Civil Rights Litigation

Linda Wong
Linda2013sBy Linda Wong, Esq.I.  THE RETAINER AGREEMENT

1.  Hourly Rates
2.  Contingency Agreement
3.  Partial Contingency Agreement

II.  WHO IS PREVAILING PARTY UNDER CIVIL RIGHTS FEE SHIFTING STATUTES?

A “prevailing party” under the LAD is entitled to an award of reasonable attorneys fees.  N.J.S.A. 10:5-27.1. In Rendine v. Pantzer, 141 N.J. 292 (1995), the Supreme Court of New Jersey laid out in detail the analysis to be used by trial judges in awarding legal fees and costs to prevailing parties under the LAD. This analysis entails a three-step process: (1) establish the “lodestar”, (2) adjust the lodestar if the fee is not reasonable in view of the result obtained; and (3) determine a contingency fee enhancement warranted by the facts of the case.

III.  WHAT IS A REASONABLE LODESTAR?

A.  Definition of lodestar

Under the LAD, the lodestar is “the number of hours reasonably expended on the litigation multiplied by a reasonable hourly rate.”  Id. At 335. The “lodestar amount is the most significant element in the award of a reasonable fee” that requires careful evaluation of the attorneys’ time by the trial judge Ibid. By way of illustration, the Supreme Court has pointed out that fees can be reduced for excess time (e.g., multiple attorneys at a deposition), redundant or unnecessary time, or time not reasonably expended Ibid. However, proportionality between damage recoveries and counsel-fee awards are not required.  Id. at 336.

B.  Community market rate rule.

To determine the reasonable hourly rate, a trial court should employ a community market rule. The Supreme Court of New Jersey relied upon and quoted from the Third Circuit’s ruling in Rode v. Dellarciprete, 892 F.2d. 1177, 1183 (3d Cir. 1990) to conclude that generally, a reasonable hourly rate is to be calculated according to the prevailing market rates in the community.”  Id. at 1183. Indeed, the U.S. Supreme Court has stated that when calculating the lodestar, “the market rate in the relevant community is the reasonable hourly rate to use, even if that method overcompensates counsel” Gulfstream III Associates, Inc. v. Gulfstream Aerospace Corp., 995 F.2d 414, 422 (3d Cir. 1993) (citing Blum v. Stenson, 465 U.S. 886, 895, 104 S. Ct. 1541, 1547 (1984).

The rate to use in the lodestar is the current rate, and the reason for this is to take into account the fact that the prevailing party’s lawyers will not have been paid until and unless they win. “To take into account delay in payment, the hourly rate at which compensation is to be awarded should be based on current rates rather than those in effect when the services were performed” Rendine, supra, 141 N.J. at 337.

C.  Hours “reasonably expended”

The number of billable hours should be set forth in sufficient detail to permit the trial court to determine that the hours were “reasonably expended.”  Id. at 335, quoting Copeland v. Marshall, 641 F.2d 880, 891 (D.C. Cir. 1980). The trial court must ascertain the manner in which the billable hours were divided among the various counsel.  Id. at 337. Furthermore, in making this assessment, the Court must consider whether the claims are “excessive, redundant, or otherwise unnecessary.”  Id., quoting Rodes v. Dellarciperte, 892 F.2d 1177, 1183 (3d Cir. 1990) (citations omitted).

IV.  ESTABLISHING A REASONABLE FEE IN VIEW OF THE RESULT OBTAINED

The recent Third Circuit case of Failla v. City of Passaic, 146 F.3d 149 (3d Cir. 1998) is instructive on establishing a reasonable fee in view of the result obtained. In Failla, the plaintiff prevailed on his LAD claim but lost on his ADA claim at trial, and had “alleged several causes of action, many of which were dismissed prior to trial,” including claims pursuant to Section 1983, for punitive damages, liability for individuals under the ADA, and intentional infliction of emotional distress.  Id. at 152 and 161 fn 2. The trial judge did not deduct any attorney’s fees expended on the non-prevailing claims and awarded a 35% multiplier.

The Third Circuit affirmed the fee award in Failla, reasoning that although Failla did not succeed on every claim originally asserted in his complaint, the successful and unsuccessful claims all arose from a common core of fact.”  Id. at 161. It thus rejected the losing party’s contention that the district court judge should have deducted time from the lodestar to reflect the plaintiff’s unsuccessful claims and purported limited success. Also of significance for the Third Circuit was the jury award of $143,000 and the district court judge’s view that this award represented a significant vindication of civil rights Ibid.

V.  CONTINGENCY ENHANCEMENT

The establishment of a lodestar does not end the analysis needed to calculate a fee award for a prevailing party under the LAD. The Supreme Court of New Jersey has specifically rejected any suggestion that an LAD fee award should customarily be limited to the lodestar (or number of hours put in by the attorneys). This is a much more liberal view of attorneys fees and expenses than is recognized for federal fee shifting statutes like the ADA. According to the Supreme Court of New Jersey, the trial judge must next “consider whether to increase that fee to reflect the risk of nonpayment in all cases in which the attorney’s compensation entirely or substantially is contingent on a successful outcome.”  Ibid. In this regard, “a counsel fee awarded under a fee-shifting statute cannot be ‘reasonable’ unless the lodestar, calculated as if the attorney’s compensation were guaranteed irrespective of result, is adjusted to reflect the actual risk that the attorney will not receive payment if the suit does not succeed.” Id. at 338.

The Supreme Court of New Jersey recognizes two forms of risk that should be awarded in the enhancement: (1) risk of nonpayment and (2) legal risk. Regarding risk of nonpayment, the Court requires “a relationship between the amount of the enhancement awarded and the extent of the risk of nonpayment assumed by counsel for the prevailing party.” Ibid. In evaluating the amount of the contingency multiplier to award to the prevailing party, the trial court is to determine whether the case was effectively taken on a contingency basis, whether the trial attorney attempted to mitigate the risk of nonpayment and whether there were other economic risks that were aggravated by the contingency of payment. Ibid.

Regarding legal risk, the Supreme Court of New Jersey also authorizes the award of contingency multipliers because of the inherent legal risks in the case. Ibid. “When the result achieved in such a case is significant and of broad public interest, an additional enhancement is justified in order to attract attorneys to take such cases, which otherwise might suffer from lack of representation.” Id. at 304-41, quoting Delaware Valley II, 483 U.S. at 751, 107 S. Ct. at 3100, 97 L.Ed.2d at 614 (Blackmun, J., dissenting). To obtain a contingency multiplier under the LAD, a prevailing party need not establish that he would have had difficulty finding counsel without the prospect of risk enhancement. Id. at 341.

As for the proper amount of a contingency multiplier, the Supreme Court of New Jersey has stated that the ordinary case deserves a multiplier in the 5% to 50% range, with the typical case falling in the 20% to 35% range: contingency enhancements in fee-shifting cases ordinarily should range between five and fifty-percent of the lodestar fee, with the enhancement in typical contingency cases ranging between twenty and thirty-five percent of the lodestar. Such enhancements should never exceed one-hundred percent of the lodestar, and an enhancement of that size will be appropriate only in the rare and exceptional case in which the risk of nonpayment has not been mitigated at all, i.e., where the “legal” risk constitutes “an economic disincentive independent of that created by the basic contingency in payment and the result achieved is significant and of broad public interest. Enhancements of that magnitude will be reserved for cases of that description in which no prospect existed for the attorney to be compensated by payment of a percentage of a large damages award, and in which the relief sought was primarily equitable in nature. Ibid. at 343.

VI.  AWARDING REASONABLE COSTS

A prevailing party is entitled to recover reasonable costs as part of an LAD victory. Rendine, supra at 318-19 and 345; Dunn v. State Dept. of Human Services, 312 N.J. Super. 321, 334 (App. Div. 1998); Murray v. Newark Housing Authority, 311 N.J. Super. 163, 180 (Law Div. 1998). Even before Rendine, it was fairly clear that reasonable costs are to be awarded a prevailing party under the LAD.  See e.g.; Robb v. Ridgewood Bd. of Educ., 269 N.J. Super. 394, 400 (Ch. Div. 1993); Bung’s Bar & Grille, Inc. v. Florence Tp., 206 N.J. Super. 432, 478-486 (Law Div. 1985) (deposition and expert witness expenses allowed).

Copyright © 2006 Wong Fleming, P.C.