Loser Pays: Risks of Civil Rights Claims
Federal civil rights actions are somewhat unique in that they allow the prevailing party to be granted “reasonable attorney’s fees.” An employer on the wrong side of a decision or verdict could leave it paying (a) damages; (b) its attorney’s fees and (c) its adversary’s attorney’s fees. But what are “reasonable” attorney fees? In Sommerfield v. City of Chicago, the Seventh Circuit shed some light on this important question.
In Sommerfield, a Jewish police officer with German heritage that worked for the Chicago Police Department (CPD) filed claims of discrimination based on religion and national origin, retaliation, and violation of civil rights. The CPD successfully argued for dismissal on summary judgment of some of the claims. Ultimately, after years of litigation, a jury found for the claimant on the discrimination counts and awarded him $30,000. In turn, the claimant’s attorney sought payment of his attorney’s fees, which he alleged added up to nearly $1.5 million.
The size of the award of attorney’s fees is normally a function of the hours worked, the hourly rate, and any overall adjustments. The district court first calculates the “lodestar,” which is the hours reasonably expended multiplied by the reasonable hourly rate. The total time should exclude work that was excessive, redundant, or otherwise unnecessary. The lodestar may also take into account factors such as the amount involved and the results obtained, as well as the experience, reputation, and ability of the attorneys.
Once the lodestar is calculated, it may be appropriate to adjust it further. While a plaintiff who achieves excellent results should receive the entire lodestar, that sum may be excessive for one who has achieved only partial or limited success. Extraordinarily good results, by the same token, may warrant extra compensation.
Claimant’s attorney claimed fees of $1,496,930 based on 3,742 hours worked at an hourly rate of $395. The trial court judge reduced the hours to 2,878 and the hourly rate to $300, which yielded a lodestar of $863,000. At that point, the judge took into account the modest degree of success he had achieved and halved the lodestar, for a final fee of $430,000.
The decision was upheld on appeal. In doing so, the 7th Circuit court considered but ultimately rejected affidavits meant to support counsel’s proposed rate of $395/hour. The Court also rejected the argument that the attorney should be reimbursed for fees incurred in litigating the unsuccessful claims because they were “inextricably linked” to the successful claims. Finally, the Court stated, that counsel “spent over a decade on a case in which he lost on most claims and netted his client $30,000. A reduction for limited success strikes us as entirely appropriate.”
When employers are evaluating the potential liability of federal civil rights claims, they must consider the possibility of prevailing party attorney fees. Even though the fees in Sommerfield were reduced, nonetheless the fees awarded far exceeded the recoverable damages by a ratio of 14:1.