One of the reasons lawyers have a bad reputation with lay people is because of the fees they charge, especially in highly contested litigation matters. Plaintiffs sometimes feel that they should not have to pay lawyers to prosecute their (arguably) clear cut claims, while defendants sometimes feel that they should not have to pay lawyers to defend against (arguably) frivolous claims. Regardless of whether you represent plaintiffs or defendants, most lawyers believe that their fees should be reasonably proportionate to the value of the claims being prosecuted or defended. However, that is not always the case in employment litigation, where federal and state statutes often provide for the recovery of attorneys’ fees and where small claims are often extensively litigated.
The United States District Court for Ninth Circuit, in Muniz v. United Parcel Service, No. 11-17282 (December 5, 2013), recently upheld a fee award of approximately $650,000 based on a jury award of $27,280. The Court sent the case back to the District Court to evaluate whether further fees were appropriate for paralegal work. The Muniz case was a California state law discrimination case that was removed to federal court based on diversity of citizenship. The jury heard three claims based on gender discrimination, and ultimately awarded the Plaintiff approximately $17,000 for past earnings and medical expenses and approximately $10,000 for non-economic loss. Plaintiff’s lawyers asked for approximately $2 million in fees including a 1.5 lodestar multiplier, which was reduced by the District Court to approximately $700,000.
The Ninth Circuit deferred to the District Court’s calculations and discretion, and sent the case back to the District Court to review only the fees sought for paralegal work. The Court noted that the parties could not determine the hours spent exclusively on unsuccessful claims, and that the relief was not insignificant. While the Ninth Circuit acknowledged the “disparity” between the fees awarded and the jury verdict, it deferred to the District Court’s determination.
While this case is likely an outlier, it does show that sometimes courts will award significant attorneys’ fees in relatively small cases. Employers should remember, when defending these smaller claims, that whether the award is damages or attorneys’ fees, it still comes out the employer’s pocket.