In a recent decision, the Missouri Courts of Appeals, Eastern District ruled that a plaintiff who prevails under the Missouri Human Rights Act cannot have the award of attorneys' fees arbitrarily reduced based on the amount of damages awarded.
In Dewalt v. Davidson Surface Air, Thomas DeWalt was a driver for a trucking company owned by Donald Davidson. During his employment, DeWalt was diagnosed with a brain tumor that restricted his ability to drive long distances. When DeWalt was unable to accept long distance delivery assignments, his employer repeatedly refused to give him available local deliveries or other jobs, and instead sent him home without pay and issued him disciplinary write-ups. DeWalt sued the company and Davidson under the Missouri Human Rights Act ("MHRA") for having constructively discharged him based on his disability. The MHRA makes it illegal to discriminate in any aspect of employment, because of an individual's race, color, religion, national origin, ancestry, sex, disability or age.
After a trial, the jury found in favor of DeWalt on his discrimination claim against Davidson individually. DeWalt sought $80,000 in compensatory damages, but the jury awarded him $7,500 and found that Davidson was not liable for punitive damages. After trial, DeWalt requested $133,198.50 in attorneys' fees, based on time expended by his attorneys on a lodestar basis. The trial court reduced that amount and awarded him $75,000 in attorneys' fees, but gave no explanation for the reduction in attorneys' fees. Davidson appealed the judgment as to liability and DeWalt cross-appealed the judgment based on the reduction of attorneys' fees. In the first appeal, the case was remanded by the Court of Appeals because the trial court did not fully explain why it limited the attorney's fees. This decision comes from DeWalt's second appeal to the Missouri Court of Appeals.
Attorneys' fees are authorized for a prevailing party under the MHRA Section 213.111.2 to fully make the plaintiff whole by compensating him or her for the costs of bringing suit. Awards of attorneys' fees are particularly important to plaintiffs in employment discrimination cases, where damages can sometimes be small or nominal, especially in comparison to the amount of attorneys' fees that can be incurred if a case is fully litigated through a trial on the merits. The Court of Appeals noted that while a trial court has discretion to determine the amount of reasonable attorneys' fees under the MHRA, a trial court must consider several factors when deciding the appropriate amount of attorneys' fees to be awarded to a prevailing plaintiff:
- the rates customarily charged by the attorneys involved in the case and by other attorneys in the community for similar services;
- the number of hours reasonably expended on the litigation;
- the nature and character of the services rendered;
- the degree of professional ability required;
- the nature and importance of the subject matter;
- the amount involved or the result obtained; and
- the vigor of the opposition.
The most crucial factor for determining attorneys' fees is the degree of success obtained. Success is partially measured by how much of the plaintiff's requested relief he or she actually recovered. The Court of Appeals added that in MHRA claims it is important to keep in mind that even small verdicts may reflect a high degree of success when considered in light of the nature and importance of the subject matter in the particular case. The Court acknowledged that the MHRA recognizes the public purpose served by litigation that vindicates the rights of those who are discriminated against.
The Court of Appeals held that when the damages awarded by a jury are small, a trial court may not reduce fees in order to maintain some proportionality between the damages and the fees awarded. In the second appeal, the Court of Appeals held that the trial court erred in reducing the attorney fees by 30+% to $87,200.75 on the notion that such an award works against the public policy of encouraging settlement. A court only needs to consider the policy of encouraging settlement when there is evidence before it regarding the settlements efforts in that particular case. Here, the court did not find settlement negotiations that were unreasonably rejected in favor of trial on a claim with limited value.
Finally, the court noted that compensable fees can include compensation for the time spent preparing an application to request fees, speaking to clients and for attorneys' fees on appeal, subject to the court's discretion. In determining attorneys' fees on appeal, courts should consider the success in the Court of Appeals and the nature and importance of the case.
This case is significant to employers because any meritorious employment discrimination claim poses a risk to an employer, even if the plaintiff's claim for damages is small or nominal. In order to avoid the risk of an award, employers should consider resolving meritorious claims early in the process before substantial attorneys' fees and costs are incurred by both sides. Oftentimes, some of the larger employment discrimination judgments occur when an employer fails to understand its risk early in the process, before substantial attorneys' fees are incurred by the plaintiff (and the employer).