Szczepanski v. Newcomb Medical Center, Inc.

• Decision Date: 24 July 1995
• Citation: 661 A.2d 1232,141 N.J. 346
• Parties: , 71 Fair Empl.Prac.Cas. (BNA) 1219 Meryl SZCZEPANSKI, Plaintiff-Respondent, v. NEWCOMB MEDICAL CENTER, INC., a Non-Profit Corporation of the State of New Jersey, Favorite Nurses, Inc., a New Jersey Corporation, Defendants-Appellants, and Elmer Mattioli, M.D., Thomas Raynor, Elizabeth Cubbage and Janell McNeill, Defendants.
• Court: New Jersey Supreme Court

Page 346

141 N.J. 346

661 A.2d 1232, 71 Fair Empl.Prac.Cas. (BNA) 1219

Meryl SZCZEPANSKI, Plaintiff-Respondent, v. NEWCOMB MEDICAL CENTER, INC., a Non-Profit Corporation of the State of New Jersey, Favorite Nurses, Inc., a New Jersey Corporation, Defendants-Appellants and Elmer Mattioli, M.D., Thomas Raynor, Elizabeth Cubbage and Janell McNeill, Defendants.

Supreme Court of New Jersey.

Argued March 13, 1995.

Decided July 24, 1995.

John C. Petrella, Livingston, for appellants Newcomb Medical Center, Inc. (Genova, Burns, Trimboli & Vernoia, attorneys).

Thomas B. Lewis, Lawrenceville, for appellant Favorite Nurses, Inc. (Stark & Stark, attorneys).

Arlene Gilbert Groch, Somers Point, for respondent.

The opinion of the Court was delivered by

STEIN, J.

As in Rendine v. Pantzer, 141 N.J. 292, 661 A.2d 1202 (1995), also decided today, this appeal concerns the standards to be applied by trial courts in awarding a reasonable counsel fee under state fee-shifting statutes. Specifically, we consider the extent to which a plaintiff's contingent fee agreement with her attorney limits or affects the award of a reasonable attorney's fee. Collaterally, we address whether a reasonable attorney's fee awarded under a state fee-shifting statute must necessarily be proportionate to the damages recovered in the litigation. Finally, we consider whether the submission of contemporaneous time records is a prerequisite to the award of fees under state fee-shifting statutes.

I

Because plaintiff's factual presentation is uncontested, we rely on the facts set forth in plaintiff's appellate brief. Plaintiff, Meryl Szczepanski, was a registered nurse employed by Favorite Nurses, Inc. (Favorite), which assigned her to work at the intensive-care unit of Newcomb Hospital, Inc. (Newcomb). In August 1987, defendant Dr. Elmer Mattioli approached plaintiff from behind, reached between her legs, and grabbed her anal-genital area. After plaintiff displayed outrage, Mattioli then bent over, pulled up his jacket, shook his buttocks at her, and stated, "Come on baby, do it."

Plaintiff immediately reported the incident to Newcomb. Newcomb told plaintiff that it no longer needed her nursing services and told Favorite not to send her to Newcomb because she had filed a complaint against Mattioli, a doctor of long standing at Newcomb. Initially, Favorite refused to reassign her to Newcomb or to any other hospital until she had decided "what she was going to do about her complaint against [Mattioli]." Thereafter, Favorite did not reassign plaintiff to any other hospital, falsely telling her that no work was available. Moreover, in an attempt to substantiate that plaintiff had been dismissed because of substandard performance, Newcomb falsified patient records, accused her of incompetence, and claimed that it had fired her moments before she had reported the sexual-misconduct incident. Notably, Newcomb neither investigated the incident nor disciplined Mattioli.

In August 1988, plaintiff filed suit against Mattioli for sexual assault and battery and intentional infliction of emotional distress, seeking compensatory and punitive damages and counsel fees. In February 1989, she filed an amended complaint, adding as defendants Favorite, Newcomb, Newcomb's Chief Executive Officer Thomas Raynor, and two Newcomb supervisors, Elizabeth Cubbage and Janell McNeill. Plaintiff charged Newcomb, Favorite, Cubbage, and McNeil with retaliatory discharge, contrary to the Law Against Discrimination (LAD), N.J.S.A. 10:5-1 to -42, specifically N.J.S.A. 10:5-12d. She further charged Newcomb, Raynor, Cubbage, and McNeil with defamation and tortious interference with her employment rights. Plaintiff sought compensatory and punitive damages and counsel fees from each defendant.

In March 1989, the trial court dismissed plaintiff's defamation claim against Newcomb and Raynor, and plaintiff's claim for tortious interference with her employment rights against Raynor, which removed Raynor from the case. In August 1992, the trial court also dismissed plaintiff's claims against Favorite for punitive damages.

After a month-long jury trial, the jury returned verdicts against (1) Mattioli for assault and battery and intentional infliction of emotional distress, (2) Newcomb for tortious interference with plaintiff's employment rights, and (3) Newcomb and Favorite for retaliatory discharge, pursuant to N.J.S.A. 10:5-12d. The jury awarded plaintiff $30,000 for compensatory damages and $10,000 for punitive damages against Mattioli, $10,000 for compensatory damages and $50,000 for punitive damages against Newcomb, and $10,000 for compensatory damages against Favorite. The trial court's final judgment reflected a total recovery of $115,441, including prejudgment interest.

Following trial, plaintiff's counsel made an application against Newcomb and Favorite for counsel fees pursuant to N.J.S.A. 10:5-27.1. In her certification, plaintiff's counsel asserted that she had spent 676.8 hours on the litigation and had incurred costs of $3,906.02. Counsel's certification concerning hours expended noted that most of her recorded time sheets were no longer available "[a]s a result of a personnel problem," and stated that the time spent during the period for which time sheets were missing was conservatively "reconstructed" by a review of her files, a process that in her view benefitted defendants because the file did not reflect all of the services rendered.

Pursuant to her regular hourly rate of $200, she calculated her lodestar fee amount (the product of the number of hours reasonably expended and counsel's reasonable hourly rate, see Rendine, supra, 141 N.J. at 335, 661 A.2d at 1226) to be $135,360. Counsel then requested a one-hundred-percent enhancement of that amount to reflect the contingent nature of her compensation agreement, or a total counsel-fee award of $270,720 in addition to costs. In June 1993, plaintiff's counsel submitted a supplemental certification reflecting work expended since the first certification, which increased the total for fees and costs to $278,740.

The trial court found that the contingent-fee agreement between plaintiff and her counsel, pursuant to which counsel was to receive one-third of any recovery up to $250,000, served as an upper limit on the fee that the court could award:

In this matter the fee of reasonableness is set by contingency. That's the key point. Built into contingency fees are the awards [that] flow from contingency. That is, the high award for perhaps a small amount of services and the reverse of that is true in every contingency case in which the acceptance of a tough case requiring long and tedious hours in court with a modest award from the jury when translated into dollars come[s] down to, in this instance, $50 an hour.

As a result, the court entered an order requiring Newcomb and Favorite to pay plaintiff "a reasonable counsel fee equal to the contingency fee earned by [p]laintiff's counsel on the respective claims against [them]," and apportioning "[e]xpenses in the amount of $3,906.02 * * * among [d]efendants on a pro rata basis in relation to their share of the overall verdict." The court subtracted from the judgment the portion reflecting plaintiff's recovery against Mattioli, $40,000, and required Newcomb to pay one-third of the $60,000 award against it, $20,000, and Favorite to pay one-third of the $10,000 award against it, $3,333. In addition, the court required Newcomb to pay expenses in the amount of $2,128.78, and Favorite to pay expenses in the amount of $351.54.

The Appellate Division, however, reversed and "remanded for a full and fresh reconsideration of plaintiff's application fees." 276 N.J.Super. 11, 19, 647 A.2d 162 (1994). That court determined that "the existence of a contingent fee agreement does not control the fee-award outcome," id. at 17, 647 A.2d 162, reasoning that "[l]imiting the awardable fee in all cases to the amount of a contingent fee arrangement ultimately could dampen counsel's enthusiasm, independent of the nature or merits of the cause of action." Id. at 16-17, 647 A.2d 162. Relying on the Supreme Court's decision in Blanchard v. Bergeron, 489 U.S. 87, 92-94, 109 S.Ct. 939, 943-45, 103 L.Ed.2d 67, 74-76 (1989), the Appellate Division observed that " 'the contingency-fee factor is simply that, a factor' " to be considered in determining a reasonable fee award. 276 N.J.Super. at 17, 647 A.2d 162 (quoting Blanchard, supra, 489 U.S. at 93, 109 S.Ct. at 944, 103 L.Ed.2d at 75). On remand it "also invite[d] consideration of [its] recent opinions on this subject" in Rendine v. Pantzer, 276 N.J.Super. 398, 648 A.2d 223 (1994), Silva v. Autos of Amboy, Inc., 267 N.J.Super. 546, 632 A.2d 291 (1993), and Chattin v. Cape May Greene, Inc., 243 N.J.Super. 590, 581 A.2d 91 (1990) (Brody, J., dissenting), aff'd o.b., 124 N.J. 520, 591 A.2d 943 (1991). 276 N.J.Super. at 19, 647 A.2d 162.

We granted Newcomb's and Favorite's petition for certification. 139 N.J. 185, 652 A.2d 173 (1994).

II

In Rendine, supra, we set forth the procedure to be followed by trial courts in determining a reasonable counsel fee under state fee-shifting statutes, explaining that the first and most important step in the process is the determination of the "lodestar": "the number of hours reasonably expended multiplied by a reasonable hourly rate." 141 N.J. at 335, 661 A.2d at 1226. We noted a trial court's obligation to exclude from the lodestar calculation hours not reasonably expended. In that respect, we referred to the United States Supreme Court's decision in City of Riverside v. Rivera, 477 U.S. 561, 106 S.Ct. 2686, 91 L.Ed.2d 466 (1986), in which the Court's plurality opinion upheld, in a suit alleging civil-rights violations, a counsel-fee award of approximately $245,000 after a trial resulting in an award of compensatory and punitive damages of $33,350. The Court concluded in Rivera that federal fee-shifting statutes...