WILSON v. NOMURA SECURITIES INTERNATIONAL INC

Reset A A Font size: Print

United States Court of Appeals,Second Circuit.

Darnel WILSON, Plaintiff-Appellee-Cross-Appellant, v. NOMURA SECURITIES INTERNATIONAL, INC., Frank Zayas and Anton Appel, Defendants-Appellants-Cross-Appellees.

Docket Nos. 02-9001(L), 02-9069(XAP), 02-9449(CON).

Decided: March 02, 2004

Before:  NEWMAN, WINTER, and B.D. PARKER, Circuit Judges. Janet A. Broeckel, (Abbie J. Chessler, of counsel) Pillsbury Winthrop LLP, New York, New York, for Defendants-Appellants-Cross-Appellees. Blaine H. Bortnick, Liddle & Robinson LLP, New York, New York for Plaintiff-Appellee-Cross-Appellant.

Nomura Securities International Inc., Frank Zayas, and Anton Appel (collectively “Nomura”) appeal, and Darnel Wilson (“Wilson”) cross-appeals, from orders entered by Judge Sweet.   The subjects of the appeal and cross-appeal concern Wilson's application for attorney's fees after his acceptance of a Rule 68 Offer of Judgment (“Offer”).

The Offer covered Wilson's claims of racial discrimination under federal, state and local statutes-namely, Title VII, Section 1981, the New York State Human Rights Law, and the New York City Human Rights Law. The various substantive claims were factually and legally identical for present purposes, and the legal work performed by Wilson's counsel was therefore indivisibly related to all claims.

We affirm the district court's rulings that Wilson may not recover attorney's fees under Title VII above and beyond those contained in the Offer, see 42 U.S.C. § 2000e-5(k) (2001), and that Wilson is not entitled to recover attorney's fees under Title VII's “mixed motive” exception, see 42 U.S.C. § 2000e-5(g)(2)(B), because he had not proven, nor had the district court found, that the defendants had acted with a mixed motive.

The primary issue, however, is whether the district court erred in granting Wilson an award of attorney's fees for his New York City Human Rights Law claim even though the Offer, which Wilson accepted, covered all rights to attorney's fees for work on his Title VII claim.   Because all of Wilson's claims were inextricably intertwined and the legal work on them was essentially indivisible, we hold that acceptance of the Offer settled all of Wilson's rights to attorney's fees.

BACKGROUND

On February 8, 2001, Wilson filed charges against Nomura with the Equal Employment Opportunity Commission (the “EEOC Charge”).   These charges alleged racial and religious discrimination.   After the EEOC issued Wilson a Right to Sue letter, he filed the present complaint claiming racial discrimination in violation of Title VII of the Civil Rights Act of 1964, as amended, 42 U.S.C. § 2000e et seq.  (“Title VII”);  the Civil Rights Act of 1866, as amended, 42 U.S.C. § 1981 (“Section 1981”);  the New York State Executive Law § 296 et seq.  (“New York State Human Rights Law”);  and the Administrative Code of the City of New York § 8-101 et seq.  (“New York City Human Rights Law” or “NYCHRL”).

Before any discovery or motion practice, Nomura made an Offer of Judgment to Wilson pursuant to Federal Rule of Civil Procedure 68.   The Offer stated:

Pursuant to Federal Rule of Civil Procedure 68, Defendants Nomura Securities International, Inc., Frank Zayas and Anton Appel make an offer to allow judgment to be taken against them in the amount of $15,000.00 inclusive of all costs available under all local, state or federal statutes accrued to date.

Joint Appendix (“JA”) at 30.   Wilson accepted the Offer.   Arguing that attorney's fees were distinct from the “costs” compensated in the Offer, he then moved for an award of $35,325.00 in attorney's fees.

The district court ruled that Wilson could not recover attorney's fees for his Title VII claim because Title VII “expressly includes attorney's fees in its definition of ‘costs.’ ”  Wilson v. Nomura Sec. Int'l, Inc., 2002 WL 1560614 at 1, No. 01-CIV-9290', 2002 U.S. Dist. LEXIS 12668, *3-*4 (S.D.N.Y. July 15, 2002) (citing 42 U.S.C. § 2000e-5(k)).  The district court also held that Wilson could not recover attorney's fees under Title VII's “mixed motive” exception because he had not proven, nor had the district court found, that the defendants had acted with a mixed motive.  Id. at *4-*5, 2002 WL 1560614 at 2.   However, reasoning that the New York City Human Rights Law § 8-502(f) provided for the award of reasonable attorney's fees separate from the Offer's award of costs, the district court ruled that Wilson could recover attorney's fees in addition to the costs covered by the Offer.  Id. at *5-*9, 2002 WL 1560614 at 2-3. The district court awarded only $17,228.26 as attorney's fees because it found that Wilson's application included excessive and redundant hours, vague entries, and fees for tasks done by partners that could have been performed by associates.  Id. at *11-*14, 2002 WL 1560614 at 4-5.

Nomura then moved for reconsideration on the ground that the district court had overlooked the fact that the attorney's fees at issue were principally incurred in connection with Wilson's Title VII claim, for which Wilson had already been compensated by the terms of the Offer.  Wilson v. Nomura Sec. Int'l, Inc., 2002 WL 31487905 at 1, No. 01-CIV-9290, 2002 U.S. Dist. LEXIS 21554, *2 (S.D.N.Y. Nov. 7, 2002). Wilson cross-moved for fees incurred in opposing Nomura's motion for reconsideration.  Id. at *1, 2002 WL 31487905 at 1. The district court upheld its previous rulings explaining that the fees awarded necessarily included work done on Wilson's Title VII claim, and observed that “[s]ince causes under Title VII and the New York City Human Rights Law are related, not discrete, Wilson is entitled to the award.”  Id. at *4, 2002 WL 31487905 at 1-2. The district court also ruled that New York law did not permit Wilson to recover attorney's fees incurred in opposing Nomura's motion for reconsideration.  Id. at *5, 2002 WL 31487905 at 2 This appeal followed.

DISCUSSION

On appeal, Nomura argues that the district court allowed Wilson to recover attorney's fees twice-once through the Offer, which included fees for the Title VII claim, and a second time by awarding fees on the NYCHRL claim.   Nomura argues that any additional award of attorney's fees should be limited to the legal work done solely in connection with the NYCHRL claim, which the parties agree was coextensive with and indivisible from the Title VII work.   Wilson's cross-appeal seeks to recover fees associated with his Title VII claim under the “mixed motive” provision of the statute, to have the district court's ruling reducing the requested attorney's fees reversed, and to recover fees with respect to opposing Nomura's motion for reconsideration and this appeal.

 We review the district court's findings of fact for clear error and its conclusions of law de novo.  Harris Trust and Sav. Bank v. John Hancock Mut. Life Ins. Co., 302 F.3d, 18, 26 (2d Cir.2002).

a) Recovery of Attorney's Fees on Title VII and NYCHRL Claims

1. Title VII Fees

 We agree with the district court that acceptance of the Offer fully settled Wilson's Title VII claim, including any right to attorney's fees.  Fed.R.Civ.P. 68 provides that “[a]t any time more than 10 days before the trial begins, a party defending against a claim may serve upon the adverse party an offer to allow judgment to be taken against the defending party for the money or property or to the effect specified in the offer, with costs then accrued.”   As used in Rule 68, the term “costs” refers to all costs awardable under the statute or other authority that is the basis for the underlying claim.  Marek v. Chesny, 473 U.S. 1, 9, 105 S.Ct. 3012, 87 L.Ed.2d 1 (1985).   Where the underlying statute defines “costs” to include attorney's fees, therefore, such fees are “costs” for purposes of Rule 68.   Id.

Nomura's Offer to Wilson included “all costs available under all local, state or federal statutes accrued to date.”   JA at 30.   Because Title VII expressly includes attorney's fees in its definition of “costs,” Wilson's acceptance of the Offer settled his claim for damages and his right to attorney's fees under Title VII. See 42 U.S.C. § 2000e-5(k) (2001) (“[T]he court, in its discretion, may allow the prevailing party ․ a reasonable attorney's fee (including expert fees) as part of the costs.”);  Lyte v. Sara Lee Corp., 950 F.2d 101, 103 (2d Cir.1991).

Wilson argues that he is entitled to attorney's fees beyond those included in the Offer based on a 1991 amendment to Title VII, 42 U.S.C. § 2000e-5(g)(2)(B).  That Section provides:

On a claim in which an individual proves a violation under § 2000e-2(m) of this title and a respondent demonstrates that the respondent would have taken the same action in the absence of the impermissible motivating factor, the court-(i) may grant declaratory relief, injunctive relief, (except as provided in clause (ii)), and attorney's fees and costs demonstrated to be directly attributable only to the pursuit of a claim under § 2000e-2(m) of this title;  and (ii) shall not award damages or issue an order requiring any admission, reinstatement, hiring, promotion, or payment, described in subparagraph (A).

Section 2000e-5(g)(2)(B) was added to Title VII specifically to address the situation in which the plaintiff does not receive a damages award at trial but nonetheless serves a public purpose by “prov[ing]” that the defendant acted with discriminatory intent.  Gudenkauf v. Stauffer Communications, Inc., 158 F.3d 1074, 1080-81 (10th Cir.1998).   However, unlike in Gudenkauf, where the plaintiff prevailed before a jury on a discrimination claim, in this case, there has been no factual determination of an improper motive with respect to Wilson's claims of discrimination.   Furthermore, the Offer included an award for damages, placing him outside the class of plaintiffs protected by the statute, i.e. those who “prov[e]” a discriminatory intent but are not awarded damages because the defendant prevailed on its mixed motive defense.  Id. Therefore, the Offer compensated Wilson for any and all rights to attorney's fees with respect to his Title VII claim.

2. NYCHRL Fees

 The district court held, however, that NYCHRL provides a separate basis for awarding Wilson attorney's fees beyond the “costs” provided for in the Offer.   Under the terms of NYCHRL, “the court ․ may award the prevailing party costs and reasonable attorney's fees.”   NYCHRL § 8-502(f).  The district court viewed this language as distinguishing between “costs” and attorney's fees, Wilson, 2002 U.S. Dist. LEXIS 12668, at *6, 2002 WL 1560614 at 2, unlike the language in Title VII that treats attorney's fees “ ‘as part of the [recoverable] costs,’ ” id. at *4, 2002 WL 1560614 at 2 (quoting 42 U.S.C. § 2000e-5(k)).  The district court therefore held that because Wilson is a prevailing party and the terms of the Offer do not expressly provide to the contrary, he was still entitled to reasonable attorney's fees under NYCHRL in addition to anything received pursuant to the Offer.  Id. at *8-*9, 2002 WL 1560614 at 3-4.   We disagree.

In Hensley v. Eckerhart, 461 U.S. 424, 435, 103 S.Ct. 1933, 76 L.Ed.2d 40 (1983), the Supreme Court addressed the distinction between wholly unrelated claims that involve different sets of facts and different legal theories and claims that “involve a common core of facts” or are “based on related legal theories.”   With regard to attorney's fees for the latter category of claims, the Court explained that in some civil rights cases

the plaintiff's claims for relief will involve a common core of facts or will be based on related legal theories.   Much of counsel's time will be devoted generally to the litigation as a whole, making it difficult to divide the hours expended on a claim-by-claim basis.   Such a lawsuit cannot be viewed as a series of discrete claims.   Instead the district court should focus on the significance of the overall relief obtained by the plaintiff in relation to the hours reasonably expended on the litigation.

Id. Therefore, when a plaintiff fails to prove one of two overlapping claims-e.g. a discriminatory discharge-but prevails on the other-e.g. retaliation for complaining of discrimination-the plaintiff may recover fees for all the legal work.   See Dominic v. Consol. Edison Co. of N.Y., Inc., 822 F.2d 1249, 1259-60 (2d Cir.1987) (“[T]he factual and legal theories underlying [plaintiff's] age discrimination claim were inextricably intertwined with those underlying his retaliatory discharge claim.   Consequently, a fully compensatory fee award was justified because [plaintiff] recovered the same relief on the retaliation claim that he would have on his discrimination claim.”).

By the same token, however, when a plaintiff prevails on two such overlapping claims, he or she is entitled to only one award of fees for the indivisible legal work performed.   In the present matter, Wilson's Title VII and NYCHRL claims were factually and legally identical-i.e. involved a “common core of facts” and were “based on related legal theories” within the meaning of Hensley and Dominic.   When Wilson accepted the Rule 68 Offer, he agreed that it covered his rights both to damages on all claims and to fees for the legal work performed with respect to his Title VII claim.   Because the work performed on the Title VII claim was the same as that performed on the NYCHRL claim, Wilson's acceptance of the Offer settled all rights to fees on that work, and he is not entitled to a second recovery.1

CONCLUSION

We affirm the district court's rulings that Wilson may not recover attorney's fees under Title VII beyond those contained in the Offer and that Wilson is not entitled to recover attorney's fees under Title VII's “mixed motive” exception.   We reverse, however, the district court's partial grant of attorney's fees under NYCHRL.

Because we deny attorney's fees in addition to those contained in the Offer, we need not reach the issue of whether the district court erred in reducing the fees requested by Wilson.   We also need not address Wilson's request for fees incurred in opposing Nomura's motion for reconsideration and in defending this appeal and pursuing the cross-appeal.   As a result of our decision, Wilson is no longer a prevailing party with regard to the issues that were the subject of those proceedings.

When opposing lawyers execute a document to settle litigation, they should expect courts to apply that document according to its precise terms, leaving room for “interpretation” only to remedy the most obvious inadvertencies.   In this case involving claims under both federal and municipal law, the lawyers settled their litigation for an amount that was stated to be “inclusive of costs.”   It did not say, “inclusive of costs and attorney's fees,” as most careful lawyers would have said if they wanted the settlement to preclude a claim for attorney's fees.   The Court acknowledges that the term “costs” includes attorney's fees under applicable federal law, but not under applicable municipal law.   Nevertheless, the Court deems the parties to have settled the Plaintiff's claim for attorney's fees under municipal law by agreeing to a payment “inclusive of costs.”   Because that ruling imports into the word “costs” a meaning that it does not have under applicable municipal law and unjustifiably rewards the Defendants for their counsel's inattention to careful drafting, I respectfully dissent.

Darnel Wilson's suit, alleging racial discrimination in employment, was settled by his acceptance of the Defendants' offer, pursuant to Fed.R.Civ.P. 68, “to allow judgment to be taken against them in the amount of $15,000.00 inclusive of all costs available under all local, state or federal statutes accrued to date” (emphasis added).   We all agree that, under applicable federal law, a reasonable attorney's fee may be allowed to the prevailing party “as part of the costs,” see 42 U.S.C. § 2000e-5(k) (2001), and that, under applicable municipal law, the prevailing party may be awarded “costs and reasonable attorney's fees,” Administrative Code of the City of New York (“New York City Human Rights Law” or “NYCHRL”) § 8-502(f) (emphasis added).   We also agree, as the Court states, that “when a plaintiff prevails on two ․ overlapping claims, he or she is entitled to only one award of fees for the indivisible legal work performed,” slip op. at [10] (emphasis added), and that Wilson's Title VII and NYCHRL claims “were factually and legally identical,” id.   Where we disagree is when the Court goes on to state that “Wilson's acceptance of the Offer settled all rights to fees.”  Id.

The settlement settled only what it said it settled, which included “all costs available under all local, state or federal statutes accrued to date.”   Because the word “costs” under federal law includes attorney's fees, the parties settled the Plaintiff's claim for an award of attorney's fees under federal law.   However, because the word “costs” under municipal law does not include attorney's fees, the parties did not settle the Plaintiff's claim for an award of attorney's fees under municipal law.   That latter claim remains viable, as the District Court ruled.

Of course, as this Court states, a plaintiff who prevails on two overlapping claims is entitled to only one “award” of attorney's fees, but Wilson has yet to receive any “award” of such fees.   Rather, he has received a lump sum settlement, which includes an amount for which he was willing to settle the merits of his discrimination claims and an amount for which he was willing to settle his claim for attorney's fees under federal law.   Had he received an “award” of attorney's fees, he would have received a reasonable fee (calculated under the lodestar approach, see Quaratino v. Tiffany & Co., 166 F.3d 422, 425 (2d Cir.1998), rather than the small portion of the $15,000 settlement amount that can be attributed to the settlement of his claim for attorney's fees under federal law).

As far as the record discloses, there is no firm basis on which to determine whether either side knew the precise meaning of “costs” under federal or municipal law when the Rule 68 offer was made and accepted.   For all I can tell, both lawyers might have been unaware that “costs” includes an attorney's fee under 42 U.S.C. § 2000e-5(k).  Thus, it may well be that both lawyers thought the settlement preserved the Plaintiff's claim for attorney's fees under federal law.   If so, the Defendants' lawyer must have been pleasantly surprised to learn that the settlement extinguished the claim for an attorney's fee under federal law.   It is also possible that both lawyers were unaware that “costs” does not include an attorney's fee under NYCHRL § 8-502(f).  If so, the Plaintiff's lawyer must have been pleasantly surprised to learn that the settlement did not extinguish the claim for an attorney's fee under municipal law.   It is also possible that both lawyers fully understood the meaning of “costs” under both provisions and understood that they were settling the claim for attorney's fees under federal law while maintaining entitlement to an award of attorney's fees under local law.   If so, the Defendant's lawyer, under this Court's ruling, is reaping a reward that is unexpected as well as undeserved.1

In the final analysis, none of these possibilities matters.   In the absence of mutual mistake, which is not even alleged, or an obvious unilateral mistake of the sort entitled to correction, see Prudential Insurance Co. of America v. S.S. American Lancer, 870 F.2d 867, 871-74 (2d Cir.1989), which is also not alleged, the parties are bound by the terms of their settlement.   In this case, regardless of the parties' understanding of the law, those terms happen to preclude an award of attorney's fees under federal law (because that claim has been settled), but permit recovery of a reasonable attorney's fee under municipal law (because that claim has not been settled).

Of course, the Plaintiff is not entitled to more than a reasonable attorney's fee under municipal law.   Had this Court upheld Judge Sweet's ruling, the Defendants would have been entitled to offset an award of reasonable attorney's fees under municipal law by whatever part of the settlement amount they can show should be attributed to settlement of the claim for attorney's fees under federal law.

Because the Court has unjustifiably denied the Plaintiff an award of a reasonable attorney's fee under municipal law, a claim that is indisputably outside the terms of the Rule 68 settlement, I respectfully dissent.

FOOTNOTES

1.   There is no claim that counsel for Nomura represented to Wilson that the Offer was not intended to cover all fees.   Counsel for Wilson has stated in an affidavit that immediately upon acceptance of the Offer of Judgment, he called counsel for Nomura to inform her that, under the Offer, Wilson was still entitled to an award of fees, which she denied.

1.   The affidavit of the Plaintiff's counsel, cited by the Court, 361 F.3d at 91, n. 1, indicates that counsel promptly made a demand for an attorney's fee upon the Defendants' counsel, but does not reveal whether he thought his entitlement to an attorney's fee derived from federal law or municipal law.

Judge JON O. NEWMAN dissents in a separate opinion.