On appeal from the Superior Court of New Jersey, Law Division, Middlesex County, Docket No. L-3224-04.
The opinion of the court was delivered by: Messano, J.A.D.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Before Judges Stern, Sapp-Peterson and Messano.
In this appeal, we consider the interplay between two competing public policies, each of which are fostered by the award of counsel fees to the prevailing party in the litigation. On the one hand, our Legislature has adopted certain fee-shifting statutes requiring or permitting an award of counsel fees to a prevailing plaintiff in order "to ensure 'that plaintiffs with bona fide claims are able to find lawyers to represent them[,] . . . to attract competent counsel in cases involving statutory rights, . . . and to ensure justice for all citizens." New Jerseyans for a Death Penalty Moratorium v. N.J. Dep't of Corr., 185 N.J. 137, 153 (2005)(quoting Coleman v. Fiore Bros., 113 N.J. 594, 598 (1989)). In this case, we deal with one such statute, the Prevailing Wage Act (PWA), N.J.S.A. 34:11-56.25 to -56.47. On the other hand, "to encourage, promote, and stimulate early out-of-court settlement of . . . claims that in justice and reason ought to be settled without trial," Schettino v. Roizman Dev., Inc., 158 N.J. 476, 482 (1999)(quoting Crudup v. Marrero, 57 N.J. 353, 361 (1971)), the Supreme Court has adopted the offer of judgment rule, Rule 4:58 (the Rule), which permits an award of counsel fees and costs to a prevailing party whose offer of judgment has been rejected by the other side.
Defendant, C&M Door Controls, Inc., appeals from those portions of the February 7, 2007, order for judgment that 1) granted plaintiff, Thomas Best, $62,529.65 in counsel fees and costs; and 2) denied defendant's motion for counsel fees and costs made pursuant to the Rule and the frivolous litigation provision of the Conscientious Employee Protection Act (CEPA), N.J.S.A. 34:19-1 to -14, specifically N.J.S.A. 34:19-6. Plaintiff cross-appeals challenging the amount of the award.
On May 3, 2004, plaintiff filed his complaint against defendant, its vice president, Christopher O'Keefe, and plaintiff's supervisor, Michael Craven, alleging violations of the PWA and CEPA.*fn1 Specifically, plaintiff alleged that by mischaracterizing the nature of his work assignments and miscalculating the hours he worked, defendant underpaid him for work performed on prevailing-wage projects. He further alleged that when he reported the matter to the New Jersey Department of Labor (DOL), which resulted in an audit of defendant's records, his employer retaliated against him by assigning him tasks in the company warehouse. These jobs were not eligible for the higher paying prevailing-wage hourly rates. Defendant filed an answer on July 26, 2004, generally denying plaintiff's allegations and asserting various affirmative defenses.
After discovery, on July 21, 2006, plaintiff made an offer of judgment "for the total sum of [$100,000] inclusive of all damages . . . any and all costs . . . and/or attorneys' fees." On July 21, 2006, defendant made its own offer of judgment, $15,000, "including . . . damages,  any and all costs . . . and/or attorneys' fees." Four days later, on July 25, defendant made a second offer of judgment in the amount of $25,000. Plaintiff did not accept defendant's offer and the matter proceeded to trial before a jury from August 14 to August 24, 2006. At trial, although plaintiff's claim under the PWA for wages due totaled $46,262.46, the jury returned a verdict of only $2,600, and found no cause for an award on plaintiff's CEPA claim.
Thereafter, plaintiff moved for an award of counsel fees pursuant to the fee-shifting provision of the PWA, N.J.S.A. 34:11-56.40, while defendant moved for fees pursuant to both the Rule and N.J.S.A. 34:19-6. Plaintiff requested $122,925 in attorneys' fees, $5,493.29 in paraprofessional costs, $602.30 in taxed costs, and $18,472.50 in litigation expenses; defendant meanwhile sought $42,417 in attorneys' fees and $328.48 in litigation expenses under the Rule, or, alternatively, $79,011.98 in fees and costs under CEPA. The trial judge considered oral argument on the applications on October 6, 2006, and filed a comprehensive written decision on January 23, 2007.
The judge found that "[t]he public interest was served . . . while [p]laintiff's counsel prosecuted the PWA claim for [his] client." However, the judge also concluded that plaintiff's counsel was entitled to a fee award only "up  until the time [he] [was] clearly vindicat[ing] his client's rights," and therefore he needed to "determine when [p]laintiff's counsel achieved that goal." The judge determined that once defendant made its offer of judgment of $25,000 in July 2006, plaintiff's rights were "unequivocally vindicated," particularly in light of plaintiff's "admittedly small wage claim" and "tenuous proofs." He determined that "continuing with [the] litigation" thereafter "was unreasonable." He therefore concluded that plaintiff's counsel fee award must be based upon only those services rendered "until July of 2006."
The judge then considered defendant's request under the Rule. He noted the amendment to the Rule, effective September 1, 2006, "provide[d] that the [Rule] should not apply if a fee allowance . . . would conflict with the policy underlying a fee-shifting provision." He concluded that in order "to prevent jeopardizing the policy fostered by the PWA's fee[-]shifting provision, the fee allowable under the [Rule] should not be allowed." The judge further concluded that defendant's fee request made under CEPA's frivolous claim provision should be denied because there was "no judicial finding that the claims asserted by [p]laintiff . . . were frivolous or without basis in fact or law," citing our holding in Buccinna v. Micheletti, 311 N.J. Super. 557 (App. Div. 1998).
The judge then considered the appropriate amount to award plaintiff using the analysis set forth in Rendine v. Pantzer, 141 N.J. 292 (1995), and applying the factors contained in Rule 4:42-9 and R.P.C. 1.5(a). After finding counsel's hourly fee and the amount of time expended to be reasonable, the judge limited the "lodestar" for the award to the time spent by counsel prosecuting plaintiff's case prior to July 2006. He then further reduced the award based on plaintiff's "limited success" in prosecuting his claims. In this regard, the judge observed that "[p]laintiff's billing does not clearly distinguish the amount of time spent on the CEPA claim," but "others prosecuting similar cases have spent approximately forty  percent of their time on the CEPA claim." He therefore limited plaintiff's recovery to sixty percent of the 226.77 hours expended before July 2006, a total of 136 hours. He limited plaintiff's requested paralegal fees and litigation costs by using the same percentage.
On February 7, 2007, the judge filed the order now under review, and this appeal and cross-appeal followed.
Defendant contends 1) that the judge erred by applying the Rule as amended in 2006; 2) alternatively, that even if the new version of the Rule was applicable, an award of counsel fees was appropriate because under the facts of this case, the policies supporting the award do not conflict with the policies that support the fee-shifting provisions of the PWA; 3) that it was entitled to an award of counsel fees under the frivolous litigation provisions of CEPA; and 4) that any award made to plaintiff was unjustified.
Plaintiff counters by arguing 1) that he was entitled to an award of counsel fees under the PWA; 2) that in both its preand post-2006 versions, the Rule is inapplicable to any litigation involving a fee-shifting statute; 3) that the judge erred in limiting his award to only those services provided prior to defendant's offer of judgment in July 2006; and 4) that it was error to reduce the award by forty percent because plaintiff failed to prevail on his CEPA claim.
We have considered the arguments raised in light of the record and applicable legal standards. We reverse and remand for further proceedings consistent with this opinion.
We first consider defendant's argument that it was entitled to an award of counsel fees under CEPA's frivolous litigation section, N.J.S.A. 34:19-6, which provides, "[a] court . . . may . . . order that reasonable attorneys' fees and court costs be awarded to an employer if the court determines that an action brought by an employee under this act was without basis in law or in fact." We affirm that portion of the order that denied defendant's request for fees under this provision of CEPA substantially for the reasons expressed by the trial judge in his written opinion. R. 2:11-3(e)(1)(A).
In Buccinna, we reversed the trial judge's award of litigation costs to defendants after a bench trial resulted in a no cause verdict on plaintiff's CEPA claim. Buccinna, supra, 311 N.J. Super. at 560. We concluded that such an award was not justified under N.J.S.A. 34:19-6 despite the no cause verdict because "[t]here was no finding that Buccinna's cause of action was without basis in law or in fact[.]" Id. at 562.
In this case, defendant moved at the conclusion of plaintiff's case to dismiss the CEPA claim, R. 4:37-2, but the judge denied the request finding sufficient evidence upon which the jury could find in plaintiff's favor. Defendant has not directly attacked that conclusion. In our opinion, the trial judge's determination not to dismiss plaintiff's CEPA claim and to submit the case to the jury forecloses any further consideration that the claim "was without [any] basis in law or in fact," thus, ...