Mcclain v. Lufkin Indus. Inc.

• Decision Date: 08 August 2011
• Docket Number: No. 10–40036.,10–40036.
• Citation: 112 Fair Empl.Prac.Cas. (BNA) 1665,94 Empl. Prac. Dec. P 44247,649 F.3d 374
• Parties: Sylvester McCLAIN, on his own behalf and on behalf of a class of similarly situated persons; Buford Thomas, on his own behalf and on behalf of a class of similarly situated persons; Patrick Ross, on his own behalf and on behalf of a class of similarly situated persons; Mary Thomas, on her own behalf and on behalf of a class of similarly situated persons; Eddie K. Mask, on his own behalf and on behalf of a class of similarly situated persons; Leroy Garner, on his own behalf and on behalf of a class of similarly situated persons; Sherry Calloway Swint, on her own behalf and on behalf of a class of similarly situated persons; Walter Butler, on his own behalf and on behalf of a class of similarly situated persons also known as “A”; Florine Thompson, on her own behalf and on behalf of a class of similarly situated persons; Clarence Owens, on his own behalf and on behalf of a class of similarly situated persons also known as “C”; Clifford R. Duirden, on his own behalf and on behalf of a class of similarly situated persons; Earl Potts, on his own behalf and on behalf of a class of similarly situated persons; Roald Mark, on his own behalf and on behalf of a class of similarly situated persons; Plaintiff Class; All Plaintiffs, Plaintiffs–Appellants Cross–Appellees,v.LUFKIN INDUSTRIES, INC., Defendant–Appellee Cross–Appellant.
• Court: U.S. Court of Appeals — Fifth Circuit

649 F.3d 374

112 Fair Empl.Prac.Cas. (BNA) 1665

94 Empl. Prac. Dec. P 44,247

Sylvester McCLAIN, on his own behalf and on behalf of a class of similarly situated persons; Buford Thomas, on his own behalf and on behalf of a class of similarly situated persons; Patrick Ross, on his own behalf and on behalf of a class of similarly situated persons; Mary Thomas, on her own behalf and on behalf of a class of similarly situated persons; Eddie K. Mask, on his own behalf and on behalf of a class of similarly situated persons; Leroy Garner, on his own behalf and on behalf of a class of similarly situated persons; Sherry Calloway Swint, on her own behalf and on behalf of a class of similarly situated persons; Walter Butler, on his own behalf and on behalf of a class of similarly situated persons also known as “A”; Florine Thompson, on her own behalf and on behalf of a class of similarly situated persons; Clarence Owens, on his own behalf and on behalf of a class of similarly situated persons also known as “C”; Clifford R. Duirden, on his own behalf and on behalf of a class of similarly situated persons; Earl Potts, on his own behalf and on behalf of a class of similarly situated persons; Roald Mark, on his own behalf and on behalf of a class of similarly situated persons; Plaintiff Class; All Plaintiffs, Plaintiffs–Appellants Cross–Appellees,

v.LUFKIN INDUSTRIES, INC., Defendant–Appellee Cross–Appellant.

No. 10–40036.

United States Court of Appeals, Fifth Circuit.

Aug. 8, 2011.

Teresa F. Demchak, Morris J. Baller, Goldstein, Demchak, Baller, Borgen & Dardarian, Oakland, CA, Timothy Borne Garrigan, Stuckey, Garrigan & Castetter Law Offices, Nacogdoches, TX, Samuel Issacharoff (argued), New York University School of Law, New York City, for Plaintiffs–Appellants Cross–Appellees.Douglas Howard Hamel (argued), Christopher Velle Bacon, Vinson & Elkins, L.L.P., Houston, TX, for Defendant–Appellee Cross–Appellant.Appeals from the United States District Court for the Eastern District of Texas.Before JONES, Chief Judge, and DENNIS and CLEMENT, Circuit Judges.EDITH H. JONES, Chief Judge:

After multiple appeals to this court¹ and extensive trial and other proceedings, plaintiffs' Title VII class action for employment discrimination against Lufkin Industries, Inc. culminated in a favorable multimillion dollar judgment and injunctive relief. Before this court—in the final possible dispute—are challenges by both parties to the district court's attorneys' fee award and Lufkin's complaint that back pay damages were erroneously authorized in an earlier appeal. We affirm as to the back pay damages but vacate and remand as to the attorney's fees. In particular, given the unrebutted evidence in the record that it was necessary for plaintiffs to retain counsel from outside the Eastern District of Texas, the district court abused its discretion in failing to use the rates counsel charged in their home district as the starting point in the lodestar calculation.

I. BACKGROUND

In early 1995, Sylvester McClain, a black employee in Lufkin's trailer division, filed a complaint with the Equal Employment Opportunity Commission (EEOC) over his manager's alleged efforts to demote him. Another Lufkin employee, Buford Thomas, filed an EEOC claim in February 1997, complaining that he was denied promotional and training opportunities on account of his race. The EEOC issued right-to-sue letters on both claims. In 1997, McClain and Thomas filed a class action under Title VII challenging many of Lufkin's employment practices under disparate treatment and disparate impact theories. The district court certified a class and narrowed the claims in ways not relevant to the issues before this court. See McClain v. Lufkin Indus., Inc., 187 F.R.D. 267 (E.D.Tex.1999).

From the start, Plaintiffs were represented by Timothy Garrigan, an attorney based in the Eastern District of Texas with extensive experience in employment law and civil rights. The court complimented his firm in the certification order:

Counsel for the Plaintiffs are known to this court as trial lawyers experienced in employment law, civil rights actions, and complex litigation. Counsel have documented their qualifications through documents submitted to the court recounting the breadth of their experience in these areas of the law. Finally, class counsel have pursued this suit and related issues with an unmistakable zeal.

Id. at 281–82. Garrigan headed a three-lawyer firm in Nacogdoches, Texas. After obtaining class certification in 2000, Garrigan found that Lufkin was unwilling to settle, and that his clients might face protracted litigation. Thus, Garrigan felt it was imperative to associate with co-counsel in order to successfully try this case. The case's ultimate trajectory, which spanned a decade and involved thousands of attorney hours, confirmed his initial impression.

Garrigan consulted with many experienced employment lawyers in Texas and found that “none of them was willing or able to commit the time and resources necessary to associate as co-counsel and prosecute this class action....” The record includes numerous affidavits from experienced Texas litigators and even the founder and past president of the Texas Employment Lawyers Association declaring, under oath, that no Texas attorneys were available to join Garrigan's team on this particular case. It is clearly established that Garrigan diligently searched for, but could not find, any lawyers in Texas who were willing and able to join him in litigating this class action.²

Significantly, Lufkin submitted nothing to refute or challenge this evidence. Lufkin submitted the declarations of five Texas lawyers regarding their hourly rates, but none of those declarants claimed that they, or anyone else they knew, would have been willing and able to get involved in this case in 2000. It is therefore uncontested that Garrigan was not able to obtain support from Texas co-counsel.

Unable to find suitable co-counsel in Texas, Garrigan turned to the firm now known as Goldstein, Demchak, Baller, Borgen & Dardarian (“Goldstein Demchak”), based in Oakland, California. Goldstein Demchak, which has a nationwide reputation as a plaintiffs' employment class action firm, agreed to associate with Garrigan and take part in this case.

Ultimately, the case went to a bench trial, and in January 2005, the district court found that Lufkin had discriminated against black employees in certain initial work assignments and in promotion decisions. The court ordered back pay, attorneys' fees, and injunctive relief. This court affirmed the disparate impact promotion claims after concluding that Thomas had properly exhausted his administrative remedies when he filed his 1997 EEOC complaint, McClain II, 519 F.3d at 264, but we reversed the judgment as to the initial assignment claims because plaintiffs had not exhausted their administrative remedies. This court directed the district court to award back pay damages for the lost promotions dating back to 1994. Id. at 281. We also vacated and remanded the trial court's injunctive order, which was too vague, and its attorneys' fee award, which was insufficiently explained. Id. at 283–84.

On remand, the new district judge, who stepped in to replace the deceased trial judge, scrupulously followed the mandate of McClain II.³ Pertinent to this appeal, he awarded $3.3 million in back pay to the class for discriminatorily lost promotions dating back to 1994. He issued a twenty-four page ruling addressing plaintiff counsel's application to receive over $7.7 million in attorneys fees. (The award exceeding $1 million for counsel's costs and expenses has not been appealed.) After sifting through voluminous billing records, the court ruled for plaintiffs' counsel on nearly all issues, and, in particular, declined to reduce their fees beyond a self-adjustment offered by counsel for having pursued unsuccessful Title VII claims. The court ordered a generous $400 hourly rate for Garrigan, the lead attorney. It refused, however, to order payment to partners at Goldstein Demchak at a $650 hourly rate, the prevailing rate in the San Francisco Bay Area. The court's discussion is concise:

2. Partners at the Goldstein Demchak Law Firm

Plaintiffs contend that the court should disregard the local rates for the Goldstein Demchak Law Firm (“Demchak Firm”) and apply a rate commensurate with attorneys from the northern California area where the Demchak Firm is located because of its unique experience dealing with employment discrimination class action cases.

When the Demchak Firm entered the case in 2000, Mr. Garrigan had already certified the case and Lufkin's appeal had been rejected. While it was still necessary to mediate the case, complete discovery, and try the case, Mr. Garrigan participated to a greater extent than any other attorney. He certified the class, was lead counsel throughout the entirety of the case, and examined 11 out of 22 witnesses at trial. The Demchak Firm possessed experience settling class action employment cases, but there is no evidence to suggest that they were experienced at trying such cases.

Plaintiffs have firmly established that in calculating the fee for Mr. Garrigan the appropriate community for rate comparison purposes are [sic] those who participate in complex litigation in the Eastern District of Texas. It would be difficult to justify assigning a higher hourly rate to second-chair attorneys, no matter how skilled in employment law. No unusual circumstances exist to suggest that those in the Eastern District who have experience with complex litigation were unavailable and could not have effectively participated. The court is aware of many attorneys in the Eastern District experienced in employment law and complex litigation. Two who would not be likely to have a conflict with Lufkin Industries are Clyde Siebman and John Werner. Absent sufficient evidence that experienced, qualified local couns...