Seventh Circuit Upholds Slashing Of Over $300K In Attorneys’ Fees Based On $2,000 Jury Verdict

scissorsAn easy to parrot, hard to apply attorney fee maxim involves the “prevailing party” standard.  To get attorneys fees awarded under a statutory or contractual fee-shifting provision, you must “prevail” or win the case.  So what happens when your win is a proverbial Pyrrhic one?  That is, you win the lawsuit but get only a fraction of the money you sought? Or, you’re victorious on only one of multiple claims; losing the other claims.  What then?

Montanez v. City of Chicago (http://caselaw.findlaw.com/us-7th-circuit/1670216.html) examines these issues and more in a decision that illustrates the broad discretion a district court has in both fashioning and reducing claimed attorneys fees based on the level of the fee seeker’s litigation success.

The plaintiff filed a civil rights suit against two police officers and a municipality alleging excessive force.  The plaintiff also pled various state law claims.  The state law claims were dismissed as untimely and the plaintiff went to trial on his civil rights (Section 1983) claims.  A jury awarded the plaintiff $2,000 against one of the officers: $1,000 in compensatory damages; $1,000 in punitives.  The jury ruled against the plaintiff on his claims against the other police officer.  The plaintiff sought fees and litigation costs of over $400,000.  The defendants of course argued for a severe fee slashing in light of the paltry jury award.  The District Court (mostly) obliged by lopping off over $300,000 of the plaintiff’s fees and costs.  Plaintiff appealed.

Held: Affirmed

Reasons:

Seven lawyers billed nearly 1100 aggregate hours for the plaintiff in litigating his excessive force claims.  The final tab exceeded over $400,000 in fees and almost $7,000 in costs.  The District Court shortened the fee amount to just over $108,000 and awarded costs of over $3,000.  So the plaintiff still got more than 50 times the jury award.

Affirming the trial court’s fees and costs reduction, the Seventh Circuit noted that in cases “lacking private incentives to limit the scope of litigation” (like fee-shifting Federal suits), a trial judge should exert his authority under Federal Rules 16 and 26 to guard against overlawyering, excessive discovery and wasteful pretrial activities.  The Court then stated the specific attorneys’ fees rules that guide the court’s analysis:

a prevailing party in a Section 1983 suit can recover “a reasonable attorney’s fee” that is generally computed by the “lodestar” method: number of hours multiplied by hourly rate;

– where the hours a plaintiff spent on successful claims can be segregated from time spent on unsuccessful claims, the time spent on the latter claims can be subtracted from the fee award;

– an attorneys’ reasonable hourly rate is based on the local market rate – the best evidence of which is the rate charged by that attorney for similar work;

– if the court can’t determine a reasonable hourly rate based on the petitioning attorney’s rates, the court looks to the rates charged by similarly experienced attorneys in the community and evidence of rates set for attorneys in similar cases;

– hourly attorney rates are particularly difficult in cases where the attorney typically uses contingent fee agreements;

– conclusory affidavits from other attorneys who opine that another attorney’s rates are reasonable have little probative value;

– the court’s goal in shifting fees (to the losing party) is not “auditing perfection”: instead, it’s to attain “rough justice”;

– in the area of legal research, the trial court has broad discretion in determining what research likely contributed to the successful result at trial and whether certain research was “esoteric”, redundant or had nothing to do with plaintiff’s winning claims;

– the district court can strike vague billing entries and where a fee request dwarfs actual damages won at trial, this raises a “red flag” (as to the validity of the requested fees);

28 U.S.C. § 1920 allows a prevailing party to recover “costs” including (i) costs for transcripts necessarily obtained for use in the case; (ii) printing costs and (iii) copying costs for materials necessarily obtained for use in a case.

Montanez, pp. 7-13, 17.

With these guideposts informing its analysis, the Seventh Circuit upheld the District Court’s cuts to the plaintiff’s fees and costs request.  Stating there is no precise mathematical formula for adjusting fee requests, the Court noted that a fee reduction is proper where fees dwarf the trial damage award and the plaintiff achieves “limited success.”

Here, the plaintiff’s success was limited as he won only $2,000 at trial and lost on 4 of his 6 claims.  The Seventh Circuit affirmed the District Court’s 50% cut in the plaintiff’s total lodestar fees based on the comparatively low money judgment amount and on plaintiff losing the majority of his claims.  The other fees and costs reductions approved by the Seventh Circuit included those based on (1) fees generated for witnesses that were never called; (2) for deposition transcripts that were never used, (3) transcription rates that exceeded the allowable amount under Local Rule 54 and (4) legal research into areas that had no bearing on plaintiff’s successful claims.  The Seventh Circuit found these subtractions proper and within the District’s Court’s fee award discretion.

Summary: The case presents a fairly exhaustive summary of a Federal court’s fee award calculus and shows the broad discretion a district court has in lopping off what it views as extraneous fees and costs.  It’s clear that while there is no precise arithmetical rule that governs in all fee cases, a court will look at the claimed fees in relation to the actual money judgment won at trial and will also consider how many claims a litigant won and lost in the same case when determining the fee award.

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PaulP

Litigation attorney at Fisher Kanaris, P.C. representing businesses and individuals in all types of commercial disputes.