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First Circuit Affirms $105,000 Attorneys’ Fee Award in Age Bias Case after Jury Awards only $7,650 in Damages

On December 30, 2013 by Schnader in Labor and Employment

By Scott J. Wenner

The Court of Appeals for the First Circuit recently affirmed a fee award to a successful plaintiff’s counsel in an age discrimination case in an amount almost 14 times larger than the damages a jury assessed against the employer.

In Diaz v. Jiten Hotel Management, No. 13-1444 (1st Cir. December 18, 2013), a former housekeeper at a Holiday Inn hotel in Massachusetts brought six causes of action based upon her discharge. By the time of trial, all but the age discrimination claims under federal and state law had been dismissed or withdrawn.  A jury found for Diaz on her state law claim in the amount of $7,650.  In post-trial proceedings, Diaz sought statutory attorneys’ fees of more than $300,000, based on the total hours her lawyers reasonably spent on the case – including the unsuccessful claims.   The employer argued that counsel was not entitled to counsel fees for the four claims that did not survive to trial.   The district court agreed, but did not sift through time records to determine the number of hours spent on the four unsuccessful claims versus the two successful claims.  Rather, the court simply reduced the fee application by two-thirds and awarded $105,000.

Even with an award of just one-third of the fees sought,  the employer was held responsible under the fee-shifting provisions of the age discrimination laws to pay almost 14  times the damages Diaz was awarded.  Based on this lack of proportionality, the employer appealed the fee award, arguing that the district court committed reversible error by failing to calibrate its fee award to the amount of damages the jury awarded.  (Diaz also appealed, arguing that the court abused its discretion by assuming that the two-thirds reduction in awardable fee hours would properly compensate her counsel.  The appellate court observed that Diaz had waived this argument for failure to raise it below but also found that the court had ample discretion to rule as it did.)

The employer asserted a single policy-based argument: that lawyers should not be encouraged to spend resources that are disproportionate to the result they obtain.  While this is a familiar refrain in the employer community, it did not resonate with the appellate panel, which easily brushed it aside.  According to the Court, there is no basis in employment discrimination jurisprudence for equating the reasonableness of an attorneys’ fee award to its proportionality to the damages awarded to a plaintiff.  To the contrary, “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.”  Far from embracing attorneys fees that are merely proportional to the results obtained, fee-shifting is designed “to encourage suits that are not likely to pay for themselves, but are nevertheless desirable because they vindicate important rights.”  Given what the panel described as the district court’s “extremely broad” discretion in awarding attorneys fees, it refused to disturb the award in this case.

The panel applied Massachusetts law, as Diaz’s successful claim arose under the state antidiscrimination statute, Mass. Gen. Laws ch. 151B.  Because the wording of that law’s fee-shifting provision is especially broad, directing that reasonable attorneys’ fees shall be awarded “irrespective of the amount in controversy,” there is room to argue that Diaz  should not apply to claims under federal or other state employment discrimination laws that are not similarly worded. However, courts in Massachusetts are instructed that when evaluating a request for reasonable attorneys’ fees by a prevailing plaintiff, “attorney’s fees available in both fora should, for the most part, be calculated in a similar manner.” Fontaine v. Ebtec Corp., 613 N.E.2d 881, 890 (Mass. 1993).

While it remains to be seen how persuasive Diaz will be in courts outside Massachusetts, the fact that both federal and state employment discrimination laws always are read broadly, vindicate the same rights as does the Massachusetts law, and vest judges with wide discretion in awarding fees, it may be difficult for employers to limit its application.