Attorney Should Not Be Penalized for Civil Rights Plaintiff’s Choice To Go To Trial.
As reported at Law Blog on October 12, 2012, the First Circuit Court of Appeals has issued an interesting civil rights fee decision in Diaz v. Jiten Hotel Mgt., Inc., Case No. 11-2400 (1st Cir. Oct. 12, 2012).
Diaz involved a housekeeper plaintiff suing defendant hotel employee for age discrimination, civil rights, and defamation, among other things, Two claims, the federal and state age counts, proceeded to trial, with plaintiff eventually winning $7,650 on the state law claim. Diaz’s attorney then sought a fee recovery of $139,622. The district judge decided that the proper lodestar was only a third ($44,766), given that only 2 of 6 claims went to trial, a proportionate reduction that the appeals court found was proper. However, the district judge also reduced fees more — down to $25,000 — after learning that hotel offered, but plaintiff rejected, a $75,000 pretrial settlement offer.
On appeal, the First Circuit reversed and remanded the fee award for restudy. It found that the district judge improperly focused upon the rejection of the settlement as a basis for reducing the award. A civil rights lawyer should be not be forced to throttle a client into a settlement, given the settlement decision lies with the client and it would be unfair to punish the attorney for a “hindsight” wrong decision. Also, hotel defendant did not use the settlement fee/costs shifting offer of judgment procedure under FRCP 68, such that “it cannot use its informal offer as a sword.”
The appeals court further decided that plaintiff was not entitled to prejudgment interest on the fee award (because it was not part of the original compensatory judgment), but was entitled to postjudgment interest on any fees award eventually awarded.