Vega v. Chi. Park Dist.

• Decision Date: 01 September 2021
• Docket Number: No. 20-3492,20-3492
• Citation: 12 F.4th 696
• Parties: Lydia E. VEGA, Plaintiff-Appellee, v. CHICAGO PARK DISTRICT, Defendant-Appellant.
• Court: U.S. Court of Appeals — Seventh Circuit

12 F.4th 696

Lydia E. VEGA, Plaintiff-Appellee,

v.CHICAGO PARK DISTRICT, Defendant-Appellant.

No. 20-3492

United States Court of Appeals, Seventh Circuit.

Argued May 27, 2021

Decided September 1, 2021

Catherine Simmons-Gill, Attorney, Office of Catherine Simmons-Gill, LLC, Chicago, IL, J. Bryan Wood, Attorney, Wood Law Office, LLC, Chicago, IL, for Plaintiff-Appellee.

Marianne C. Holzhall, Attorney, Annette M. McGarry, Attorney, McGarry & McGarry LLC, Chicago, IL, for Defendant-Appellant.

Before Kanne, Scudder, and Kirsch, Circuit Judges.

Kirsch, Circuit Judge.

Title VII of the Civil Rights Act of 1964 is one of several federal statutes that allows a prevailing party to shift its attorneys’ fees to its adversary. After years of litigation, a federal jury sided with Lydia Vega on her national origin discrimination claim against the Chicago Park District. We affirmed that result on appeal. The parties then began discussing Vega's attorneys’ fees request. But, just as in the merits litigation, the parties could not resolve their differences. Vega ultimately submitted two fee petitions to the district court—covering two distinct time periods—that the court granted. The district court also granted Vega's request for a tax-component award to offset her income tax liability on the backpay award from her successful Title VII claim. The Park District now appeals, taking aim at both the reasonableness of the attorneys’ fee awards and the amount of the tax-component award. For the reasons discussed below, we affirm.

I

In 2013, Lydia Vega, a Hispanic woman, brought 12 claims against the Chicago Park District all related to its investigation and termination of her employment for allegedly falsifying her timesheets. After extended pretrial motions practice, the district court allowed Vega's national origin discrimination and retaliation claims under 42 U.S.C. § 1983 and Title VII to proceed to trial.

The jury returned a verdict for Vega on the discrimination claims, but not the retaliation claims, and awarded $750,000 in damages. The Park District moved for remittitur and for judgment as a matter of law on the discrimination claims; the district judge granted the former, reducing the award to Title VII's statutory maximum of $300,000, and partially granted the latter, entering judgment for the Park District on Vega's § 1983 discrimination claim. After the district court held an equitable damages hearing, it ordered the Park District to reinstate Vega in her position, pay her backpay, provide her with the cash value of lost benefits, pay prejudgment interest, and pay a tax-component award (that is, an award granted to make a plaintiff whole by easing the tax burden from a lump-sum award).

The Park District appealed every decision it lost at trial, and Vega cross-appealed the district court's ruling on her § 1983 discrimination claim. We affirmed all the district court's rulings except for the tax-component award, which we held was not explained sufficiently for meaningful appellate review. The facts are set forth fully in our previous opinion. See Vega v. Chicago Park Dist. , 954 F.3d 996, 1002–03 (7th Cir. 2020).

Not part of that first appeal was the issue of attorneys’ fees. On March 28, 2019, Vega submitted her first fee petition totaling $1,073,901.25. With her motion Vega included a 200-page document listing the date on which the work occurred, the billing attorney, a brief description of the work performed, the hours expended, and the total cost of the work. Vega redacted portions of the entries that she maintained were privileged or revealed litigation strategy. Vega's counsel, Catherine Simmons-Gill,¹ submitted sample contingent-fee agreements from 2018 and 2019, an hourly fee agreement, two agreements from her work as an expert witness, and three declarations from Chicago employment lawyers to support her current hourly rate of $425 for general tasks and $450 for in-court work. And she included declarations from three employment law practitioners attesting that the time she spent on this case, considering all circumstances, was reasonable.

The Park District objected to all but $41,784.88 of Vega's fee petition. It also insisted that the court should apply Simmons-Gill's hourly rate at the time the litigation began of $300 per hour. The district court, in an order dated July 20, 2020,² granted Vega's first fee petition in the amount of $1,006,592. The court noted that the fees were "a massive amount for a single-plaintiff employment discrimination case" but laid some of the blame on the Park District for taking "a scorched-earth litigation approach" that "played a role in inflating the time [Vega's] counsel spent on the case." After noting that Vega voluntarily eliminated billing entries that exclusively concerned her unsuccessful claims, the district court held that Vega's claims "were all bound up together in the same essential course of events consisting of the investigation of [Vega's] timesheets and her ultimate termination." Nonetheless, the district court reviewed Vega's fee petition line by line (although under no obligation to do so). The court then disallowed line entries it found to be "plainly deficient" and reduced the total fee amount by 5% across the board.

The district court also held that using Simmons-Gill's current billing rates was reasonable based on the three contingency representation agreements, affidavits from employment lawyers, an unexecuted hourly fee agreement, and Simmons-Gill's expert witness agreements. The district court rejected the Park District's request to apply Vega's historical billable rates, reasoning that the Park District did not satisfy its burden under Pickett v. Sheridan Health Care Ctr. , 664 F.3d 632 (7th Cir. 2011), "to provide a good reason why a lower rate is essential" in this case, "particularly given that the delay in resolving this case can hardly be blamed on [Vega] or her counsel." Noting that we have approved fee awards based on both current and historical billing rates, the court reasoned that the "current-rate method has the virtue of simplicity" and was "more appropriate in a long-pending, multi-year case such as this one."

Vega filed a second fee petition totaling $254,635.69 for Simmons-Gill's work following the first petition. The Park District objected to every entry except for $10,160. The district court disallowed Simmons-Gill's fees for litigating a motion for clarification, for the cross-appeal of Vega's § 1983 claim, and for hours her legal team spent conferring amongst themselves, ultimately awarding $218,221.69 in supplemental fees.

In addition to attorneys’ fees, the district court also granted Vega a tax-component award of $49,224.30. The court based this award on redacted tax records Vega provided from 2013 to 2019, showing no actual tax liability for each year from 2013 to 2017 and $2,800 in tax liability for 2018; her testimony that, had she remained employed with the Park District from 2012 to 2017, she would not have paid any federal income tax (based on her zero tax liability while employed with the Park District from 2010 to 2012); her testimony that she would have paid $2,800 in federal income tax in 2018 if employed with the Park District; and a calculation of the award, following the methodology described in Washington v. Office of the State Appellate Defender , No. 12 C 8533, 2016 WL 3058377 (N.D. Ill. May 31, 2016). When employing the Washington methodology, the district court calculated Vega's total income for the current tax year by adding together the backpay award and the compensatory damages award. It used this total to calculate Vega's effective tax rate. The court then applied that effective tax rate to the backpay award (but not to the compensatory damages) to arrive at the tax-component award. In doing so, the court rejected the Park District's argument that the compensatory damages award should not be used to calculate Vega's effective tax rate.

II

The Park District appeals the district court's attorneys’ fees and tax-component awards. We address each in turn.

A

Section 2000e-5(k) of Title 42 permits a district court, in its discretion, to award reasonable attorneys’ fees to the prevailing party in a Title VII action. Pickett , 664 F.3d at 639. We review a district court's determination of attorneys’ fees under a highly deferential abuse of discretion standard. Paz v. Portfolio Recovery Assocs., LLC , 924 F.3d 949, 954 (7th Cir. 2019). That level of deference follows from the nature of attorneys’ fees litigation. Specifically, we have observed that: "(1) [the district court] 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." Farfaras v. Citizens Bank & Tr. of Chicago , 433 F.3d 558, 569 (7th Cir. 2006) (internal citations and alteration omitted); see Fox v. Vice , 563 U.S. 826, 838, 131 S.Ct. 2205, 180 L.Ed.2d 45 (2011). In practice, then, we find an abuse of discretion only "where no reasonable person could take the view espoused by the district court." Cooney v. Casady , 735 F.3d 514, 518 (7th Cir. 2013) (quotation omitted). To the extent the appeal challenges the district court's application of the "correct legal framework", we review de novo. Nichols v. Ill. Dep't of Transp. , 4 F.4th 437, 441 (7th Cir. 2021).

The Park District's opening salvo takes broad aim at the district court's approach to the burden of proving reasonable fees under Hensley v. Eckerhart , 461 U.S. 424, 103 S.Ct. 1933, 76 L.Ed.2d 40 (1983). Neither party disputes that, under Hensley , Vega "bears the burden of establishing entitlement to an award and documenting the appropriate hours expended and hourly rates." Id. at 437, 103 S.Ct. 1933....