Reiter v. Mta New York City Transit Auth.

Citation457 F.3d 224
Decision Date20 July 2006
Docket NumberDocket No. 04-5420-CV.
PartiesJohn REITER, Plaintiff-Appellant, v. MTA NEW YORK CITY TRANSIT AUTHORITY, Defendant-Appellee, Metropolitan Transportation Authority of the State of New York and Mysore L. Nagaraja, Senior Vice President and Chief Engineer, Defendants.
CourtUnited States Courts of Appeals. United States Court of Appeals (2nd Circuit)

Gregory G. Smith, Gregory G. Smith & Associates, New York, NY, for Appellant John Reiter.

Steven M. Stimell, Bryan Cave LLP, New York, N.Y. (Jay P. Warren, on the brief), for Appellee MTA New York City Transit Authority.

Before SACK, KATZMANN, and B.D. PARKER, Circuit Judges.

B.D. PARKER, Circuit Judge.

Plaintiff-Appellant John Reiter appeals from a judgment of the United States District Court for the Southern District of New York (Gorenstein, M.J.) limiting attorneys' fees under Rule 68.1 The award followed a trial on a claim of retaliation under Title VII of the Civil Rights Act of 1964, 42 U.S.C. § 2000e et seq. Reiter sued Defendant-Appellee MTA New York City Transit Authority ("NYCTA") for monetary and equitable relief, principally seeking compensatory damages plus restoration to the job from which he had been demoted. After the litigation started, the NYCTA served an Offer of Judgment for $20,001 (the "Offer") under Rule 68. The Offer, however, made no mention of equitable relief. The case proceeded to trial and the jury awarded Reiter $140,000. The district court then awarded Reiter substantial equitable relief, the most prominent feature of which was his restoration to his job. Reiter v. Metro. Transp. Auth., 2003 WL 22271223, at *14 (S.D.N.Y. Sept.30, 2003). But the district court also granted the NYCTA's motion for a new trial conditioned on Reiter's agreement to accept a remittitur to $10,000. Id. at * 16.

Reiter agreed to accept that amount and the parties agreed to permit a magistrate judge to determine attorneys' fees in the light of Reiter's success and NYCTA's Offer. This task required the magistrate judge to compare the monetary relief with the equitable relief Reiter secured. After that comparison, the magistrate judge concluded that the equitable relief did not have "any significant value" and that the final monetary award was less than the Offer. The court then awarded Reiter only pre-Offer attorneys' fees. Since this conclusion was clearly erroneous, we reverse. We also remand so the court can consider additional factors related to the calculation of attorneys' fees.

Background

The NYCTA provides public transportation in New York and is comprised of several departments, including the Capital Program Management ("CPM") department, which is responsible for major architectural and engineering projects. In 1999, Reiter was employed by NYCTA as Deputy Vice President of Engineering Services ("DVP Engineering"), making him the head of the Engineering Services Department. That Department, which was part of the CPM, was responsible for major NYCTA engineering projects. As DVP Engineering Services, Reiter was one of thirteen senior-level executives who reported directly to the Senior Vice President and Chief Engineer of CPM, and the position required Reiter to be a licensed engineer or architect. The Department had an annual budget in excess of one billion dollars.

As the head of Engineering Services, Reiter earned around $119,000 per year. Eight senior executives reported directly to him and he exercised supervisory responsibility over 900 employees. As a perquisite of the position, Reiter had a large, prominent corner office on the seventh floor (near his staff) with a front view of Manhattan and a confidential secretary who was among the most experienced secretaries in the organization. The NYCTA's salary and compensation structures are based on the "Hay Points" system, which ranks the importance and difficulty of various positions. Hay Points are essentially an objective measure of a position's value in terms of responsibility, complexity and salary. In his position, Reiter was given 1560 Hay Points—a relatively large amount—to reflect his responsibilities and salary.

In January 2000, Reiter received a negative annual performance review and was rated as a marginal employee. Reiter disagreed with the evaluation and filed several complaints through the internal appeals process and with the Equal Employment Opportunity Commission ("EEOC"), alleging that he received the negative evaluation as retaliation because his wife, who also worked for the NYCTA, had filed separate EEOC charges alleging discrimination and harassment.

In June 2001, Reiter was demoted. He was transferred to the position of Deputy Vice President of Technical Services ("DVP Technical"). The Technical Services Department was responsible for working with the customers of CPM on the acceptance of capital projects. Its role was to ensure that capital projects built by Engineering Services could be used by customers and were capable of being maintained by Engineering Services over time. Reiter contended that the transfer was both retaliatory and a substantial demotion.

He pointed out that as DVP Engineering, he had supervisory responsibility for 900 employees and eight executives directly reported to him. As DVP Technical, he had no staff and no direct reports. While Engineering Services was the largest department within CPM, with roughly 60% of its workforce, Technical Services was one of the smallest departments, with approximately ten employees. Moreover, Reiter testified that in his new position he had no specifically assigned responsibilities or functions and did not have enough projects to fill his work day. While Engineering Services oversaw the development and implementation of large capital projects, Technical Services essentially ensured that the projects completed by Engineering Services were used and maintained. Moreover, in his new position, Reiter reported to the Vice-President of Technical Services, not to senior management of CPM as he done as DVP Engineering. The new position did not require that Reiter be a licensed architect or an engineer. In addition, Reiter's demotion resulted in the loss of a number of substantial perquisites. He lost his confidential secretary, was moved from his large corner office on the seventh floor with a front view of Broadway to a small, less desirable one on the second floor with a view of an alley, and lost all of his Hay Points.

In April 2001, Reiter sued the NYCTA. His complaint alleged that he was subject to retaliation—in the form of verbal reprimands, negative performance reviews, and demotion—for filing his initial EEOC charge in March 2000. By way of relief, Reiter sought compensatory damages as well as equitable relief. Specifically, he alleged that he was entitled to return to his prior position, along with all of the benefits of that position.

In July 2001, defendants made an Offer of Judgment under Rule 68. In it they proposed allowing judgment to be taken against them in the amount of $20,001, "together with costs and reasonable attorneys fees accrued in this litigation to date." The Rule 68 Offer ignored the non-monetary relief Reiter had sought. Reiter did not accept the Offer and the case proceeded to trial with the jury deciding liability and compensatory damages and the court addressing equitable relief.

Following a six-day trial, the jury returned a verdict in favor of Reiter, finding that NYCTA unlawfully retaliated against him for filing an EEOC complaint and awarded him $140,000 in compensatory damages for emotional suffering. After the verdict, the NYCTA moved to vacate the award on the ground that Reiter had failed to present sufficient evidence of emotional distress. See Fed. R.Civ.P. 50. In the alternative, the NYCTA moved for a new trial or for a remittitur reducing the award to $5,000-$10,000. See Fed. R.Civ.P. 59(a) & (e).

While opposing these motions, Reiter continued to pursue equitable relief, seeking, among other things, reinstatement to his former position with the restoration of various perquisites of his job and an injunction against future retaliation. Reiter also sought back pay, front pay, and pre-and post-judgment interest.

Ultimately, the court denied the defendant's motion for judgment as a matter of law but agreed to a new trial unless Reiter accepted $10,000. Reiter accepted the remittitur and ultimately received that amount. Judge Koeltl granted Reiter equitable relief. He ordered Reiter reinstated to his former position of DVP Engineering, with an office comparable to the one he had prior to the demotion, the return of a confidential secretary and the restoration of lost Hay Points. The parties then consented to have Reiter's request for attorneys' fees resolved by a magistrate judge.

Before the magistrate judge, Reiter sought substantial attorneys' fees at a rate of $350 per hour for two attorneys and $125 per hour for one attorney and court costs. NYCTA, on the other hand, contended that its Offer cut off attorneys' fees and costs incurred after the Offer.

Ultimately, the magistrate judge agreed with the NYCTA and denied Reiter fees and costs incurred after the Rule 68 Offer. Reiter v. Metro. Transp. Auth., 224 F.R.D. 157, 159 (S.D.N.Y.2004). He noted that the monetary award was less than the amount in the Offer and then proceeded to completely discount the equitable relief that Judge Koeltl had awarded on the ground that none "of the various injunctive elements of the final judgment [had] any significant value." Id. at 169. Specifically, the court concluded that Reiter's reinstatement to his former position, responsibilities, and status, was "of limited value," and "the restoration of Hay Points had no practical or economic significance." Id. at 168. The court also concluded that the value of a confidential secretary and desirable office space "was minimal, if anything." Id. at 168-69. Based on plaintiff's failure to accept NYCTA's "more favorable"...

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