Circuit opined would present “a strong basis for
denying her fees for some, if not all, of the hours her
attorney expended on [the first trial].” Gierlinger, 160 F.3d
at 881.
  Shott acknowledges that she opposed Jury Instruction No.
23, specifically the “focus on” language, but she maintains
that she did agree that the court could instruct the jury that
May 27, 1994, was the first date that she requested an
accommodation for her disability. Our reading of the record
No. 02-3839                                                      11

of the jury instruction conference, however, indicates that
it is far from clear that Shott would have agreed to such an
instruction. Furthermore, in its new trial order the district
court explicitly noted that it was the “focus on” language in
the instruction offered by Rush, that, if given, would have
properly guided the jury:
    [T]he likelihood of prejudice to Rush was compounded
    by the court’s failure to give an instruction, such as
    Rush’s proposed instruction no. 23, which would have
    focused the jury’s attention on the chronology critical to
    evaluating the failure to accommodate claim.
(R. 150 at 21.)
  Therefore, we conclude that Shott should not receive
attorney’s fees or costs for the first trial. As noted above,
Shott’s presentation of the evidence in a way that confused
the jury and her opposition to jury instructions that may
have alleviated some of the confusion—along with the
district court’s specific finding that a second trial was
necessary because of Shott’s unreasonable strategy—leads
us to this conclusion. We simply do not think it appropriate
to award a litigant attorney’s fees for a trial that was
voided by her unreasonable strategy.
  In sum, on remand the district court should not award
attorney’s fees or costs for the work performed by Shott’s
attorneys during the first trial. We see no problem, how-
ever, with awarding fees for the work done in preparation
for that trial because it is likely that this work benefitted
the second trial as well.1

1
  We acknowledge that the second trial involved only the ADA
claim, as opposed to the first, which involved four claims; there-
fore, it is possible that some of the preparation for the first trial
did not benefit the second, but we find that the district court’s
prior reduction of the fees by one-third based on degree of success
adequately addresses this issue.
12                                              No. 02-3839

  B. Rush’s Settlement Offer
  Rush next argues that we should further reduce the
attorney’s fee award based on a settlement offer made very
early in this litigation, which Shott rejected.
  In Moriarty v. Svec, we held that in determining the
appropriate attorney’s fee award the district court should
consider whether substantial settlement offers were
rejected by the party claiming attorney’s fees. 233 F.3d 955,
967 (7th Cir. 2000). We reasoned that “[a]ttorney’s fees
accumulated after a party rejects a substantial offer provide
minimal benefit to the prevailing party” and thus may not
warrant being included in the fee award as a “reasonable
attorney’s fee.” Id. We held that an offer was substantial,
and therefore must be considered, if “the offered amount
appears to be roughly equal to or more than the total
damages recovered by the prevailing party.” Id.
   We must then determine if Rush’s settlement offer was
substantial; that is, whether the total damages Shott
received by going to trial exceed the offered amount. Rush’s
offer came in March 1995, roughly five months after this
litigation began. Under the terms of the offer, Rush would
move Shott from her position at the Cancer Institute to a
new position in the Department of Neurosurgery at no loss
in rank. Rush also agreed that for the remainder of that
academic year, which ended June 30, 1995, Shott would
continue to receive the same salary, $62,400, in the Depart-
ment of Neurosurgery that she did at the Cancer Institute.
Rush’s offer did not include any payment for damages,
attorney’s fees, or costs. And Rush conditioned the offer on
Shott’s signing a statement that read: “As part of a settle-
ment in this case, I retract the statements made in the
complaint and accept a position as Associate Professor of
Neurosurgery.” (R. 212, Ex. 1 at ¶ 7.) By rejecting this of-
fer, Shott proceeded to trial and ultimately won a judge-
ment of $60,000.
No. 02-3839                                                13

  We find that this settlement offer was not substantial
because the actual value of Rush’s offer to transfer Shott to
the Department of Neurosurgery at no cut in pay for the
remainder of the academic year was somewhat illusory. On
July 11, 1995, roughly three months after Shott rejected the
settlement offer, Rush removed her from her position at the
Cancer Institute, placed her in the previously offered
position in the Department of Neurosurgery, and cut her
salary to $48,548. According to the Chair of Rush’s Depart-
ment of Medicine, Dr. Stuart Levin, Shott’s salary was cut
because, in this new position, her responsibilities, workload,
and administrative duties were reduced. If she had accepted
Rush’s settlement, she would have been transferred to the
same position in Neurosurgery as early as March 1995, but
would have received her former salary only until the end of
academic year, which concluded on June 30, 1995. After the
academic year ended, Rush would have been under no
further obligation to continue paying Shott at her former
salary, and given Dr. Levin’s testimony, Rush would have
likely cut her salary to $48,548 to reflect her new position’s
diminished responsibility, workload, and administrative
duties. Therefore, by rejecting the offer, Shott was certainly
no worse off than she would have been had she accepted the
offer; in fact, she received 11 days more pay at her former
salary by not accepting the offer and received a $60,000
damage award at trial.
  Rush argues, however, that when the tax consequences of
the attorney’s fee award are considered, Shott actually
would have been better off accepting its offer of basically
nothing rather than going to trial and winning a $60,000
judgment but incurring a huge tax bill. According to Rush,
Shott’s attorney’s fee award will likely be subject to the
Alternative Minimum Tax (“AMT”). 26 U.S.C. § 55 (2003).
The AMT applies if the total tax calculated under the
AMT’s guidelines exceeds the regular tax liability. Rush
contends that Shott will likely be subject to the AMT
14                                               No. 02-3839

because while the fee award must be included in taxable
income under both the AMT and the regular tax, it is
deductible only for regular tax purposes because “it is one
of a long list of expenses (‘miscellaneous expenses’) that are
not deductible from gross income in computing the alterna-
tive minimum tax.” Kenseth v. Comm’r, 259 F.3d 881, 882
(7th Cir. 2001). Using Shott’s 2002 salary of $48,548, Rush
calculates that under the AMT Shott’s federal income tax
liability on the fee award would be $125,644—more than
enough to swallow her $60,000 damage award. Therefore,
according to Rush, we should find that Shott would have
been better off accepting its meager settlement award than
winning and incurring a large bill from the IRS.
  An overriding problem with Rush’s argument is that none
of the information upon which it relies in purporting to
calculate Shott’s tax liability is in the record. Even if we
accepted Rush’s premise that tax consequences should be
considered, because Shott’s tax information is not a matter
of record in the case, we could not accurately calculate
Shott’s tax liability to determine whether it will leave her
worse off. Therefore, we cannot say with any assurance that
Shott’s tax liability will exceed the damage award.
  Furthermore, though we need not decide this issue now,
we doubt that it would be appropriate for this court to
establish a precedent wherein attorneys would be required
to know the tax status of their clients before accepting or
rejecting a settlement offer or wherein courts would
routinely have to delve into the tax records of the parties to
determine an appropriate fee award. As we noted in Ustrak
v. Fairman, 851 F.2d 983, 987 (7th Cir. 1988), fee litigation
already places a “heavy burden” on the federal courts;
adding a requirement to calculate the tax status of the
parties would only increase that burden.
  Finally, even if it were possible to determine that Rush’s
settlement offer was substantial under the Moriarty
No. 02-3839                                               15

framework, we still would find no abuse of discretion here.
In Moriarty, we cautioned that settlement offers are only
one of many considerations to be made in awarding fees and
thus district courts were only required to consider whether
an attorney’s fee award should be reduced based on the
plaintiff’s rejection of a substantial settlement offer; they
are not necessarily required to reduce the fee award in
every case. Moriarty, 233 F.2d at 967. Our review of the
record satisfies us that the district court in this case
adequately considered whether the fee award should be
reduced based on the settlement offer and reasonably
decided that it should not because the offer required Shott
to recant all of the accusations in her complaint as part of
the settlement. We, therefore, find no abuse of discretion in
the district court’s decision not to reduce the fee award on
the basis of the settlement offer.

  C. Prejudgment Interest
  In Missouri v. Jenkins, the Supreme Court determined
that a “reasonable attorney’s fee,” as provided for under
§ 1988, should include an enhancement for delay in pay-
ment. 491 U.S. 274, 283-84 (1989). The Court concluded
that in order to ensure that attorney’s fee awards reflected
the market, such an enhancement was necessary because
when compensation is received “years after the services
were rendered . . . [it] is not equivalent to the same dollar
amount received reasonably promptly as the legal services
are performed, as would normally be the case with private
billings.” Id. at 283.
   In recognizing and applying this principle, we have noted
that a court may compensate for delay in one of two ways:
(i) it may award fees based on the attorney’s rates at the
time of the award (the “current rate” method) or (ii) it may
award fees based on the attorney’s rates at the time the
services were rendered and add prejudgment interest on
16                                               No. 02-3839

that amount (the “historical rate plus interest” method). See
In re Continental Ill. Sec. Litig., 962 F.2d 566, 571 (7th Cir.
1992). We have also stated that the historical-rate-plus-
interest method is probably the most accurate and straight-
forward. Id.
  The district court in this case found that Shott was
entitled to an enhancement for delay and used the
historical-rate-plus-interest method to calculate that
enhancement. Our review of a district court’s decision to
award prejudgment interest is for abuse of discretion.
McRoberts Software, Inc. v. Media 100, Inc., 329 F.3d 557,
572 (7th Cir. 2003). We note also that there is a presump-
tion in favor of awarding prejudgment interest. See In re
Milwaukee Cheese Wis., Inc., 112 F.3d 845, 849 (7th Cir.
1997) (“[A district court’s] [d]iscretion must be exercised
according to law, which means that prejudgment interest
should be awarded unless there is a sound reason not to do
so.”); Gorenstein Enter., Inc. v. Quality Care—U.S.A., Inc.,
874 F.2d 431, 436 (7th Cir. 1989) (“The time has come, we
think, to generalize, and to announce a rule that prejudg-
ment interest should be presumptively available to victims
of federal law violations. Without it, compensation of the
plaintiff is incomplete and the defendant has an incentive
to delay.”). In other words, in most cases prejudgment
interest is an element of full compensation. Id. at 436.
  Rush argues that our decision in People Who Care v.
Rockford Bd. of Educ., 272 F.3d 936 (7th Cir. 2001), is
controlling and precludes an award of prejudgment interest
in this case. In People Who Care, the prevailing plaintiffs
sought an interim attorney’s fee award in 1999 for services
performed in 1997. Id. at 937. The district court awarded
the fees and prejudgment interest on those fees. Id. at 937-
38. The defendants appealed the award of prejudgment
interest, and we reversed and remanded, holding that
prejudgment interest was not appropriate. Id. at 938.
No. 02-3839                                                    17

   Several facts, however, distinguish People Who Care from
the case at bar. First, the plaintiffs in People Who Care
sought prejudgment interest on an interim fee award;
whereas, here, Shott seeks prejudgment interest on a final
fee award. The distinction is not without some importance
because, as the Supreme Court noted in Missouri v.
Jenkins, interim fee awards and prejudgment interest often
serve the same purpose of accounting for the delay in
compensation that long litigation often causes. 491 U.S. at
284 n.6 (“We note also that we have recognized the avail-
ability of interim fee awards under § 1988 when a litigant
becomes a prevailing party on one issue in the course of the
litigation. In economic terms, such an interim award does
not differ from an enhancement for delay in payment.”).
   Second, and more importantly, People Who Care was an
unusual situation in that the plaintiff was responsible for
the delay in the receipt of its own attorney’s fees because it
did not bill the defendant for the services rendered in 1997
until 1999.2 People Who Care, 272 F.3d at 938. Conse-
quently, it would have been inappropriate to provide the
plaintiff with an enhancement for delay when the plain-
tiff caused the delay. See In re Milwaukee Cheese Wis., Inc.,
112 F.3d at 849 (“Gratuitous delay by the party seeking
the award—delay that injures the other side by forcing it
to act as an uncompensated trustee or investment
manager—might be a reason to limit an award of inter-

2
   People Who Care was also unusual because it was an institu-
tional reform case that was in the remediation stage. Plaintiff ’s
counsel had previously sought and obtained compensation for its
work related to the implementation of the remedy. In 1996 and
again in 1998, the district court issued orders directing the
plaintiff to submit to the defendant monthly statements setting
out the work done and amounts owed. Plaintiffs did not provide
these monthly statements between 1997 and 1999, opting instead
to submit only one fee request in 1999 for the entire period.
18                                               No. 02-3839

est.”). As we noted, such an award would not reflect the
market in any reasonable way: “Imagine the response of a
client in the market who received a bill more than a year
after the rendition of the services covered by it and was told
that he owed not only the amount of the bill but compound
interest for every month but one since the services were
rendered.” People Who Care, 272 F.3d at 938. In reality, the
plaintiff in People Who Care sought prejudgment interest
not as compensation for delay but simply as a matter of
course. Id.
  Finally, in People Who Care, the district court had
awarded prejudgment interest accruing from the 30th day
after the services were rendered. We noted that the calcula-
tion of interest should reflect the prevailing market and
that such a billing scheme “obviously” would not exist in the
market for legal services: “Lawyers rarely bill their clients
within days of rendering services in an ongoing suit, receive
payment within thirty days of that rendition, or charge
interest for payment after thirty days.” Id. (citations
omitted). Unlike People Who Care, the district judge in this
case determined that the prejudgment interest should begin
to accrue thirty days after the client was billed for the
service. We have no doubt that this is a much more reason-
able reflection of how attorneys bill their clients in the
market. Indeed, several district courts in the Northern
District of Illinois have adopted this general method of
calculating prejudgment as the best reflection of the
market. See, e.g., Eirhart v. Libbey-Owens-Ford Co., 774 F.
Supp. 454, 456 (N.D. Ill. 1991); Lippo v. Mobil Oil Corp.,
692 F. Supp. 826, 842 (N.D. Ill. 1988).
  In this case, the district court properly awarded prejudg-
ment interest to compensate for the delay in payment. Rush
makes no claim that Shott caused the delay in the way that
the plaintiff in People Who Care had, and we are persuaded
that the district court here used a much more sensible
method of calculating prejudgment interest than was used
No. 02-3839                                                   19

by the district court in People Who Care. Thus, we find that
the district court did not abuse its discretion in awarding
prejudgment interest. Such an award was necessary to
ensure full compensation.3

                      III. Conclusion
  In sum, we find that the district court did not abuse
its discretion in refusing to reduce the attorney’s fees
award based on the rejection of a settlement offer early in
the litigation, nor do we find an abuse of discretion in
awarding of prejudgment interest. As to these two issues,
the ruling of the district court is AFFIRMED. We, however,
also conclude that Shott should not receive attorney’s fees
and costs for the first trial, although she may be compen-
sated for work done in preparation for that trial. The
district court’s grant of attorney’s fees for the first trial
is REVERSED and the case is REMANDED for further pro-
ceedings consistent with this opinion.

A true Copy:
       Teste:

                          ________________________________
                          Clerk of the United States Court of
                            Appeals for the Seventh Circuit

3
  It is possible that the amount of prejudgment interest may need
to be recalculated on remand to account for our decision not to
allow attorney’s fees for the first trial, but we will leave that
calculation to the district court’s discretion.

                     USCA-02-C-0072—8-1-03