Lead Opinion
Opinion by Judge SINGLETON; Partial Concurrence and Partial Dissent by Judge MILAN D. SMITH, JR. ■
OPINION
Kim Muniz sued her employer United Parcel Service, Inc., (“UPS”) in California State Superior Court for employment-related discrimination in violation of California’s Fair Employment and Housing Act (“FEHA”), California Government Code § 12900. Muniz made no federal claim. UPS removed the case to federal court on the basis of diversity of citizenship. The case was tried to a jury which returned a verdict in Muniz’s favor finding that UPS had discriminated against her on the basis of her gender and awarded her $27,280 in damages. Muniz, as a prevailing plaintiff under FEHA, sought an award of attorney fees. Cal. Gov’t Code § 12965(b). Muniz requested $1,945,726.50 in fees. After extensive argument, the district court awarded Muniz $697,971.80.
UPS appeals. The sole issue on appeal is. whether the district court abused its discretion in awarding Muniz $697,971.80 where the jury awarded her only $27,280.
JURISDICTION
The district court had subject matter jurisdiction over Muniz’s gender discrimination claims based upon diversity of citizenship. 28 U.S.C. § 1332. This court has jurisdiction over the final judgment under 28 U.S.C. § 1291.
STANDARDS OF REVIEW
We review the district court’s interpretation of state law in a diversity case de novo. Stanford Ranch, Inc. v. Md. Cas. Co.,
“We review evidentiary rulings for abuse of discretion, though we review de novo the district court’s interpretation of the Federal Rules of Evidence.” United States v. Urena,
We may affirm on any basis supported by the record, whether or not relied upon by the district court. Hall v. N. Am. Van Lines, Inc.,
PRIOR PROCEEDINGS AND FACTUAL BACKGROUND
In her complaint, Muniz identified a single adverse employment action — her two-level demotion from Division Manager to Supervisor — and alleged alternative “discriminatory motives” for UPS’s action in separate claims for retaliation, gender discrimination and age discrimination. Muniz contended-that the wrongful discrimination was traceable in part to UPS’s negligence in hiring and training its .employees.
It appears that Muniz only identified one adversary in' UPS management — Ron Meyer — to ■ whom she traced all of her problems. Meyer is the only one specifically accused by Muniz of retaliation and age and, gender discrimination. She does not contend that .Mary Gill, the District Manager who demoted her, or UPS’s other managers were gender biased or had any reason to retaliate against her. She maintains . that Gill and the other managers were influenced by Meyer into taking all of. the actions upon which this case is brought.
From the record provided, it appears that UPS essentially- argued that Muniz was an example- of what has elsewhere been called the “Peter Principle” — that she had been promoted to her level, of incompetence. See Laurence. J. Peter '& Raymond Hull, The Peter Principle: Why Things Always Go Wrong 7 (William Morrow ed.1969). In line with this theory, UPS apparently argued that' Meyer was simply the first to recognize Muniz’s failings, and that his efforts were a reasonable attempt to persuade senior management to
On March 30, 2009, Muniz filed a complaint with the California Department of Fair Employment and Housing (“DFEH”) alleging that she was demoted based on gender, age and retaliation for engaging in protected activity: The only adverse action Muniz mentioned in her state court complaint and in her administrative complaint was .the two-step demotion. Her complaint, about the Manager Performance Improvement Plan (“MPIP”) and the stock bonus came later. Muniz filed the instant action on April 6, 2009.
Muniz’s claims for age discrimination, retaliation and punitive damages were resolved against her through summary judgment. After UPS moved for summary judgment but prior to oral argument, Muniz abandoned her age discrimination claim and no longer argued that her retaliation claim fell under FEHA as pled. Muniz sought to amend her complaint to properly allege retaliation under state labor law, but the district court held that she had waited too long and, in any event, she could not show that her reports of Fair Labor Standards Act violations in 2007 were close enough in time to permit an inference of causation regarding the adverse employment actions in 2008. Mun-iz’s claim for negligent supervision and training survived summary judgment but was abandoned at: trial. UPS concedes that the negligent supervision claim was interrelated with the gender discrimination claim.
The case went to trial on claims of gender/sex-based employment discrimination. See Muniz v. United Parcel Serv., Inc., No. 4:09-cv-019887-CW,
A jury trial was held on Plaintiffs FEHA gender discrimination claim. This claim rested on three alleged adverse actions: (1) the denial of a stock bonus; (2) her placement on the MPIP; and (3) her demotion from division manager to supervisor. The jury found that UPS’s decision to deny Plaintiff a stock bonus was not motivated by her gender. It concluded that UPS’s decision to place her on an MPIP, although motivated by her gender and a substantial factor in causing her harm, was made for both discriminatory and nondiscriminatory reasons and that UPS would have made the same decision for a non-discriminatory reason.2 However, the juryfound that Plaintiffs gender motivated UPS to demote her, it was a substantial factor in causing her harm and. UPS would not have demoted her for a nondiscriminatory reason. The jury award-, ed Plaintiff $27,280.00, which was the sum of $9,990 for her lost earnings, $7,300 for her past medical expenses and $9,990 for her past non-economic loss. 3
Muniz, 2011 WL '3740808, at *2. UPS and Muniz, each claiming to be prevailing parties, sought attorney fees under FEHA, California Government Code section 12965(b).
UPS brought a number of post-trial motions which were decided by the trial court. In that decision, the district court also addressed both parties’ request for attorney fees. The court found Muniz to be a prevailing party and rejected UPS’s motion for attorney fees.. The court summarized Muniz’s fee request in the following table:
Attorney Hourly Rate Hours Billed Total Fees
Stephen Jaffe $650.00 1,610.8 $1,047,020.00
Daniel Zaheer $350.00 395.2 $ 138,320.00
Kathryn Landman $290.00 28.1 $ 8,149.00
Susan Jaffe $195.00 531.6 $ 103,662.00
Subtotal $1,297,151.00
Subtotal x Proposed 1.5 Lodestar Multiplier $1,945,726.50
The district court considered Muniz’s requested fees in determining the lodestar. Based upon the district court’s review of the record, the submissions of the parties, fees awarded in other cases in the same district, and the district court’s observation of Mr. Jaffe during trial and earlier proceedings, the district court reduced his requested hourly fee from $650 per hour to $445 per hour. The district court reduced Ms. Landman’s requested fee from $290 to $230 and Ms. Jaffe’s rate from $195 to $130 per hour. The district court left Mr. Zaheer’s quoted fee intact..
Initially UPS vigorously objected to the hours claimed by the Jaffes. The district court largely agreed with ÜPS. It found Mr. Jaffe’s record keeping inadequate and sent him back three times to improve it. The court ultimately found that Jaffe had not sufficiently proved his hours or Ms. Jaffe’s hours and therefore reduced each by 20 percent. The court then multiplied the adjusted hourly rate by the adjusted
Attorney Hourly Rate Hours Billed Total Fees
Stephen Jaffe :_$445.00_1,288.64 $573,444.80
Daniel Zaheer $350.00 395.2 $138,320.00
Kathryn Landman $230.00 28.1 $ 6,463.00
Susan Jaffe $130.00 425.28 $ 55,286.40
Subtotal $773,514.20
Subtotal x Lodestar Reduction of 0.1 $696,162.78
Non-statutory costs $ 1,809.02
Total award $697,971.80
DISCUSSION
In general, California courts,, like their federal counterparts, utilize the lodestar (or “touchstone”) approach to determine a proper fee award to a prevailing plaintiff in a civil rights law suit. Chavez,
UPS has narrowly focused its appeal. It does not challenge the jury verdict. It concedes that the district court’s lodestar calculation, after the reductions noted, was within its discretion except in one particular instance. UPS argues that the award of fees to paralegal Susan Jaffe was based upon inadmissible hearsay. UPS directs its primary argument to the court’s treatment of Muniz’s limited success and its inflated fee request, which UPS contends required a substantially greater downward adjustment.
WAS THE FEE AWARD TO PARALEGAL SUSAN JAFFE BASED UPON INADMISSIBLE HEARSAY?
Declarations in support of attorney .fee awards should be based upon personal knowledge. Mardirossian & Assocs., Inc. v. Ersoff,
UPS objected that this statement and the accompanying spreadsheet were inadmissible hearsay. Muniz argued that Mr. Jaffe’s declaration verified Ms. Jaffe’s hours based upon his personal knowledge. No evidentiary hearing was held. The district court interpreted Mr. Jaffe’s declaration as stating that he had -personal knowledge of Ms. Jaffe’s hours and tasks, that he watched her reconstruct her hours and the spreadsheet he attached to his declaration showed her hours, and that he could state from personal knowledge that the hours she put down were an approximation of those she actually expended under his supervision on the identified tasks. See Strong v. Valdez Fine Foods,
Our decision on this'issue is controlled by the Federal Rules of Evidence. Hearsay is a statement by someone who does not testify at a hearing and which is offered to prove the truth of the matter asserted in the statement. FED! R. EVID. 801(c). Here the matter asserted in the statement is the hours expended by Ms. Jaffe in this case and contained in the spreadsheet. We are satisfied that the only reasonable interpretation of Mr. Jaffe’s declaration is that Ms. Jaffe provided this information to him. It was therefore hearsay and the district court’s conclusion to the contrary clearly mistaken.
Muniz argues that if the spreadsheet is hearsay, any error was harmless because the trial court had sufficient information to éstimate hours reasonably spent by the Jaffes, and her adjusted hours reflects the district court’s conclusion regarding the proper hours. Mardirossian analogizes the foundation for an attorney fee award in California to the rule that an injured party must show that he was injured — i.e., damaged — by persuasive evidence, but is not required to show with certainty the amount of his damage.
DID THE DISTRICT COURT ABUSE ITS DISCRETION IN FAILING TO REDUCE THE FEE AWARD TO A GREATER EXTENT DUE TO LIMITED SUCCESS AND INFLATED FEES?
No - reported decision of the California Supreme Court has held that a trial court abused its discretion by awarding a prevailing plaintiff in a FEHA case fees based upon the lodestar. The cases like Chavez, upon which UPS relies, all involve decisions upholding the trial court’s discretion in adjusting the lodestar calculation and determining fees. See
I. Limited success
UPS argues that the district court did not adequately account for Mun-iz’s limited success in this case. Under both California and federal law, a fee award must be adjusted to reflect limited success. Hensley v. Eckerhart,
(a) The district court did not abuse its discretion in failing to deduct more time for unsuccessful claims
California law requires a trial court to adjust a lodestar award to account for time spent exclusively on an unsuccessful claim. Chavez,
Hensley cautions that, before hours may be deducted specifically for unsuccessful claims, the claims must be suitable for entirely separate lawsuits.
UPS does not attempt to estimate the actual number of hours the Jaffes could reasonably have spent on the claims for age discrimination, retaliation, negligent hire and punitive damages. UPS apparently assumes that it and the Jaffes spent an equal amount of time on each claim, whether successful or unsuccessful. UPS points to no evidence supporting this
In Corder v. Gates, this Court criticized percentage adjustments to the lodestar amount for limited success, concluding that limited success should be addressed in the lodestar calculation by deducting specific hours.
We are not convinced, however, that the district court was clearly wrong in failing to deduct further for them, particularly where it does not appear that either party could segregate hours spent exclusively on the unsuccessful claims. The district court was not clearly mistaken in declining to deduct a greater amount for unsuccessful claims.
(b) The district court’s implicit conclusion that the hours claimed by Mun-iz after deductions were reasonably incurred in order to obtain a $27,280 verdict and a determination of a gender-biased employment decision was not clearly mistaken
The second component of the limited success inquiry asks whether .the hours allowed were reasonably necessary to achieve the result reached. Hensley,
UPS argues that the district court abused its discretion by failing to discuss the relationship that the damages awarded to Muniz had to the- damages Muniz sought. The district court’s opinion, however, makes clear that it was well aware of this relationship. The district court expressly relied on the fact that Muniz “was awarded a minimal amount for her past losses and received nothing for future economic and noneconomic losses.” This was not an abuse of discretion.
II. The district court did not abuse its discretion in declining to reduce the fee request further because the initial fee request was inflated
Muniz sought attorney'fees of $1,297,151.00, enhanced by a 1.5 multiplier to $1,945,726.50. The district court denied the multiplier and ultimately awarded $696,162.78, or approximately 36 percent of the amount requested.- California law clearly allows the trial court to reduce or deny attorney fees if it is satisfied that the fee request is unreasonably inflated. Chavez,
UPS argues that Chavez,
-. UPS’s reliance on Farrar v. Hobby,
To the extent that presenting an unreasonably inflated request for fees presents a separate issue from limited success, it is determined as of the time the request for fees is made.- Here, the district court found that Muniz made an unreasonably inflated fee request. Its decision to deduct 10 percent of the lodestar was based in part on this finding. The district court believed that it had discretion under Chavez to deduct further or eliminate attorney fees entirely, but concluded a lesser sanction was appropriate. See Beaty v. BET Holdings, Inc.,
In conclusion, UPS has not demonstrated that the initial fee request in this case was made in bad faith and was so inflated that a 10 percent negative multiplier was not adequate to account both for limited success and possible inflation of the fee request.
It is not clear that the dissent disputes anything we have said so far. The dissent argues that the district court failed to “show her work,” which we understand to mean that the district court did not disclose the basis for her decision to deduct only 10 percent from the lodestar calculation rather than some other percentage, e.g., 5 percent, 50 percent or 90 percent, based upon its conclusion that limited success and an inflated fee request warranted a deduction from the lodestar. A trial court owes the parties and a reviewing court a reasoned resolution of the factual and legal disputes presented by a case. Typically this involves finding facts and providing legal conclusions, which may
Notably, UPS did not press on appeal the approach favored by the dissent. Even assuming that we should consider the matter, the district court sufficiently explained its reasoning to permit meaningful appellate review. See Padgett v. Loventhal,
CONCLUSION
The district court recognized that it had discretion to reduce Muniz’s fee award further than it did. The district court gave a clear and concise explanation of its reasoning addressing every issue that UPS asks us to consider on appeal. There is a disparity between the damages recovered and the fees awarded. We are not convinced that California law requires the trial court to reduce that disparity. See Beaty,
UPS has failed to demonstrate that the fee award, except to the extent it addressed paralegal fees, was clearly mistaken.
The judgment of the district court is AFFIRMED in part and Vacated in part, and this case is REMANDED to the district court 1) to reconsider an award of fees to Susan Jaffe for paralegal work on behalf of Muniz and to determine, in the first instance, whether any hearsay exception applies to Mr. Jaffe’s declaration regarding fees for paralegal work in this case and 2) to determine an award to Muniz for reasonable attorney fees and costs incurred in defending this appeal.
Notes
. UPS did not include a transcript of the trial in its excerpts of record. This failure makes a determination regarding attorney fees difficult. See Maria P. v. Riles,
. At the time this case was tried, the Ninth Circuit had held, in reliance on 1991 amendments to Title VII, that a plaintiff who proved discrimination but lost a mixed-motive case because the jury believed the employér would have made the same adverse decision in the absence of a discriminatory motive may nevertheless recover reasonable attorney fees. See Costa v. Desert Palace, Inc.,
It does not appear that Hams should affect the outcome here. While UPS terms the mixed-motive result a win for it and suggests that Muniz should not recover any fees for time spent on it, the district court apparently treated all of the gender discrimination claims as related and apparently included time spent on them in the lodestar; Harris supports including any time spent on challenging the MPIP decision in the award of attorney fees
. At the close of trial, Muniz asked the jury during argument to award damages totaling over $700,000.
. We will consider federal cases arising under Title VII and 42 U.S.C. § 1988 to the extent California would consider them persuasive. As we shall see, however, in some respects California law differs from federal law regarding the calculation of reasonable fees based upon differences in the language of the governing statutes, and we will be sensitive to those differences. See Chavez,
. The initial fee request (approximately $2 million) was approximately 73 times the damage award ($27,280). The reduced fee award of $696,162.78 is approximately 26 times the damage award.
. California law allows a plaintiff to recover not only the fees incurred with respect to the underlying claim but also any fees incurred in enforcing the right to fees. Maria P.,
Concurrence Opinion
concurring in part apd dissenting in part:
I agree with the majority that the district court abused its discretion.in granting paralegal fees based solely on hearsay evidence. I respectfully dissent from the remainder of the majority opinion.
Although we review attorney fee awards for abuse of discretion, “[w]e have long held that district courts must show their work when calculating [such awards].” Padgett v. Loventhal,
Fee awards that employ, across-the-board percentage reductions “are subject to heightened scrutiny....” Gates v. Deukmejian,
Here, the district court applied a ten-percent across-the-board lodestar reduction. In so doing, the court merely explained that a reduction was necessary to account -for “Plaintiffs limited success.” The court did not explain how it arrived-at a ten-percent reduction, nor how the $697,971.80 fee award it approved after applying this reduction could have been reasonable in light of the mere $27,280.00 that plaintiff recovered in damages. See Hensley v. Eckerhart,
Under these circumstances, I believe we must remand for the district court to complete its work. To the degree the majority holds otherwise, it departs from and adds confusion to our well-settled jurisprudence governing the review of fee awards.
I respectfully dissent.