By Gerald L. Maatman, Jr. and Rebecca S. Bjork
Duane Morris Takeaway: Even when class actions span decades prior to settling, the case seems unwinnable, the settlement contains a vast record, and the outcome was largely favorable to plaintiffs, courts nonetheless might be reluctant to add a “superior attorney performance” lodestar multiplier for an award of attorneys’ fees when the evidence provided by plaintiffs’ counsel is insufficient to do so. This issue was present in the U.S. District Court for the District of Columbia’s recent ruling in the extraordinary 45-year long case of Hartman, et al. v. Blinken, Case No. 77-CV-2019 (D.D.C. Mar. 31, 2023).
The ruling is a must read for any corporate counsel involved in class action litigation.
Case Background
Hartman was originally filed on Nov. 25, 1977 by over 1,000 female plaintiffs alleging that they were discriminated against by the United States Information Agency on the basis of their sex in violation of Title VII of the Civil Rights Act when they were allegedly passed over for hiring or promotions at the agency. The resulting litigation continued for decades, until the last several years, which involved negotiations between the plaintiffs’ counsel and the United States Department of State, the resulting defendant following the dissolution of the U.S. Information Agency. In 2000, the parties entered into a consent decree that provided for a $508 million settlement fund for the class and for “reasonable attorneys’ fees, expenses, and costs.” Id. at 2. The parties also settled more than 20 interim attorneys’ fee requests. Id.
The class action settlement constitutes the largest employment discrimination class action settlement ever.
In 2018, after all settlement funds were issued, plaintiffs filed a motion for a final determination of attorneys’ fees, seeking an additional award of $34 million as an enhancement to the lodestar amount.
Following an extensive evaluation and analysis of the previously awarded attorneys’ fees, the court denied plaintiffs’ request. It ruled that although the lodestar fee that had been awarded up to that point was “likely not an adequate measure of class counsel’s true market value,” plaintiffs had failed to properly identify information necessary for the court to approve a modification to the award. Id. at 3. Specifically, the court noted that plaintiffs had not submitted information regarding the “Laffey Matrix rates” used to calculate interim fees over the past several years, and failed to provide interest rate differences between the 1-year Treasury bill rate and the prime rate. Id. at 3-4.
The parties thereafter stipulated that defendants: (i) would pay plaintiffs $9,033,600 to resolve any issues concerning the use of the below-market Laffey Matrix rates and the Treasury bill interest rate; (ii) that the value of the base lodestar for the enhancement was $19 million; and (iii) that all other claims based on delay of fees, true market lodestar value, or interest paid on the interim fee awards were fully resolved. Id. at 4. The only remaining issue, identified by the parties as a potential dispute, was the possibility of a lodestar enhancement for “superior attorney performance” or “exceptional results.” Id.
Plaintiffs thereafter filed a motion for a lodestar enhancement based on “superior attorney performance.” The court denied the motion.
The Court’s Ruling
The court reviewed plaintiffs’ request under the D.C. Circuit’s “three-part analysis to assess appropriate fee awards under fee-shifting statutes in cases involving complex federal litigation.” Id. at 5. Under that framework, the third part of the analysis, or whether the use multiplies as warranted, was applicable here. Id.
Plaintiffs asserted that exceptional results and superior lawyering justified enhancement of the lodestar because it did not account for: (i) the results obtained; (ii) “the preclusion of other employment by committing both human and capital resources to the case;” (iii) “the duration of the case;” (4) “the ‘undesirability’ of the case;” and (iv) “awards in similar cases.” Id. at 10.
The court essentially found that none of the factors warranted a lodestar enhancement, as all factors were already accounted for in other areas of the lodestar determination. The court explained that any special results obtained should be already reflected in the reasonableness or the hourly rates. The court also noted that the complexity and voluminous nature of the record materials would be reflected in the overall number of hours billed. The court also stated that plaintiffs failed to show how any special commitment of human or capital resources was not already reflected in the lodestar.
As to plaintiffs’ argument that the case was “undesirable” and thus an enhancement was warranted, the court ruled that plaintiffs failed to identify specific evidence demonstrating that the case was undesirable, which was required under pertinent case law. Further, any societal implications from plaintiffs’ victory could not be measured in an objective way by the court in order to provide a lodestar enhancement.
The court concluded by emphasizing that the decision not to multiply the lodestar should not be taken to diminish the “resounding success plaintiffs’ counsel achieved.” Id. at 13-14. However, the court ruled that this case was not the “rare” or “exceptional” case in which “specific evidence” supports an “objective and reviewable basis” for enhancement of the lodestar. Id. at 14. The court thereby denied plaintiffs’ request for an enhancement of the lodestar amount.
Implications For Employers
Fee awards are discretionary, but the ruling in Hartman demonstrates the high standard of evidence required for an enhancement award. This decision is an excellent reference for defense efforts to fight attorneys’ fees awards in large-scale class actions.