Coutin v. Young & Rubicam Puerto Rico, Inc.

Decision Date30 July 1997
Docket NumberNo. 97-1128,97-1128
Parties74 Fair Empl.Prac.Cas. (BNA) 1463, 72 Empl. Prac. Dec. P 45,260 Denise COUTIN, et al., Plaintiffs, Appellants, v. YOUNG & RUBICAM PUERTO RICO, INC., Defendant, Appellee. . Heard
CourtU.S. Court of Appeals — First Circuit

Jorge Miguel Suro Ballester, San Juan, PR, for appellants.

Etienne Totti Del Valle, with whom Totti & Rodriguez Diaz, Hato Rey, PR, was on brief, for appellee.

Before SELYA, Circuit Judge, GIBSON, * Senior Circuit Judge, and LYNCH, Circuit Judge.

SELYA, Circuit Judge.

Plaintiff-appellant Denise Coutin, 1 flush with victory after winning an employment discrimination suit, encountered disappointment when the district court awarded her only a fraction of the attorneys' fees to which she believed herself entitled under the Fees Act, 42 U.S.C. § 1988 (1994). Coutin appeals. Because the district court employed a flawed methodology and relied on impermissible criteria, we vacate its order and remand for further proceedings.

I. BACKGROUND

On December 30, 1993, the appellant sued her former employer, defendant-appellee Young & Rubicam of Puerto Rico, Inc. (Y & R), an advertising agency, for over $1,500,000 in compensatory and punitive damages. Her complaint advanced one substantive federal claim: that Y & R had violated Title VII of the Civil Rights Act of 1964, 42 U.S.C. §§ 2000e to 2000e-17 (1994), including the Pregnancy Discrimination Act, 42 U.S.C. § 2000e(k) (1994), by (1) assigning Coutin (who was then pregnant) to tasks that were detrimental to her physical and emotional health, (2) requiring her to work under unsafe conditions, (3) condoning (or, at least, neglecting to curb) her coworkers' disparaging comments about her gravidity, and (4) constructively discharging her. The complaint also included several claims under local law, the elements of which were subsumed, without exception, under the broader federal claim.

Y & R denied Coutin's allegations and defended the suit with considerable vigor. Along the way, the parties attempted to reach an accord, but they came no closer than a demand of $150,000 as against an offer of $15,000. At trial, the appellant (who had secured and retained other employment) offered no evidence of lost income, and that aspect of her original claim was pretermitted. The case went to the jury, which found that Y & R had intentionally discriminated against, and constructively discharged, the appellant, thus violating both federal and Puerto Rico law. The jury awarded the appellant and her spouse a total of $44,000 in compensatory damages, plus an additional $1,538 in severance pay under Law 80, P.R. Laws Ann. tit. 29, § 185a (1985). The jury rejected the appellant's prayer for punitive damages.

Y & R, which had moved unsuccessfully for judgment as a matter of law on several occasions during the trial, renewed that motion and asked alternatively for a new trial. See Fed.R.Civ.P. 50, 59. The district court refused relief. In turn, the appellant petitioned under 42 U.S.C. § 1988 for an award of $52,793.75 in counsel fees and related expenses. The fee application contained a sworn statement delineating her lawyer's two decades of experience in personal injury, labor, and discrimination cases, as well as extensive, contemporaneous billing records that detailed the lawyer's work over four calendar years. At the bottom line, the reckoning reflected out-of-court time (250.25 hours) billed at $175 per hour and in-court time (45 hours) billed at $200 per hour.

Despite this meticulous proffer, the judge eschewed any discussion of either the hours spent or the billing rates assigned and instead awarded the appellant a mere $5,000 in fees. The judge purported to base his decision entirely on the "plaintiffs' limited success on their claims, the plaintiffs' willingness to go to trial despite the defendant's earnest efforts to settle the case for a reasonable sum, and the equities involved." 2 This appeal ensued.

II. STANDARD OF REVIEW

We review fee awards deferentially, according substantial respect to the trial court's informed discretion. See Brewster v. Dukakis, 3 F.3d 488, 492 (1st Cir.1993). We will disturb such an award only for mistake of law or abuse of discretion. See United States v. Metropolitan Dist. Comm'n, 847 F.2d 12, 14 (1st Cir.1988). In this regard, an abuse of discretion occurs "when a material factor deserving significant weight is ignored, when an improper factor is relied upon, or when all proper and no improper factors are assessed, but the court makes a serious mistake in weighing them." Foster v. Mydas Assocs., Inc., 943 F.2d 139, 143 (1st Cir.1991) (internal quotation marks and citation omitted).

Although our analytical posture is respectful, we nonetheless must engage the district court's decision critically. To facilitate this perlustration, we require the lower court to explain its actions. See id. at 141. The explanation need not be painstaking, and, sometimes, it may even appear by implication, but at a bare minimum, the order awarding fees, read against the backdrop of the record as a whole, must expose the district court's thought process and show the method and manner underlying its decisional calculus. See Blum v. Stenson, 465 U.S. 886, 898, 104 S.Ct. 1541, 1548-49, 79 L.Ed.2d 891 (1984); Hensley v. Eckerhart, 461 U.S. 424, 437, 103 S.Ct. 1933, 1941, 76 L.Ed.2d 40 (1983).

This principle is especially important when the fee award departs substantially from the contours shaped by the application. "As a general rule, a fee-awarding court that makes a substantial reduction in either documented time or authenticated rates should offer reasonably explicit findings, for the court, in such circumstances, 'has a burden to spell out the whys and wherefores.' " Brewster, 3 F.3d at 493 (quoting Metropolitan Dist. Comm'n, 847 F.2d at 18). An appellate court deprived of meaningful insight into the trial court's thinking frequently will be unable to conduct an adequate review of a significantly adjusted fee award, and thus will be compelled to remand for further findings. See, e.g., Riley v. City of Jackson, 99 F.3d 757, 760 (5th Cir.1996); Freeman v. Franzen, 695 F.2d 485, 494 (7th Cir.1982).

III. METHODOLOGY

The lodestar method is the strongly preferred method by which district courts should determine what fees to award prevailing parties in actions that fall within the ambit of section 1988. See Lipsett v. Blanco, 975 F.2d 934, 937 (1st Cir.1992). This approach contemplates judicial ascertainment of "the number of hours reasonably expended on the litigation multiplied by a reasonable hourly rate" as the starting point in constructing a fee award. Hensley, 461 U.S. at 433, 103 S.Ct. at 1939. While the lodestar method is a tool, not a straitjacket--as we have acknowledged, some deviation from an orthodox application of the method is permissible in highly unusual situations, see Metropolitan Dist. Comm'n, 847 F.2d at 15-16--a fee-awarding court shuns this tried-and-true approach at its peril. See Segal v. Gilbert Color Sys., Inc., 746 F.2d 78, 87 (1st Cir.1984). As we have said, the lodestar method is a tool, but it is not merely a tool. The method is also a device which enables courts to pay homage to the fundamental reason that Congress passed the Fees Act: its resolve that certain types of wrongs, such as discrimination on account of sex, should not be countenanced, and that private suits aimed at redeeming such abuses should be encouraged. See City of Riverside v. Rivera, 477 U.S. 561, 574-75, 106 S.Ct. 2686, 2694-95, 91 L.Ed.2d 466 (1986) (plurality opinion).

To say that a trial court mulling a fee request ordinarily must fashion a lodestar is not to say that the court is in thrall to an attorney's time records. The court can segregate time spent on certain unsuccessful claims, see, e.g., Hensley, 461 U.S. at 435, 103 S.Ct. at 1940, eliminate excessive or unproductive hours, see, e.g., Lipsett, 975 F.2d at 937, and assign more realistic rates to time spent, see, e.g., Brewster, 3 F.3d at 492. In these and other ways, the trial court, though adhering to the time-and-rate-based method of fee calculation, may fashion a lodestar which differs substantially from the fee requested by the prevailing party. Moreover, the trial court retains the authority to adjust the lodestar after initially computing it--but it must do so in accordance with accepted principles. See Hensley, 461 U.S. at 429-31, 103 S.Ct. at 1937-38 (citing the legislative history of the Fees Act and observing that it is appropriate to adjust fees in accordance with the twelve factors set forth in Johnson v. Georgia Highway Express, Inc., 488 F.2d 714, 717-19 (5th Cir.1974)). 3

IV. ANALYSIS

In this instance, Coutin submitted the documentation needed to permit the district court to follow the conventional approach, but the court scarcely mentioned that proffer and, in all events, did not engage in any lodestar analysis whatever. While such a departure from preferred practice will not necessarily be fatal, spurning all consideration of a lodestar places a substantial burden upon the district court to account for its actions. See Berg v. Gackenbach, 966 F.2d 731, 732 (2d Cir.1992); Metropolitan Dist. Comm'n, 847 F.2d at 12, 15.

Here, the district court did not cite any reason for abjuring the lodestar method. Still, the court did make an effort to explain its decisionmaking process, indicating that it had premised its decision on three factors: the appellant's limited success, the parties' abortive efforts to settle the case, and the equities of the situation. But the court's reliance on the first of these factors is at best insufficiently explained, and its reliance on the other two factors is plainly wrong. Moreover, none of these factors justifies the court's failure to compute (and then adjust, if necessary) a lodestar.

A. Limited Success.

The district court's conclusion that the appellant enjoyed...

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