June 14, 2007
VIRGINIA FANELLI, PLAINTIFF-APPELLANT/ CROSS-RESPONDENT,
UNION COUNTY SHERIFF'S OFFICE AND THE COUNTY OF UNION,*FN1 DEFENDANTS-RESPONDENTS/CROSS-APPELLANTS, AND RALPH FROEHLICH, INDIVIDUALLY AND IN HIS OFFICIAL CAPACITY AS UNION COUNTY SHERIFF; WILLIAM V. MALCOM, INDIVIDUALLY AND HIS OFFICIAL CAPACITY AS UNION COUNTY UNDERSHERIFF; ANNA BUCKLEY, INDIVIDUALLY AND IN HER OFFICIAL CAPACITY AS A UNION COUNTY SHERIFF'S OFFICER; VINCENT DITROLIO, INDIVIDUALLY AND IN HIS OFFICIAL CAPACITY AS A UNION COUNTY SHERIFF'S OFFICER; AND BARRY MIGLIORE, INDIVIDUALLY AND IN HIS OFFICIAL CAPACITY AS A UNION COUNTY SHERIFF'S OFFICER,*FN2 DEFENDANTS.
On appeal from the Superior Court of New Jersey, Law Division, Middlesex County, L-4935-02.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Submitted February 15, 2007
Before Judges Parrillo and Sapp-Peterson.
This is an appeal and cross-appeal of the trial court order granting counsel fees and costs to plaintiff Virginia Fanelli following the settlement of her Conscientious Employee Protection Act (CEPA), N.J.S.A. 34:19-1 to -8, claim against the Union County Sheriff's Office (UCSO) and the County of Union (County) (collectively defendants). Plaintiff contends the trial court abused its discretion when it reduced the lodestar by (1) excluding work her attorney performed in connection with disciplinary charges filed against her and (2) excluding work performed by paraprofessional Adam Mangino (Mangino). Plaintiff contends the court also erred when it denied a contingency fee enhancement and supplemental attorney's fees. Defendants contend plaintiff is estopped from challenging the counsel fee award because plaintiff accepted the check they issued pursuant to the court's order. In their cross-appeal, defendants claim the lodestar should be further reduced because the attorneys' hourly rates, as fixed by the trial court, were excessive. We vacate the counsel fees and costs awarded and remand for further proceedings on plaintiff's application for paraprofessional fees, a contingency fee enhancement, and supplemental fees. In all other respects, we affirm.
By way of factual background, plaintiff is a former sheriff's officer with UCSO. She served in that capacity for more than fourteen years before she claimed she was constructively discharged. According to plaintiff, in August 1998, she was approached by Undersheriff William V. Malcolm (Malcolm) in connection with disciplinary charges he filed against another sheriff's officer, James A. MacDonald (MacDonald). The original charges included an allegation that MacDonald submitted overtime records for a period of time that he was not working, but was instead at plaintiff's residence. Plaintiff denied the allegation and refused to testify against MacDonald. Plaintiff claimed that because of this refusal, she was thereafter subjected to a series of adverse employment actions, which included disciplinary charges filed against her on July 3, 2001.
On July 8, 2001, plaintiff retained Bruce McMoran (McMoran) of McMoran, O'Connor & Bramley to represent her. In November 2001, plaintiff filed a complaint in the Law Division against UCSO, Sheriff Ralph Froehlich, Malcolm, Captains Barry Migliore and Vincent DiTrolio,*fn3 and Lieutenant Anna Buckley, alleging a violation of CEPA, intentional infliction of emotional distress and tortious interference with employment.
Plaintiff subsequently amended her complaint to add the County as a defendant and to remove her common-law claims, which she voluntarily dismissed. Prior to settlement, plaintiff voluntarily dismissed all of the claims against the individually-named defendants. Thus, at the time of settlement, the CEPA claim was the only remaining cause of action, and UCSO and the County were the only remaining defendants.
As part of the settlement, the parties agreed that plaintiff could file an application with the court for counsel fees and costs. McMoran submitted a certification indicating that he, his partner, two associates and a paraprofessional devoted 3,402.75 hours to the resolution of this matter at rates ranging from $490 per hour for lead counsel to $150 per hour for paraprofessional support. The total lodestar fee sought was $1,062,199.20, increased by a forty percent contingency enhancement of $424,879.68, plus $36,373.54 in costs and disbursements, for a total of $1,523,452.30.
Defendants opposed the amount of the fees sought, claiming the hourly rate submitted was excessive. According to defendants, the prevailing market rate for attorneys with similar experience ranged from a high of $300 per hour, to a low of $150 per hour. In addition, defendants claimed that the fees sought for services performed by the paraprofessional should be disallowed because there was no fee agreement between plaintiff and Mangino and also because the services performed were duplicative. McMoran argued that the fee agreement was between Mangino and the law firm, which Mangino billed at $150 per hour. McMoran also urged that the services were necessary.
The court, in a written opinion, made the following findings:
The Court has reviewed the certifications and briefs submitted by the parties. In the Certification of Bruce McMoran, he details the experience, qualifications and hourly rate of himself and Douglas S. Bramley. . . .
Mr. McMoran's practice has been exclusive to employment law since 1976. He is a partner in the firm of McMoran, O'Connor & Bramley. He has tried many employment law cases. He has taught and spoken to groups extensively on the subject of employment law. . . .
Mr. Bramley is a partner with McMoran, O'Connor & Bramley and has been practicing law since 1998. He is admitted to practice in the States of New Jersey and New York. He is a member of the NJSBA Labor and Employment Section and is Co-Chair of the Employment Torts Sub-Committee. . . . Mr. Bramley has not submitted a certification setting forth his experience in trying employment cases.
The Court has reached the conclusion that based on the experience and qualifications of Mr. McMoran, an hourly rate of $450.00 is reasonable and appropriate under the circumstances of this case.
Attached to the certification submitted by Mr. McMoran is a Law Journal article which states that the average mean rate for all partners is $394 per hour. The Court has decided that based on the experience and qualifications of Mr. Bramley, an hourly rate of $285.00 is reasonable and appropriate.
Mr. McMoran's certification does not address the background, experience or billing rates of Micha[e]l F. O'Connor or Justin D. Burns. Mr. McMoran's reply brief does address in argument the background and work of Adam Mangino. A certification of Adam Mangino was attached to the initial submission providing his extensive background in law enforcement. With regard to employment matters he recites:
For the past several years I have worked on employment related cases on an almost daily basis including initial client interviews; witness interviews; discovery and deposition preparation (attendance and review); complete trial preparation; client testimony (review and preparation); locating and developing of evidence; preparing trial exhibits; preparing visual aids for trial, mock juries and trial study groups; jury selection and general courtroom assistance.
However, there is no[t] [a] detailed provision of the work he rendered in this matter except the billing statement.
The court recognizes defendants' detailed objections to the hours expended for Mr. McMoran and Mr. Bramley, as stated with particularity in Mr. Varady's brief dated March 8, 2006. The Court incorporates these objections by reference. Defendants emphasize that duplicative and excessive hours should be eliminated. The Court agrees that plaintiff is not entitled to pre-retainer work nor work performed on the disciplinary action.
Plaintiff will be allowed time spent for occasions when more than one of her attorneys argued before the Court. It is clear from the billing summaries that plaintiff's attorneys spent large amounts of time in preparation for litigation. However, the Court finds that plaintiff has not demonstrated that it was necessary to have an attorney and Mr. Mangino, the investigator, present.
The total amount of hours allowed for Mr. Bramley will therefore be 1,775.94 hours. The total amount of hours allowed for Mr. McMoran will be 595.3 hours.
While plaintiff is entitled to reasonable costs, ... plaintiff's request for $970.55 for meals are not proven to be warranted. In addition, the Court will not allow plaintiff's request for travel related expenses in the amount of $1,965.80; and miscellaneous expenses in the amount of $28.00. The Court will allow the remainder of reasonable disbursements, in the amount of $33,409.19.
The Court finds that the lodestar amount of $782.495.40 is reasonable and appropriate. The Court will also allow costs in the amount of $33,409.19. The total fees and disbursements awarded to plaintiff are in the amount of $815,904.59. Thereafter, plaintiff filed a motion to recover supplemental attorney's fees for work performed in reviewing defendants' opposition to the counsel fee application, preparation of a reply brief, and appearing at oral argument. Defendants opposed the motion, arguing that plaintiff's reply was a duplicative restatement of the moving papers.
The court, in a written opinion, denied the motion, reasoning that plaintiff failed to submit any legal support for the award of counsel fees "after settlement and after the Court had previously made a ruling awarding attorney's fees." The court reasoned that "[p]laintiff could potentially make infinite supplemental requests if she seeks fees for each post-settlement motion filed." The present appeal and cross-appeal followed.
As an initial matter, we reject defendants' contention that by accepting the check it issued in the amount of $815,904.59, as ordered by the court, plaintiff is equitably estopped from challenging the amount of the award on appeal. "A party has a right to accept a sum to which [s]he is in any event entitled and still pursue [her] request for a legal ruling on appeal which would increase the sum." 49 Prospect St. Tenants Ass'n v. Sheva Gardens, Inc., 227 N.J. Super. 449, 460 n.3 (App. Div. 1988) (citing Adolph Gottscho, Inc. v. Am. Marking Corp., 26 N.J. 229, 242 (1958)); see also Guarantee Ins. Co. v. Saltman, 217 N.J. Super. 604, 609 (App. Div.) (rejecting the contention "that defendants, having executed upon and obtained satisfaction of the judgment . . . [were] estopped from pursuing [an] appeal" for additional attorney's fees), certif. denied, 109 N.J. 484 (1987). In addition, although plaintiff accepted the check without expressing her intent to appeal, there is no evidence of prejudice to defendants. Adolph Gottscho, Inc., supra, 26 N.J. at 242.
We turn our attention to the merits. In reviewing a trial court's counsel fee award, we apply a deferential standard, meaning those determinations "will be disturbed only on the rarest of occasions, and then only because of a clear abuse of discretion." Packard-Bamberger & Co. v. Collier, 167 N.J. 427, 444 (2001); see also Rendine v. Pantzer, 141 N.J. 292, 317 (1995). An abuse of discretion occurs when the decision is made without a rational explanation, represents an inexplicable departure from established policies, or is premised upon an impermissible basis. Flagg v. Essex County Prosecutor, 171 N.J. 561, 571 (2002).
Rule 4:42-9(a)(8) authorizes an award of counsel fees when permitted by statute. CEPA provides that the court may award to a prevailing party in a civil action "[t]he payment by the employer of reasonable costs, and attorney's fees," N.J.S.A. 34:19-5(e), making it a "fee-shifting" statute. A prevailing party is one who has achieved success on any significant issue in litigation. Tarr v. Ciasulli, 181 N.J. 70, 85-87 (2004) ("cit[ing] with approval the federal view that a prevailing party is one who succeeds 'on any significant issue in litigation [that] achieves some of the benefit the parties sought in bringing suit.'" (citing Szczepanski v. Newcomb Med. Ctr., 141 N.J. 346, 355 (1995) (quoting Hensley v. Eckerhart, 461 U.S. 424, 433, 103 S.Ct. 1933, 1938, 76 L.Ed. 2d 40, 50 (1983))). The success achieved need not result from a favorable jury verdict but also includes a settlement in which plaintiff obtains some affirmative relief that may be enforced against a party. Tarr, supra, 181 N.J. at 86. There is no dispute that plaintiff's settlement constitutes the achievement of a favorable result for which an award of counsel fees is authorized. Additionally, both sides, as part of the settlement, agreed that plaintiff was entitled to reasonable counsel fees and costs.
In Rendine, supra, the Court held that the first step in calculating a fee award under a fee-shifting statute is to determine the lodestar, which is the number of hours reasonably expended multiplied by a reasonable hourly rate. Rendine, supra, 141 N.J. at 334-35. The determination of the lodestar "is the most significant element in the award of a reasonable fee because that function requires the trial court to evaluate carefully and critically the aggregate hours and specific hourly rates advanced by counsel for the prevailing party to support the fee application." Id. at 335.
Plaintiff argues that the trial court abused its discretion when it excluded from the lodestar paraprofessional work performed by Mangino. There is no question that reasonable attorney's fees may include work performed by paraprofessionals. Missouri v. Jenkins, 491 U.S. 274, 285, 109 S.Ct. 2463, 2470, 105 L.Ed. 2d 229, 241 (1989) (holding that reasonable attorney's fees are awarded for "the work product of an attorney" which includes the work of paralegals). Likewise, under our court rules, where attorney's fees are authorized, the affidavit of services must include "a detailed statement of the time spent and services rendered by paraprofessionals, a summary of the paraprofessionals' qualifications, and the attorney's billing rate for paraprofessional services to clients generally." R. 4:42-9(b).
Rule 4:42-9(b) cross-references the Rules of Professional Conduct and contemplates that the attorney submitting the counsel fee application will include the requisite information to assist the court in its determination of the reasonableness of the fees sought. See RPC 1:5. McMoran did not entirely comply with these requirements. While his affidavit sets forth Mangino's customary billing rate, it was Mangino who submitted an affidavit summarizing his qualifications and experience. Of greater significance, however, is that neither McMoran nor Mangino submitted an affidavit detailing the specific paraprofessional services performed. Rather, McMoran described the services performed in his billing statement that accompanied the fee application. Defendants addressed this deficiency in their argument:
They don't say what -- if any investigative work Mr. Mangino ever did, I pointed out to Your Honor that I believe it was 12.35 hours of investigative work that I found in regard to tape -- getting tape recordings, re-recording the tapes, and then going to the city of Rahway in an attempt to photograph a vehicle. That was it out of all that -- out of all that was $122,000, that was it 12.35 hours of investigative work. The rest was simply . . . duplicative work, I don't know what for, but it was Mr. Mangino reading deposition transcripts, attending depositions, attending trial. There was no need for him to do any of that and that should all be barred.
The court agreed and excluded the paraprofessional fees, concluding that "plaintiff has not demonstrated that it was necessary to have an attorney and Mr. Mangino, the investigator, present." This statement apparently relates to Mangino's appearances at depositions and conferences along with McMoran and/or Bramley. The court, however, did not specifically identify what billings it considered to be duplicative, a necessary explanation here because not all of the paraprofessional fees billed reflect time where Mangino was present with an attorney.
For example, the billing records indicate that Mangino devoted a considerable amount of time reviewing deposition and trial transcripts from the lawsuit MacDonald filed after he successfully defended the disciplinary charges lodged against him. There are also entries in the records that describe other investigative work. The court gives no explanation of its view of those entries, thus impairing meaningful appellate review. Raspantini v. Arocho, 364 N.J. Super. 528, 532 (App. Div. 2003); see also Finderne Heights Condo. v. Rabinowitz, 390 N.J. Super. 154, 165 (App. Div. 2007) (noting that the presence of the trial court's reasons for its decision allows for meaningful review).
Although McMoran represented to the court that Mangino's review of these transcripts was necessary, he never explained why. Such an explanation was particularly important because the time period during which Mangino reviewed depositions and transcripts from the MacDonald action occurred while plaintiff's disciplinary charges were still pending.
Because "the lodestar amount is the most significant element in the award of a reasonable fee," the trial court must carefully evaluate the hours advanced by the prevailing party. Rendine, supra, 141 N.J. at 335. In our view, that evaluation includes not only a detailed explanation for awarding a particular fee but also specific reasons why a particular category of fees is disallowed. See Rule 1:7-4(a); see also Furst v. Einstein Moomjy, Inc., 182 N.J. 1, 21 (2004) (requiring that a trial court engage in a thorough analysis or explanation). Here, the trial court's analysis and explanation for its elimination of all fees incurred for paraprofessional work performed was not as comprehensive as required under Furst. Furst, supra, 182 N.J. at 21. This may have been caused by the fact that McMoran's affidavit of services submitted did not fully comply with Rule 4:42-9(b). Consequently, remand is warranted for further fact-finding, based solely upon the existing record, and articulation of reasons for allowance or disallowance of paraprofessional fees. See R. 1:7-4.
Plaintiff argues that the trial court also abused its discretion in establishing the lodestar by excluding 149.5 hours of work performed in connection with the defense of the July 3, 2001 disciplinary charge lodged against plaintiff. In rejecting these fees, the court incorporated the defendant's arguments into its reasoning. Defendants argued that because N.J.A.C. 4A:2-2.12(b) to -2.12(i) expressly authorizes the award of counsel fees to a prevailing party in connection with a departmental hearing, the trial court lacked jurisdiction to award fees stemming from this hearing.
Relying upon our decision in Hancock v. Borough of Oaklyn, 347 N.J. Super. 350 (App. Div.), certif. granted, 174 N.J. 191 (2002), appeal dismissed 177 N.J. 217 (2003), plaintiff argues that successful defense of the disciplinary charges was a condition precedent to bringing her CEPA claim; hence, she is not precluded from seeking counsel fees in connection with work her attorneys performed in defending that action. We disagree.
In Hancock, we affirmed the grant of summary judgment where the trial court "found that the claimed retaliation by [plaintiffs] was not cognizable under CEPA." Id. at 358. The plaintiffs alleged that the retaliatory action culminated in disciplinary charges. Id. at 360. We did not rule that successful defense of departmental disciplinary charges is a condition precedent to maintaining a CEPA action. Rather we concluded that substantiated disciplinary charges and resulting punishments could not be considered retaliatory. Id. at 360-61.
Here, the Notice of Disciplinary Action filed against plaintiff on July 3, 2001, was not the sole basis of plaintiff's CEPA claim. In her complaint, plaintiff detailed no less than nine specific incidents of alleged retaliation, including a demotion from detective to line officer, that defendants committed prior to the filing of the July 2001 disciplinary charge. These other alleged acts of retaliation were unrelated to the July 2001 disciplinary charge, which alleged that plaintiff "was untruthful in statements she gave the Union County Police on January 25, 2001 in connection with the internal affairs investigation." Consequently, we find no merit to plaintiff's claim that counsel's defense of the July 3, 2001 disciplinary charge was essential to maintaining her CEPA claim.*fn4
Plaintiff argues that the trial court abused its discretion by denying her application for a contingency fee enhancement. A contingency fee enhancement is also within a court's discretion. Rendine, supra, 141 N.J. at 339-40. After determining the lodestar, trial courts "should consider whether to increase that fee to reflect the risk of nonpayment in all cases in which the attorney's compensation entirely or substantially is contingent on a successful outcome." Id. at 337. The purpose of a contingency fee enhancement rests on the desire to enable parties to compete for legal services in the private market. In that market, parties who can offer only fee awards contend with parties who can offer certain hourly payments and with parties who can offer contingent percentage fees from damage awards. To bid for services effectively, parties with only fee awards to offer must be able to pay market rates. They cannot do that when they are denied contingency enhancements because they cannot cover the nonpayment risk. A lawyer given a choice between an unenhanced hourly rate in a fee award case and an equal rate in a case where payment is certain will have a strong incentive to decline the fee award case. [Id. at 339 (quoting Charles Silver, Incoherence & Irrationality in the Law of Attorneys' Fees, 12 Rev. Litig. 301, 331-32 (1993) (footnote omitted)).]
In evaluating the merit of a contingency fee enhancement application, the trial court is required "to determine whether a case was taken on a contingent basis, whether the attorney was able to mitigate the risk of nonpayment in any way, and whether other economic risks were aggravated by the contingency of payment" under the guideline that "it is the actual risks or burdens that are borne by the lawyer or lawyers that determine whether an upward adjustment is called for." Id. at 339-40 (internal quotation marks omitted).
In this analysis, trial courts should consider factors which have either mitigated or aggravated the risk. Id. at 340. Risks are mitigated when attorneys are paid a portion of their fee regardless of the outcome and when damages sought on a contingent fee basis would result in "compensation greater than the prospective lodestar amount." Ibid. (internal quotation marks omitted). Even where mitigation is attempted, "specific problems of proof and the hazards inherent in all litigation" or the nature of the case itself could preclude attorneys from mitigating the risk of nonpayment. Ibid.
Trial courts may also consider the likelihood of success when they exercise their discretion to award reasonable attorney's fees. Ibid. In cases where the legal risks are so great as to discourage representation, an additional enhancement may be in order to encourage cases of significance and public interest. Id. at 340-41. Similarly, where a party holds a strong position and likelihood of success, these are appropriate factors in determining a contingency fee enhancement. Id. at 341.
Here, plaintiff's counsel undertook plaintiff's representation on a contingency basis, mitigated solely by counsel's representation that the firm had an active practice. There were other factors raised by plaintiff that, arguably, may have aggravated the risk of nonpayment. For example, plaintiff had no direct evidence that she was instructed to testify falsely in the MacDonald matters. During the period when plaintiff alleged that she was repeatedly subjected to retaliation, she pled guilty to a charge of conduct unbecoming a public employee.
The court's sole basis for rejecting plaintiff's request for a contingency fee enhancement was the court's conclusion that plaintiff's attorneys were able to mitigate their risk because they had many prospective clients. This conclusion appears to be derived from two statements made by plaintiff's counsel at oral argument:
Regarding how much work we have. We average more than one new client call a day. We turn down eight out of ten without even talking to them. Anyone who doesn't want to pay our rates, we don't take.
It is always the same in each and every one of our letters. Whether it's contingent, non-contingent, and hourly, it is exactly the same rate. And, if somebody says they don't want to pay it, our answer is simply, go elsewhere 'cause we're inundated with work. Maybe others' attorneys aren't as fortunate, but that's what we've been able to do through our reputation. And that's why the rate works. 'Cause if nobody would pay it, the rate doesn't work. Then it's not your real rate. I would agree with you.
But that's the actual rate we charge.
The fact that plaintiff's attorneys have a busy practice and have the ability to carefully select cases was simply one factor the court should have considered in assessing the risks associated with representing plaintiff. See id. at 340 (where the court outlines that courts are to evaluate all factors affecting an attorney's ability to mitigate risk of nonpayment).
The trial court did not, as required under Rendine, supra, ibid., discuss any of the risk factors plaintiff raised. We believe the trial court mistakenly exercised its discretion by relying on statements only indirectly and minimally probative of risk and mitigation rather than conducting a more meaningful analysis of relevant factors and, in doing so, abused its discretion. Id. at 317.
Plaintiff next argues that the trial court abused its discretion when it denied her motion for supplemental attorney's fees, for time her attorney expended reviewing defendants' opposition to the amount of the fee application, preparing her reply brief, and appearing at oral argument. Plaintiff relied upon Ackerman v. Money Store, 330 N.J. Super. 366 (Law Div. 1999), to support her claim for supplemental fees. Ackerman involved the award of interim counsel fees rather than supplemental fees. Id. at 371. Counsel fees associated with a fee application are, however, commonly recoverable. See, e.g., Courier News v. Hunterdon County Prosecutor's Office, 378 N.J. Super. 539, 547 (App. Div. 2005); see also Tanksley v. Cook, 360 N.J. Super. 63, 67 (App. Div. 2003); H.I.P. (Heightened Independence & Progress, Inc.) v. K. Hovnanian at Mahwah VI, Inc., 291 N.J. Super. 144, 163 (Law Div. 1996); Robb v. Ridgewood Bd. of Educ., 269 N.J. Super. 394 (Ch. Div. 1993); Council Enters., Inc. v. Atl. City, 200 N.J. Super. 431, 443 (Law Div. 1984). Therefore, the court erred in rejecting this claim on the basis that it was not legally cognizable. Upon remand, the trial court should consider the reasonableness of fees sought in the supplemental application.
Finally, defendants, in their cross-appeal, claim the lodestar should be further reduced because of the limited success plaintiff achieved. We disagree.
Other than the paraprofessional and supplemental fee application, the court's determination of the appropriate hourly rate is entitled to deference. The court rationally explained how it arrived at the hourly rate, and the record does not reflect that the decision was reached inexplicably or by a departure from established policies, or was premised upon an impermissible basis. Flagg, supra, 171 N.J. at 571.
To summarize, the court's determination of the hourly rates and the number of hours for which a reasonable counsel fee should be compensated is affirmed. The order is otherwise vacated and remanded for further proceedings, based solely upon the existing record, consistent with this opinion, as to whether and to what extent plaintiff is entitled to paraprofessional fees, a contingency fee enhancement, and supplemental fees.
Affirmed in part, reversed in part, and remanded for further proceedings consistent with this opinion. We do not retain jurisdiction.