Pickett v. Sheridan Health Care Ctr.

• Decision Date: 15 December 2011
• Docket Number: No. 11–2146.,11–2146.
• Citation: 664 F.3d 632,114 Fair Empl.Prac.Cas. (BNA) 76
• Parties: Danielle PICKETT, Plaintiff–Appellant, v. SHERIDAN HEALTH CARE CENTER, Defendant–Appellee.
• Court: U.S. Court of Appeals — Seventh Circuit

114 Fair Empl.Prac.Cas. (BNA) 76

664 F.3d 632

Danielle PICKETT, Plaintiff–Appellant,

v.SHERIDAN HEALTH CARE CENTER, Defendant–Appellee.

No. 11–2146.

United States Court of Appeals, Seventh Circuit.

Argued Oct. 27, 2011.Decided Dec. 15, 2011.

Ernest T. Rossiello (argued), Attorney, Ernest T. Rossiello & Associates, P.C., Chicago, IL, for Plaintiff–Appellant.

Gary A. Weintraub (argued), Attorney, Northfield, IL, for Defendant–Appellee.

Before FLAUM, KANNE, and WOOD, Circuit Judges.

FLAUM, Circuit Judge.

Ernest T. Rossiello & Associates, P.C. successfully represented plaintiff Danielle Pickett in a Title VII retaliation suit against her employer, defendant Sheridan Health Care Center (“Sheridan”). The jury awarded $65,000 in damages to Pickett, and her attorneys then sought to recover attorneys' fees in the amount of $131,665.88. The district court granted plaintiff's fee request in part and denied it in part, resulting in a fee award to Rossiello of $70,000.

Although we appreciate the district court's desire to limit the substantial fees that Rossiello stands to recover from this case, we conclude that the district court looked to certain impermissible considerations in calculating the fee award. Most significantly, the district court erred to the extent that it relied on the existence of the contingent fee agreement to reduce the statutory fee award. Further, the court should have provided plaintiff with an opportunity to respond before applying the Consumer Price Index (“CPI”) and the Laffey Matrix, and the court should have provided a clear explanation as to how it arrived at the hourly rate of $400. Finally, the district court erred in reversing its award of fees to outside counsel. We therefore vacate the award of attorneys' fees and remand for further proceedings.

I. Background

The present dispute over attorneys' fees stems from litigation brought under Title VII of the Civil Rights Act of 1964. Pickett claimed that she was fired from her job as a housekeeper for complaining to management about being sexually harassed by residents of the Sheridan Health Care Center, a nursing home. The district court granted Sheridan's motion for summary judgment on the sexual harassment claim but permitted the retaliation claim to go to trial. After a two-day trial, the jury returned a verdict for plaintiff in the amount of $65,000, consisting of $15,000 in compensatory damages and $50,000 in punitive damages. In addition, the district court awarded equitable relief, including back pay of $1,357.42. We affirmed these judgments. Pickett v. Sheridan Health Care Ctr., 610 F.3d 434 (7th Cir.2010). The parties then attempted but were unable to settle the issue of attorneys' fees.

Plaintiff's contract with her attorneys requires her to pay a 33.33% contingent fee and a $7,500 flat fee, in addition to assigning her statutory right to fees. The contract states that no portion of the contingent fee will be credited towards the statutory fee and that any statutory award is in addition to the contingent fee. Plaintiff sought a statutory award of $131,665.88 in attorneys' fees and $1,271.27 in costs. Accompanying the fee petition was an affidavit from Rossiello, affidavits from three experienced employment lawyers in Chicago, evidence of Rossiello's past fee awards, time and billing records for this case, and time records from Davis v. Electrical Insurance Trustees, No. 06C5913, a two-day Title VII case decided around the same time. Plaintiff also filed three motions requesting an evidentiary hearing on the fee petition, but none was held.

On March 29, 2011, the district court issued an opinion that granted in part and denied in part plaintiff's request for fees and costs. The court eliminated 20 hours due to Rossiello's failure to remove hours spent on the losing sexual harassment claim. The court further reduced the award by 2.17 hours of associate time because Rossiello should not have been supervising while suspended from the practice of law. The district court then reduced the fee award due to duplicative work on the fee petition: even though Rossiello had retained outside counsel, Abrahamson, Vorachek & Levinson (“Abrahamson”), to prepare the fee petition, Rossiello also spent 17.16 hours on this task. The court awarded Rossiello only 10 of those hours but approved all 13.75 of Abrahamson's hours.

Moreover, the court determined that Rossiello had not established his claimed hourly rate of $592.50 to be his market rate. The district court instead used the CPI and the Laffey Matrix (a measure used by some district courts to determine hourly rates), even though neither methodology had been presented by the parties. The district court then noted “most significantly” that Rossiello was entitled to receive a contingent fee and a flat fee, in addition to the statutory fee. The court stated that “[i]n light of this agreement, the evidence that Mr. Rossiello cites in support of his very substantial hourly fee is less persuasive” and concluded that “an hourly rate of $400 will amply compensate” him.

The district court ordered the parties to submit an agreed calculation of the amounts owed in accordance with its opinion. The parties arrived at a reduced fee award of $70,000 (175 hours at $400 per hour) for Rossiello and $9,268.79 in fees and costs for Abrahamson. The district court then entered its final award two days later, awarding $70,000 in fees to plaintiff for Rossiello's work. Unexpectedly, the court denied the $9,268.79 award to Abrahamson, reversing its previous position on the ground that Rossiello had failed to establish that he had prepaid Abrahamson's fees.

Plaintiff now appeals certain aspects of the district court's fee reduction. Specifically, plaintiff argues that the district court improperly reduced Rossiello's hourly rate based on the contingent fee agreement and that the court improperly rejected the evidence submitted by Rossiello in support of his claimed hourly rate. Plaintiff also argues that the district court should not have applied the CPI adjustment or the Laffey Matrix without prior notice. Plaintiff further contends that the court failed to explain how it arrived at an hourly rate of $400 and that it abused its discretion in refusing to conduct an evidentiary hearing regarding attorneys' fees. Finally, plaintiff argues that the district court erred in denying Abrahamson's fees on the ground that they had not been prepaid.

II. Discussion

A. Standard of Review

We review the award of attorneys' fees for abuse of discretion. Anderson v. AB Painting & Sandblasting Inc., 578 F.3d 542, 544 (7th Cir.2009). This is a “highly deferential abuse of discretion standard.” Estate of Borst v. O'Brien, 979 F.2d 511, 514 (7th Cir.1992). We accord this significance deference to the district court because: “(1) it possesses ‘superior understanding of the litigation and [there exists a] desirability of avoiding frequent appellate review of what essentially are factual matters'; (2) the need for uniformity in attorneys' fees awards is not great enough to warrant appellate review of minutia; and (3) the desirability of avoiding ‘a second major litigation’ strictly over attorneys' fees is high.” Spellan v. Bd. of Educ. for Dist. 111, 59 F.3d 642, 645 (7th Cir.1995) (citation omitted) (quoting Hensley v. Eckerhart, 461 U.S. 424, 437, 103 S.Ct. 1933, 76 L.Ed.2d 40 (1983)). But even this “ ‘wide latitude’ is not unlimited latitude, and the district court still bears the responsibility of justifying its conclusions.” Sottoriva v. Claps, 617 F.3d 971, 975 (7th Cir.2010); see also Perdue v. Kenny A., ––– U.S. ––––, 130 S.Ct. 1662, 1676, 176 L.Ed.2d 494 (2010).

We review the district court's “legal analysis and methodology” de novo, see Anderson, 578 F.3d at 544, because “the justifications for the generally deferential standard of review are absent” when the district court denies a fee award based on a legal principle. Jaffee v. Redmond, 142 F.3d 409, 412 (7th Cir.1998).

B. Reasonable Hourly Rate

In Title VII actions, the prevailing party may recover reasonable attorneys' fees pursuant to 42 U.S.C. § 2000e–5(k).¹ To determine a reasonable fee, the district court uses the lodestar method, multiplying the “number of hours reasonably expended on the litigation ... by a reasonable hourly rate.” Hensley, 461 U.S. at 433, 103 S.Ct. 1933. The lodestar approach forms the “centerpiece” of attorneys' fee determinations, and it applies even in cases where the attorney represents the prevailing party pursuant to a contingent fee agreement. Blanchard v. Bergeron, 489 U.S. 87, 94, 109 S.Ct. 939, 103 L.Ed.2d 67 (1989). There is a strong presumption that the lodestar calculation yields a reasonable attorneys' fee award. See Perdue, 130 S.Ct. at 1673; Eddleman v. Switchcraft, Inc., 927 F.2d 316, 318 (7th Cir.1991).

We have defined a reasonable hourly rate as one that is “derived from the market rate for the services rendered.” Denius v. Dunlap, 330 F.3d 919, 930 (7th Cir.2003). We presume that an attorney's actual billing rate for similar litigation is appropriate to use as the market rate. Id. The fee applicant bears the burden of “produc[ing] satisfactory evidence—in addition to the attorney's own affidavits—that the requested rates are in line with those prevailing in the community.” Blum v. Stenson, 465 U.S. 886, 895 n. 11, 104 S.Ct. 1541, 79 L.Ed.2d 891 (1984). If the fee applicant satisfies this burden, the burden shifts to the other party to offer evidence that sets forth “a good reason why a lower rate is essential.” People Who Care v. Rockford Bd. of Educ., 90 F.3d 1307, 1313 (7th Cir.1996) (internal quotation marks omitted) (quoting Gusman v. Unisys Corp., 986 F.2d 1146, 1151 (7th Cir.1993)).

Recognizing the difficulty of determining the hourly rate of an attorney who uses contingent fee agreements, we have advised district courts to rely on the “next best evidence” of an attorney's market rate, namely “evidence of rates...