Pham v. City of Seattle

• Decision Date: 20 December 2004
• Docket Number: No. 52356-2-I.,52356-2-I.
• Citation: 103 P.3d 827,124 Wn. App. 716,124 Wash. App. 716
• Parties: Chuong Van PHAM, an individual, and Heliodoro Lara, an individual, Appellants, v. The CITY OF SEATTLE, Seattle City Light, Respondent.
• Court: Washington Court of Appeals

103 P.3d 827

124 Wn. App. 716

124 Wash. App. 716

Chuong Van PHAM, an individual, and Heliodoro Lara, an individual, Appellants, v. The CITY OF SEATTLE, Seattle City Light, Respondent.

No. 52356-2-I.

Court of Appeals of Washington, Division 1.

December 20, 2004.

John Patrick Sheridan, Randy Perry Baker, Seattle, for Appellants.

Frederick E. Wollett, Seattle City Attorneys Office, Seattle, for Respondent.

BECKER, J.

This appeal concerns the attorney fees awarded against Seattle City Light in an employment discrimination lawsuit, and an award of supplemental damages for the increased tax liability. We hold that the weakness of a plaintiff's case is not an appropriate basis for denying a request for an attorney fees multiplier otherwise justified by the risk involved. We also hold the supplemental damages a successful plaintiff may obtain to cover the adverse tax consequences of a lump sum award may include the consequences attributable to an award for emotional distress.

Chuong Van Pham and Heliodoro Lara sued Seattle City Light in 1997. Five years of litigation, including a detour to federal court and two appeals, whittled their lawsuit down to a claim of disparate treatment on the basis of race and national origin. Plaintiffs tried this claim to a jury for three weeks and obtained a verdict for over $550,000.¹ The award was for front and back pay, and for non-economic damages of $120,000.

ATTORNEY FEE MULTIPLIER

The verdict entitled plaintiffs to an award of reasonable attorneys' fees under the Washington Law Against Discrimination, RCW 49.60.030(2).

Trial courts must independently determine what are reasonable attorneys' fees, beginning first by calculating a lodestar figure. The lodestar method is grounded in the market value of the lawyer's services, and is determined by multiplying the hours reasonably expended in the litigation by each attorney's reasonable hourly rate of compensation. Steele v. Lundgren, 96 Wash.App. 773, 780, 982 P.2d 619 (1999).

Plaintiffs calculated a lodestar of $347,588.27.² The trial court found the hourly rates and the overall time claimed to be generally reasonable.³ The court made specific modifications resulting in a deduction of some $50,000, to reach a final lodestar amount of $297,532.77 for fees.⁴

In cases where the attorney's compensation is contingent on success, the court may consider the necessity of adjusting the lodestar figure to account for the risk factor. Bowers v. Transamerica Title Ins. Co., 100 Wash.2d 581, 598-99, 675 P.2d 193 (1983). This calls for an assessment of what the likelihood of success was at the outset of litigation. Bowers, 100 Wash.2d at 598-99,675 P.2d 193. The contingency adjustment is designed solely to compensate for the possibility that the litigation would be unsuccessful and that no fee would be obtained. It should not be granted in a case where the hourly rate underlying the lodestar figure already comprehends an allowance for the contingent nature of counsel's work. The burden of justifying any deviation from the lodestar rests on the party proposing the deviation. Bowers, 100 Wash.2d at 598,675 P.2d 193.

In this case, plaintiffs requested a contingency adjustment. Attorney John Sheridan declared that the difficulties of proof were apparent to him as soon as he met plaintiffs Pham and Lara. "Their case was a difficult one in that each ... knew that he had been discriminated against but was unable to provide details of the discrimination — only a strong belief that each was treated unfairly owing to his race or national origin."⁵ Sheridan explained how he overcame this problem by pursuing a high-risk litigation strategy of proving the case through cross-examination and the testimony of adverse witnesses.⁶ "I chose to call nine adverse witnesses before calling my first friendly witness, because my clients were unable to explain their claims and because the evidence of discrimination was in the actions or inaction of management."⁷

The court, tracking the factors mentioned in Bowers, found that counsel worked on a contingent fee agreement and that the lodestar hourly rate was consistent with ordinary market rates. The court agreed that the litigation was a "high risk case."⁸ The court nevertheless denied the request for a multiplier. The court concluded that the lodestar amount was "just compensation" without a multiplier because the risk, by counsel's own admission, derived from the difficulty of proof.⁹ The court found that much of the risk "was a consequence of the plaintiffs' own difficulty in articulating the nature of the claims of discrimination against them," as well as "the paucity of compelling relevant evidence of discrimination".¹⁰ Pham and Lara assign error to the court's decision not to grant a contingency adjustment.

A trial court's award of fees will not be reversed absent an abuse of discretion. Steele, 96 Wash.App. at 780, 982 P.2d 619. City Light defends the ruling by arguing that the issues in the case were neither legally novel nor technically difficult. But the adjustment was requested on the basis of risk, not on the basis of quality of representation, so City Light's arguments are not particularly relevant. Washington case law supports granting a contingency adjustment to the lodestar as long as the circumstances meet the tests set forth in Bowers. The legislative goal in enacting the fee shifting statute was to enable vigorous enforcement of modern civil rights litigation, and to make it financially feasible for individuals to litigate civil rights violations. Hume v. American Disposal Co., 124 Wash.2d 656, 675, 880 P.2d 988 (1994). An attorney who takes such a case on a contingent fee basis assumes a substantial risk that a fee will never materialize. "The experience of the marketplace indicates that lawyers generally will not provide legal representation on a contingent basis unless they receive a premium for taking that risk." Bowers, 100 Wash.2d at 598, 675 P.2d 193 (quoting Samuel Berger, Court Awarded Attorneys' Fees: What is "Reasonable"?, 126 U. Pa. L.Rev. 281, 324-25 (1977)).

The law against discrimination is not intended to protect only the articulate. The plaintiffs' inability to "articulate" their claims is an indicator of the risk the attorney assumed in taking their case. And the "paucity" of evidence known to the plaintiffs at the outset of the case is a common feature of disparate treatment litigation. Direct proof of intentional discrimination is typically difficult to come by. Riordan v. Kempiners, 831 F.2d 690, 697-98 (7th Cir.1987). In determining attorney fees, a trial court abuses its discretion when it takes irrelevant factors into account. See Perry v. Costco Wholesale, Inc., 123 Wash.App. 783, 98 P.3d 1264 (2004)(court abused discretion by declining to consider a multiplier solely because the resulting award of attorney fees would be "disproportionate" to the damage award); Martinez v. City of Tacoma, 81 Wash.App. 228, 241, 914 P.2d 86 (1996) (court abused discretion by placing undue emphasis on contingent fee agreement when determining reasonable attorney fees under RCW 49.60.030(2)); Boeing Co. v. Sierracin Corp., 108 Wash.2d 38, 65, 738 P.2d 665 (1987) (court abused discretion by reducing fee award on the basis of the novelty of the claim). We conclude the court here abused its discretion by denying an otherwise justified multiplier solely on the basis of an irrelevant factor — the inability of the plaintiffs to supply their attorney with compelling evidence at the outset of the case. The award is reversed and remanded for a contingency adjustment.

Plaintiffs requested a multiplier of 2.0. They seek a ruling from this court endorsing that number. That decision, however, is not one that should originate in an appellate court. Fee decisions are entrusted to the discretion of the trial court. Steele, 96 Wash.App. at 780, 982 P.2d 619. A reviewing court may remand an award of attorney fees for reconsideration when the trial court has applied erroneous standards. Blair v. Washington State University, 108 Wash.2d 558, 570, 740 P.2d 1379 (1987). We do so here. See Perry, 123 Wash.App. at ___, 98 P.3d at 1277.

REDUCTION OF HOURS

The trial court disallowed certain hours, with the effect of reducing the lodestar by some $50,000. The plaintiffs challenge these deductions.

The statute provides that a successful plaintiff may recover, among other things, "reasonable" attorneys' fees:

Any person deeming himself or herself injured by any act in violation of this chapter shall have a civil action in a court of competent jurisdiction to enjoin further violations, or to recover the actual damages sustained by the person, or both, together with the cost of suit including reasonable attorneys' fees or any other appropriate remedy authorized by this chapter or the United States Civil Rights Act of 1964 as amended, or the Federal Fair Housing Amendments Act of 1988 (42 U.S.C. Sec. 3601 et seq.).

RCW 49.60.030(2).

The court must limit the lodestar amount to hours reasonably expended and therefore must eliminate hours "spent on unsuccessful claims, duplicated effort, or otherwise unproductive time." Bowers, 100 Wash.2d at 597, 675 P.2d 193.

The specific tasks for which the court denied compensation were among numerous items criticized by City Light as unnecessary and unproductive. The deductions included 47 hours for preparing an unsuccessful cross motion for summary judgment in federal court; 5 hours for time spent on an amended complaint that was never filed; and 3.3 hours for preparing a motion on the merits in this court. The court reasoned that this time "was not reasonably related to, nor did it cumulatively result in plaintiffs' favorable resolution".¹¹ The court also made various deductions for time expended post-verdict that the court found was "not devoted to issues of relevance that were tried in this litigation."¹² These deductions included 4.3 hours spent on settlement...