Court May Not Reduce Statutory Fee Award Simply Because Attorney Is Keeping Both Statutory And Contingent Fee
PICKETT v. SHERIDAN HEALTH CARE CENTER (December 15, 2011)
Danielle Pickett’s retaliation claim against her former employer, Sheridan Health Care Center, was tried to a jury. The jury awarded her $15,000 in compensatory damages and $50,000 in punitive damages. The Seventh Circuit affirmed (opinion and intheiropinion). Pickett had agreed to pay her attorney a $7,500 flat fee and a 1/3 contingent fee. She also agreed to assign to him any statutory fee. Her attorney sought statutory fees of approximately $130,000. Judge Pallmeyer (N.D. Ill.) rejected the attorney's claimed $592/hour market rate. Relying on the CPI and the Laffey Matrix (neither of which had been mentioned or relied on by the parties) and the fact that the attorney was entitled to the flat fee and the contingent fee on top of the statutory fee, she set a market rate of $400. Based on that rate, she awarded $70,000 in fees. Although she originally awarded almost $10,000 to the law firm that prepared the fee petition, she later reversed herself and denied those fees on the grounds that Pickett's lawyer had not be prepaid them. Plaintiff appeals.
In their opinion, Seventh Circuit Judges Flaum, Kanne, and Wood vacated and remanded with respect to the principal fee award and reinstated the fees to the firm that prepared the fee petition. Under Title VII, the prevailing party can recover attorney's fees. Fees are generally calculated by multiplying the time reasonably incurred by a reasonable rate. When the attorney seeking fees has no set hourly rate because he typically works on a contingent basis, courts should determine the rate based upon what similarly experienced attorneys charge. Here, the Court concluded that the district court was influenced by the fact that Pickett's attorney was receiving the flat, contingent, and statutory fees. It was error for her to do so. The Supreme Court has adopted the lodestar approach (hours times rate) notwithstanding its shortcomings and has recognized that lawyers can receive both contractual and statutory fees. The district court is not allowed to reduce the statutory fee recovery simply because the client also agreed to a contingent fee (and, for that matter, a flat fee). Since the Court was not sure how much the contingent fee agreement contributed to the hourly rate reduction, it remanded for further consideration. The Court did agree that the evidence supporting the almost $600 an hour rate was lacking. However, the district court erred in disregarding the rates offered in affidavits of other practicing attorneys on the ground that they did not perform contingent work -- and erred when it reduced the award because of a lack of evidence of prior fee awards in contested cases. With respect to the district court's use of the consumer price index and the Laffey Matrix, the Court did not consider the use of either to be a problem. However, the district court should have given the parties an opportunity to address the use of those matters. Ultimately, the Court emphasized that it was not rejecting the $400 rate approved by the district court. It was just unsure how the court reached that number. Finally, the Court reinstated the fee award to the firm that prepared the fee petition. The only reason the district court gave for reversing its prior award was that the firm had not been prepaid. There is no such requirement. Particularly since the district court approved the award in the first instance, it does not appear that the court had any issue with the reasonableness of the fee.
Michael Rigney practices in the law offices of GVC Ltd. in Chicago. In this blog, he reports on select