Hamlin v. Hampton Lumber Mills, Inc.

• Decision Date: 01 April 2009
• Docket Number: 040302235.,A130213.
• Citation: 227 Or. App. 165,205 P.3d 70
• Parties: Ken HAMLIN, Plaintiff-Respondent, v. HAMPTON LUMBER MILLS, INC., an Oregon corporation, dba Willamina Lumber Company, Defendant-Appellant.
• Court: Oregon Court of Appeals

205 P.3d 70

227 Or. App. 165

Ken HAMLIN, Plaintiff-Respondent, v. HAMPTON LUMBER MILLS, INC., an Oregon corporation, dba Willamina Lumber Company, Defendant-Appellant.

040302235.

A130213.

Court of Appeals of Oregon.

On respondent's petition for attorneys fees and costs September 30, 2008.

Appellant's statement of costs and disbursements September 30, 2008.

Respondent's opposition to appellant's statement of costs and disbursements October 14, 2008.

Appellant's response to respondent's petition for attorney fees and costs October 14, 2008.

Respondent's reply on motion for attorneys fees and costs October 24, 2008.

Respondent's supplemental petition for attorney fees October 24, 2008.

Appellant's response to respondent's objection to costs October 27, 2008.

Decided April 1, 2009.

Craig A. Crispin, Portland, and Crispin Employment Lawyers for petition.

Edwin A. Harnden, Brenda K. Baumgart, and Barran Liebman LLP, Portland, for response.

Before HASELTON, Presiding Judge, and ARMSTRONG, Judge, and ROSENBLUM, Judge.

ARMSTRONG, J.

In Hamlin v. Hampton Lumber Mills, Inc., 222 Or.App. 230, 193 P.3d 46 (2008), we designated defendant as the prevailing party on appeal and allowed it costs and disbursements. Notwithstanding that designation, plaintiff petitioned for attorney fees and costs, which defendant has opposed. Defendant also submitted a statement of costs and disbursements. For the reasons set forth below, we conclude that we erred in designating defendant as the prevailing party. Accordingly, we designate plaintiff as the prevailing party, award him attorney fees and costs, and deny defendant's statement of costs and disbursements.

Plaintiff initiated employment discrimination claims, ORS 659A.040-659A.043, against defendant, seeking compensatory and punitive damages. A jury awarded plaintiff $6,000 in economic damages, no noneconomic damages, and $175,000 in punitive damages. Defendant appealed and challenged only the punitive damage award, arguing that (1) plaintiff did not present evidence sufficient to support the award, and (2) even if a punitive damage award was appropriate, the amount awarded by the jury was excessive. We determined that the evidence was sufficient to support an award of punitive damages. Hamlin, 222 Or.App. at 237-38, 193 P.3d 46. However, we also concluded that the award exceeded due process limits and required that it be reduced to approximately $24,000. Id. at 247-50, 193 P.3d 46. We designated defendant as the prevailing party on appeal. See ORAP 13.05(3). Accordingly, defendant submitted a statement of costs and disbursements. Plaintiff, meanwhile, petitioned for attorney fees and costs, arguing that he was entitled to fees and costs pursuant to ORS 659A.885(1).

ORS 659A.885(1) provides that, in employment discrimination actions such as the one plaintiff successfully brought here, "the court may allow the prevailing party costs and reasonable attorney fees at trial and on appeal." Although that language is permissive, Oregon courts have construed it as mandatory and highly favorable to plaintiffs, holding that prevailing plaintiffs are entitled to recover their attorney fees. Chase v. Vernam, 199 Or.App. 129, 138-39, 110 P.3d 128 (2005); see also Turnbow v. K.E. Enterprises, Inc., 155 Or.App. 59, 68, 962 P.2d 764 (1998) (holding same under former equivalent statute); Dobie v. Liberty Homes, 53 Or.App. 366, 373-74, 632 P.2d 449 (1981) (same). Along those same lines, prevailing defendants generally cannot recover attorney fees unless they can show that the plaintiff brought a claim in bad faith or asserted a frivolous, unfounded, or objectively unreasonable claim. Chase, 199 Or.App. at 139, 110 P.3d 128; Turnbow, 155 Or.App. at 68, 962 P.2d 764. In so holding, the courts have identified the statute's underlying legislative policy: promoting vigorous enforcement of employment discrimination statutes and encouraging employees with reasonable claims to assert them. See, e.g., Turnbow, 155 Or.App. at 68, 962 P.2d 764 (summarizing rationale as described in Dobie, 53 Or.App. at 373-74, 632 P.2d 449).

ORS 20.077 governs our determination of the prevailing party "[i]n any action or suit in which one or more claims are asserted for which an award of attorney fees is either authorized or required." Subsection (2) states:

"For the purposes of making an award of attorney fees on a claim, the prevailing party is the party who receives a favorable judgment * * * on the claim."

Further, subsection (3) provides:

"Notwithstanding subsection (2) of this section, upon appeal of a judgment in an action or suit in which one or more claims are asserted for which the prevailing party may receive an award of attorney fees, the appellate court in its discretion may designate as the prevailing party a party who obtains a substantial modification of the judgment."

Hence, in a case such as this, where attorney fees are authorized by statute, the default prevailing party is the one who receives a favorable judgment on the claim; however, at our discretion, we may designate as prevailing the "party who obtains a substantial modification of the judgment." As applied here, for plaintiff to recover his fees and costs, we would need to determine that he received "a favorable judgment * * * on the claim"; in light of ORS 659A.885(1), he would then be entitled to fees and costs on appeal. However, defendant asserts that this case presents appropriate circumstances for us to exercise our discretion and designate it as the prevailing party for obtaining "a substantial modification of the judgment," as we did. The upshot of that scenario is that, given the limits in ORS 659A.885(1) on a prevailing defendant's ability to recover fees, neither party would recover its costs or fees on appeal.

As a preliminary matter, for purposes of determining the prevailing party, it is proper for us to narrow the scope of the "claim" on appeal to the parties' positions on appeal. Cf. McCarthy v. Oregon Freeze Dry, Inc., 334 Or. 77, 86, 46 P.3d 721 (2002) (holding that it is appropriate for this court to review the plaintiff's position on appeal—not the factual merits of the underlying claim for discrimination—for purposes of determining whether the prevailing defendant should be awarded fees). Here, defendant sought on appeal (1) complete relief from the punitive damage award and, alternatively, (2) a reduction in the punitive damage award to only one or two times the economic damage award.

Thus remains the question of properly identifying the "prevailing party" on appeal in a situation in which a defendant loses on its primary argument to eliminate punitive damages, but succeeds, in part, on its alternate argument to reduce those damages. The parties here appear to agree that plaintiff is the prevailing party under ORS 20.077(2) as the party who received a favorable judgment on the claim. We agree: plaintiff succeeded in the underlying employment discrimination claim and succeeded in defending his award of some punitive damages, even though we ultimately reduced the award. Hence, the question reduces to two issues: (1) whether the reduction in the punitive damage award constitutes a "substantial modification" of the judgment and, (2) if so, whether it is proper for us to exercise our discretion under ORS 20.077(3) to designate defendant as the prevailing party. We need not...