Harman v. City & County of San Francisco

Following our remand, the trial court denied the City’s motion for nonsuit. Settlement negotiations produced a demand for $600,000 in damages from Harman; the City countered with an offer of $25,000. Trial then proceeded before a jury. The jury found in a special verdict form “that the City had ‘an official policy or custom to intentionally discriminate against [Wjhite males in promotional opportunities at the San Francisco International Airport.’ The jury then awarded Harman $15,300 as damages for economic harm and another $15,000 as damages for emotional distress. The City moved for judgment notwithstanding the verdict and for new trial relying chiefly on a claim of Monell [v. New York City Dept. of Social Services (1978) 436 U.S. 658 [ 56 L.Ed.2d 611 , 98 S.Ct. 2018 ]] error. The trial court denied the motions and entered judgment for Harman.” (Harman, supra, 136 Cal.App.4th 1279 , 1288.)

“Harman then filed two motions for attorney fees under title 42 United States Code section 1988 in the total amount of $1,095,202. He sought $713,152.75 on behalf of the Pacific Legal Foundation, which filed the original action, and $382,050.23 for trial counsel, Andrea Miller. The trial court awarded the entire sum finding that it was ‘reasonable, after due consideration of the success obtained relative to the relief sought and other circumstances of this case.’ The City filed a timely notice of appeal.” (Harman, supra, 136 Cal.App.4th 1279 , 1288.)

In our opinion in Harman, supra, 136 Cal.App.4th 1279 , 1317, we affirmed the judgment for $30,300 in compensatory damages, but vacated the award of attorney fees. We concluded “that the trial court did not properly consider the standards governing the award of attorney fees under section 1988” as articulated in Hensley v. Eckerhart (1983) 461 U.S. 424 [ 76 L.Ed.2d 40 , 103 S.Ct. 1933 ]. (Harman, supra, at p. 1316 .) We again remanded the case “to give the court an opportunity to consider the determination of a reasonable fee.” (Ibid.) We advised the trial court to “recalculate the lodestar figures applying the proper standards of reasonableness. Then, it must adjust the fee to reflect plaintiff’s limited success by pursuing the two-step analysis dictated by Hensley. First, it should exclude hours expended on claims that are unrelated to the claim of damages on which Harman succeeded at trial. Secondly, it must reduce the award to reflect the limited nature of Harman’s relief in comparison with the scope of the litigation as a whole. As instructed by Hensley, the court ‘may attempt to identify specific hours that should be

DISCUSSION

In this appeal we are confronted with the taxing problem of determining the reasonableness of an attorney fee award that far exceeds the monetary award recovered at the end of protracted and hard-fought litigation. The lodestar method that is used in section 1983 fee requests is so fraught with subjective factors that its real-life application is not easily reduced to the mathematical precision the method seems to invite. (See Arbor Hill Concerned Citizens v. County of Albany (2d Cir. 2007) 493 F.3d 110 , 117.) Application of the lodestar method in this case also comes at a time when the trial court and the parties have the benefit of hindsight of over seven years of litigation. In this era of ever increasing legal fees and costs, few would claim to have the prescient abilities necessary to predict the final outcome of this litigation that started in 1999. With these observations, we proceed with our analysis, mindful of the broad discretion that is required to be accorded to the trial court.

Appellant claims that the attorney fee award is excessive, particularly when compared to the “limited success” of respondent in the “litigation as a whole.” Although appellant challenges various aspects of the trial court’s attorney fee award, its primary argument is that the attorney fee award simply has no proper “measure of proportionality” to the recovery of compensatory damages by respondent. The City maintains that “in light of Harman’s extraordinarily limited success” in the case, “an award of $1.1 million on a recovery of $30,300 is totally out of line with the case law” cited in Harman. The City requests that we “simply reduce” the attorney fee award to $90,900, which represents an appropriate figure of “three times the amount” of recovery of damages by Harman. In the alternative, the City proposes that we undertake a reduction “to properly eliminate time billed for the unsuccessful claims,” before and after our first opinion in the case that finally eliminated all the claims other than Harman’s section 1983 action for damages, and on appeal.

As we also noted in Harman, our review of the award is severely constrained. “We review the trial court’s award of attorney fees under section 1988 for an abuse of discretion.” (Robbins v. Regents of University of California (2005) 127 Cal.App.4th 653 , 665 [ 25 Cal.Rptr.3d 851 ].) “ ‘ “[T]he appropriate test for abuse of discretion is whether the trial court exceeded the bounds of reason.” ’ [Citations.]” (Foundation for Taxpayer & Consumer Rights v. Garamendi (2005) 132 Cal.App.4th 1375 , 1388 [ 34 Cal.Rptr.3d 368 ].) “ ‘We review the entire record, attentive to the trial court’s stated reasons in denying [or granting] the fees and to whether it applied the proper standards of law in reaching its decision. . . .’ [Citation.]” (Wal-Mart Real Estate Business Trust v. City Council of San Marcos (2005) 132 Cal.App.4th 614 , 620 [ 33 Cal.Rptr.3d 817 ].) “If it did, we then determine whether the application of that standard to the facts was within the scope of its discretion under the statute.” (City of Santa Monica v. Stewart (2005) 126 Cal.App.4th 43 , 83 [ 24 Cal.Rptr.3d 72 ]; see also Punsly v. Ho (2003) 105 Cal.App.4th 102 , 113 [ 129 Cal.Rptr.2d 89 ].) We defer to the trial court’s discretion “because of its ‘superior understanding of the litigation and the desirability of avoiding frequent appellate review of what essentially are factual matters.’ [Citation.]” (Choate v. County of Orange (2000) 86 Cal.App.4th 312 , 324 [ 103 Cal.Rptr.2d 339 ].) The California Supreme Court has explained, “ ‘The “experienced trial judge is the best judge of the value of professional services rendered in his court, and while his judgment is of course subject to review, it will not be disturbed unless the appellate court is convinced that it is clearly wrong[”] ’—meaning that it abused its discretion. (Serrano v. Priest (1977) 20 Cal.3d 25 , 49 [ 141 Cal.Rptr. 315 , 569 P.2d 1303 ]; Fed-Mart Corp. v. Pell Enterprises, Inc. (1980) 111 Cal.App.3d 215 , 228 [ 168 Cal.Rptr. 525 ] [an appellate court will interfere with a determination of reasonable attorney fees ‘only where there has been a manifest abuse of discretion’].)” (PLCM Group, Inc. v. Drexler, supra, 22 Cal.4th 1084 , 1095; see also Children’s Hospital & Medical Center v. Bonta' (2002) 97 Cal.App.4th 740 , 777 [ 118 Cal.Rptr.2d 629 ].)

We first consider appellant’s contention that the palpable disparity between the damages ultimately recovered by respondent and the $1,113,905.40 award of attorney fees alone demands reversal of the judgment. The case commenced with the claims of three plaintiffs for equitable relief to end discriminatory employment practices by the City and implement race- and sex-neutral recruitment, hiring, and promotional policies, but was subsequently amended to include causes of action for damages under Proposition 209 and section 1983. Of these multiple legal and equitable claims by multiple parties, only the damages claim of Harman survived to reach trial, and after his $600,000 settlement demand only $30,300 was awarded by the jury as compensatory damages for the delay in his promotion. We thus acknowledge the obvious: the damages obtained by respondent are quite disproportionate to the award of attorney fees.

The law does not mandate, however, that attorney fees bear a percentage relationship to the ultimate recovery of damages in a civil rights case. (Harrington v. City of Napa (N.D.Cal., Dec. 12, 2005, Civ. No. C-04-0958) 2005 U.S.Dist. Lexis 32341, *17.) “There is no precise formula for determining the extent to which a party has prevailed.” (LeMaire v. Maass (9th Cir. 1993) 12 F.3d 1444 , 1461.) “[T]he Supreme Court has not adopted a rule that measures a fee award by a proportion of the damages awarded.” (System Management, Inc. v. Loiselle (D.Mass. 2001) 154 F.Supp.2d 195 , 200, citing Riverside v. Rivera (1986) 477 U.S. 561 [ 91 L.Ed.2d 466 , 106 S.Ct. 2686 ].) “Instead, the court must consider the significance of the overall relief obtained by the prevailing party in relation to the hours reasonably expended on the litigation and whether the expenditure of counsel’s time was reasonable in relation to the success achieved.” (Mann v. Quality Old Time Service, Inc., supra, 139 Cal.App.4th 328 , 344.) The “ ‘most critical factor’ ” in assessing the proper amount of attorney fees to award a prevailing party under 42 United States Code section 1988 is not strict proportionality, but rather the “ ‘degree of success obtained’ ” by the plaintiff. (Harman, supra, 136 Cal.App.4th 1279 , 1312, quoting Hensley v. Eckerhart, supra, 461 U.S. 424 , 436.)

When assessing the reasonableness of an attorney fee award under 42 United States Code section 1988, the concepts of “degree of success” and direct “proportionality” are distinguishable. We recognized in Harman that the plurality opinion in Riverside v. Rivera, supra, 477 U.S. 561 , 574, “rejected ‘the proposition that fee awards under § 1988 should necessarily be proportionate to the amount of damages a civil rights plaintiff actually recovers.’ ” (Harman, supra, 136 Cal.App.4th 1279 , 1313.) The court in

“ ‘A rule that limits attorney’s fees in civil rights cases to a proportion of the damages awarded would seriously undermine Congress’ purpose in enacting [42 United States Code section] 1988. Congress enacted [42 United States Code section] 1988 specifically because it found that the private market for legal services failed to provide many victims of civil rights violations with effective access to the judicial process. [Citation.] These victims ordinarily cannot afford to purchase legal services at the rates set by the private market. . . . Moreover, the contingent fee arrangements that make legal services available to many victims of personal injuries would often not encourage lawyers to accept civil rights cases, which frequently involve substantial expenditures of time and effort but produce only small monetary recoveries.’ [Citation.] ‘A rule of proportionality would make it difficult, if not impossible, for individuals with meritorious civil rights claims but relatively small potential damages to obtain redress from the courts.’ ” (Graciano v. Robinson Ford Sales, Inc., supra, 144 Cal.App.4th 140 , 164, quoting Riverside v. Rivera, supra, 477 U.S. 561 , 576-578.) Further, “a unifactor approach tying the number of hours accepted as reasonable” solely to the proportion of damages recovered “would be inconsistent with the statutory mandate that district courts exercise discretion by considering all factors relevant to reasonableness.” (Cunningham v. County of Los Angeles, supra, 879 F.2d 481 , 486.)

The “ ‘amount of damages a plaintiff recovers is certainly relevant to the amount of attorney’s fees to be awarded under § 1988. It is, however, only one of many factors that a court should consider in calculating an award of attorney’s fees. . . .’ [Citation.]” (Butler v. Dowd (8th Cir. 1992) 979 F.2d 661 , 676.) “There is no requirement of proportionality of fees sought to verdict though the court in its discretion may consider plaintiff’s success in determin

Nor are we persuaded to adopt the City’s mathematical proposal to cap the fee award at a figure that represents a ratio of three times the damages recovered. (Hensley v. Eckerhart, supra, 461 U.S. 424 , 435, fn. 11; Gates v. Deukmejian, supra, 987 F.2d 1392 , 1404; Gr. L.A. Coun. on Deafness v. Comm. TV of So. Cal. (9th Cir. 1987) 813 F.2d 217 , 222.) “The Supreme Court has disapproved on more than one occasion of such pretensions to mathematical precision.” (Cunningham v. County of Los Angeles, supra, 879 F.2d 481 , 485.) “ ‘[S]uch a ratio provides little aid in determining what is a reasonable fee in light of all the relevant factors.’ [Citation.]” (Id. at p. 486.) We therefore conclude that the award of attorney fees is not subject to reversal simply because it lacks definitive proportionality to the amount of damages recovered by respondent. There is “no mathematical rule requiring proportionality between compensatory damages and attorney’s fees awards, see City of Riverside v. Rivera, 477 U.S. 561 , 91 L.Ed.2d 466 , 106 S.Ct. 2686 (1986), and courts have awarded attorney’s fees where plaintiffs recovered only nominal or minimal damages. See e.g., Pollock v. Baxter Manor Nursing Home, 716 F.2d 545 , 547 (8th Cir. 1983) (upholding award of $50,000 in attorney’s fees where plaintiff recovered $1.00 nominal damages); Milwe v. Cavuoto, 653 F.2d 80 , 84 (2d Cir. 1983) (directing award of ‘reasonable’ attorney’s fees where plaintiff recovered $1.00 in nominal damages on constitutional claim and ‘substantial’ compensatory damages on pendent state law claims); Allen v. District of Columbia, 503 A.2d 1233 (D.C. App. 1986) (ordering award of ‘reasonable’ attorney’s fees where plaintiff recovered nothing on constitutional claim and $3,000 on pendent state law claim).” (Thompson v. Intern. Ass’n of Mach. & Aero. Workers (D.D.C. 1987) 664 F.Supp. 578 , 581.)

II. The Adjustments Made by the Trial Court.

We proceed to an examination of the adjustments made by the trial court to account for Harman’s limited success in the case, with primary emphasis “on the significance of the overall relief obtained by the plaintiff in relation to the hours reasonably expended on the litigation.” (Hensley v. Eckerhart, supra, 461 U.S. 424 , 435; see also Morales v. City of San Rafael, supra,

For the post-April 23, 2003 billings—that is, following the remand which limited Harman’s action to his single claim for damages—the City submits that his recovery of attorney fees should be limited to “one-twentieth of the fees he now seeks for this period.” The City’s proposed “one-twentieth” formula is based on the fact that Harman recovered ($30,300) only “one-twentieth of what he demanded” ($600,000). The City complains that Harman “incurred $344,678 in fees for a net gain of $5,300” above the “pre-trial settlement offer” of $25,000. For the fees on appeal, the City requests that we deny any fees “incurred in pursuit of the fee award,” particularly since “there never would have been an appeal (or a trial for that matter) had Harman and his attorneys taken a reasonable position at settlement.”

While percentage reductions may in some cases be appropriate, the adjustments proposed by the City are inconsistent with the very expansive Hensley standard of related and unrelated claims. As we remarked in Harman, supra, 136 Cal.App.4th 1279 , 1310-1311, under Hensley, although “ ‘there is no certain method of determining when claims are “related” or “unrelated,” ’ ” the essential inquiry is “whether the ‘different claims for relief ... are based on different facts and legal theories.’ [Citation.] If so, they qualify as unrelated claims. Conversely, related claims ‘will involve a common core of facts or will be based on related legal theories.’ [Citation.]” “ ‘Under this analysis, an unsuccessful claim will be unrelated to a successful claim when the relief sought on the unsuccessful claim is intended to remedy a course of conduct entirely distinct and separate from the course of conduct that gave rise to the injury on which the relief granted is premised.’ [Citations.]” (Harman, supra, at p. 1311 ; see also Schwarz v. Secretary of Health & Human (9th Cir. 1995) 73 F.3d 895 , 903; O’Neal v. City of Seattle (9th Cir. 1995) 66 F.3d 1064 , 1068-1069.)

Thus, rather than follow a formulaic reduction based on the number and percentage of unsuccessful claims, as the City seems to suggest, we must examine the nature and “course of conduct” upon which the claims are based, as did the trial court. (Harman, supra, 136 Cal.App.4th 1279 , 1311.) The trial court characterized the essence of the relief requested as designed “to deter illegal discrimination in promotions at the Airport,” and we do not find that characterization to be an abuse of discretion. While in Harman we stated that the successful damages claim was limited in its scope to the policy decision on approval of provisional appointments, the entire course of conduct that respondent attempted to remedy may be more broadly defined to include the City’s discriminatory employment practices and policies. And the effort to prove racially discriminatory purposes associated with his provisional appointment shared a common core of facts and legal theories with the

B. Reductions for Degree of Success.

The second step of the Hensley analysis focuses upon whether additional adjustments in the fee award must be made to account for the partial degree of success achieved. “[U]nder Hensley, a partially prevailing party is not necessarily entitled to all incurred fees even where the work on the successful and unsuccessful claims was overlapping.” (Mann v. Quality Old Time Service, Inc., supra, 139 Cal.App.4th 328 , 344.) “[T]he court makes further reductions when plaintiffs’ success on any remaining interrelated unsuccessful and successful claims was limited.” (Gates v. Deukmejian, supra, 987 F.2d 1392 , 1404.)

The City claims that even if the “time was properly eliminated for the unsuccessful claims, a fee award of $1,113,905.40 was still an abuse of discretion under the second step of Hensley.” The City again calls our attention to the profound disparity between the compensatory damages recovered and the attorney fees awarded, and refers to our observation in Harman, supra, 136 Cal.App.4th 1279 , 1314, that the cases “often display a marked restraint in approving attorney fee awards in amounts that constitute a high multiple of damages.”

Here, the trial court exercised its discretion by considering an “adjustment to the lodestar” according to the “second step of Hensley” to account for the “lack of overall success.” In evaluating the degree of success, the court followed the directions recited in Harman. In settling on a reasonable amount of fees, the court specifically expressed awareness that the award was “far greater than the amount of monetary damages awarded.” Thus, we cannot find an abuse of discretion based upon the failure of the court to understand or apply the correct legal standards to determine the amount of

The court declined to make further adjustments under the second step of Hensley for a number of stated reasons. First, the court took into account that the lodestar figure had already been significantly reduced under the first step of the analysis, and determined that additional reductions for lack of success “would amount to doubly reducing the fees.” The court also determined that the fee award was “not out of proportion to the overall success and significance of the litigation, and is commensurate to Plaintiff’s long, hard-fought struggle for vindication of his constitutional right.” Harman’s “primary purpose” in pursuing the litigation, the court stated, was to obtain his promotion and prevent the City from continuing to implement the challenged discriminatory employment practices, which the court found occurred “because of Plaintiff’s lawsuit.” In addition to a “special verdict” from the jury that found the City’s policy “intentionally discriminated] against White males in promotional opportunities at the San Francisco International Airport,” the court recognized the additional “benefit to the public via the published opinion establishing that employers may not shield themselves against liability for illegal discriminatory conduct by its employee when it has, in fact, a policy or practice of delegating final decisionmaking authority in the realm of the conduct at issue to that employee.”

Finally, in response to our admonition in Harman, supra, 136 Cal.App.4th 1279 , 1316, to consider “the settlement offer in evaluating the benefit to plaintiff of the attorney’s services at trial,” the court noted that respondent succeeded on the only count taken to the jury, and “the jury awarded 78% of the highest amount of actual damages requested.” For that reason the court declined to reduce the award for Harman’s refusal to accept the City’s settlement offer and his minimal additional recovery after trial.

We agree with appellant that the trial court somewhat overvalued the “public benefit” conferred by the present action (Harman, supra, 136 Cal.App.4th 1279 , 1316), but we cannot fault the trial court’s ultimate reasoning. The courts have often expressed the principle that a slight monetary recovery will not control assessment of the appropriate amount of attorney fees where a constitutional right is vindicated or a significant public benefit conferred. (See Riverside v. Rivera, supra, 477 U.S. 561 , 574; Duckworth v. Whisenant (11th Cir. 1996) 97 F.3d 1393 , 1399, appen.;

We do not find that the award at issue here reaches the level of an abuse of discretion. The trial court handled this case for several years, and upon remand engaged in a rigorous and thorough procedure to review the attorney billings. We are not in a position to second-guess the court’s factual findings, nor are we persuaded that the attorney fees were awarded arbitrarily with no reason or justification. We therefore conclude that after the adjustments made according to the first step of Hensley, the trial court did not err by failing to further reduce the award to account for respondent’s lack of success.

In conclusion, we borrow from Justice Powell’s observations in his concurring opinion in Riverside: “On its face, the fee award seems unreasonable. But [we] find no basis for this Court to reject the findings made and approved by the [court] below.” (Riverside v. Rivera, supra, 477 U.S. 561 , 581 (conc. opn. of Powell, J.).) Although we may have exercised our discretion differently, we “cannot conclude that the detailed findings made by the [trial court] . . . were clearly erroneous, or that the [trial court] abused its discretion in making this fee award.” (Id. at p. 586.)

DISPOSITION

Accordingly, that part of the attorney fee award based upon billings submitted for work performed on the unsuccessful attorney fee issue in the prior appeal is reversed. The case is remanded to the trial court for the limited purpose of deleting from the total award those amounts that relate solely to billing for work done on the attorney fee issue in Harman, supra, 136 Cal.App.4th 1279 . In all other respects the judgment is affirmed.

Marchiano, P. J., and Margulies, J., concurred.

Appellant’s petition for review by the Supreme Court was denied March 12, 2008, SI60463. Moreno, J., did not participate therein. Baxter, J., and Corrigan, J., were of the opinion that the petition should be granted.