The 10th Circuit Court of Appeals settled an appeal over attorney fees awarded to plaintiffs in a class-action lawsuit against the City and County of Denver. Although unpublished, the order issued May 7 provides a glimpse into interpretations for determining fee awards.
The underlying case, filed by Marian Kerner and Ramona Lopez on behalf of the plaintiff class, alleged a type of pre-employment screening test used by Denver had a disparate impact on minority applicants. The district court ruled in favor of the plaintiffs after five years of litigation. The order noted the amount of damages as “hotly contested,” with the plaintiffs initially seeking $18 million and the court awarding $1,674,807. The district court also awarded $894,443 in attorney fees and $97,494.99 in expenses, the latter including expert fees. But the plaintiffs had initially sought $1,550,195 in attorney’s fees and $162,120.99 in expenses, and appealed the reduced award.
The plaintiffs claimed the district court did not conduct a proper lodestar analysis to determine the attorney fee award, and also that it abused its discretion in reducing the expert fee award. The 10th Circuit affirmed in part and reversed in part, concluding the district court abused its discretion in determining the attorney fee award but did not do so in the award for expert fees and other expenses.
The lodestar method for determining a fee amount for a prevailing party involves multiplying a reasonable hourly rate by a reasonable number of hours spent on litigation. Appellate attorney Dean Neuwirth explained in an email to Law Week that a reasonable hourly rate is based on rates commonly charged by lawyers in the local market.
“At least in Denver, there can be a wide range of hourly rates for many kinds of legal work, so in practice the issue generally boils down to answering the question of what is the top accepted market rate at the time,” he wrote.
The district court rejected Denver’s proposed reduction in reasonable attorney rates from $500 to $400 for lead counsel and $375 to $250 for assistant counsel. The court agreed with Denver’s assertion to reduce the number of hours claimed by the plaintiffs’ counsel.
“Without fixing a specific figure of the number of hours reasonably expended in this case, the Court exercises its discretion to defer to those admitted as reasonable by Denver — $894,443,” the order read.
But the 10th Circuit found that statement ambiguous and under either of two possible interpretations, the district court abused its discretion in determining the attorney fee award. According to the order, the reasonable rates accepted by the district court multiplied by the reasonable number of hours proposed by Denver should have resulted in a lodestar calculation of $1,124,120, more than $200,000 less than what the district court awarded.
The figure of $894,443 was calculated based on Denver’s proposed reduction both in rates and hours, and because the district court accepted the plaintiffs’ proposed rates, it erred in the attorney fee award.
The 10th Circuit concluded the district court abused its discretion under a second possible interpretation of the figure of $894,443 as well. “A second way to read the sentence is that the district court was adopting the total amount of fees Denver admitted was reasonable,” read the order. “Denver relies on this interpretation to argue that the district court did not err when it found the lodestar figure to be the amount of fees Denver had conceded were reasonable. Denver asserts the district court properly exercised its discretion to award plaintiffs the unchallenged portion of the fees claimed.”
The order disagreed, saying Denver did not justify the district court’s possible approach of determining the reasonable rate, but forgoing its responsibility to then determine the reasonable number of hours spent.
“Once the district court determined that the rates were reasonable, it needed to continue the analysis by making a determination about the reasonable number of hours and then calculate the final lodestar figure,” read the order. The court remanded the decision to the district court for a new lodestar calculation.
But the 10th Circuit rejected the plaintiffs’ argument that the district court abused its discretion by reducing the award of expenses related to expert witness fees from $162,120.99 to $97,494.99. The 10th Circuit concluded the district court adequately explained its basis for the proposed reduction in expenses, which was related to an expert witness on the plaintiffs’ side abandoning his damage model in the middle of trial and taking up a different approach that partly adopted the approach to damages offered by the defense’s expert witness.
Case law in the 10th Circuit establishing the lodestar method stems from an analysis by a 1974 5th Circuit decision, Johnson v. Georgia Highway Express. The decision set forth that a court calculates a reasonable number of hours spent by examining several potentially relevant factors such as the novelty and difficulty of the case’s issues, the result obtained, the skill required for the work, and the timeline a lawyer had to work under.
A 1983 case in the 10th Circuit, Ramos v. Lamm, cited the Johnson case. The opinion analyzing the case’s fee awards stated the factors set out in Johnson that the court considered included considered time and labor spent, complexity of the case’s questions, skills required of the attorneys as well as their experience and abilities, the customary fee, contingency factors and undesirability of the case.
The Ramos decision was itself revisited in 1988 in Robinson v. City of Edmond, and Robinson noted a district court has discretion to award an amount below that of what a losing party has not challenged. Neuwirth wrote he believes the Robinson decision is likely the most frequently cited case concerning fee awards in the jurisdiction.
Neuwirth wrote he believes that because the Johnson case’s approach for determining reasonableness under the lodestar method is so well known, courts tend to apply variations on the theme of calculating a reasonable number of hours at a reasonable rate. “So in this [Denver] opinion the circuit is effectively telling the district court to do its job.”
— Julia Cardi