Thursday, February 9, 2012

Enhancement of Fee Awards in New Jersey

After the Supreme Court’s decision in Purdue v. Kenny A., __ U.S. __, 130 S. Ct. 1662, 176 L. Ed. 2d 494 (2010), one would have thought that enhancements of the lodestar would come almost to a screeching halt and only be rarely awarded in fee-shifting litigation.  Not so in New Jersey under state law.  

On January 25, 2012, the New Jersey Supreme Court handed down its decision in two consolidated appeals.  Walker v. Guiffre, Nos. A-72, A-100, Sept. Term 2010, 066969, 067267, 2012 N.J. LEXIS 15 (Jan. 25, 2012).  Walker was consolidated on appeal from two lower court decisions, Walker v. Giuffre, 2 A.3d 1165 (N.J. Super. Ct. App. Div. 2010) and Humphries v. Powder Mill Shopping Plaza, No. A-6083-08T1, 2010 N.J. Super. Unpub. LEXIS 2664 (N.J. Super. Ct. App. Div. Oct. 5, 2010).

 In Walker, a consumer protection case, the trial court awarded walker $654.50 in total damages, and a lodestar fee of $68,450.  The trial court then enhanced the lodestar fee by 45% for a total fee award of $99,252.50.  The intermediate New Jersey Appeals Court reversed the 45% contingency enhancement, relying upon Purdue.  2 A.3d 1165 (N.J. Super. Ct. App. Div. 2010).

In Humphries, a New Jersey Law Against Discrimination case, the parties entered into a partial settlement agreement which required modifications to the shopping center’s parking area and awarded the plaintiff $2,500 in damages.  The Plaintiff, as a “prevailing party”, then sought an award of legal fees.  The trial court awarded a lodestar fee with a 20% contingency enhancement, rejecting plaintiff’s request for a 50% contingency enhancement.  Again, the intermediate Appeals Court reversed, holding that Purdue permits contingency enhancements only in “rare and exceptional circumstances.”  Humphries, 2010 N.J. Super. Unpub. LEXIS 2664 at *25.  

The New Jersey Supreme Court, in a unanimous decision, rejected the intermediate appellate court’s reliance on Purdue, opining that its 1995 decision in Rendine v. Pantzer, 661 A.2d 1202 (N.J. 1995) had rejected the 1992 decision of the United States Supreme Court in City of Burlington v. Dague, 505 U.S. 557 (1992), in which the Court had addressed the propriety of contingency enhancements.  The New Jersey Supreme Court further explained that the U.S. Supreme Court’s decision in Purdue was merely a reaffirmation of Dague, and “the opinion made it abundantly clear that, for federal fee-shifting purposes, this issue had been settled in Dague…Simply put, the Court’s decision in Purdue reiterates the framework that applies to fee awards in federal courts arising from federal statutes and does not represent any new approach on the subject.”  In short, New Jersey considered and rejected the “rare circumstance” rule respecting contingency fee enhancements in Rendine, and merely reaffirmed that in Walker.  

The New Jersey Supreme Court went on to state that it “fixed the ordinary range for a contingency enhancement as being between five and fifty percent and we also identified the typical range as being between twenty and thirty-five percent of the lodestar.”  The New Jersey Supreme Court’s “rare and exceptional case” rule is a 100% enhancement.  Further, it did preclude an award of a contingency enhancement in excess of 100%.  

The Court sent Walker back to the trial court for further proceedings, and then proceeded to reverse the trial court’s twenty-percent fee-enhancement, and instead found that “the requested fifty percent was eminently reasonable…”

The decision in the consolidated cases will undoubtedly be a catalyst to plaintiff’s counsel arguing that the rationale of Rendine and Walker ought to be applied to their state anti-discrimination statute.

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