Court Opinion

ID: 809997
Source: CourtListenerOpinion
Date Created: 2012-10-12 20:21:54+00
Date Added: 2024-06-11T18:00:36.479282
License: Public Domain

United States Court of Appeals
                      For the First Circuit
No. 11-2400

                       CARMEN LLERENA DIAZ,

                      Plaintiff, Appellant,

                                v.

                  JITEN HOTEL MANAGEMENT, INC.,

                       Defendant, Appellee.

           APPEAL FROM THE UNITED STATES DISTRICT COURT
                 FOR THE DISTRICT OF MASSACHUSETTS

          [Hon. William G. Young,    U.S. District Judge]

                              Before

                  Boudin, Hawkins* and Thompson,
                         Circuit Judges.

     Lynn A. Leonard for Appellant.
     Ryan C. Siden for Appellee.
     Jonathan J. Margolis, Ellen J. Messing, and James S. Weliky,
on brief for Massachusetts Employment Lawyers Association, Amicus
Curiae.
     Anne L. Josephson and Sarah Wunsch, on brief for American
Civil Liberties Union of Massachusetts, Gay & Lesbian Advocates &
Defenders, the Jewish Alliance for Law and Social Action, the
Lawyers’ Committee for Civil Rights and Economic Justice,
Massachusetts Law Reform Institute, and the National Police
Accountability Project, Amici Curiae.

                         October 12, 2012

     *
      Of the Ninth Circuit, sitting by designation.
           HAWKINS, Circuit Judge.            Plaintiff-Appellant Carmen Diaz

(“Diaz”), after obtaining a jury verdict in her favor in the amount

of $7,650 on one of six claims raised in her complaint, sought

attorney’s fees of $139,622 and $13,389.34 in costs.                 The district

court awarded $25,000 in fees and $9,434.74 in costs.                We affirm in

part, reverse in part, and remand for further proceedings.

           Beginning in 1985, Diaz worked as a housekeeper at a

hotel in Dorchester, which was eventually purchased by defendant

Jiten Hotel Management (“Jiten”) and operated as a Holiday Inn

Express.   In 1997-98, Mitesh Patel began working at the hotel as a

general manager, and he and Diaz had various difficulties working

together   over   the    years.     Beginning      in   2004,      Diaz    began    to

associate the problems she experienced with her age, claiming that

Patel was making degrading age-related remarks to and about her.

The last few years she did not receive annual raises and Diaz was

eventually terminated.

           In 2008, Diaz brought an action against Jiten, alleging

six   causes   of    action:      (1)    violation      of   the     federal       Age

Discrimination      in   Employment      Act;    (2)    violation     of    state

antidiscrimination law; (3) violation of the state civil rights act

(for intimidating witnesses to support false allegations of racism

against Diaz); (4) wrongful termination; (5) intentional infliction

of emotional distress; and (6) defamation.                   Jiten denied the

allegations and claimed it had good cause to terminate Diaz.

                                        -2-
           After taking depositions of various Jiten employees, Diaz

moved voluntarily to dismiss all of her wrongful termination claims

“as a result of discovery in this matter.”     The court therefore

dismissed Counts III and IV.     Diaz later also moved to dismiss

Count VI (defamation).   The court also granted Jiten’s motion for

summary judgment on Count V (intentional inflection of emotional

distress), concluding it was barred by workers’ compensation.

           Ultimately Diaz proceeded to trial on two claims: her

federal and state age discrimination claims. The jury found in her

favor on the state law claim and awarded her $7,650 in compensatory

damages.   As a prevailing party, Diaz then sought attorney’s fees

in the amount of $139,622 and costs of $13,389.34.

           The district court noted that only two of Diaz’s original

six claims proceeded to trial, and she only succeeded on one of

them.   The court reduced the requested fees by two-thirds “as an

approximation for the number of hours spent working on the four

claims that were not viable.”     The court accepted the requested

hourly rate ($300/hr) as reasonable, and computed a lodestar of

$44,766.

           However, the court determined that the fees should be

further adjusted downward.   The court pointed out that if Diaz had

accepted Jiten’s $75,000 settlement offer, she would have received

more personally and her attorney would have only received about

$25,000, and that it created a dangerous incentive to take low

                                -3-
value claims to trial instead of settling.                The court ultimately

determined    that    “imposing       a   one-third     limit   of   the   offered

settlement enacts a reasonable compromise on the need to compensate

Attorney Leonard, encourage lawyers to represent civil rights

plaintiffs,   and     the    need    to   deter    lawyers   from    discouraging

settlement in order to get rich on the backs of their clients.”

           We review an award of attorney’s fees for legal error or

manifest abuse of discretion.             Burke v. McDonald, 572 F.3d 51, 63

(1st Cir. 2009).

           Because she was a prevailing party on her state law age

discrimination claim, Diaz was entitled to attorney’s fees under

M.G.L. 151B § 9.      The initial estimate of a reasonable attorney’s

fee is the lodestar calculation of hours reasonably expended times

a reasonable hourly rate.           Draper v. Town Clerk of Greenfield, 384

Mass. 444, 449 (1981).

           However, Diaz prevailed on only one of the six claims she

initially raised in her complaint.                 In such a situation, the

Supreme   Court      has    directed      courts   to   consider     whether   the

unsuccessful claims were unrelated, or whether they were instead

based on a “common core of facts” or “related legal theories.”

Hensley v. Eckerhart, 461 U.S. 424, 435 (1983).

           Here, the district court expressly recognized that two of

the claims, which went to trial, were interrelated and based on the

same core facts.       By implication, the district court necessarily

                                          -4-
found the remaining four claims were distinct and severable from

the successful claim.        This conclusion is not unreasonable, as

Diaz’s own pleadings recognize that the dismissed claims are based

on a different core of facts: in her Motion to Dismiss Claims and

to Clarify Complaint, she indicates she wishes to proceed on Counts

I and II (the state and federal age discrimination claims), and

states that Paragraphs 6-17 of her amended complaint “form the

factual basis of this claim”; paragraphs 18-28, on the other hand,

are relevant to the dismissed termination, defamation, and witness

tampering counts.1

            The   district    court    therefore    applied    a   two-thirds

reduction to the lodestar “as an approximation for the number of

hours spent working on the four claims that were not viable.”              The

court    explained   that    it   would   ideally   make   a   more   specific

reduction by the exact hours worked on those claims, but that the

invoices did not provide a level of detail that permitted the court

to do so.     The court did not abuse its discretion by making this

proportionate reduction under these circumstances.             See Burke, 572

F.3d at 64.

            The district court’s further reduction of fees from

     1
     Because our analysis turns on the severability of Diaz’s
claims that did not go to trial, and not on the underlying merits
of such claims, we deny her Motion to Strike Appellee’s
Supplemental Appendix as moot. We also deny Jiten’s Request for
Sanctions under Local Rule 38.0.

                                      -5-
$44,766   to   $25,000,   because    of    an   undue   emphasis   on   Diaz’s

rejection of a pre-trial $75,000 settlement offer, is another

matter. Although the court noted that it had “absolutely no reason

to question [Diaz’s counsel’s] integrity,” it appeared concerned

that there was a perverse incentive for attorneys to encourage

clients to reject reasonable offers and proceed to trial to earn

more in fees. These assumptions, which underlie the perceived need

for this reduction, are flawed for a variety of reasons.

           First, a contingent fee arrangement in a civil rights

case does not impose a ceiling on the amount an attorney can

recover under fee-shifting statutes.            See Blanchard v. Bergeron,

489 U.S. 87, 93 (1989); Furtado v. Bishop, 635 F.2d 915, 917-20

(1st Cir. 1980). Rather, the rules surrounding fee-shifting in

civil rights cases are designed to encourage attorneys to take

these types of cases and are based on full compensation for the

work performed, rather than on the particular agreement between the

plaintiff and her attorney.

           Significantly,    civil     rights     attorneys   already     have

incentives to encourage their clients to take reasonable settlement

offers, because they can only recover fees if their client is the

“prevailing party,” something that is not assured if they take the

gamble of going to trial, not to mention the additional work and

preparation that is required for taking a case to trial.            Further,

the district court’s rationale assumes that attorneys are violating

                                     -6-
their ethical duties, which require the client, not the lawyer, to

make all settlement decisions.

          Moreover, the Federal Rules already contain a mechanism

whereby a defendant can contain fees and costs through a reasonable

settlement offer:   Under Rule 68, a party who rejects a formal Rule

68 offer and then fails to obtain greater relief cannot recover any

fees and costs which accrue after the date of rejection.        Marek v.

Chesny, 473 U.S. 1, 11-12 (1985).       Thus, the federal rules already

provide the defendant with a mechanism to make the plaintiff

“‘think   very   hard’    about   whether    continued   litigation    is

worthwhile,” id. at 11, such that the judge-made prophylactic

ruling in this case is unnecessary.

          Importantly,     this   limitation    on   recovery   is    only

available where Rule 68 has been formally invoked: a “garden-

variety settlement offer made without resort to Rule 68 affords the

offeror no similar protection; he cannot reasonably expect to gain

the benefits that Rule 68 confers.”      Spooner v. EEN, Inc., 644 F.3d

62, 71 (1st Cir. 2011).    Because Jiten did not avail itself of this

option, it cannot now use its informal offer as a sword.2

          For these reasons, and in the absence of any suggestion

     2
     In fact, the district court actually penalized Diaz more than
applying Rule 68 would have: under Rule 68, Diaz would have only
forfeited fees and costs incurred after rejection of the offer,
whereas the $25,000 figure is only a fraction of fees incurred
prior to the offer.

                                  -7-
of actual attorney misconduct, we conclude the district court’s fee

reduction improperly focused on Diaz’s rejection of the settlement

offer.     We remand for the court to re-evaluate the twelve Hensley

factors3 and determine whether any further reduction to the fee

award is proper.

             On remand, the district court should also re-examine its

reduction of costs.     The court indicated it was excluding from the

cost award the cost of deposing any deponents who did not actually

testify, but three of the excluded deponents–Maria Hernandez, Maria

(Elena) Lopez, and Denise Brown–actually did testify at trial.

             Finally, the court’s order was silent as to pre- or post-

judgment interest on the attorney’s fee award. Diaz is entitled to

post-judgment interest on the fee award, calculated from the time

of judgment. Nardone v. Patrik Motors Sales, Inc., 46 Mass.App.Ct.

452, 453 & n.3 (1999).          She is also entitled to pre-judgment

interest on her compensatory damages award, but is not entitled to

pre-judgment interest on the attorney’s fee award because the fees

are not part of the underlying damages.       See Siegel v. Berkshire

Life Ins. Co., 70 Mass.App.Ct. 318, 322 (2007) (differentiating

between attorney’s fees expended defending a creditor’s suit as a

result of the company’s unfair conduct, which were part of the

actual compensatory award, and the attorney’s fees expended against

defendant vindicating rights under c. 93A, which were not).

     3
         461 U.S. at 430 n.3.

                                    -8-
          For the foregoing reasons, we affirm in part, reverse in

part, and remand for further proceedings consistent with this

disposition.   Each party shall bear its own costs on appeal.

                               -9-