Wright v. N.Y. Transit Auth.
| Decision Date | 18 August 2020 |
| Docket Number | No. 18-cv-1968 (RA),18-cv-1968 (RA) |
| Parties | SYLVIA WRIGHT, Plaintiff, v. NEW YORK TRANSIT AUTHORITY and JOHN FOLK, Defendants. |
| Court | U.S. District Court — Southern District of New York |
Plaintiff Sylvia Wright brought this employment discrimination and retaliation action against her employer, the New York City Transit Authority ("NYCTA"), alleging violations of Title VII of the Civil Rights Act of 1964, 42 U.S.C. § 2000e et seq., the New York State Human Rights Law, N.Y. Exec. Law. § 290 et seq., and the New York City Human Rights Law, N.Y. City Admin. Code § 8-101 et seq. Now before the Court is her former attorney, Michael Diederich, Jr.'s, motion for authorization of payment of a $30,000 charging lien pursuant to New York Judiciary Law § 475. For the reasons that follow, Diederich's motion is granted.
Wright initiated this action, pro se, against NYCTA on March 5, 2018, alleging that she was unlawfully groped by a male coworker. See Dkt. 2 ("Compl.") at 5. In April 2018, NYCTA charged Wright with disciplinary infractions in connection with a purported threat she subsequently made to that coworker. See Dkt. 49 ("Wright Decl.") ¶ 6. In April or May 2018, NYCTA terminated her employment. See id. ¶¶ 2, 6; Dkt. 48 ("Wright Opp.") at 2. Shortly thereafter, she and Diederich entered into a retainer agreement for representation in this action, as well as in an arbitration challenging NYCTA's disciplinary charges. See Wright Decl. ¶¶ 7, 10; Wright Opp. at 2-3; Dkt. 43-1 ("Diederich Decl.") ¶¶ D-G. After an arbitrator ruled against Wright in relation to her challenge to the disciplinary charges in May 2018, Diederich filed a state court action on Wright's behalf, claiming that the arbitrator's disciplinary decision was arbitrary. See Wright Decl. ¶¶ 11-12. Following a state court ruling in Wright's favor, Diederich sought a preliminary injunction in this Court to reinstate Wright's employment with NYCTA. See Diederich Decl. ¶ J; Dkt. 23.
Throughout these actions, Diederich and Wright negotiated various agreements regarding payment of Diederich's legal fees, which at times were billed between $200 and $400, and/or at a percentage of Wright's prospective recovery. See Dkt. 43-2 ("Retainers"); Dkt. 43-3 ("Email Correspondence"); Wright Decl. ¶¶ 8, 10, 12, 16; Diederich Decl. ¶¶ A, E-G, M. Because Wright allegedly owed Diederich nearly $18,000 in outstanding legal fees as of December 12, 2018, see Email Correspondence at 10, they agreed to a modified retainer agreement in which Diederich would receive (1) "the greater of one-third of the recovery or [his hours] expended to date in [Wright's] case at [the] ordinary hourly rate ($400)" and (2) contingent upon reinstatement of Wright's employment, 5 percent of her gross NYCTA earnings for a period of four years, id. at 10-11.
In December 2018, the Court referred Wright and NYCTA to the Southern District of New York's Alternative Dispute Resolution Program. Dkt. 17. Following mediation and a conference with the Court in January 2019, NYCTA agreed to (1) reinstate Wright and pay her at her former salary of $80,000 annually, (2) pay her $7,000 in accrued vacation pay, and (3) pay her $30,000 in additional damages. See Wright Decl. ¶ 30. Over the subsequent two months, Wright and Diederich continued to negotiate attorney's fees. See Wright Opp. at 5; Diederich Decl. ¶¶ R-T.Diederich contends that he and Wright orally agreed that the $30,000 NYCTA payment "would be paid directly" to Diederich but that he would not receive 5% of Wright's future earnings. See Diederich Decl. ¶ T. Wright, by contrast, contends that she was "unwilling to agree" to Diederich's proposal that the $30,000 NYCTA payment would go directly to him. Wright Decl. ¶ 27. In any event, the alleged oral agreement did not settle the dispute. On March 26, 2019, Diederich moved to reopen this case, requested a conference to discuss the ongoing fee dispute, and sought the Court's permission to withdraw as counsel in the event that Wright failed to cooperate with the payment of fees. See Dkt. 39.
The Court held a conference on April 12, 2019, during which Wright discharged Diederich as her attorney, entered into the settlement with NYCTA pro se, and agreed to the previously agreed upon settlement terms of reinstatement and a collective $37,000 in damages, including $7,000 in accrued vacation pay and $30,000 in other damages. See Wright Opp. at 6.
On April 17, 2019, Diederich filed a motion pursuant to N.Y. Jud. Law § 475 seeking enforcement of a charging lien in the sum of $30,000 and an order directing NYCTA to pay "any proceeds otherwise due" to Wright directly to Diederich. See Dkt. 43. In a declaration filed in support of his motion, Diederich asserts that the value of his professional time devoted to Wright's case was over $40,000 and "thus significantly exceeds the settlement payout ($30,000) created as a result of [his] professional efforts." Diederich Decl. ¶ B; see also Dkt. 43-4 ("Time and Expense Itemization") (providing that Wright owed Diederich $43,152). On May 22, 2019, Wright filed an opposition to Diederich's motion with the assistance of the New York Legal Assistance Group Legal Clinic for Pro Se Litigants in the SDNY, see Dkts. 48-49, and one week later Diederich filed his reply, see Dkts. 50-51.
On July 10, 2019, NYCTA, Wright, and Diederich agreed to a stipulation that was signed and ordered by the Court. See Dkt. 57. The stipulation provided that Diederich would waive his pending charging lien with respect to the $7,000 cash value of Wright's accrued vacation time, thus authorizing NYCTA to pay it directly to Wright. See id. Yet the matter of Diederich's attorney's fees remained unsettled.
On October 18, 2019, Diederich filed a letter informing the Court that on the previous day, he and Wright took part in an arbitration regarding their fee dispute at the Rockland County Bar Association under state court supervision. See Dkt. 58. The three-arbitrator panel concluded on October 24, 2019 that Diederich was entitled to a $54,552 award for his services. See Dkt. 59 at 3. Thereafter, Wright moved to set aside the arbitration award in state court. See Dkt. 60, Ex. 2 (Wright v. Diederich, No. 8871/19, (N.Y. Sup. Ct. Orange Cty. Feb. 5, 2020)). On February 5, 2020, the New York State Supreme Court in Orange County declined to set aside the award, holding that Wright did not meet the "'heavy burden' of proving by 'clear and convincing evidence' that impropriety by the arbitrator prejudiced [her] rights or impaired the integrity of the arbitration process . . . [in fact, she] did not present, or even describe, the written evidence she claim[ed] was not considered by the arbitration panel." Id. at 4 (quoting Verille v. Jeanette, 163 A.D.3d 830 (2nd Dept. 2018).
On May 8, 2020, Diederich notified the Court that Wright had filed for Chapter 7 personal bankruptcy. See Dkt. 61. After the bankruptcy trustee conducted a meeting of creditors, he emailed Wright that he would be not be pursuing or deeming the $30,000 settlement as an asset of Wright's bankruptcy estate, meaning that it would not be used as proceeds for creditors to claim. Id. No other person or entity has since pursued the $30,000 settlement. See id. at 1-2. On June 1, 2020, Diederich notified the Court that Wright had been discharged in bankruptcy with the $30,000settlement unclaimed. See Dkt. 62. Accordingly, there has been no claim to the settlement funds other than Diederich's charging lien. One month later, Diederich filed an additional letter reiterating that this Court is within its power to authorize payment of the charging lien and that no one other than him is claiming the $30,000 settlement funds. See Dkt. 63.
Diederich filed certificates of service attesting to service on Wright of each of his letters to the Court regarding the fee arbitration and the bankruptcy petition. See Dkts. 58-63. Wright has not filed responses to any of Diederich's letters.
"[I]t is well established that a court 'may, in its discretion, exercise ancillary jurisdiction to hear fee disputes and lien claims between litigants and their attorneys.'" Purchase Partners, LLC v. Carver Fed. Sav. Bank, No. 09 Civ. 9687 (JMF), 2014 WL 462823, at *1 (S.D.N.Y. Feb. 5, 2014) (quoting Marrero v. Christiano, 575 F. Supp. 837, 839 (S.D.N.Y. 1983)). Money charged for work performed outside of a federal case may be incorporated into a charging lien as an exercise of the district court's supplemental jurisdiction pursuant to 28 U.S.C. § 1367(a). See Sellick v. Consol. Edison Co. of N.Y., Inc., No. 15-cv-9082 (RJS), 2017 WL 1133443, at *2 n.2 (S.D.N.Y. Mar. 23, 2017). "[T]he lien created by [N.Y. Jud. Law §] 475 . . . is enforceable in federal courts in accordance with its interpretation by New York courts," Chesley v. Union Carbide Corp., 927 F.2d 60, 67 (2d Cir. 1991) (internal citations omitted), and federal courts should only decline supplemental jurisdiction in exceptional circumstances, such as those enumerated in 28 U.S.C. § 1367(c).1 See Itar-Tass Russian News Agency v. Russian Kurier, Inc.,140 F.3d 442, 448 (2d Cir. 1998). None of the circumstances enumerated in 28 U.S.C. § 1367(c) apply in the instant case. Moreover, Wright does "not dispute that this court has the authority to fix and enforce a charging lien." Wright Opp. at 6. The Court will thus exercise supplemental jurisdiction pursuant to 28 U.S.C. § 1367(a) to determine whether to authorize payment of the charging lien.
N.Y. Jud. Law § 475 provides, in pertinent part:
From the commencement of an action, special or other proceeding in any court or before any state, municipal or federal department . . . the attorney who appears for a party has a lien upon his or her client's cause of action . . . which attaches to a . . . settlement [] in his or her client's favor, and the proceeds thereof in...
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