Shott v. Rush-Presbyterian-St. Luke's M.C.

• Decision Date: 01 August 2003
• Docket Number: No. 02-3839.,02-3839.
• Citation: 338 F.3d 736
• Parties: Susan SHOTT, Plaintiff-Appellee, v. RUSH-PRESBYTERIAN-ST. LUKE'S MEDICAL CENTER, Defendant-Appellant.
• Court: U.S. Court of Appeals — Seventh Circuit

338 F.3d 736

Susan SHOTT, Plaintiff-Appellee, v. RUSH-PRESBYTERIAN-ST. LUKE'S MEDICAL CENTER, Defendant-Appellant.

No. 02-3839.

United States Court of Appeals, Seventh Circuit.

Argued April 9, 2003.

Decided August 1, 2003.

Petition for rehearing is Denied September 4, 2003.

Cynthia H. Hyndman (argued), Robinson, Curley & Clayton, Chicago, IL, for Plaintiff-Appellee.

Michael G. Cleveland, Vedder, Price, Kaufman & Kammholz, Chicago, IL, for Defendant-Appellant.

Before FLAUM, Chief Judge, POSNER and KANNE, Circuit Judges.

KANNE, Circuit Judge.

In this appeal, Rush-Presbyterian-St. Luke's Medical Center ("Rush") challenges the amount of attorney's fees and prejudgment interest awarded to the plaintiff, Dr. Susan Shott, after she prevailed on a disability discrimination claim against Rush. The district court awarded plaintiff roughly 66% of the amount of attorney's fees she sought and awarded all the prejudgment interest she requested. Rush argues that the attorney's fees award should be reduced (i) because Shott pursued an unreasonable strategy in the first trial that led to that verdict being set aside and (ii) because Shott rejected a substantial settlement offer early in the litigation. Rush also maintains that no prejudgment interest should be awarded. We affirm in part, reverse in part, and remand for further proceedings consistent with this opinion.

I. History

Dr. Susan Shott, who holds a Ph.D. in statistics, began work at Rush in June 1982. In 1986, she was diagnosed with rheumatoid arthritis, though she did not inform Rush of her medical condition until 1994. In January 1993, Dr. Harvey Preisler, head of the Rush Cancer Institute, named Shott as the Director of the Biostatistics Unit of the Institute.

Shott alleges that troubles with Preisler began on March 23, 1994, when she informed him that she was an Orthodox Jew and advised him that she would not be able to work on Passover. Shott alleges that following her request Preisler became hostile toward her and began greatly increasing her work load by requiring her to do excessive computer work and refusing to hire an assistant for her. Further, she claimed that Preisler began scheduling meetings that conflicted with her religious observances.

On May 27, 1994, some three months after the trouble began, Shott first informed Preisler, via a letter from her physician, that she had rheumatoid arthritis. This letter did not specifically request an accommodation for arthritis, but it did note that Shott generally tries to work from 5:30 a.m. to 2:30 p.m. to avoid having to sit in rush hour traffic for an extended period of time, which aggravated her arthritis.

Between May 27 and July 22, 1994, Shott and Preisler did not discuss her disability, but they did exchange correspondence about Shott's requests not to work on Jewish holidays. Also during this period, Shott filed a charge of religious and disability discrimination against Preisler with the Chicago Commission on Human Relations.

On July 22, Shott gave Preisler a letter in which, for the first time, she informed him that because he had not hired an assistant for her, she was having to do a large amount of data entry on the computer, which greatly aggravated her arthritis. On July 27, Preisler assured Shott that he would hire an assistant, but it appears he never did so. Over the next few months, Shott and Preisler exchanged a series of hostile letters related to Shott's need for accommodation of her disability and her religious observances.

On November 14, 1994, Shott filed this lawsuit against Rush. In her Third Amended Complaint, Shott alleged: (i) disability discrimination by failure to reasonably accommodate her disability in violation of the Americans with Disabilities Act ("ADA"), 42 U.S.C. § 12101 et seq.; (ii) retaliation in violation of the ADA; (iii) religious discrimination in violation of Title VII of the Civil Right Act of 1964, 42 U.S.C. § 2000e et seq.; and (iv) retaliation in violation of Title VII.

In January 1995, at the district court's urging, the parties began settlement negotiations. In March 1995, while Shott still worked at the Cancer Institute, Rush made a settlement offer, whereby Shott would be transferred to a new position in the Department of Neurosurgery with no change in salary for the current academic year. The settlement offer did not include payment for damages, attorney's fees, or costs, and it required Shott to sign a letter that, among other things, stated that she retracted all allegations in her complaint. Shott refused the offer.

On July 11, 1995, Rush transferred Shott from her position in the Cancer Institute and placed her in the previously offered position in the Department of Neurosurgery at a pay cut of roughly 22%. After the transfer, Shott added the retaliation claims to her complaint.

The case went to trial, and the jury found for Rush on the religious-discrimination claim and on both retaliation claims. The jury, however, held for Shott on the disability-discrimination claim, awarding her $250,000 in compensatory damages and $1,000,000 in punitive damages. The district judge, however, on Rush's motion, set aside this verdict and ordered a new trial.

According to the district court's order, a new trial was warranted because the verdict on the ADA claim was against the weight of the evidence and because the plaintiff had presented her case to the jury in an unreasonable manner that likely confused the jury and prejudiced Rush. Specifically, the district court was concerned that the jury may have found Rush liable on the disability claim based on certain events that occurred before Shott ever requested an accommodation.

At the second trial, which was limited to the disability discrimination claim, the jury again returned a verdict for the plaintiff; this time awarding her only $60,000 in compensatory damages and no punitive damages.

Following the second trial, Shott filed a petition for attorney's fees under 42 U.S.C. § 12205, in the amount of $513,388.25. Rush opposed the petition on several grounds, claiming that Shott was entitled to only 25% of the amount sought. The district court found that based on the degree of success Shott achieved in the litigation the award should be reduced by 33% to $343,970.13. Shott later filed petitions for further attorney's fees incurred and for prejudgment interest, which were granted, making the final award $412,679.63 for attorney's fees, $120,801.37 for prejudgment interest, and $21,191.21 in costs; for a total of $554,672.21.

II. Analysis

The parties do not dispute that Shott is a "prevailing party" in this litigation and therefore is entitled to "a reasonable attorney's fee" under the ADA. 42 U.S.C. § 12205 (2003). We note that Rush does not challenge the district court's determination that Shott's unsuccessful claims (ADA retaliation, Title VII discrimination, and Title VII retaliation) were related to her successful claim or that, because they were related, Shott could receive at least partial attorney's fees for the work done on these unsuccessful claims. See Hensley v. Eckerhart, 461 U.S. 424, 434-35, 103 S.Ct. 1933, 76 L.Ed.2d 40 (1983) (holding that courts may award compensation for time spent pursuing unsuccessful claims that related to the successful claims).

Rush does, however, challenge the reasonableness of the fees awarded on three fronts, arguing (i) that Shott should not receive attorney's fees for the first trial because she engaged in an unreasonable trial strategy that caused the verdict to be set aside; (ii) that the attorney's fee award should be reduced based on Shott's rejection of a substantial settlement offer very early in the litigation; and (iii) that Shott should not receive prejudgment interest.

A. Award of Attorney's Fees for First Trial

We review a district court's refusal to reduce an award of attorney's fees for abuse of discretion. Jaffee v. Redmond, 142 F.3d 409, 412 (7th Cir.1998). It is true, of course, that a prevailing party under the ADA is entitled to "an award of fees for all time reasonably expended in pursuit of the ultimate result achieved." Id. at 416 (quoting Hensley, 461 U.S. at 431, 103 S.Ct. 1933). Therefore, when two trials are required to achieve the "ultimate result," a plaintiff should be compensated for both trials, so long as the time spent at both was "reasonably expended." Rush argues, however, that when a plaintiff's unreasonable arguments at the first trial force the parties to participate in a second proceeding, the plaintiff should not be allowed compensation for both proceedings.

To establish this principle, Rush relies heavily on our second decision in Jaffee v. Redmond. 142 F.3d 409, 411 (7th Cir.1998) [hereinafter Jaffee II]. The Jaffee case involved two trials and two appeals. In the appeal from the first trial, Jaffee v. Redmond, 51 F.3d 1346 (7th Cir.1995) [hereinafter Jaffee I], we held that the district court had erroneously ruled, at the plaintiff's urging, that there was no federal patient-psychotherapist privilege. Id. at 1356-58. The plaintiff appealed to the Supreme Court, which affirmed our decision and resolved a circuit split by recognizing a federal evidentiary privilege for patient-psychotherapist communications. Jaffee v. Redmond, 518 U.S. 1, 18, 116 S.Ct. 1923, 135 L.Ed.2d 337 (1996). The case was remanded for a new trial, and at the second trial, plaintiff again prevailed. See Jaffee II, 142 F.3d at 411. On plaintiff's motion for attorney's fees the district court held that given the split in authority, it was reasonable for the plaintiff to argue against the privilege in the first trial; however, the court awarded no fees for the second trial, reasoning that if the plaintiff had not argued incorrectly at the first trial there would have been no need for the second. See id. The plaintiff appealed, and in Jaffee II, we reversed the district court, noting that "[w]hile an unreasonable argument that necessitates...