Opinion
CIVIL ACTION NO. 04-214-HRW.
April 30, 2007
MAGISTRATE JUDGE'S REPORT AND RECOMMENDATION
I. INTRODUCTION
The above-styled matter was referred to the undersigned for preparation of a report and recommendation on pending motions pursuant to 28 U.S.C. § 636(b)(1)(B). [Record No. 38.] Those motions include: Motion for Attorney Fees [Record No. 26], Motion to Set Hearing as to Damage Claims of Plaintiff [Record No. 32], and Motion to Enforce Settlement [Record No. 37]. All motions have been either fully briefed or briefed to the extent each party chose to do so, as some responses and replies were not filed. In addition, the undersigned conducted a full hearing on all pending motions on March 28, 2007. [See Record Nos. 49, 50 52.] Now ripe for decision on the parties' motions, the undersigned recommends that: Plaintiff's Motion for Attorney Fees [Record No. 26] be granted, in the manner outlined below; Plaintiff's Motion to Set Hearing as to Damage Claims of Plaintiff [Record No. 32] be denied; and Defendants' Motion to Enforce Settlement [Record No. 37] be granted in part and denied in part.
II. BACKGROUND
Plaintiff brought the instant action against Defendants, pursuant to 42 U.S.C. § 1983, for her firing from the position of secretary at the Lawrence County Board of Education by the Superintendent. Specifically, Plaintiff claimed violations of her due process and equal protection rights under the United States Constitution. On April 17, 2006, after a hearing [see Record Nos. 21 48], Judge Henry R. Wilhoit, Jr. granted Plaintiff's motion for summary judgment on the issue of the due process violation and instructed the parties to attempt to stipulate to damages. [Record No. 22.] In the event a joint stipulation of damages could not be agreed upon, a hearing on damages was to be held. [Id. at 15.] Judge Wilhoit did not rule on Plaintiff's equal protection claim, noting that:
At the April 17, 2006 Status Conference, counsel for Plaintiff stated that if the Court were to rule in Plaintiff's favor with regard to her due process claim, she would not pursue her equal protection claim. As such, the Court need not address the merits of this claim.
[Id. at 14.]
The parties were able to reach an agreement on damages relating to the due process claim, and filed said joint stipulation on July 28, 2006, and further requested that "the Court enter a final order dismissing the case as resolved, while retaining jurisdiction for any potential future issues related to enforcement of the judgment." [Record No. 24.] On July 31, 2006, Judge Wilhoit entered an order dismissing the case, with prejudice, as settled with each party to bear their own costs. [Record No. 25.]
On August 30, 2006, Plaintiff's attorney, James Follace Fields II ("Fields"), filed a motion for attorneys' fees. [Record No. 26.] On December 6, 2006, attorney Ned Pillersdorf ("Pillersdorf") filed a notice of appearance [Record No. 30] and a Motion to Substitute Attorney on behalf of the Plaintiff [Record No. 31], which was granted. [Record No. 33.] That same day, Plaintiff also filed her Motion to Set Hearing as to Damage Claims of Plaintiff [Record No. 32], claiming that she had no knowledge of any stipulation as to damages and did not give her consent to enter into any such stipulation. Attorney Fields responded with a notice, the intent of which was to clarify the record in that he contended he had not been dismissed by the Plaintiff. [Record Nos. 34 35.]
Defendants responded to Plaintiff's Motion to Set Hearing as to Damage Claims of Plaintiff [Record No. 36], and a Motion to Enforce Settlement [Record No. 37]. Both Fields and Pillersdorf filed responses to Defendants' Motion to Enforce Settlement [Record Nos. 40 41, respectively.] Subsequently, the undersigned held telephone conferences with all parties [Record Nos. 45 47] and a hearing on all pending motions [Record Nos. 49-52].
III. ANALYSIS
A. Motion for Attorneys' Fees
Plaintiff's motion encompasses a request for compensation for the work of three attorneys, for a total of 165.3 hours, at hourly rates of $175 and $125 per hour. [Record No. 26.] The total amount requested is $27,087.50. [Id.] Defendants oppose this motion on several grounds, arguing first that the motion was not filed in a timely manner. [Record No. 27.] Specifically, Defendants argue that the 30-day time limit on filing such motions, set by Local Rule 54.4, should have run from the date of entry of Judge Wilhoit's opinion granting summary judgment and not from the order dismissing the case. [Id.] Second, Defendants argue that the hours listed and the rates charged are unreasonable. [Id.]
Plaintiff replies that the time period for filing a motion for attorneys' fees begins at the time of judgment, which was in the form of Judge Wilhoit's order dismissing the case, on July 31, 2006. [Record No. 28.] Plaintiff further argues that the April 17, 2006 date argued for by the Defendants is incorrect since the issue of damages had not yet been resolved, as evidenced by Judge Wilhoit's direction to the parties that they attempt to reach an agreement as to damages, lest a hearing be held to determine those damages. [Record No. 22.] Plaintiff's response to Defendants' reasonableness arguments is brief, and limited to a reference to affidavits filed in support of the original motion, which stated that the rates listed were reasonable for the area. [Record No. 26.]
The undersigned finds Defendants' timeliness argument to be without merit. Local Rule 54.4 references entry of judgment, indicating some final resolution of the case as a whole. While liability was established by the Court's granting of summary judgment on the due process claim, damages were yet to be decided. Thus, the only date which could reasonably be pointed to as the time when the case became final is July 31, 2006, the date of the Court's Order dismissing the case with prejudice. See generally Stallworth v. Greater Cleveland Reg'l Transit Auth., 105 F.3d 252, 257 (6th Cir. 1997). Accordingly, the undersigned finds that Plaintiff's motion was filed in a timely manner.
The issue of whether the requested fees are reasonable is more problematic. Both sides correctly note that the proper method of calculating attorneys' fees under 42 U.S.C. § 1988 is the "lodestar" method, which is defined as "the number of hours reasonably expended on the litigation multiplied by a reasonable hourly rate." Hensley v. Eckerhart, 461 U.S. 424, 433 (1983). The undersigned is also mindful of the Supreme Court's history of strong support for awarding attorneys' fees to prevailing plaintiffs, in a variety of circumstances. See generally Texas Ass'n v. Garland, 489 U.S. 782 (1989); Maher v. Gagne, 448 U.S. 122 (1980); Maine v. Thiboutot, 448 U.S. 1 (1980); Hensley,supra; and Alan Hirsch Diane Sheehey, Awarding Attorneys' Fees and Managing Fee Litigation (Federal Judicial Center) (2d ed. 2005). However, courts are also given discretion in determining the amount of attorneys' fees awarded. Hensley, 461 U.S. at 437.
In Plaintiff's motion for attorneys' fees, Fields listed $175 as his hourly rate and $125 per hour for that of two associates. However, during the March 28, 2007 hearing, Fields noted that his firm was paid by the Kentucky Education Association ("KEA") on behalf of the Plaintiff. The Plaintiff and KEA, the union to which she belongs, executed a contract whereby KEA agreed to fund the litigation on her behalf and referred her to Fields. [Record No. 52, at 31-33.] A separate agreement exists between KEA and Fields' firm. Specifically, Fields testified as to the rates charged to KEA for representing the Plaintiff:
Q. Let me ask you this. In terms of — I guess, does your law firm have a written agreement or an understanding with KEA with respect to an hourly rate and the services that you're to perform for KEA members?
A. Yes.
Q. And what is that hourly rate?
A. Currently?
Q. Yes.
A. I believe it is $125 an hour. We give them a discounted rate because of the volume of cases they refer to us.
Q. Again, during the years 2005 and — 2004 and 2005 and through October or so of 2006, was the hourly rate still $125 an hour? . . .
A. I believe we have raised it during that period of time. I know we did recently. And I want to say it was in the last couple of years. So about that time it went up to 125. Either right before or right after this case started, I'm not sure exactly.
Q. Do you remember what it was before that time?
A. I believe it was 115 an hour or 120.
[Record No. 52, at 48-49.]
This testimony and the information provided in Plaintiff's motion are not consistent. Fields testified that he believes his hourly rate to be somewhere between $115 and $125 per hour, while listing $175 as his standard hourly rate in his motion before the Court. Fields mentions the "excellent results" he obtained on the Plaintiff's behalf, having secured a summary judgment ruling on his client's due process claim. [Record No. 26.] However, there is no indication in the record that Fields' firm ever raised their fee above the $125 per hour rate to which he testified.
The undersigned also notes that testimony confirms an agreement between KEA and Fields' firm regarding the fees charged and paid for the representation of the Plaintiff, yet there is no information in the record concerning the details of this arrangement except for Fields' testimony. While the existence of third-party financing of a plaintiff's suit, as is the case here, has been held to be no bar to the awarding of attorneys' fees,Am. Council of the Blind v. Romer, 962 F.2d 1501, 1503 (10th Cir. 1992), vacated and remanded on other grounds, 113 S Ct. 1038 (1993), such financing arrangements could certainly be indicative of what the market rate is or was at the time counsel was retained. In the absence of such documentation, the undersigned is left with the contradictory statements of Plaintiff's motion for attorneys' fees and Fields' testimony to assist in rendering a decision.
To the extent that Plaintiff may be seeking an award higher than what could be termed a "fully compensable fee," see Hensley, 461 U.S. at 435, the undersigned declines to make such a recommendation. While the undersigned agrees that Fields obtained excellent results for his client in the form of a successful summary judgment motion, that fact is mitigated by the dearth of evidence in the record concerning the hourly rates charged, the absence of details of the agreement between Fields' firm and KEA, and the uncertainty surrounding resolution of this case. In this context, the undersigned finds that, while Plaintiff is entitled to a "fully compensatory fee," she is not entitled to the full sum requested.
The law is quite clear that the attorney fee award is made on behalf of, and belongs to, the prevailing plaintiff, Evans v. Jeff D., 475 U.S. 717 (1986), but that in reality the money is intended to reimburse whatever party is out-of-pocket for the expense of litigation. Richardson v. Penfold, 900 F.2d 116 (7th Cir. 1990). In some instances this may be the attorney. In others, as is the case here, it may be a third party that financed the litigation on behalf of the plaintiff and is thus entitled to the award. It is clear from the testimony offered and the contract signed by KEA and the Plaintiff that KEA is to be reimbursed with the money that would be awarded by the granting of Plaintiff's motion. [See Record No. 50, Exhibit 9, Section 1(e).]
Based on Fields' testimony, the rate his firm charged KEA was $125 per hour for his services. [Record No. 52, at 48-49.] This is the market rate for the services of Fields' firm, as negotiated by the firm and KEA. While this rate is significantly lower than that claimed in Plaintiff's motion, it is still reasonable, as Fields testified that his firm grants KEA a discount based on the volume of cases the union refers to it. [Record No. 52, at 48-49.] By recommending that the Plaintiff be awarded an amount reflecting the hours reasonably expended, at the actual rate charged, the undersigned is recommending a "fully compensatory fee."
The undersigned has reviewed the documents provided by Fields and finds them, in general acceptable, but questions the need to bill 49.3 hours in preparation of a motion and memorandum in support of Branham's Motion for Summary Judgment. [Record No. 12.] This amount represents roughly 30 percent of the entire bill. Given the nature of the case, the claims made and defenses presented, the amount of discovery and number of depositions taken, the undersigned believes such a motion would reasonably be prepared in no more than 25 hours, and adjusts the fee accordingly.
The undersigned also notes that, in Plaintiff's motion for attorneys' fees, attorneys Powers and Collins received hourly rates that were 60 percent of that charged for Fields' services. This percentage difference in rates is reflected in the undersigned's recommendation. Accordingly, it is the undersigned's recommendation that Plaintiff's Motion for Attorney Fees [Record No. 26] be granted in part, and that she be awarded attorneys' fees as follows: Attorney Hours Rate Fee Totals 141 $16,535
J. Follace Fields II 119.2 $125 per hour $14,900 B. Leigh Powers 15.8 $75 per hour $1,185 Steven A. Collins 6.0 $75 per hour $450 B. Motions to Set Hearing as to Damage Claims and Motion to Enforce SettlementThe remaining motions concern the ultimate issue of whether the Plaintiff consented to the joint stipulation of damages [Record No. 24 (alternately referred to by all counsel as a "settlement agreement")], and in the process waived her right to pursue a claim for punitive damages or emotional distress. Accordingly, the following discussion will involve resolution of both motions. Plaintiff claims "that she has no knowledge of any such stipulation and has never consented to any stipulation of her damage claims." [Record No. 32.] Defendants contend otherwise, and respond in detail in their Motion to Enforce Settlement. [Record No. 37.] The Plaintiff's sole focus is to preserve her ability to pursue damages based on claims of pain and suffering, emotional distress and punitive damages, rather than reopen the issue of back pay and other damages to which she has previously stipulated.
The Parties' Joint Stipulation of Damages was entered July 28, 2006, and, in addition to informing the Court that they had reached an agreement, requested that "the Court enter a final order dismissing the case as resolved, while retaining jurisdiction for any potential future issues related to enforcement of the judgment." [Record No. 24.] As would be expected, Judge Wilhoit followed with the requested order, stating that [t]he Court, being advised that all claims brought, or which could have been brought, have now been fully compromised and settled by and between the parties, hereby orders that this matter is hereby dismissed with prejudice as settled." [Record No. 25.] One month passed before Plaintiff filed her motion for attorneys' fees and there were no requests for clarification, no motion that the Court reconsider or modify its order, or any other motion on the part of either party that would indicate the Plaintiff intended to pursue her other claims or took issue with the final disposition of her case. It was four months before Plaintiff retained new counsel, in December 2006, and gave any indication to the Court that she may have disagreed with the resolution of her case.
Defendants cite to Michigan law in contending that the apparent authority arising from the attorney-client relationship is sufficient to support Fields' agreement to the settlement reached. [Record No. 37.] Plaintiff correctly responds that it is Kentucky law which governs such matters, citing Clark v. Burden, 917 S.W.2d 574 (Ky. 1996). In Clark, The Supreme Court of Kentucky held that an attorney must have express authority before entering into a settlement agreement. Id. at 576.
However, the Court also noted circumstances under which an agreement could be enforced absent express authority, namely when failing to do so would unjustly injure the third party relying on the representations of opposing counsel or when the client fails to take action when learning of an unacceptable settlement:
[E]xpress client authority is required [to enter into a settlement agreement]. Without such authority, no enforceable settlement agreement may come into existence. Our recent decision in Farmers Deposit Bank v. Ripato, Ky., 760 S.W.2d 396 (1988), is not to the contrary for it was premised on the active participation by the represented parties in the negotiations. We noted that the attorney was not discharged until after the compromise had been reached and that the settlement took place under the clients' watchful eyes. Active participation in the particulars of settlement may be deemed to create implied authority. . . . `It is the client's duty, having knowledge of the settlement, to express his disapproval within a reasonable time.'Id. at 576-77 (internal citations omitted).
There are several instances established in the record indicating that the Plaintiff knew of, and consented to, a settlement of her claims that included a waiver of her right to pursue punitive damages or those for pain and suffering. The first was Fields' report to Judge Wilhoit, during the April 17, 2006 hearing, that he had issued a formal settlement demand to the Defendants. [Record No. 48, at 2.] That demand included Plaintiff's return to comparable work with comparable pay in the Lawrence County school system, back pay, a travel reimbursement and proper crediting of time for retirement and other benefits. [Id.] Judge Wilhoit specifically questioned Fields concerning damages beyond those given above:
THE COURT: Well, what about pain and suffering? MR. FIELDS: We're willing to compromise on that issue for settlement purposes. Her main goal was to get reinstated. And I believe she needs six more years for full retirement. Back wages and benefits and retirement credit, et cetera. [Record No. 48, at 3.]Near the end of the April 17 hearing, and before Judge Wilhoit revealed his decision to grant summary judgment to Plaintiff, Fields was again asked about his client's intentions concerning a claim for punitive and emotional distress damages:
THE COURT: Now, let me ask you a question, Mr. Fields. If the plaintiff is successful on the due process claim, would the plaintiff want to proceed on the equal protection plan? MR. FIELDS: As I indicated earlier, your Honor, her main goal is reinstatement with back wages and lost benefits. I would not anticipate further pursuing the equal protection issue, if she is reinstated and awarded those damages and attorneys' fees. [Id. at 24.]Judge Wilhoit informed the parties at the hearing that he would be entering an order granting Plaintiff's motion for summary judgment on the issue of the violations of her due process rights. [Id. at 24-25.] Over the next several weeks, Fields and the Plaintiff had numerous conversations about Judge Wilhoit's ruling, particularly what terms would be acceptable in settling her case. [Record No. 52, at 15-17.] A primary topic of conversation between Plaintiff and Fields was whether to pursue punitive and emotional distress damages, with Fields explaining why KEA would not fund pursuit of those claims:
Q. And I explained to you that typically KEA would not fund a trial purely for punitive damages and emotional distress, especially in your situation where you had been reinstated to work with all your back pay, something to that effect?
A. Yes, I remember.
Q. Do you recall that I told you you could contact another attorney, if you wanted to, to pursue further claims?
A. I can't remember if you specifically said, yes, I could, but we kind of — like I said, we kind of talked about it. And you never said I couldn't do that.
Q. And this would have been shortly after we got Judge Wilhoit's ruling . . .?
A. Yes.
Q. Because I sent you the decision and you read through it, and we discussed what we could and couldn't do from that point forward?
A. Yes.
[Id. at 18.]
On April 21, 2006, Fields sent the Plaintiff a letter summarizing their conversations to date and setting forth his understanding of the course of action to which they had agreed. [Record No. 50, Exhibit 3.] When questioned about the letter in particular and her conversations with Fields in general on the point of settlement, Plaintiff admits she understood the case would be settled and agreed with that outcome:
Q. Now, after you received the letter of April 21st, you did not write Mr. Fields and advise him that you did not agree to — you did not tell him that you intended to pursue this other claim as he outlined in this letter to you; isn't that correct?
A. I was aware that the matter of settlement now would have to be just strictly back wages, back to work, everything. I realized that that would be — and, yes, I mean, I agreed to that. At the point, after that, I had not made any determination of pursuing anything, because at that point I didn't know if I could pursue something separately. . . .
Q. So, you received information from Mr. Fields, by way of letters, that the — your case for emotional distress and punitive damages, the claims in the complaint, that KEA would not fund or move further with that litigation, correct?
A. Yes.
Q. And that your claim was going to be settled unless — that the claim would move forward unless there was an agreement on damages by some date during the summer of 2006, according to the exhibits, correct?
A. Yes.
[Id. at 26-29.]
Plaintiff admits that she did not voice her opposition — if it existed — prior to her retaining Mr. Pillersdorf in December 2006 — four months after the order dismissing her case as settled. In fact, prior to December 2006, Plaintiff received her settlement checks and cashed them. [Record No. 52, at 26.] She also took the time to send a handwritten letter to Fields, dated August 16, 2006, thanking him for his help, and stating:
I just wanted to thank you for your time, patience and expertise over the past two years. I also appreciate the fact that you were willing to come here any time it was necessary. . . . I hope all goes well with you and we might cross paths someday, although not for the same reason.
[Record No. 50, Exhibit 5.]
Finally, Plaintiff admits that she sought the help of KEA's legal assistance program and signed a contract to that effect. [Record No. 52, at 10-12.] That contract included language requiring Plaintiff "[t]o accept a reasonable settlement proposal or other reasonable disposition of the case as advised by the assigned attorney." [Record No. 50, Exhibit 9, Section 1(e)(7).]
Based on these facts, it is clear that the Plaintiff was well-informed of the details of her case as it moved through the process, particularly the discussions surrounding settlement in the wake of Judge Wilhoit's granting of summary judgment. Whether the Plaintiff gave express authority to settle the case, and thereby waive her rights to pursue punitive and other damages, prior to Judge Wilhoit's ruling, is immaterial. The record clearly shows that the Plaintiff agreed to such a settlement and waiver shortly thereafter. The circumstances of the instant case are quite similar to Clark v. Burden, in that the Plaintiff was actively involved in negotiating the terms of settlement and did not discharge Fields until after an agreement had been reached — and accepted by the Court. It is equally clear that the Plaintiff, were she unsure as to the implications of the settlement or if she fervently objected to waiving her right to pursue punitive damages, declined to do or say anything to address those concerns. It is unreasonable to hold an objection until four months after the Court enters a final order dismissing her case.
Accordingly, the undersigned recommends that Plaintiff's Motion to Set Hearing as to Damage Claims of Plaintiff [Record No. 32] be denied and Defendant's Motion to Enforce Settlement [Record No. 37] be granted in part and denied in part. In addition, it is recommended that Defendant's Motion to Enforce Settlement is specifically denied to the extent that it alleges the settlement agreement reached included attorneys' fees, and granted to the extent that the Plaintiff has otherwise settled her case.
IV. CONCLUSION
Therefore, for the reasons set forth above, it is recommended that: Plaintiff's Motion for Attorney Fees [Record No. 26] be granted, in the manner outlined above; Plaintiff's Motion to Set Hearing as to Damage Claims of Plaintiff [Record No. 32] be denied; Defendant's Motion to Enforce Settlement [Record No. 37] be granted in part and denied in part; and that this action be stricken from the Court's docket.Specific objections to this Report and Recommendation must be filed within ten days from the date of service thereof or further appeal is waived. United States v. Campbell, 261 F.3d 628, 632 (6th Cir. 2001); Bituminous Cas. Corp. v. Combs Contracting Inc., 236 F. Supp. 2d 737, 749-750 (E.D. Ky. 2002). General objections or objections that require a judge's interpretation are insufficient to preserve the right to appeal. Cowherd v. Million, 380 F.3d 909, 912 (6th Cir. 2004); Miller v. Currie, 50 F.3d 373, 380 (6th Cir. 1995). A party may file a response to another party's objections within ten days after being served with a copy thereof. 28 U.S.C. § 636(b)(1)(C); Fed.R.Civ.P. 72(b).