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Rule 23. Class Actions | Federal Rules of Civil Procedure | LII / Legal Information Institute

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Federal Rules of Civil Procedure › TITLE IV. PARTIES

Rule 23. Class Actions

(a) PREREQUISITES. One or more members of a class may sue or be sued as representative parties onbehalf of all members only if:

(1) the class is so numerous that joinder of all members is impracticable;

(2) there are questions of law or fact common to the class;

(3) the claims or defenses of the representative parties are typical of the claims or defenses ofthe class; and

(4) the representative parties will fairly and adequately protect the interests of the class.

(b) TYPES OF CLASS ACTIONS. A class action may be maintained if Rule 23(a) is satisfied and if:

(1) prosecuting separate actions by or against individual class members would create a risk of:

(A) inconsistent or varying adjudications with respect to individual class members that wouldestablish incompatible standards of conduct for the party opposing the class; or

(B) adjudications with respect to individual class members that, as a practical matter, would bedispositive of the interests of the other members not parties to the individual adjudications orwould substantially impair or impede their ability to protect their interests;

(2) the party opposing the class has acted or refused to act on grounds that apply generally tothe class, so that final injunctive relief or corresponding declaratory relief is appropriate respectingthe class as a whole; or

(3) the court finds that the questions of law or fact common to class members predominate overany questions affecting only individual members, and that a class action is superior to otheravailable methods for fairly and efficiently adjudicating the controversy. The matters pertinent tothese findings include:

(A) the class members’ interests in individually controlling the prosecution or defense ofseparate actions;

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(B) the extent and nature of any litigation concerning the controversy already begun by oragainst class members;

(C) the desirability or undesirability of concentrating the litigation of the claims in the particularforum; and

(D) the likely difficulties in managing a class action.

(c) CERTIFICATION ORDER; NOTICE TO CLASS MEMBERS; JUDGMENT; ISSUES CLASSES; SUBCLASSES.

(1) Certification Order.

(A) Time to Issue. At an early practicable time after a person sues or is sued as a classrepresentative, the court must determine by order whether to certify the action as a class action.

(B) Defining the Class; Appointing Class Counsel. An order that certifies a class action mustdefine the class and the class claims, issues, or defenses, and must appoint class counsel underRule 23(g).

(C) Altering or Amending the Order. An order that grants or denies class certification may bealtered or amended before final judgment.

(2) Notice.

(A) For (b)(1) or (b)(2) Classes. For any class certified under Rule 23(b)(1) or (b)(2), the courtmay direct appropriate notice to the class.

(B) For (b)(3) Classes. For any class certified under Rule 23(b)(3), the court must direct toclass members the best notice that is practicable under the circumstances, including individualnotice to all members who can be identified through reasonable effort. The notice must clearlyand concisely state in plain, easily understood language:

(i) the nature of the action;

(ii) the definition of the class certified;

(iii) the class claims, issues, or defenses;

(iv) that a class member may enter an appearance through an attorney if the member sodesires;

(v) that the court will exclude from the class any member who requests exclusion;

(vi) the time and manner for requesting exclusion; and

(vii) the binding effect of a class judgment on members under Rule 23(c)(3).

(3) Judgment. Whether or not favorable to the class, the judgment in a class action must:

(A) for any class certified under Rule 23(b)(1) or (b)(2), include and describe those whom thecourt finds to be class members; and

(B) for any class certified under Rule 23(b)(3), include and specify or describe those to whomthe Rule 23(c)(2) notice was directed, who have not requested exclusion, and whom the courtfinds to be class members.

(4) Particular Issues. When appropriate, an action may be brought or maintained as a class



action with respect to particular issues.

(5) Subclasses. When appropriate, a class may be divided into subclasses that are each treatedas a class under this rule.

(d) CONDUCTING THE ACTION.

(1) In General. In conducting an action under this rule, the court may issue orders that:

(A) determine the course of proceedings or prescribe measures to prevent undue repetition orcomplication in presenting evidence or argument;

(B) require—to protect class members and fairly conduct the action—giving appropriate noticeto some or all class members of:

(i) any step in the action;

(ii) the proposed extent of the judgment; or

(iii) the members’ opportunity to signify whether they consider the representation fair andadequate, to intervene and present claims or defenses, or to otherwise come into the action;

(C) impose conditions on the representative parties or on intervenors;

(D) require that the pleadings be amended to eliminate allegations about representation ofabsent persons and that the action proceed accordingly; or

(E) deal with similar procedural matters.

(2) Combining and Amending Orders. An order under Rule 23(d)(1) may be altered or amendedfrom time to time and may be combined with an order under Rule 16.

(e) SETTLEMENT, VOLUNTARY DISMISSAL, OR COMPROMISE. The claims, issues, or defenses of a certified class maybe settled, voluntarily dismissed, or compromised only with the court's approval. The followingprocedures apply to a proposed settlement, voluntary dismissal, or compromise:

(1) The court must direct notice in a reasonable manner to all class members who would bebound by the proposal.

(2) If the proposal would bind class members, the court may approve it only after a hearing andon finding that it is fair, reasonable, and adequate.

(3) The parties seeking approval must file a statement identifying any agreement made inconnection with the proposal.

(4) If the class action was previously certified under Rule 23(b)(3), the court may refuse toapprove a settlement unless it affords a new opportunity to request exclusion to individual classmembers who had an earlier opportunity to request exclusion but did not do so.

(5) Any class member may object to the proposal if it requires court approval under thissubdivision (e); the objection may be withdrawn only with the court's approval.

(f) APPEALS. A court of appeals may permit an appeal from an order granting or denying class-actioncertification under this rule if a petition for permission to appeal is filed with the circuit clerk within14 days after the order is entered. An appeal does not stay proceedings in the district court unlessthe district judge or the court of appeals so orders.

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(g) CLASS COUNSEL.

(1) Appointing Class Counsel. Unless a statute provides otherwise, a court that certifies a classmust appoint class counsel. In appointing class counsel, the court:

(A) must consider:

(i) the work counsel has done in identifying or investigating potential claims in the action;

(ii) counsel's experience in handling class actions, other complex litigation, and the types ofclaims asserted in the action;

(iii) counsel's knowledge of the applicable law; and

(iv) the resources that counsel will commit to representing the class;

(B) may consider any other matter pertinent to counsel's ability to fairly and adequatelyrepresent the interests of the class;

(C) may order potential class counsel to provide information on any subject pertinent to theappointment and to propose terms for attorney's fees and nontaxable costs;

(D) may include in the appointing order provisions about the award of attorney's fees ornontaxable costs under Rule 23(h); and

(E) may make further orders in connection with the appointment.

(2) Standard for Appointing Class Counsel. When one applicant seeks appointment as classcounsel, the court may appoint that applicant only if the applicant is adequate under Rule 23(g)(1)and (4). If more than one adequate applicant seeks appointment, the court must appoint theapplicant best able to represent the interests of the class.

(3) Interim Counsel. The court may designate interim counsel to act on behalf of a putative classbefore determining whether to certify the action as a class action.

(4) Duty of Class Counsel. Class counsel must fairly and adequately represent the interests of theclass.

(h) ATTORNEY'S FEES AND NONTAXABLE COSTS. In a certified class action, the court may award reasonableattorney's fees and nontaxable costs that are authorized by law or by the parties’ agreement. Thefollowing procedures apply:

(1) A claim for an award must be made by motion under Rule 54(d)(2), subject to the provisionsof this subdivision (h), at a time the court sets. Notice of the motion must be served on all partiesand, for motions by class counsel, directed to class members in a reasonable manner.

(2) A class member, or a party from whom payment is sought, may object to the motion.

(3) The court may hold a hearing and must find the facts and state its legal conclusions underRule 52(a).

(4) The court may refer issues related to the amount of the award to a special master or amagistrate judge, as provided in Rule 54(d)(2)(D).

NOTES

(As amended Feb. 28, 1966, eff. July 1, 1966; Mar. 2, 1987, eff. Aug. 1, 1987; Apr. 24, 1998, eff.



Dec. 1, 1998; Mar. 27, 2003, eff. Dec. 1, 2003; Apr. 30, 2007, eff. Dec. 1, 2007; Mar. 26, 2009, eff.Dec. 1, 2009.)

NOTES OF ADVISORY COMMITTEE ON RULES—1937

Note to Subdivision (a). This is a substantial restatement of [former] Equity Rule 38(Representatives of Class) as that rule has been construed. It applies to all actions, whether formerlydenominated legal or equitable. For a general analysis of class actions, effect of judgment, andrequisites of jurisdiction see Moore, Federal Rules of Civil Procedure: Some Problems Raised by thePreliminary Draft, 25 Georgetown L.J. 551, 570 et seq. (1937); Moore and Cohn, Federal ClassActions, 32 Ill.L.Rev. 307 (1937); Moore and Cohn, Federal Class Actions—Jurisdiction and Effect ofJudgment, 32 Ill.L.Rev. 555—567 (1938); Lesar, Class Suits and the Federal Rules, 22 Minn.L.Rev.34 (1937); cf. Arnold and James, Cases on Trials, Judgments and Appeals (1936) 175; and seeBlume, Jurisdictional Amount in Representative Suits, 15 Minn.L.Rev. 501 (1931).

The general test of [former] Equity Rule 38 (Representatives of Class) that the question should be“one of common or general interest to many persons constituting a class so numerous as to make itimpracticable to bring them all before the court,” is a common test. For states which require the twoelements of a common or general interest and numerous persons, as provided for in [former] EquityRule 38, see Del.Ch.Rule 113; Fla.Comp.Gen.Laws Ann. (Supp., 1936) §4918 (7); Georgia Code(1933) §37–1002, and see English Rules Under the Judicature Act (The Annual Practice, 1937) O. 16,r. 9. For statutory provisions providing for class actions when the question is one of common orgeneral interest or when the parties are numerous, see Ala.Code Ann. (Michie, 1928) §5701; 2Ind.Stat.Ann. (Burns, 1933) §2–220; N.Y.C.P.A. (1937) §195; Wis.Stat. (1935) §260.12. Thesestatutes have, however, been uniformly construed as though phrased in the conjunctive. See Garfeinv. Stiglitz, 260 Ky. 430, 86 S.W.(2d) 155 (1935). The rule adopts the test of [former] Equity Rule38, but defines what constitutes a “common or general interest”. Compare with code provisionswhich make the action dependent upon the propriety of joinder of the parties. See Blume, The“Common Questions” Principle in the Code Provision for Representative Suits, 30 Mich.L.Rev. 878(1932). For discussion of what constitutes “numerous persons” see Wheaton, Representative SuitsInvolving Numerous Litigants, 19 Corn.L.Q. 399 (1934); Note, 36 Harv.L.Rev. 89 (1922).

Clause (1), Joint, Common, or Secondary Right. This clause is illustrated in actions brought by oragainst representatives of an unincorporated association. See Oster v. Brotherhood of LocomotiveFiremen and Enginemen, 271 Pa. 419, 114 Atl. 377 (1921); Pickett v. Walsh, 192 Mass. 572, 78 N.E.753, 6 L.R.A. (N.S.) 1067 (1906); Colt v. Hicks, 97 Ind.App. 177, 179 N.E. 335 (1932). CompareRule 17(b) as to when an unincorporated association has capacity to sue or be sued in its commonname; United Mine Workers of America v. Coronado Coal Co., 259 U.S. 344 (1922) (anunincorporated association was sued as an entity for the purpose of enforcing against it a federalsubstantive right); Moore, Federal Rules of Civil Procedure: Some Problems Raised by the PreliminaryDraft, 25 Georgetown L.J. 551, 566 (for discussion of jurisdictional requisites when an unincorporatedassociation sues or is sued in its common name and jurisdiction is founded upon diversity ofcitizenship). For an action brought by representatives of one group against representatives ofanother group for distribution of a fund held by an unincorporated association, see Smith v.Swormstedt, 16 How. 288 (U.S. 1853). Compare Christopher, et al. v. Brusselback, 58 S.Ct. 350 [302 U.S. 500 ] (1938).

For an action to enforce rights held in common by policyholders against the corporate issuer of thepolicies, see Supreme Tribe of Ben Hur v. Cauble, 255 U.S. 356 (1921). See also Terry v. Little, 101



U.S. 216 (1880); John A. Roebling's Sons Co. v. Kinnicutt, 248 Fed. 596 (D.C.N.Y., 1917) dealingwith the right held in common by creditors to enforce the statutory liability of stockholders.

Typical of a secondary action is a suit by stockholders to enforce a corporate right. For discussionof the general nature of these actions see Ashwander v. Tennessee Valley Authority, 297 U.S. 288(1936); Glenn, The Stockholder's Suit—Corporate and Individual Grievances, 33 Yale L.J. 580 (1924);McLaughlin, Capacity of Plaintiff-Stockholder to Terminate a Stockholder's Suit, 46 Yale L.J. 421(1937). See also Subdivision (b) of this rule which deals with Shareholder's Action; Note, 15Minn.L.Rev. 453 (1931).

Clause (2). A creditor's action for liquidation or reorganization of a corporation is illustrative of thisclause. An action by a stockholder against certain named defendants as representatives of numerousclaimants presents a situation converse to the creditor's action.

Clause (3). See Everglades Drainage League v. Napoleon Broward Drainage Dist., 253 Fed. 246(D.C.Fla., 1918); Gramling v. Maxwell, 52 F.(2d) 256 (D.C.N.C., 1931), approved in 30 Mich.L.Rev.624 (1932); Skinner v. Mitchell, 108 Kan. 861, 197 Pac. 569 (1921); Duke of Bedford v. Ellis (1901)A.C. 1, for class actions when there were numerous persons and there was only a question of law orfact common to them; and see Blume, The “Common Questions” Principle in the Code Provision forRepresentative Suits, 30 Mich.L.Rev. 878 (1932).

Note to Subdivision (b). This is [former] Equity Rule 27 (Stockholder's Bill) with verbal changes.See also Hawes v. Oakland, 104 U.S. 450, 26 L.Ed. 827 (1882) and former Equity Rule 94,promulgated January 23, 1882, 104 U.S. IX.

Note to Subdivision (c). See McLaughlin, Capacity of Plaintiff-Stockholder to Terminate aStockholder's Suit, 46 Yale L.J. 421 (1937).

NOTES OF ADVISORY COMMITTEE ON RULES—1946 AMENDMENT

Subdivision (b), relating to secondary actions by shareholders, provides among other things, thatin, such an action the complainant “shall aver (1) that the plaintiff was a shareholder at the time ofthe transaction of which he complains or that his share thereafter devolved on him by operation oflaw . . .”

As a result of the decision in Erie R. Co. v. Tompkins, 304 U.S. 64 (decided April 25, 1938, afterthis rule was promulgated by the Supreme Court, though before it took effect) a question has arisenas to whether the provision above quoted deals with a matter of substantive right or is a matter ofprocedure. If it is a matter of substantive law or right, then under Erie R. Co. v. Tompkins clause (1)may not be validly applied in cases pending in states whose local law permits a shareholder tomaintain such actions, although not a shareholder at the time of the transactions complained of. TheAdvisory Committee, believing the question should be settled in the courts, proposes no change inRule 23 but thinks rather that the situation should be explained in an appropriate note.

The rule has a long history. In Hawes v. Oakland (1882) 104 U.S. 450, the Court held that ashareholder could not maintain such an action unless he owned shares at the time of the transactionscomplained of, or unless they devolved on him by operation of law. At that time the decision in Swiftv. Tyson (1842) 16 Peters 1, was the law, and the federal courts considered themselves free toestablish their own principles of equity jurisprudence, so the Court was not in 1882 and has not been,until Erie R. Co. v. Tompkins in 1938, concerned with the question whether Hawes v. Oakland dealtwith substantive right or procedure.



Following the decision in Hawes v. Oakland, and at the same term, the Court, to implement itsdecision, adopted [former] Equity Rule 94, which contained the same provision above quoted fromRule 23 F.R.C.P. The provision in [former] Equity Rule 94 was later embodied in [former] Equity Rule27, of which the present Rule 23 is substantially a copy.

In City of Quincy v. Steel (1887) 120 U.S. 241, 245, the Court referring to Hawes v. Oakland said:“In order to give effect to the principles there laid down, this Court at that term adopted Rule 94 ofthe rules of practice for courts of equity of the United States.”

Some other cases dealing with [former] Equity Rules 94 or 27 prior to the decision in Erie R. Co. v.Tompkins are Dimpfel v. Ohio & Miss. R. R. (1884) 110 U.S. 209; Illinois Central R. Co. v. Adams(1901) 180 U.S. 28, 34; Venner v. Great Northern Ry. (1908) 209 U.S. 24, 30; Jacobson v. GeneralMotors Corp. (S.D.N.Y. 1938) 22 F.Supp. 255, 257. These cases generally treat Hawes v. Oakland asestablishing a “principle” of equity, or as dealing not with jurisdiction but with the “right” to maintainan action, or have said that the defense under the equity rule is analogous to the defense that theplaintiff has no “title” and results in a dismissal “for want of equity.”

Those state decisions which held that a shareholder acquiring stock after the event may maintain aderivative action are founded on the view that it is a right belonging to the shareholder at the time ofthe transaction and which passes as a right to the subsequent purchaser. See Pollitz v. Gould (1911)202 N.Y. 11.

The first case arising after the decision in Erie R. Co. v. Tompkins, in which this problem wasinvolved, was Summers v. Hearst (S.D.N.Y. 1938) 23 F.Supp. 986. It concerned [former] Equity Rule27, as Federal Rule 23 was not then in effect. In a well considered opinion Judge Leibell reviewed thedecisions and said: “The federal cases that discuss this section of Rule 27 support the view that itstates a principle of substantive law.” He quoted Pollitz v. Gould (1911) 202 N.Y. 11, as saying thatthe United States Supreme Court “seems to have been more concerned with establishing this rule asone of practice than of substantive law” but that “whether it be regarded as establishing a principleof law or a rule of practice, this authority has been subsequently followed in the United Statescourts.”

He then concluded that, although the federal decisions treat the equity rule as “stating a principleof substantive law”, if [former] “Equity Rule 27 is to be modified or revoked in view of Erie R. Co. v.Tompkins, it is not the province of this Court to suggest it, much less impliedly to follow that courseby disregarding the mandatory provisions of the Rule.”

Some other federal decisions since 1938 touch the question.

In Piccard v. Sperry Corporation (S.D.N.Y. 1941) 36 F.Supp. 1006, 1009–10, affirmed withoutopinion (C.C.A.2d, 1941) 120 F.(2d) 328, a shareholder, not such at the time of the transactionscomplained of, sought to intervene. The court held an intervenor was as much subject to Rule 23 asan original plaintiff; and that the requirement of Rule 23(b) was “a matter of practice,” notsubstance, and applied in New York where the state law was otherwise, despite Erie R. Co. v.Tompkins. In York v. Guaranty Trust Co. of New York (C.C.A.2d, 1944) 143 F.(2d) 503, rev'd onother grounds (1945) 65 S.Ct. 1464, the court said: “Restrictions on the bringing of stockholders’actions, such as those imposed by F.R.C.P. 23 (b) or other state statutes are procedural,” citing thePiccard and other cases.

In Gallup v. Caldwell (C.C.A.3d, 1941) 120 F.(2d) 90, 95, arising in New Jersey, the point was



raised but not decided, the court saying that it was not satisfied that the then New Jersey rulediffered from Rule 23(b), and that “under the circumstances the proper course was to follow Rule23(b).”

In Mullins v. De Soto Securities Co. (W.D.La. 1942) 45 F.Supp. 871, 878, the point was notdecided, because the court found the Louisiana rule to be the same as that stated in Rule 23(b).

In Toebelman v. Missouri-Kansas Pipe Line Co. (D.Del. 1941) 41 F.Supp. 334, 340, the court dealtonly with another part of Rule 23(b), relating to prior demands on the stockholders and did notdiscuss Erie R. Co. v. Tompkins, or its effect on the rule.

In Perrott v. United States Banking Corp. (D.Del. 1944) 53 F.Supp. 953, it appeared that theDelaware law does not require the plaintiff to have owned shares at the time of the transactioncomplained of. The court sustained Rule 23(b), after discussion of the authorities, saying:

“It seems to me the rule does not go beyond procedure. * * * Simply because a particular plaintiffcannot qualify as a proper party to maintain such an action does not destroy or even whittle at thecause of action. The cause of action exists until a qualified plaintiff can get it started in a federalcourt.”

In Bankers Nat. Corp. v. Barr (S.D.N.Y. 1945) 9 Fed.Rules Serv. 23b.11, Case 1, the court heldRule 23(b) to be one of procedure, but that whether the plaintiff was a stockholder was a substantivequestion to be settled by state law.

The New York rule, as stated in Pollitz v. Gould, supra, has been altered by an act of the New YorkLegislature (Chapter 667, Laws of 1944, effective April 9, 1944, General Corporation Law, §61) whichprovides that “in any action brought by a shareholder in the right of a . . . corporation, it mustappear that the plaintiff was a stockholder at the time of the transaction of which he complains, orthat his stock thereafter devolved upon him by operation of law.” At the same time a further andseparate provision was enacted, requiring under certain circumstances the giving of security forreasonable expenses and attorney's fees, to which security the corporation in whose right the actionis brought and the defendants therein may have recourse. (Chapter 668, Laws of 1944, effective April9, 1944, General Corporation Law, §61–b.) These provisions are aimed at so-called “strike”stockholders’ suits and their attendant abuses. Shielcrawt v. Moffett (Ct.App. 1945) 294 N.Y. 180, 61N.E.(2d) 435, rev'g 51 N.Y.S.(2d) 188, aff'g 49 N.Y.S.(2d) 64; Noel Associates, Inc. v. Merrill(Sup.Ct. 1944) 184 Misc. 646, 53 N.Y.S.(2d) 143.

Insofar as §61 is concerned, it has been held that the section is procedural in nature. Klum v.Clinton Trust Co. (Sup.Ct. 1944) 183 Misc. 340, 48 N.Y.S.(2d) 267; Noel Associates, Inc. v. Merrill,supra. In the latter case the court pointed out that “The 1944 amendment to Section 61 rejected therule laid down in the Pollitz case and substituted, in place thereof, in its precise language, the rulewhich has long prevailed in the Federal Courts and which is now Rule 23(b) . . .” There is,nevertheless, a difference of opinion regarding the application of the statute to pending actions. SeeKlum v. Clinton Trust Co., supra (applicable); Noel Associates, Inc. v. Merrill, supra (inapplicable).

With respect to §61–b, which may be regarded as a separate problem (Noel Associates, Inc. v.Merrill, supra), it has been held that even though the statute is procedural in nature—a matter notdefinitely decided—the Legislature evinced no intent that the provision should apply to actionspending when it became effective. Shielcrawt v. Moffett, supra. As to actions instituted after theeffective date of the legislation, the constitutionality of §61–b is in dispute. See Wolf v. Atkinson



(Sup.Ct. 1944) 182 Misc. 675, 49 N.Y.S.(2d) 703 (constitutional); Citron v. Mangel Stores Corp.(Sup.Ct. 1944) — Misc. —, 50 N.Y.S.(2d) 416 (unconstitutional); Zlinkoff, The American Investor andthe Constitutionality of Section 61–B of the New York General Corporation Law (1945) 54 Yale L.J.352.

New Jersey also enacted a statute, similar to Chapters 667 and 668 of the New York law. See P.L.1945, Ch. 131, R.S.Cum.Supp. 14:3–15. The New Jersey provision similar to Chapter 668 (§61–b)differs, however, in that it specifically applies retroactively. It has been held that this provision isprocedural and hence will not govern a pending action brought against a New Jersey corporation inthe New York courts. Shielcrawt v. Moffett (Sup.Ct.N.Y. 1945) 184 Misc. 1074, 56 N.Y.S.(2d) 134.

See also generally, 2 Moore's Federal Practice (1938) 2250–2253, and Cum.Supplement §23.05.

The decisions here discussed show that the question is a debatable one, and that there isrespectable authority for either view, with a recent trend towards the view that Rule 23(b)(1) isprocedural. There is reason to say that the question is one which should not be decided by theSupreme Court ex parte, but left to await a judicial decision in a litigated case, and that in the lightof the material in this note, the only inference to be drawn from a failure to amend Rule 23(b) wouldbe that the question is postponed to await a litigated case.

The Advisory Committee is unanimously of the opinion that this course should be followed.

If, however, the final conclusion is that the rule deals with a matter of substantive right, then therule should be amended by adding a provision that Rule 23(b)(1) does not apply in jurisdictionswhere state law permits a shareholder to maintain a secondary action, although he was not ashareholder at the time of the transactions of which he complains.


Difficulties with the original rule. The categories of class actions in the original rule were defined interms of the abstract nature of the rights involved: the so-called “true” category was defined asinvolving “joint, common, or secondary rights”; the “hybrid” category, as involving “several” rightsrelated to “specific property”; the “spurious” category, as involving “several” rights affected by acommon question and related to common relief. It was thought that the definitions accuratelydescribed the situations amendable to the class-suit device, and also would indicate the properextent of the judgment in each category, which would in turn help to determine the res judicataeffect of the judgment if questioned in a later action. Thus the judgments in “true” and “hybrid” classactions would extend to the class (although in somewhat different ways); the judgment in a“spurious” class action would extend only to the parties including intervenors. See Moore, FederalRules of Civil Procedure: Some Problems Raised by the Preliminary Draft, 25 Geo.L.J. 551, 570–76(1937).

In practice, the terms “joint,” “common,” etc., which were used as the basis of the Rule 23classification proved obscure and uncertain. See Chaffee, Some Problems of Equity 245–46, 256–57(1950); Kalven & Rosenfield, The Contemporary Function of the Class Suit, 8 U. of Chi.L.Rev. 684,707 & n. 73 (1941); Keeffe, Levy & Donovan, Lee Defeats Ben Hur, 33 Corn.L.Q. 327, 329–36(1948); Developments in the Law: Multiparty Litigation in the Federal Courts, 71 Harv.L.Rev. 874,931 (1958); Advisory Committee's Note to Rule 19, as amended. The courts had considerabledifficulty with these terms. See, e.g., Gullo v. Veterans’ Coop. H. Assn., 13 F.R.D. 11 (D.D.C. 1952);Shipley v. Pittsburgh & L. E. R. Co., 70 F.Supp. 870 (W.D.Pa. 1947); Deckert v. Independence



Shares Corp., 27 F.Supp. 763 (E.D.Pa. 1939), rev'd, 108 F.2d 51 (3d Cir. 1939), rev'd, 311 U.S. 282(1940), on remand, 39 F.Supp. 592 (E.D.Pa. 1941), rev'd sub nom. Pennsylvania Co. for Ins. onLives v. Deckert, 123 F.2d 979 (3d Cir. 1941) (see Chafee, supra, at 264–65).

Nor did the rule provide an adequate guide to the proper extent of the judgments in class actions.First, we find instances of the courts classifying actions as “true” or intimating that the judgmentswould be decisive for the class where these results seemed appropriate but were reached by dint ofdepriving the word “several” of coherent meaning. See, e.g., System Federation No. 91 v. Reed, 180F.2d 991 (6th Cir. 1950); Wilson v. City of Paducah, 100 F.Supp. 116 (W.D.Ky. 1951); CitizensBanking Co. v. Monticello State Bank, 143 F.2d 261 (8th Cir. 1944); Redmond v. Commerce TrustCo., 144 F.2d 140 (8th Cir. 1944), cert. denied, 323 U.S. 776 (1944); United States v. AmericanOptical Co., 97 F.Supp. 66 (N.D.Ill. 1951); National Hairdressers’ & C. Assn. v. Philad. Co., 34F.Supp. 264 (D.Del. 1940); 41 F.Supp. 701 (D.Del. 1940), aff'd mem., 129 F.2d 1020 (3d Cir. 1942).Second, we find cases classified by the courts as “spurious” in which, on a realistic view, it wouldseem fitting for the judgments to extend to the class. See, e.g., Knapp v. Bankers Sec. Corp., 17F.R.D. 245 (E.D.Pa. 1954); aff'd 230 F.2d 717 (3d Cir. 1956); Giesecke v. Denver Tramway Corp., 81F.Supp. 957 (D.Del. 1949); York v. Guaranty Trust Co., 143 F.2d 503 (2d Cir. 1944), rev'd ongrounds not here relevant, 326 U.S. 90 (1945) (see Chafee, supra, at 208); cf. Webster Eisenlohr,Inc. v. Kalodner, 145 F.2d 316, 320 (3d Cir. 1944), cert. denied, 325 U.S. 807 (1945). But cf. theearly decisions, Duke of Bedford v. Ellis [1901], A.C. 1; Sheffield Waterworks v. Yeomans, L.R. 2Ch.App. 8 (1866); Brown v. Vermuden, 1 Ch.Cas. 272, 22 Eng.Rep. 796 (1676).

The “spurious” action envisaged by original Rule 23 was in any event an anomaly because,although denominated a “class” action and pleaded as such, it was supposed not to adjudicate therights or liabilities of any person not a party. It was believed to be an advantage of the “spurious”category that it would invite decisions that a member of the “class” could, like a member of the classin a “true” or “hybrid” action, intervene on an ancillary basis without being required to show anindependent basis of Federal jurisdiction, and have the benefit of the date of the commencement ofthe action for purposes of the statute of limitations. See 3 Moore's Federal Practice, pars. 23.10[1],23.12 (2d ed. 1963). These results were attained in some instances but not in others. On the statuteof limitations, see Union Carbide & Carbon Corp. v. Nisley, 300 F.2d 561 (10th Cir. 1961), pet. cert.dism., 371 U.S. 801 (1963); but cf. P. W. Husserl, Inc. v. Newman, 25 F.R.D. 264 (S.D.N.Y. 1960);Athas v. Day, 161 F.Supp. 916 (D.Colo. 1958). On ancillary intervention, see Amen v. Black, 234F.2d 12 (10th Cir. 1956), cert. granted, 352 U.S. 888 (1956), dism. on stip., 355 U.S. 600 (1958);but. cf. Wagner v. Kemper, 13 F.R.D. 128 (W.D.Mo. 1952). The results, however, can hardly dependupon the mere appearance of a “spurious” category in the rule; they should turn no more basicconsiderations. See discussion of subdivision (c)(1) below.

Finally, the original rule did not squarely address itself to the question of the measures that mightbe taken during the course of the action to assure procedural fairness, particularly giving notice tomembers of the class, which may in turn be related in some instances to the extension of thejudgment to the class. See Chafee, supra, at 230–31; Keeffe, Levy & Donovan, supra; Developmentsin the Law, supra, 71 Harv.L.Rev. at 937–38; Note, Binding Effect of Class Actions, 67 Harv.L.Rev.1059, 1062–65 (1954); Note, Federal Class Actions: A Suggested Revision of Rule 23, 46Colum.L.Rev. 818, 833–36 (1946); Mich.Gen.Court R. 208.4 (effective Jan. 1, 1963); Idaho R.Civ.P.23(d); Minn.R.Civ.P. 23.04; N.Dak.R.Civ.P. 23(d).

The amended rule describes in more practical terms the occasions for maintaining class actions;



provides that all class actions maintained to the end as such will result in judgments including thosewhom the court finds to be members of the class, whether or not the judgment is favorable to theclass; and refers to the measures which can be taken to assure the fair conduct of these actions.

Subdivision (a) states the prerequisites for maintaining any class action in terms of thenumerousness of the class making joinder of the members impracticable, the existence of questionscommon to the class, and the desired qualifications of the representative parties. See Weinstein,Revision of Procedure; Some Problems in Class Actions, 9 Buffalo L.Rev. 433, 458–59 (1960); 2Barron & Holtzoff, Federal Practice & Procedure §562, at 265, §572, at 351–52 (Wright ed. 1961).These are necessary but not sufficient conditions for a class action. See, e.g., Giordano v. RadioCorp. of Am., 183 F.2d 558, 560 (3d Cir. 1950); Zachman v. Erwin, 186 F.Supp. 681 (S.D.Tex.1959); Baim & Blank, Inc. v. Warren Connelly Co., Inc., 19 F.R.D. 108 (S.D.N.Y. 1956). Subdivision(b) describes the additional elements which in varying situations justify the use of a class action.

Subdivision (b)(1). The difficulties which would be likely to arise if resort were had to separateactions by or against the individual members of the class here furnish the reasons for, and theprincipal key to, the propriety and value of utilizing the class-action device. The considerations statedunder clauses (A) and (B) are comparable to certain of the elements which define the persons whosejoinder in an action is desirable as stated in Rule 19(a), as amended. See amended Rule 19(a)(2)(i)and (ii), and the Advisory Committee's Note thereto; Hazard, Indispensable Party; The HistoricalOrigin of a Procedural Phantom, 61 Colum.L.Rev. 1254, 1259–60 (1961); cf. 3 Moore, supra, par.23.08, at 3435.

Clause (A): One person may have rights against, or be under duties toward, numerous personsconstituting a class, and be so positioned that conflicting or varying adjudications in lawsuits withindividual members of the class might establish incompatible standards to govern his conduct. Theclass action device can be used effectively to obviate the actual or virtual dilemma which would thusconfront the party opposing the class. The matter has been stated thus: “The felt necessity for aclass action is greatest when the courts are called upon to order or sanction the alteration of thestatus quo in circumstances such that a large number of persons are in a position to call on a singleperson to alter the status quo, or to complain if it is altered, and the possibility exists that [the]actor might be called upon to act in inconsistent ways.” Louisell & Hazard, Pleading and Procedure;State and Federal 719 (1962); see Supreme Tribe of Ben-Hur v. Cauble, 255 U.S. 356, 366 –67(1921). To illustrate: Separate actions by individuals against a municipality to declare a bond issueinvalid or condition or limit it, to prevent or limit the making of a particular appropriation or tocompel or invalidate an assessment, might create a risk of inconsistent or varying determinations. Inthe same way, individual litigations of the rights and duties of riparian owners, or of landowners’rights and duties respecting a claimed nuisance, could create a possibility of incompatibleadjudications. Actions by or against a class provide a ready and fair means of achieving unitaryadjudication. See Maricopa County Mun. Water Con. Dist. v. Looney, 219 F.2d 529 (9th Cir. 1955);Rank v. Krug, 142 F.Supp. 1, 154–59 (S.D.Calif. 1956), on app., State of California v. Rank, 293F.2d 340, 348 (9th Cir. 1961); Gart v. Cole, 263 F.2d 244 (2d Cir. 1959), cert. denied 359 U.S. 978(1959); cf. Martinez v. Maverick Cty. Water Con. & Imp. Dist., 219 F.2d 666 (5th Cir. 1955); 3Moore, supra, par. 23.11[2], at 3458–59.

Clause (B): This clause takes in situations where the judgment in a nonclass action by or againstan individual member of the class, while not technically concluding the other members, might do soas a practical matter. The vice of an individual actions would lie in the fact that the other members of



the class, thus practically concluded, would have had no representation in the lawsuit. In an actionby policy holders against a fraternal benefit association attacking a financial reorganization of thesociety, it would hardly have been practical, if indeed it would have been possible, to confine theeffects of a validation of the reorganization to the individual plaintiffs. Consequently a class actionwas called for with adequate representation of all members of the class. See Supreme Tribe of Ben-Hur v. Cauble, 255 U.S. 356 (1921); Waybright v. Columbian Mut. Life Ins. Co., 30 F.Supp. 885(W.D.Tenn. 1939); cf. Smith v. Swormstedt, 16 How. (57 U.S.) 288 (1853). For much the samereason actions by shareholders to compel the declaration of a dividend the proper recognition andhandling of redemption or pre-emption rights, or the like (or actions by the corporation forcorresponding declarations of rights), should ordinarily be conducted as class actions, although thematter has been much obscured by the insistence that each shareholder has an individual claim. SeeKnapp v. Bankers Securities Corp., 17 F.R.D. 245 (E.D.Pa. 1954), aff'd, 230 F.2d 717 (3d Cir. 1956);Giesecke v. Denver Tramway Corp., 81 F.Supp. 957 (D.Del. 1949); Zahn v. Transamerica Corp., 162F.2d 36 (3d Cir. 1947); Speed v. Transamerica Corp., 100 F.Supp. 461 (D.Del. 1951); Sobel v.Whittier Corp., 95 F.Supp. 643 (E.D.Mich. 1951), app. dism., 195 F.2d 361 (6th Cir. 1952); Goldbergv. Whittier Corp., 111 F.Supp. 382 (E.D.Mich. 1953); Dann v. Studebaker-Packard Corp., 288 F.2d201 (6th Cir. 1961); Edgerton v. Armour & Co., 94 F.Supp. 549 (S.D.Calif. 1950); Ames v. MengelCo., 190 F.2d 344 (2d Cir. 1951). (These shareholders’ actions are to be distinguished fromderivative actions by shareholders dealt with in new Rule 23.1). The same reasoning applies to anaction which charges a breach of trust by an indenture trustee or other fiduciary similarly affectingthe members of a large class of security holders or other beneficiaries, and which requires anaccounting or like measures to restore the subject of the trust. See Bosenberg v. Chicago T. & T.Co., 128 F.2d 245 (7th Cir. 1942); Citizens Banking Co. v. Monticello State Bank, 143 F.2d 261 (8thCir. 1944); Redmond v. Commerce Trust Co., 144 F.2d 140 (8th Cir. 1944), cert. denied, 323 U.S.776 (1944); cf. York v. Guaranty Trust Co., 143 F.2d 503 (2d Cir. 1944), rev'd on grounds not hererelevant, 326 U.S. 99 (1945).

In various situations an adjudication as to one or more members of the class will necessarily orprobably have an adverse practical effect on the interests of other members who should therefore berepresented in the lawsuit. This is plainly the case when claims are made by numerous personsagainst a fund insufficient to satisfy all claims. A class action by or against representative membersto settle the validity of the claims as a whole, or in groups, followed by separate proof of the amountof each valid claim and proportionate distribution of the fund, meets the problem. Cf. Dickinson v.Burnham, 197 F.2d 973 (2d Cir. 1952), cert. denied, 344 U.S. 875 (1952); 3 Moore, supra, at par.23.09. The same reasoning applies to an action by a creditor to set aside a fraudulent conveyance bythe debtor and to appropriate the property to his claim, when the debtor's assets are insufficient topay all creditors’ claims. See Hefferman v. Bennett & Armour, 110 Cal.App.2d 564, 243 P.2d 846(1952); cf. City & County of San Francisco v. Market Street Ry., 95 Cal.App.2d 648, 213 P.2d 780(1950). Similar problems, however, can arise in the absence of a fund either present or potential. Anegative or mandatory injunction secured by one of a numerous class may disable the opposingparty from performing claimed duties toward the other members of the class or materially affect hisability to do so. An adjudication as to movie “clearances and runs” nominally affecting only oneexhibitor would often have practical effects on all the exhibitors in the same territorial area. Cf.United States v. Paramount Pictures, Inc., 66 F.Supp. 323, 341–46 (S.D.N.Y. 1946); 334 U.S. 131,144 –48 (1948). Assuming a sufficiently numerous class of exhibitors, a class action would beadvisable. (Here representation of subclasses of exhibitors could become necessary; see subdivision(c)(3)(B).)



Subdivision (b)(2). This subdivision is intended to reach situations where a party has taken actionor refused to take action with respect to a class, and final relief of an injunctive nature or of acorresponding declaratory nature, settling the legality of the behavior with respect to the class as awhole, is appropriate. Declaratory relief “corresponds” to injunctive relief when as a practical matterit affords injunctive relief or serves as a basis for later injunctive relief. The subdivision does notextend to cases in which the appropriate final relief relates exclusively or predominantly to moneydamages. Action or inaction is directed to a class within the meaning of this subdivision even if it hastaken effect or is threatened only as to one or a few members of the class, provided it is based ongrounds which have general application to the class.

Illustrative are various actions in the civil-rights field where a party is charged with discriminatingunlawfully against a class, usually one whose members are incapable of specific enumeration. SeePotts v. Flax, 313 F.2d 284 (5th Cir. 1963); Bailey v. Patterson, 323 F.2d 201 (5th Cir. 1963), cert.denied, 377 U.S. 972 (1964); Brunson v. Board of Trustees of School District No. 1, Clarendon City,S.C., 311 F.2d 107 (4th Cir. 1962), cert. denied, 373 U.S. 933 (1963); Green v. School Bd. ofRoanoke, Va., 304 F.2d 118 (4th Cir. 1962); Orleans Parish School Bd. v. Bush, 242 F.2d 156 (5thCir. 1957), cert. denied, 354 U.S. 921 (1957); Mannings v. Board of Public Inst. of HillsboroughCounty, Fla., 277 F.2d 370 (5th Cir. 1960); Northcross v. Board of Ed. of City of Memphis, 302 F.2d818 (6th Cir. 1962), cert. denied 370 U.S. 944 (1962); Frasier v. Board of Trustees of Univ. of N.C.,134 F.Supp. 589 (M.D.N.C. 1955, 3-judge court), aff'd, 350 U.S. 979 (1956). Subdivision (b)(2) isnot limited to civil-rights cases. Thus an action looking to specific or declaratory relief could bebrought by a numerous class of purchasers, say retailers of a given description, against a selleralleged to have undertaken to sell to that class at prices higher than those set for other purchasers,say retailers of another description, when the applicable law forbids such a pricing differential. Soalso a patentee of a machine, charged with selling or licensing the machine on condition thatpurchasers or licensees also purchase or obtain licenses to use an ancillary unpatented machine,could be sued on a class basis by a numerous group of purchasers or licensees, or by a numerousgroup of competing sellers or licensors of the unpatented machine, to test the legality of the “tying”condition.

Subdivision (b)(3). In the situations to which this subdivision relates, class-action treatment is notas clearly called for as in those described above, but it may nevertheless be convenient and desirabledepending upon the particular facts. Subdivision (b)(3) encompasses those cases in which a classaction would achieve economies of time, effort, and expense, and promote, uniformity of decision asto persons similarly situated, without sacrificing procedural fairness or bringing about otherundesirable results. Cf. Chafee, supra, at 201.

The court is required to find, as a condition of holding that a class action may be maintained underthis subdivision, that the questions common to the class predominate over the questions affectingindividual members. It is only where this predominance exists that economies can be achieved bymeans of the class-action device. In this view, a fraud perpetrated on numerous persons by the useof similar misrepresentations may be an appealing situation for a class action, and it may remain sodespite the need, if liability is found, for separate determination of the damages suffered byindividuals within the class. On the other hand, although having some common core, a fraud casemay be unsuited for treatment as a class action if there was material variation in the representationmade or in the kinds or degrees of reliance by the persons to whom they were addressed. SeeOppenheimer v. F. J. Young & Co., Inc., 144 F.2d 387 (2d Cir. 1944); Miller v. National City Bank of



N.Y., 166 F.2d 723 (2d Cir. 1948); and for like problems in other contexts, see Hughes v.Encyclopaedia Brittanica, 199 F.2d 295 (7th Cir. 1952); Sturgeon v. Great Lakes Steel Corp., 143F.2d 819 (6th Cir. 1944). A “mass accident” resulting in injuries to numerous persons is ordinarilynot appropriate for a class action because of the likelihood that significant questions, not only ofdamages but of liability and defenses of liability, would be present, affecting the individuals indifferent ways. In these circumstances an action conducted nominally as a class action woulddegenerate in practice into multiple lawsuits separately tried. See Pennsylvania R.R. v. United States,111 F.Supp. 80 (D.N.J. 1953); cf. Weinstein, supra, 9 Buffalo L.Rev. at 469. Private damage claimsby numerous individuals arising out of concerted antitrust violations may or may not involvepredominating common questions. See Union Carbide & Carbon Corp. v. Nisley, 300 F.2d 561 (10thCir. 1961), pet. cert. dism., 371 U.S. 801 (1963); cf. Weeks v. Bareco Oil Co., 125 F.2d 84 (7th Cir.1941); Kainz v. Anheuser-Busch, Inc., 194 F.2d 737 (7th Cir. 1952); Hess v. Anderson, Clayton &Co., 20 F.R.D. 466 (S.D.Calif. 1957).

That common questions predominate is not itself sufficient to justify a class action undersubdivision (b)(3), for another method of handling the litigious situation may be available which hasgreater practical advantages. Thus one or more actions agreed to by the parties as test or modelactions may be preferable to a class action; or it may prove feasible and preferable to consolidateactions. Cf. Weinstein, supra, 9 Buffalo L.Rev. at 438–54. Even when a number of separate actionsare proceeding simultaneously, experience shows that the burdens on the parties and the courts cansometimes be reduced by arrangements for avoiding repetitious discovery or the like. Currently theCoordinating Committee on Multiple Litigation in the United States District Courts (a subcommittee ofthe Committee on Trial Practice and Technique of the Judicial Conference of the United States) ischarged with developing methods for expediting such massive litigation. To reinforce the point thatthe court with the aid of the parties ought to assess the relative advantages of alternative proceduresfor handling the total controversy, subdivision (b)(3) requires, as a further condition of maintainingthe class action, that the court shall find that that procedure is “superior” to the others in theparticular circumstances.

Factors (A)–(D) are listed, non-exhaustively, as pertinent to the findings. The court is to considerthe interests of individual members of the class in controlling their own litigations and carrying themon as they see fit. See Weeks v. Bareco Oil Co., 125 F.2d 84, 88–90, 93–94 (7th Cir. 1941) (anti-trust action); see also Pentland v. Dravo Corp., 152 F.2d 851 (3d Cir. 1945), and Chaffee, supra, at273–75, regarding policy of Fair Labor Standards Act of 1938, §16(b), 29 U.S.C. §216(b), prior toamendment by Portal-to-Portal Act of 1947, §5(a). [The present provisions of 29 U.S.C. §216(b) arenot intended to be affected by Rule 23, as amended.]

In this connection the court should inform itself of any litigation actually pending by or against theindividuals. The interests of individuals in conducting separate lawsuits may be so strong as to callfor denial of a class action. On the other hand, these interests may be theoretic rather than practical;the class may have a high degree of cohesion and prosecution of the action through representativeswould be quite unobjectionable, or the amounts at stake for individuals may be so small thatseparate suits would be impracticable. The burden that separate suits would impose on the partyopposing the class, or upon the court calendars, may also fairly be considered. (See the discussion,under subdivision (c)(2) below, of the right of members to be excluded from the class upon theirrequest.)

Also pertinent is the question of the desirability of concentrating the trial of the claims in the



particular forum by means of a class action, in contrast to allowing the claims to be litigatedseparately in forums to which they would ordinarily be brought. Finally, the court should consider theproblems of management which are likely to arise in the conduct of a class action.

Subdivision (c)(1). In order to give clear definition to the action, this provision requires the courtto determine, as early in the proceedings as may be practicable, whether an action brought as aclass action is to be so maintained. The determination depends in each case on satisfaction of theterms of subdivision (a) and the relevant provisions of subdivision (b).

An order embodying a determination can be conditional; the court may rule, for example, that aclass action may be maintained only if the representation is improved through intervention ofadditional parties of a stated type. A determination once made can be altered or amended before thedecision on the merits if, upon fuller development of the facts, the original determination appearsunsound. A negative determination means that the action should be stripped of its character as aclass action. See subdivision (d)(4). Although an action thus becomes a nonclass action, the courtmay still be receptive to interventions before the decision on the merits so that the litigation maycover as many interests as can be conveniently handled; the questions whether the intervenors inthe nonclass action shall be permitted to claim “ancillary” jurisdiction or the benefit of the date of thecommencement of the action for purposes of the statute of limitations are to be decided by referenceto the laws governing jurisdiction and limitations as they apply in particular contexts.

Whether the court should require notice to be given to members of the class of its intention tomake a determination, or of the order embodying it, is left to the court's discretion under subdivision(d)(2).

Subdivision (c)(2) makes special provision for class actions maintained under subdivision (b)(3). Asnoted in the discussion of the latter subdivision, the interests of the individuals in pursuing their ownlitigations may be so strong here as to warrant denial of a class action altogether. Even when a classaction is maintained under subdivision (b)(3), this individual interest is respected. Thus the court isrequired to direct notice to the members of the class of the right of each member to be excludedfrom the class upon his request. A member who does not request exclusion may, if he wishes, enteran appearance in the action through his counsel; whether or not he does so, the judgment in theaction will embrace him.

The notice setting forth the alternatives open to the members of the class, is to be the bestpracticable under the circumstances, and shall include individual notice to the members who can beidentified through reasonable effort. (For further discussion of this notice, see the statement undersubdivision (d)(2) below.)

Subdivision (c)(3). The judgment in a class action maintained as such to the end will embrace theclass, that is, in a class action under subdivision (b)(1) or (b)(2), those found by the court to beclass members; in a class action under subdivision (b)(3), those to whom the notice prescribed bysubdivision (c)(2) was directed, excepting those who requested exclusion or who are ultimately foundby the court not to be members of the class. The judgment has this scope whether it is favorable orunfavorable to the class. In a (b)(1) or (b)(2) action the judgment “describes” the members of theclass, but need not specify the individual members; in a (b)(3) action the judgment “specifies” theindividual members who have been identified and described the others.

Compare subdivision (c)(4) as to actions conducted as class actions only with respect to particularissues. Where the class-action character of the lawsuit is based solely on the existence of a “limited



fund,” the judgment, while extending to all claims of class members against the fund, has ordinarilyleft unaffected the personal claims of nonappearing members against the debtor. See 3 Moore, supra,par. 23.11[4].

Hitherto, in a few actions conducted as “spurious” class actions and thus nominally designed toextend only to parties and others intervening before the determination of liability, courts have held orintimated that class members might be permitted to intervene after a decision on the meritsfavorable to their interests, in order to secure the benefits of the decision for themselves, althoughthey would presumably be unaffected by an unfavorable decision. See, as to the propriety of this so-called “one-way” intervention in “spurious” actions, the conflicting views expressed in Union Carbide& Carbon Corp. v. Nisley, 300 F.2d 561 (10th Cir. 1961), pet. cert. dism., 371 U.S. 801 (1963); Yorkv. Guaranty Trust Co., 143 F.2d 503, 529 (2d Cir. 1944), rev'd on grounds not here relevant, 326U.S. 99 (1945); Pentland v. Dravo Corp., 152 F.2d 851, 856 (3d Cir. 1945); Speed v. TransamericaCorp., 100 F.Supp. 461, 463 (D.Del. 1951); State Wholesale Grocers v. Great Atl. & Pac. Tea Co., 24F.R.D. 510 (N.D.Ill. 1959); Alabama Ind. Serv. Stat. Assn. v. Shell Pet Corp., 28 F.Supp. 386, 390(N.D.Ala. 1939); Tolliver v. Cudahy Packing Co., 39 F.Supp. 337, 339 (E.D.Tenn. 1941); Kalven &Rosenfield, supra, 8 U. of Chi.L.Rev. 684 (1941); Comment, 53 Nw.U.L.Rev. 627, 632–33 (1958);Developments in the Law, supra, 71 Harv.L.Rev. at 935; 2 Barron & Holtzoff, supra, §568; but cf.Lockwood v. Hercules Powder Co., 7 F.R.D. 24, 28–29 (W.D.Mo. 1947); Abram v. San Joaquin CottonOil Co., 46 F.Supp. 969, 976–77 (S.D.Calif. 1942); Chaffee, supra, at 280, 285; 3 Moore, supra, par.23.12, at 3476. Under proposed subdivision (c)(3), one-way intervention is excluded; the action willhave been early determined to be a class or nonclass action, and in the former case the judgment,whether or not favorable, will include the class, as above stated.

Although thus declaring that the judgment in a class action includes the class, as defined,subdivision (c)(3) does not disturb the recognized principle that the court conducting the actioncannot predetermine the res judicata effect of the judgment; this can be tested only in a subsequentaction. See Restatement, Judgments §86, comment (h), §116 (1942). The court, however, in framingthe judgment in any suit brought as a class action, must decide what its extent or coverage shall be,and if the matter is carefully considered, questions of res judicata are less likely to be raised at alater time and if raised will be more satisfactorily answered. See Chafee, supra, at 294; Weinstein,supra, 9 Buffalo L.Rev. at 460.

Subdivision (c)(4). This provision recognizes that an action may be maintained as a class action asto particular issues only. For example, in a fraud or similar case the action may retain its “class”character only through the adjudication of liability to the class; the members of the class maythereafter be required to come in individually and prove the amounts of their respective claims.

Two or more classes may be represented in a single action. Where a class is found to includesubclasses divergent in interest, the class may be divided correspondingly, and each subclass treatedas a class.

Subdivision (d) is concerned with the fair and efficient conduct of the action and lists some types oforders which may be appropriate.

The court should consider how the proceedings are to be arranged in sequence, and whatmeasures should be taken to simplify the proof and argument. See subdivision (d)(1). The ordersresulting from this consideration, like the others referred to in subdivision (d), may be combined witha pretrial order under Rule 16, and are subject to modification as the case proceeds.



Subdivision (d)(2) sets out a non-exhaustive list of possible occasions for orders requiring notice tothe class. Such notice is not a novel conception. For example, in “limited fund” cases, members ofthe class have been notified to present individual claims after the basic class decision. Notice hasgone to members of a class so that they might express any opposition to the representation, seeUnited States v. American Optical Co., 97 F.Supp. 66 (N.D.Ill. 1951), and 1950–51 CCH Trade Cases64573–74 (par. 62869); cf. Weeks v. Bareco Oil Co., 125 F.2d 84, 94 (7th Cir. 1941), and noticemay encourage interventions to improve the representation of the class. Cf. Oppenheimer v. F. J.Young & Co., 144 F.2d 387 (2d Cir. 1944). Notice has been used to poll members on a proposedmodification of a consent decree. See record in Sam Fox Publishing Co. v. United States, 366 U.S.683 (1961).

Subdivision (d)(2) does not require notice at any stage, but rather calls attention to its availabilityand invokes the court's discretion. In the degree that there is cohesiveness or unity in the class andthe representation is effective, the need for notice to the class will tend toward a minimum. Theseindicators suggest that notice under subdivision (d)(2) may be particularly useful and advisable incertain class actions maintained under subdivision (b)(3), for example, to permit members of theclass to object to the representation. Indeed, under subdivision (c)(2), notice must be ordered, andis not merely discretionary, to give the members in a subdivision (b)(3) class action an opportunityto secure exclusion from the class. This mandatory notice pursuant to subdivision (c)(2), togetherwith any discretionary notice which the court may find it advisable to give under subdivision (d)(2),is designed to fulfill requirements of due process to which the class action procedure is of coursesubject. See Hansberry v. Lee, 311 U.S. 32 (1940); Mullane v. Central Hanover Bank & Trust Co.,339 U.S. 306 (1950); cf. Dickinson v. Burnham, 197 F.2d 973, 979 (2d Cir. 1952), and studies citedat 979 n. 4; see also All American Airways, Inc. v. Elderd, 209 F.2d 247, 249 (2d Cir. 1954); Gart v.Cole, 263 F.2d 244, 248–49 (2d Cir. 1959), cert. denied, 359 U.S. 978 (1959).

Notice to members of the class, whenever employed under amended Rule 23, should beaccommodated to the particular purpose but need not comply with the formalities for service ofprocess. See Chafee, supra, at 230–31; Brendle v. Smith, 7 F.R.D. 119 (S.D.N.Y. 1946). The factthat notice is given at one stage of the action does not mean that it must be given at subsequentstages. Notice is available fundamentally “for the protection of the members of the class or otherwisefor the fair conduct of the action” and should not be used merely as a device for the undesirablesolicitation of claims. See the discussion in Cherner v. Transitron Electronic Corp., 201 F.Supp. 934(D.Mass. 1962); Hormel v. United States, 17 F.R.D. 303 (S.D.N.Y. 1955).

In appropriate cases the court should notify interested government agencies of the pendency of theaction or of particular steps therein.

Subdivision (d)(3) reflects the possibility of conditioning the maintenance of a class action, e.g., onthe strengthening of the representation, see subdivision (c)(1) above; and recognizes that theimposition of conditions on intervenors may be required for the proper and efficient conduct of theaction.

As to orders under subdivision (d)(4), see subdivision (c)(1) above.

Subdivision (e) requires approval of the court, after notice, for the dismissal or compromise of anyclass action.




The amendments are technical. No substantive change is intended.

COMMITTEE NOTES ON RULES—1998 AMENDMENT

Subdivision (f). This permissive interlocutory appeal provision is adopted under the power conferredby 28 U.S.C. §1292(e). Appeal from an order granting or denying class certification is permitted inthe sole discretion of the court of appeals. No other type of Rule 23 order is covered by thisprovision. The court of appeals is given unfettered discretion whether to permit the appeal, akin tothe discretion exercised by the Supreme Court in acting on a petition for certiorari. This discretionsuggests an analogy to the provision in 28 U.S.C. §1292(b) for permissive appeal on certification bya district court. Subdivision (f), however, departs from the §1292(b) model in two significant ways. Itdoes not require that the district court certify the certification ruling for appeal, although the districtcourt often can assist the parties and court of appeals by offering advice on the desirability of appeal.And it does not include the potentially limiting requirements of §1292(b) that the district court order“involve[] a controlling question of law as to which there is substantial ground for difference ofopinion and that an immediate appeal from the order may materially advance the ultimatetermination of the litigation.”

The courts of appeals will develop standards for granting review that reflect the changing areas ofuncertainty in class litigation. The Federal Judicial Center study supports the view that many suitswith class-action allegations present familiar and almost routine issues that are no more worthy ofimmediate appeal than many other interlocutory rulings. Yet several concerns justify expansion ofpresent opportunities to appeal. An order denying certification may confront the plaintiff with asituation in which the only sure path to appellate review is by proceeding to final judgment on themerits of an individual claim that, standing alone, is far smaller than the costs of litigation. An ordergranting certification, on the other hand, may force a defendant to settle rather than incur the costsof defending a class action and run the risk of potentially ruinous liability. These concerns can be metat low cost by establishing in the court of appeals a discretionary power to grant interlocutory reviewin cases that show appeal-worthy certification issues.

Permission to appeal may be granted or denied on the basis of any consideration that the court ofappeals finds persuasive. Permission is most likely to be granted when the certification decision turnson a novel or unsettled question of law, or when, as a practical matter, the decision on certification islikely dispositive of the litigation.

The district court, having worked through the certification decision, often will be able to providecogent advice on the factors that bear on the decision whether to permit appeal. This advice can beparticularly valuable if the certification decision is tentative. Even as to a firm certification decision, astatement of reasons bearing on the probable benefits and costs of immediate appeal can help focusthe court of appeals decision, and may persuade the disappointed party that an attempt to appealwould be fruitless.

The 10-day period for seeking permission to appeal is designed to reduce the risk that attemptedappeals will disrupt continuing proceedings. It is expected that the courts of appeals will act quicklyin making the preliminary determination whether to permit appeal. Permission to appeal does notstay trial court proceedings. A stay should be sought first from the trial court. If the trial courtrefuses a stay, its action and any explanation of its views should weigh heavily with the court ofappeals.

Appellate Rule 5 has been modified to establish the procedure for petitioning for leave to appeal



under subdivision (f).

Changes Made after Publication (GAP Report). No changes were made in the text of Rule 23(f) aspublished.

Several changes were made in the published Committee Note. (1) References to 28 U.S.C.§1292(b) interlocutory appeals were revised to dispel any implication that the restrictive elements of§1292(b) should be read in to Rule 23(f). New emphasis was placed on court of appeals discretionby making explicit the analogy to certiorari discretion. (2) Suggestions that the new procedure is a“modest” expansion of appeal opportunities, to be applied with “restraint,” and that permission“almost always will be denied when the certification decision turns on case-specific matters of factand district court discretion,” were deleted. It was thought better simply to observe that courts ofappeals will develop standards “that reflect the changing areas of uncertainty in class litigation.”


Subdivision (c). Subdivision (c) is amended in several respects. The requirement that the courtdetermine whether to certify a class “as soon as practicable after commencement of an action” isreplaced by requiring determination “at an early practicable time.” The notice provisions aresubstantially revised.

Paragraph (1). Subdivision (c)(1)(A) is changed to require that the determination whether tocertify a class be made “at an early practicable time.” The “as soon as practicable” exaction neitherreflects prevailing practice nor captures the many valid reasons that may justify deferring the initialcertification decision. See Willging, Hooper & Niemic, Empirical Study of Class Actions in Four FederalDistrict Courts: Final Report to the Advisory Committee on Civil Rules 26–36 (Federal Judicial Center1996).

Time may be needed to gather information necessary to make the certification decision. Althoughan evaluation of the probable outcome on the merits is not properly part of the certification decision,discovery in aid of the certification decision often includes information required to identify the natureof the issues that actually will be presented at trial. In this sense it is appropriate to conductcontrolled discovery into the “merits,” limited to those aspects relevant to making the certificationdecision on an informed basis. Active judicial supervision may be required to achieve the mosteffective balance that expedites an informed certification determination without forcing an artificialand ultimately wasteful division between “certification discovery” and “merits discovery.” A criticalneed is to determine how the case will be tried. An increasing number of courts require a partyrequesting class certification to present a “trial plan” that describes the issues likely to be presentedat trial and tests whether they are susceptible of class-wide proof. See Manual For Complex LitigationThird, §21.213, p. 44; §30.11, p. 214; §30.12, p. 215.

Other considerations may affect the timing of the certification decision. The party opposing theclass may prefer to win dismissal or summary judgment as to the individual plaintiffs withoutcertification and without binding the class that might have been certified. Time may be needed toexplore designation of class counsel under Rule 23(g), recognizing that in many cases the need toprogress toward the certification determination may require designation of interim counsel under Rule23(g)(2)(A).

Although many circumstances may justify deferring the certification decision, active managementmay be necessary to ensure that the certification decision is not unjustifiably delayed.



Subdivision (c)(1)(C) reflects two amendments. The provision that a class certification “may beconditional” is deleted. A court that is not satisfied that the requirements of Rule 23 have been metshould refuse certification until they have been met. The provision that permits alteration oramendment of an order granting or denying class certification is amended to set the cut-off point atfinal judgment rather than “the decision on the merits.” This change avoids the possible ambiguity inreferring to “the decision on the merits.” Following a determination of liability, for example,proceedings to define the remedy may demonstrate the need to amend the class definition orsubdivide the class. In this setting the final judgment concept is pragmatic. It is not the same as theconcept used for appeal purposes, but it should be flexible, particularly in protracted litigation.

The authority to amend an order under Rule 23(c)(1) before final judgment does not restore thepractice of “one-way intervention” that was rejected by the 1966 revision of Rule 23. Adetermination of liability after certification, however, may show a need to amend the class definition.Decertification may be warranted after further proceedings.

If the definition of a class certified under Rule 23(b)(3) is altered to include members who have notbeen afforded notice and an opportunity to request exclusion, notice—including an opportunity torequest exclusion—must be directed to the new class members under Rule 23(c)(2)(B).

Paragraph (2). The first change made in Rule 23(c)(2) is to call attention to the court's authority—already established in part by Rule 23(d)(2)—to direct notice of certification to a Rule 23(b)(1) or(b)(2) class. The present rule expressly requires notice only in actions certified under Rule 23(b)(3).Members of classes certified under Rules 23(b)(1) or (b)(2) have interests that may deserveprotection by notice.

The authority to direct notice to class members in a (b)(1) or (b)(2) class action should beexercised with care. For several reasons, there may be less need for notice than in a (b)(3) classaction. There is no right to request exclusion from a (b)(1) or (b)(2) class. The characteristics of theclass may reduce the need for formal notice. The cost of providing notice, moreover, could easilycripple actions that do not seek damages. The court may decide not to direct notice after balancingthe risk that notice costs may deter the pursuit of class relief against the benefits of notice.

When the court does direct certification notice in a (b)(1) or (b)(2) class action, the discretion andflexibility established by subdivision (c)(2)(A) extend to the method of giving notice. Notice facilitatesthe opportunity to participate. Notice calculated to reach a significant number of class members oftenwill protect the interests of all. Informal methods may prove effective. A simple posting in a placevisited by many class members, directing attention to a source of more detailed information, maysuffice. The court should consider the costs of notice in relation to the probable reach of inexpensivemethods.

If a Rule 23(b)(3) class is certified in conjunction with a (b)(2) class, the (c)(2)(B) noticerequirements must be satisfied as to the (b)(3) class.

The direction that class-certification notice be couched in plain, easily understood language is areminder of the need to work unremittingly at the difficult task of communicating with classmembers. It is difficult to provide information about most class actions that is both accurate andeasily understood by class members who are not themselves lawyers. Factual uncertainty, legalcomplexity, and the complication of class-action procedure raise the barriers high. The FederalJudicial Center has created illustrative clear-notice forms that provide a helpful starting point foractions similar to those described in the forms.



Subdivision (e). Subdivision (e) is amended to strengthen the process of reviewing proposed class-action settlements. Settlement may be a desirable means of resolving a class action. But courtreview and approval are essential to assure adequate representation of class members who have notparticipated in shaping the settlement.

Paragraph (1). Subdivision (e)(1)(A) expressly recognizes the power of a class representative tosettle class claims, issues, or defenses.

Rule 23(e)(1)(A) resolves the ambiguity in former Rule 23(e)'s reference to dismissal orcompromise of “a class action.” That language could be—and at times was—read to require courtapproval of settlements with putative class representatives that resolved only individual claims. SeeManual for Complex Litigation Third, §30.41. The new rule requires approval only if the claims,issues, or defenses of a certified class are resolved by a settlement, voluntary dismissal, orcompromise.

Subdivision (e)(1)(B) carries forward the notice requirement of present Rule 23(e) when thesettlement binds the class through claim or issue preclusion; notice is not required when thesettlement binds only the individual class representatives. Notice of a settlement binding on the classis required either when the settlement follows class certification or when the decisions on certificationand settlement proceed simultaneously.

Reasonable settlement notice may require individual notice in the manner required by Rule23(c)(2)(B) for certification notice to a Rule 23(b)(3) class. Individual notice is appropriate, forexample, if class members are required to take action—such as filing claims—to participate in thejudgment, or if the court orders a settlement opt-out opportunity under Rule 23(e)(3).

Subdivision (e)(1)(C) confirms and mandates the already common practice of holding hearings aspart of the process of approving settlement, voluntary dismissal, or compromise that would bindmembers of a class.

Subdivision (e)(1)(C) states the standard for approving a proposed settlement that would bindclass members. The settlement must be fair, reasonable, and adequate. A helpful review of manyfactors that may deserve consideration is provided by In re: Prudential Ins. Co. America SalesPractice Litigation Agent Actions, 148 F.3d 283, 316–324 (3d Cir. 1998). Further guidance can befound in the Manual for Complex Litigation.

The court must make findings that support the conclusion that the settlement is fair, reasonable,and adequate. The findings must be set out in sufficient detail to explain to class members and theappellate court the factors that bear on applying the standard.

Settlement review also may provide an occasion to review the cogency of the initial classdefinition. The terms of the settlement themselves, or objections, may reveal divergent interests ofclass members and demonstrate the need to redefine the class or to designate subclasses.Redefinition of a class certified under Rule 23(b)(3) may require notice to new class members underRule 23(c)(2)(B). See Rule 23(c)(1)(C).

Paragraph (2). Subdivision (e)(2) requires parties seeking approval of a settlement, voluntarydismissal, or compromise under Rule 23(e)(1) to file a statement identifying any agreement made inconnection with the settlement. This provision does not change the basic requirement that the partiesdisclose all terms of the settlement or compromise that the court must approve under Rule 23(e)(1).



It aims instead at related undertakings that, although seemingly separate, may have influenced theterms of the settlement by trading away possible advantages for the class in return for advantagesfor others. Doubts should be resolved in favor of identification.

Further inquiry into the agreements identified by the parties should not become the occasion fordiscovery by the parties or objectors. The court may direct the parties to provide to the court orother parties a summary or copy of the full terms of any agreement identified by the parties. Thecourt also may direct the parties to provide a summary or copy of any agreement not identified bythe parties that the court considers relevant to its review of a proposed settlement. In exercisingdiscretion under this rule, the court may act in steps, calling first for a summary of any agreementthat may have affected the settlement and then for a complete version if the summary does notprovide an adequate basis for review. A direction to disclose a summary or copy of an agreementmay raise concerns of confidentiality. Some agreements may include information that meritsprotection against general disclosure. And the court must provide an opportunity to claim work-product or other protections.

Paragraph (3). Subdivision (e)(3) authorizes the court to refuse to approve a settlement unless thesettlement affords class members a new opportunity to request exclusion from a class certified underRule 23(b)(3) after settlement terms are known. An agreement by the parties themselves to permitclass members to elect exclusion at this point by the settlement agreement may be one factorsupporting approval of the settlement. Often there is an opportunity to opt out at this point becausethe class is certified and settlement is reached in circumstances that lead to simultaneous notice ofcertification and notice of settlement. In these cases, the basic opportunity to elect exclusion applieswithout further complication. In some cases, particularly if settlement appears imminent at the timeof certification, it may be possible to achieve equivalent protection by deferring notice and theopportunity to elect exclusion until actual settlement terms are known. This approach avoids the costand potential confusion of providing two notices and makes the single notice more meaningful. Butnotice should not be delayed unduly after certification in the hope of settlement.

Rule 23(e)(3) authorizes the court to refuse to approve a settlement unless the settlement affordsa new opportunity to elect exclusion in a case that settles after a certification decision if the earlieropportunity to elect exclusion provided with the certification notice has expired by the time of thesettlement notice. A decision to remain in the class is likely to be more carefully considered and isbetter informed when settlement terms are known.

The opportunity to request exclusion from a proposed settlement is limited to members of a (b)(3)class. Exclusion may be requested only by individual class members; no class member may purportto opt out other class members by way of another class action.

The decision whether to approve a settlement that does not allow a new opportunity to electexclusion is confided to the court's discretion. The court may make this decision before directingnotice to the class under Rule 23(e)(1)(B) or after the Rule 23(e)(1)(C) hearing. Many factors mayinfluence the court's decision. Among these are changes in the information available to classmembers since expiration of the first opportunity to request exclusion, and the nature of theindividual class members’ claims.

The terms set for permitting a new opportunity to elect exclusion from the proposed settlement ofa Rule 23(b)(3) class action may address concerns of potential misuse. The court might direct, forexample, that class members who elect exclusion are bound by rulings on the merits made before



the settlement was proposed for approval. Still other terms or conditions may be appropriate.

Paragraph (4). Subdivision (e)(4) confirms the right of class members to object to a proposedsettlement, voluntary dismissal, or compromise. The right is defined in relation to a disposition that,because it would bind the class, requires court approval under subdivision (e)(1)(C).

Subdivision (e)(4)(B) requires court approval for withdrawal of objections made under subdivision(e)(4)(A). Review follows automatically if the objections are withdrawn on terms that lead tomodification of the settlement with the class. Review also is required if the objector formallywithdraws the objections. If the objector simply abandons pursuit of the objection, the court mayinquire into the circumstances.

Approval under paragraph (4)(B) may be given or denied with little need for further inquiry if theobjection and the disposition go only to a protest that the individual treatment afforded the objectorunder the proposed settlement is unfair because of factors that distinguish the objector from otherclass members. Different considerations may apply if the objector has protested that the proposedsettlement is not fair, reasonable, or adequate on grounds that apply generally to a class or subclass.Such objections, which purport to represent class-wide interests, may augment the opportunity forobstruction or delay. If such objections are surrendered on terms that do not affect the classsettlement or the objector's participation in the class settlement, the court often can approvewithdrawal of the objections without elaborate inquiry.

Once an objector appeals, control of the proceeding lies in the court of appeals. The court ofappeals may undertake review and approval of a settlement with the objector, perhaps as part ofappeal settlement procedures, or may remand to the district court to take advantage of the districtcourt's familiarity with the action and settlement.

Subdivision (g). Subdivision (g) is new. It responds to the reality that the selection and activity ofclass counsel are often critically important to the successful handling of a class action. Until now,courts have scrutinized proposed class counsel as well as the class representative under Rule23(a)(4). This experience has recognized the importance of judicial evaluation of the proposed lawyerfor the class, and this new subdivision builds on that experience rather than introducing an entirelynew element into the class certification process. Rule 23(a)(4) will continue to call for scrutiny of theproposed class representative, while this subdivision will guide the court in assessing proposed classcounsel as part of the certification decision. This subdivision recognizes the importance of classcounsel, states the obligation to represent the interests of the class, and provides a framework forselection of class counsel. The procedure and standards for appointment vary depending on whetherthere are multiple applicants to be class counsel. The new subdivision also provides a method bywhich the court may make directions from the outset about the potential fee award to class counselin the event the action is successful.

Paragraph (1) sets out the basic requirement that class counsel be appointed if a class is certifiedand articulates the obligation of class counsel to represent the interests of the class, as opposed tothe potentially conflicting interests of individual class members. It also sets out the factors the courtshould consider in assessing proposed class counsel.

Paragraph (1)(A) requires that the court appoint class counsel to represent the class. Class counselmust be appointed for all classes, including each subclass that the court certifies to representdivergent interests.



Paragraph (1)(A) does not apply if “a statute provides otherwise.” This recognizes that provisions ofthe Private Securities Litigation Reform Act of 1995, Pub. L. No. 104–67, 109 Stat. 737 (1995)(codified in various sections of 15 U.S.C.), contain directives that bear on selection of a lead plaintiffand the retention of counsel. This subdivision does not purport to supersede or to affect theinterpretation of those provisions, or any similar provisions of other legislation.

Paragraph 1(B) recognizes that the primary responsibility of class counsel, resulting fromappointment as class counsel, is to represent the best interests of the class. The rule thus establishesthe obligation of class counsel, an obligation that may be different from the customary obligations ofcounsel to individual clients. Appointment as class counsel means that the primary obligation ofcounsel is to the class rather than to any individual members of it. The class representatives do nothave an unfettered right to “fire” class counsel. In the same vein, the class representatives cannotcommand class counsel to accept or reject a settlement proposal. To the contrary, class counselmust determine whether seeking the court's approval of a settlement would be in the best interestsof the class as a whole.

Paragraph (1)(C) articulates the basic responsibility of the court to appoint class counsel who willprovide the adequate representation called for by paragraph (1)(B). It identifies criteria that must beconsidered and invites the court to consider any other pertinent matters. Although couched in termsof the court's duty, the listing also informs counsel seeking appointment about the topics that shouldbe addressed in an application for appointment or in the motion for class certification.

The court may direct potential class counsel to provide additional information about the topicsmentioned in paragraph (1)(C) or about any other relevant topic. For example, the court may directapplicants to inform the court concerning any agreements about a prospective award of attorney feesor nontaxable costs, as such agreements may sometimes be significant in the selection of classcounsel. The court might also direct that potential class counsel indicate how parallel litigation mightbe coordinated or consolidated with the action before the court.

The court may also direct counsel to propose terms for a potential award of attorney fees andnontaxable costs. Attorney fee awards are an important feature of class action practice, and attentionto this subject from the outset may often be a productive technique. Paragraph (2)(C) thereforeauthorizes the court to provide directions about attorney fees and costs when appointing classcounsel. Because there will be numerous class actions in which this information is not likely to beuseful, the court need not consider it in all class actions.

Some information relevant to class counsel appointment may involve matters that includeadversary preparation in a way that should be shielded from disclosure to other parties. Anappropriate protective order may be necessary to preserve confidentiality.

In evaluating prospective class counsel, the court should weigh all pertinent factors. No singlefactor should necessarily be determinative in a given case. For example, the resources counsel willcommit to the case must be appropriate to its needs, but the court should be careful not to limitconsideration to lawyers with the greatest resources.

If, after review of all applicants, the court concludes that none would be satisfactory class counsel,it may deny class certification, reject all applications, recommend that an application be modified,invite new applications, or make any other appropriate order regarding selection and appointment ofclass counsel.



Paragraph (2). This paragraph sets out the procedure that should be followed in appointing classcounsel. Although it affords substantial flexibility, it provides the framework for appointment of classcounsel in all class actions. For counsel who filed the action, the materials submitted in support of themotion for class certification may suffice to justify appointment so long as the information describedin paragraph (g)(1)(C) is included. If there are other applicants, they ordinarily would file a formalapplication detailing their suitability for the position.

In a plaintiff class action the court usually would appoint as class counsel only an attorney orattorneys who have sought appointment. Different considerations may apply in defendant classactions.

The rule states that the court should appoint “class counsel.” In many instances, the applicant willbe an individual attorney. In other cases, however, an entire firm, or perhaps numerous attorneyswho are not otherwise affiliated but are collaborating on the action will apply. No rule of thumb existsto determine when such arrangements are appropriate; the court should be alert to the need foradequate staffing of the case, but also to the risk of overstaffing or an ungainly counsel structure.

Paragraph (2)(A) authorizes the court to designate interim counsel during the pre-certificationperiod if necessary to protect the interests of the putative class. Rule 23(c)(1)(B) directs that theorder certifying the class include appointment of class counsel. Before class certification, however, itwill usually be important for an attorney to take action to prepare for the certification decision. Theamendment to Rule 23(c)(1) recognizes that some discovery is often necessary for thatdetermination. It also may be important to make or respond to motions before certification.Settlement may be discussed before certification. Ordinarily, such work is handled by the lawyer whofiled the action. In some cases, however, there may be rivalry or uncertainty that makes formaldesignation of interim counsel appropriate. Rule 23(g)(2)(A) authorizes the court to designate interimcounsel to act on behalf of the putative class before the certification decision is made. Failure tomake the formal designation does not prevent the attorney who filed the action from proceeding in it.Whether or not formally designated interim counsel, an attorney who acts on behalf of the classbefore certification must act in the best interests of the class as a whole. For example, an attorneywho negotiates a pre-certification settlement must seek a settlement that is fair, reasonable, andadequate for the class.

Rule 23(c)(1) provides that the court should decide whether to certify the class “at an earlypracticable time,” and directs that class counsel should be appointed in the order certifying the class.In some cases, it may be appropriate for the court to allow a reasonable period after commencementof the action for filing applications to serve as class counsel. The primary ground for deferringappointment would be that there is reason to anticipate competing applications to serve as classcounsel. Examples might include instances in which more than one class action has been filed, or inwhich other attorneys have filed individual actions on behalf of putative class members. The purposeof facilitating competing applications in such a case is to afford the best possible representation forthe class. Another possible reason for deferring appointment would be that the initial applicant wasfound inadequate, but it seems appropriate to permit additional applications rather than deny classcertification.

Paragraph (2)(B) states the basic standard the court should use in deciding whether to certify theclass and appoint class counsel in the single applicant situation—that the applicant be able to providethe representation called for by paragraph (1)(B) in light of the factors identified in paragraph (1)(C).



If there are multiple adequate applicants, paragraph (2)(B) directs the court to select the classcounsel best able to represent the interests of the class. This decision should also be made using thefactors outlined in paragraph (1)(C), but in the multiple applicant situation the court is to go beyondscrutinizing the adequacy of counsel and make a comparison of the strengths of the variousapplicants. As with the decision whether to appoint the sole applicant for the position, no single factorshould be dispositive in selecting class counsel in cases in which there are multiple applicants. Thefact that a given attorney filed the instant action, for example, might not weigh heavily in thedecision if that lawyer had not done significant work identifying or investigating claims. Depending onthe nature of the case, one important consideration might be the applicant's existing attorney-clientrelationship with the proposed class representative.

Paragraph (2)(C) builds on the appointment process by authorizing the court to include provisionsregarding attorney fees in the order appointing class counsel. Courts may find it desirable to adoptguidelines for fees or nontaxable costs, or to direct class counsel to report to the court at regularintervals on the efforts undertaken in the action, to facilitate the court's later determination of areasonable attorney fee.

Subdivision (h). Subdivision (h) is new. Fee awards are a powerful influence on the way attorneysinitiate, develop, and conclude class actions. Class action attorney fee awards have heretofore beenhandled, along with all other attorney fee awards, under Rule 54(d)(2), but that rule is not addressedto the particular concerns of class actions. This subdivision is designed to work in tandem with newsubdivision (g) on appointment of class counsel, which may afford an opportunity for the court toprovide an early framework for an eventual fee award, or for monitoring the work of class counselduring the pendency of the action.

Subdivision (h) applies to “an action certified as a class action.” This includes cases in which thereis a simultaneous proposal for class certification and settlement even though technically the classmay not be certified unless the court approves the settlement pursuant to review under Rule 23(e).When a settlement is proposed for Rule 23(e) approval, either after certification or with a request forcertification, notice to class members about class counsel's fee motion would ordinarily accompanythe notice to the class about the settlement proposal itself.

This subdivision does not undertake to create new grounds for an award of attorney fees ornontaxable costs. Instead, it applies when such awards are authorized by law or by agreement of theparties. Against that background, it provides a format for all awards of attorney fees and nontaxablecosts in connection with a class action, not only the award to class counsel. In some situations, theremay be a basis for making an award to other counsel whose work produced a beneficial result for theclass, such as attorneys who acted for the class before certification but were not appointed classcounsel, or attorneys who represented objectors to a proposed settlement under Rule 23(e) or to thefee motion of class counsel. Other situations in which fee awards are authorized by law or byagreement of the parties may exist.

This subdivision authorizes an award of “reasonable” attorney fees and nontaxable costs. This is thecustomary term for measurement of fee awards in cases in which counsel may obtain an award offees under the “common fund” theory that applies in many class actions, and is used in many fee-shifting statutes. Depending on the circumstances, courts have approached the determination of whatis reasonable in different ways. In particular, there is some variation among courts about whether in“common fund” cases the court should use the lodestar or a percentage method of determining whatfee is reasonable. The rule does not attempt to resolve the question whether the lodestar or



percentage approach should be viewed as preferable.

Active judicial involvement in measuring fee awards is singularly important to the proper operationof the class-action process. Continued reliance on caselaw development of fee-award measures doesnot diminish the court's responsibility. In a class action, the district court must ensure that theamount and mode of payment of attorney fees are fair and proper whether the fees come from acommon fund or are otherwise paid. Even in the absence of objections, the court bears thisresponsibility.

Courts discharging this responsibility have looked to a variety of factors. One fundamental focus isthe result actually achieved for class members, a basic consideration in any case in which fees aresought on the basis of a benefit achieved for class members. The Private Securities Litigation ReformAct of 1995 explicitly makes this factor a cap for a fee award in actions to which it applies. See 15U.S.C. §§77z–1(a)(6); 78u–4(a)(6) (fee award should not exceed a “reasonable percentage of theamount of any damages and prejudgment interest actually paid to the class”). For a percentageapproach to fee measurement, results achieved is the basic starting point.

In many instances, the court may need to proceed with care in assessing the value conferred onclass members. Settlement regimes that provide for future payments, for example, may not result insignificant actual payments to class members. In this connection, the court may need to scrutinizethe manner and operation of any applicable claims procedure. In some cases, it may be appropriateto defer some portion of the fee award until actual payouts to class members are known. Settlementsinvolving nonmonetary provisions for class members also deserve careful scrutiny to ensure thatthese provisions have actual value to the class. On occasion the court's Rule 23(e) review will providea solid basis for this sort of evaluation, but in any event it is also important to assessing the feeaward for the class.

At the same time, it is important to recognize that in some class actions the monetary reliefobtained is not the sole determinant of an appropriate attorney fees award. Cf. Blanchard v.Bergeron, 489 U.S. 87, 95 (1989) (cautioning in an individual case against an “undesirableemphasis” on “the importance of the recovery of damages in civil rights litigation” that might“shortchange efforts to seek effective injunctive or declaratory relief”).

Any directions or orders made by the court in connection with appointing class counsel under Rule23(g) should weigh heavily in making a fee award under this subdivision.

Courts have also given weight to agreements among the parties regarding the fee motion, and toagreements between class counsel and others about the fees claimed by the motion. Rule54(d)(2)(B) provides: “If directed by the court, the motion shall also disclose the terms of anyagreement with respect to fees to be paid for the services for which claim is made.” The agreementby a settling party not to oppose a fee application up to a certain amount, for example, is worthy ofconsideration, but the court remains responsible to determine a reasonable fee. “Side agreements”regarding fees provide at least perspective pertinent to an appropriate fee award.

In addition, courts may take account of the fees charged by class counsel or other attorneys forrepresenting individual claimants or objectors in the case. In determining a fee for class counsel, thecourt's objective is to ensure an overall fee that is fair for counsel and equitable within the class. Insome circumstances individual fee agreements between class counsel and class members might haveprovisions inconsistent with those goals, and the court might determine that adjustments in the classfee award were necessary as a result.



Finally, it is important to scrutinize separately the application for an award covering nontaxablecosts. If costs were addressed in the order appointing class counsel, those directives should be apresumptive starting point in determining what is an appropriate award.

Paragraph (1). Any claim for an award of attorney fees must be sought by motion under Rule54(d)(2), which invokes the provisions for timing of appeal in Rule 58 and Appellate Rule 4. Owing tothe distinctive features of class action fee motions, however, the provisions of this subdivision controldisposition of fee motions in class actions, while Rule 54(d)(2) applies to matters not addressed inthis subdivision.

The court should direct when the fee motion must be filed. For motions by class counsel in casessubject to court review of a proposed settlement under Rule 23(e), it would be important to requirethe filing of at least the initial motion in time for inclusion of information about the motion in thenotice to the class about the proposed settlement that is required by Rule 23(e). In cases litigated tojudgment, the court might also order class counsel's motion to be filed promptly so that notice to theclass under this subdivision (h) can be given.

Besides service of the motion on all parties, notice of class counsel's motion for attorney fees mustbe “directed to the class in a reasonable manner.” Because members of the class have an interest inthe arrangements for payment of class counsel whether that payment comes from the class fund oris made directly by another party, notice is required in all instances. In cases in which settlementapproval is contemplated under Rule 23(e), notice of class counsel's fee motion should be combinedwith notice of the proposed settlement, and the provision regarding notice to the class is parallel tothe requirements for notice under Rule 23(e). In adjudicated class actions, the court may calibratethe notice to avoid undue expense.

Paragraph (2). A class member and any party from whom payment is sought may object to the feemotion. Other parties—for example, nonsettling defendants—may not object because they lack asufficient interest in the amount the court awards. The rule does not specify a time limit for makingan objection. In setting the date objections are due, the court should provide sufficient time after thefull fee motion is on file to enable potential objectors to examine the motion.

The court may allow an objector discovery relevant to the objections. In determining whether toallow discovery, the court should weigh the need for the information against the cost and delay thatwould attend discovery. See Rule 26(b)(2). One factor in determining whether to authorize discoveryis the completeness of the material submitted in support of the fee motion, which depends in part onthe fee measurement standard applicable to the case. If the motion provides thorough information,the burden should be on the objector to justify discovery to obtain further information.

Paragraph (3). Whether or not there are formal objections, the court must determine whether a feeaward is justified and, if so, set a reasonable fee. The rule does not require a formal hearing in allcases. The form and extent of a hearing depend on the circumstances of the case. The rule doesrequire findings and conclusions under Rule 52(a).

Paragraph (4). By incorporating Rule 54(d)(2), this provision gives the court broad authority toobtain assistance in determining the appropriate amount to award. In deciding whether to directsubmission of such questions to a special master or magistrate judge, the court should giveappropriate consideration to the cost and delay that such a process might entail.

Changes Made After Publication and Comment. Rule 23(c)(1)(B) is changed to incorporate the



counsel-appointment provisions of Rule 23(g). The statement of the method and time for requestingexclusion from a (b)(3) class has been moved to the notice of certification provision in Rule23(c)(2)(B).

Rule 23(c)(1)(C) is changed by deleting all references to “conditional” certification.

Rule 23(c)(2)(A) is changed by deleting the requirement that class members be notified ofcertification of a (b)(1) or (b)(2) class. The new version provides only that the court may directappropriate notice to the class.

Rule 23(c)(2)(B) is revised to require that the notice of class certification define the certified classin terms identical to the terms used in (c)(1)(B), and to incorporate the statement transferred from(c)(1)(B) on “when and how members may elect to be excluded.”

Rule 23(e)(1) is revised to delete the requirement that the parties must win court approval for aprecertification dismissal or settlement.

Rule 23(e)(2) is revised to change the provision that the court may direct the parties to file a copyor summary of any agreement or understanding made in connection with a proposed settlement. Thenew provision directs the parties to a proposed settlement to identify any agreement made inconnection with the settlement.

Rule 23(e)(3) is proposed in a restyled form of the second version proposed for publication.

Rule 23(e)(4)(B) is restyled.

Rule 23(g)(1)(C) is a transposition of criteria for appointing class counsel that was published asRule 23(g)(2)(B). The criteria are rearranged, and expanded to include consideration of experience inhandling claims of the type asserted in the action and of counsel's knowledge of the applicable law.

Rule 23(g)(2)(A) is a new provision for designation of interim counsel to act on behalf of a putativeclass before a certification determination is made.

Rule 23(g)(2)(B) is revised to point up the differences between appointment of class counsel whenthere is only one applicant and when there are competing applicants. When there is only oneapplicant the court must determine that the applicant is able to fairly and adequately represent classinterests. When there is more than one applicant the court must appoint the applicant best able torepresent class interests.

Rule 23(h) is changed to require that notice of an attorney-fee motion by class counsel be“directed to class members,” rather than “given to all class members.”


The language of Rule 23 has been amended as part of the general restyling of the Civil Rules tomake them more easily understood and to make style and terminology consistent throughout therules. These changes are intended to be stylistic only.

Amended Rule 23(d)(2) carries forward the provisions of former Rule 23(d) that recognize twoseparate propositions. First, a Rule 23(d) order may be combined with a pretrial order under Rule 16.Second, the standard for amending the Rule 23(d) order continues to be the more open-endedstandard for amending Rule 23(d) orders, not the more exacting standard for amending Rule 16orders.



‹ Rule 22. Interpleader up Rule 23.1. Derivative Actions ›

As part of the general restyling, intensifiers that provide emphasis but add no meaning areconsistently deleted. Amended Rule 23(f) omits as redundant the explicit reference to court ofappeals discretion in deciding whether to permit an interlocutory appeal. The omission does not inany way limit the unfettered discretion established by the original rule.


The time set in the former rule at 10 days has been revised to 14 days. See the Note to Rule 6.

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4:42-9. Attorney's Fees

(a) Actions in Which Fee Is Allowable. No fee for legal services shall be allowed in the taxed costs or otherwise, except

• (1) In a family action, a fee allowance both pendente lite and on final determination may be made pursuant to R. 5:3-5(c).

• (2) Out of a fund in court. The court in its discretion may make an allowance out of such a fund, but no allowance shall be made as to issues triable of right by a jury. A fiduciary may make payments on account of fees for legal services rendered out of a fund entrusted to the fiduciary for administration, subject to approval and allowance or to disallowance by the court upon settlement of the account.

• (3) In a probate action, if probate is refused, the court may make an allowance to be paid out of the estate of the decedent. If probate is granted, and it shall appear that the contestant had reasonable cause for contesting the validity of the will or codicil, the court may make an allowance to the proponent and the contestant, to be paid out of the estate. In a guardianship action, the court may allow a fee in accordance with R. 4:86-4(e) to the attorney for the party seeking guardianship, counsel appointed to represent the alleged incapacitated person, and the guardian ad litem.

• (4) In an action for the foreclosure of a mortgage, the allowance shall be calculated as follows: on all sums adjudged to be paid the plaintiff amounting to $5,000 or less, at the rate of 3.5%, provided, however, that in any action a minimum fee of $75 shall be allowed; upon the excess over $5,000 and up to $10,000 at the rate of 1.5%; and upon the excess over $10,000 at the rate of 1%, provided that the allowance shall not exceed $7,500. If, however, application of the formula prescribed by this rule results in a sum in excess of $7,500, the court may award an additional fee not greater than the amount of such excess on application supported by affidavit of services. In no case shall the fee allowance exceed the limitations of this rule.

• (5) In an action to foreclose a tax certificate or certificates, the court may award attorney's fees not exceeding $500 per tax sale certificate in any in rem or in personam proceeding except for special cause shown by affidavit. If the plaintiff is other than a municipality no attorney's fees shall be allowed unless prior to the filing of the complaint the plaintiff shall have given not more than 120 nor fewer than 30 days' written notice to all parties entitled to redeem whose interests appear of record at the time of the tax sale, by registered or certified mail with postage prepaid thereon addressed to their last known addresses, of intention to file such complaint. The notice shall also contain the amount due on the tax lien as of the day of the notice. A copy of the notice shall be filed in the office of the municipal tax collector.

• (6) In an action upon a liability or indemnity policy of insurance, in favor of a successful claimant.

• (7) As expressly provided by these rules with respect to any action, whether or not there is a fund in court.

• (8) In all cases where attorney's fees are permitted by statute. (b) Affidavit of Service. Except in tax and mortgage foreclosure actions, all applications

for the allowance of fees shall be supported by an affidavit of services addressing the factors enumerated by RPC 1.5(a). The affidavit shall also include a recitation of other factors pertinent in the evaluation of the services rendered, the amount of the allowance applied for, and an itemization of disbursements for which reimbursement is sought. If the court is requested to consider the rendition of paraprofessional services in making a fee allowance, the affidavit shall 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. No portion of any fee allowance claimed for attorneys' services shall duplicate in any way the fees claimed by the attorney for paraprofessional services rendered to the client. For purposes of this rule, "paraprofessional services" shall mean those services rendered by individuals who are qualified through education, work experience or training who perform specifically delegated tasks which are legal in nature under the direction and supervision of attorneys and which tasks an attorney would otherwise be obliged to perform.

(c) Statement of Fees Received. All applications for the allowance of fees shall state how much had been paid to the attorney (including, in a matrimonial action, the amount, if any, received by the attorney from pendente lite allowances) and what provision, if any, has been made for the payment of fees to the attorney in the future.

(d) Prohibiting Separate Orders for Allowances of Fees. An allowance of fees made on the determination of a matter shall be included in the judgment or order stating the determination.

Note: Source - R.R. 4:55-7(a) (b) (c) (d) (e) (f), 4:55-8, 4:98-4(c). Paragraphs (a) and (b) amended July 7, 1971 to be effective September 13, 1971; paragraph (a) amended November 27, 1974 to be effective April 1, 1975; paragraph (a) amended July 16, 1981 to be effective September 14, 1981; paragraph (a)(1) amended December 20, 1983 to be effective December 31, 1983; paragraphs (a)(1) and (b) amended November 1, 1985 to be effective January 2, 1986; paragraph (b) amended January 19, 1989 to be effective February 1, 1989; paragraph (a)(4) amended June 29, 1990 to be effective September 4, 1990; paragraph (a)(5) amended July 14, 1992 to be effective September 1, 1992; paragraphs (a)(1), (2) and (c) amended July 13, 1994 to be effective September 1, 1994; paragraph (a)(5) amended June 28, 1996 to be effective September 1, 1996; paragraph (a)(1) amended January 21, 1999 to be effective April 5, 1999; paragraph (a)(5) amended July 28, 2004 to be effective September 1, 2004; paragraph (a)(3) amended July 27, 2006 to be effective September 1, 2006; caption amended and subparagraphs (a)(5) and (a)(8) amended July 23, 2010 to be effective September 1, 2010.

42:2C-68 Derivative action.

68. Derivative Action. A member may maintain a derivative action to enforce a right of a limited liability company if:

a. the member first makes a demand on the other members in a member-managed limited liability company, or the managers of a manager-managed limited liability company, requesting that they cause the company to bring an action to enforce the right, and the managers or other members do not bring the action within a reasonable time; or

b. A demand under subsection a. of this section would be futile.

L.2012, c.50, s.68.

42:2C-72 Proceeds and expenses.

72. Proceeds and Expenses.

a. Except as otherwise provided in subsection b. of this section:

(1) any proceeds or other benefits of a derivative action under section 68 of this act, whether by judgment, compromise, or settlement, belong to the limited liability company and not to the plaintiff; and

(2) if the plaintiff receives any proceeds, the plaintiff shall remit them immediately to the company.

b. If a derivative action under section 68 of this act is successful in whole or in part, the court may award the plaintiff reasonable expenses, including reasonable attorney's fees and costs, from the recovery of the limited liability company.

L.2012, c.50, s.72.

Page 1

10 of 14 DOCUMENTS

THERESA M. ELLIS and SCOTT A. ZUKOWSKI, w/h, Plaintiffs, v. ETHICON, INC., JOHNSON & JOHNSON, INC., and JOHN DOE(S), Defendants.

Civil Action No. 05-726(FLW)

UNITED STATES DISTRICT COURT FOR THE DISTRICT OF NEW JERSEY

2010 U.S. Dist. LEXIS 18455

March 1, 2010, Decided March 1, 2010, Filed

NOTICE: NOT FOR PUBLICATION SUBSEQUENT HISTORY: Request granted, Stay de-nied by Ellis v. Ethicon, Inc., 2010 U.S. Dist. LEXIS 98603 (D.N.J., Sept. 20, 2010) PRIOR HISTORY: Ellis v. Ethicon, Inc., 2009 U.S. Dist. LEXIS 106620 (D.N.J., Nov. 13, 2009) COUNSEL: [*1] For THERESA M. ELLIS, Plaintiff: ELIZABETH ZUCKERMAN, LEAD ATTORNEY, GEORGE WRIGHT FISHER, JR., ZUCKERMAN & FISHER, LLC, PRINCETON, NJ. For SCOTT A. ZUKOWSKI, Plaintiff: GEORGE WRIGHT FISHER, JR., LEAD ATTORNEY, ZUCK-ERMAN & FISHER, LLC, PRINCETON, NJ. For ETHICON, INC., JOHNSON & JOHNSON, INC., Defendants: FRANCIS X. DEE, LEAD ATTORNEY, MCELROY, DEUTSCH, MULVANEY, & CARPEN-TER, LLP, NEWARK, NJ; DONNA DUBETH GAR-DINER, MCELROY, DEUTSCH, MULVANEY & CARPENTER, LLP, MORRISTOWN, NJ; JANE A. RIGBY, MCELROY, DEUTSCH, MULVANEY & CARPENTER, LLP, NEWARK, NJ. JUDGES: FREDA L. WOLFSON, United States Dis-trict Judge. OPINION BY: FREDA L. WOLFSON OPINION

WOLFSON, District Judge:

In the instant application, Plaintiff Theresa M. Ellis ("Plaintiff") seeks, inter alia, $ 387,481.35 in attorney's fees and $ 35,176.50 in costs in connection with litigat-ing this suit, wherein she obtained a favorable jury ver-dict with respect to her discrimination claim pursuant to the Americans with Disabilities Act ("ADA") against Defendant Ethicon, Inc. ("Defendant"). Previously, on November 16, 2009, the Court denied Defendant's mo-tion for judgment or a new trial and awarded Plaintiff back pay in the amount of $ 42,400, along with pre-judgment interest, [*2] and an amount to compensate Plaintiff for any negative tax consequences. The Court also reinstated Plaintiff to her position at Ethicon in lieu of front pay. To that end, the Court advised Plaintiff to submit an application for attorney's fees and costs, along with the appropriate calculations to adjust the back pay award to present value, to add prejudgment interest and include an appropriate amount compensating for nega-tive tax consequences. In response to the Court's Order, Defendant now moves to alter the judgment pursuant to Fed. R. Civ. P. 59(e) with respect to adjusting the back pay award to present value, and it opposes, in part, Plain-tiff's application for fees and costs. For the reasons stated herein, the Court will award Plaintiff $ 340,858.85 in fees and $ 37,926.50 in expenses and costs. The Court will amend its previous ruling regarding back pay con-sistent with this Opinion. Background

Since the facts of this case have been extensively recounted in various opinions, the Court will not repeat them here. However, the Court will incorporate, and re-

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Page 2 2010 U.S. Dist. LEXIS 18455, *

fer to, the facts set forth in its November 16, 2009 Opin-ion for the purpose of these motions. Discussion I. Attorneys' Fees and [*3] Costs

According to the Court's instructions, Plaintiff files the instant application for attorneys' fees and costs asso-ciated with this litigation. In support of her application, Plaintiff relies on various exhibits and certifications, in-cluding the certification of Plaintiff's counsel, Elizabeth Zuckerman, Esq. and the Declaration of Fredric J. Gross, Esq., an experienced employment attorney practicing in New Jersey, to justify her request of $ 387,481.35 in fees and $ 35,176.50 in costs. Defendant raises three distinct objections to Plaintiff's fee application: (1) a $ 400 hour-ly rate is not reasonable; (2) a lower rate should apply to associate-level work performed by Ms. Zuckerman; and (3) fees should not be awarded in connection with filing a motion to disqualify. Defendant otherwise does not object to the number of hours expended on the litigation.

The Americans with Disabilities Act permits courts to award reasonable attorneys' costs to a prevailing party. The statute provides that "[i]n any action or administra-tive proceeding commenced pursuant to this Act, the court or agency, in its discretion, may allow the prevail-ing party, other than the United States, a reasonable at-torney's [*4] fee, including litigation expenses, and costs . . . ." 42 U.S.C. § 12205.

Plaintiff, the prevailing party in this case, is not au-tomatically entitled to compensation for all the time her attorneys spent working on the case; rather, a court awarding fees must "decide whether the hours set [forth] were reasonably expended for each of the particular purposes described and then exclude those that are 'ex-cessive, redundant, or otherwise unnecessary.'" Student Pub. Interest Research Group v. AT & T Bell Lab., 842 F.2d 1436, 1441-42 (3d Cir. 1988)(citation and quotation omitted). 1 A party seeking attorney fees bears the ulti-mate burden of showing that its requested hourly rates and the hours it claims are reasonable. See Rode v. Del-larciprete, 892 F.2d 1177, 1183 (3d Cir. 1990); see also Smith v. Philadelphia Hous. Auth., 107 F.3d 223, 225 (3d Cir. 1997). To initially satisfy this burden, "the fee petitioner must 'submit evidence supporting the hours worked and rates claimed.'" Rode, 892 F.2d at 1183 (quotation omitted).

1 "[Third Circuit] case law construing what is a reasonable fee applies uniformly to all fee shift-ing statutes." Goodman v. Pa. Turnpike Comm'n, 293 F.3d 655, 677 (3d Cir. 2002) [*5] (altera-tion, quotation marks and citation omitted).

Under the ADA, the determination of a reasonable fee begins by calculating a lodestar, which is the product of hours counsel reasonably worked on the litigation and a reasonable hourly rate. Lanni v. State of New Jersey, 259 F.3d 146, 149 (3d Cir. 2001); Public Interest Re-search Group of New Jersey, Inc. v. Windall, 51 F.3d 1179, 1185 (3d Cir. 1995)("PIRGNJ"); Damian J. v. Sch. Dist. of Phila., No. 08-2520, 358 Fed. Appx. 333, 2009 U.S. App. LEXIS 28255, at *5-6 (3d Cir. Dec. 23, 2009). Thus, there are two components to the reasonable fee analysis: the rate charged and the time expended. The lodestar is the presumptively reasonable fee. Planned Parenthood of Cent. New Jersey v. Attorney General of the State of New Jersey, 297 F.3d 253, 265 n.5 (3d Cir. 2002).

"It is the general rule that a reasonable hourly rate is calculated according to the prevailing market rates in the community." S.D. v. Manville Bd. of Educ., 989 F.Supp. 649, 656 (D.N.J. 1998). "This burden is normally ad-dressed by submitting affidavits of other attorneys in the relevant legal community attesting to the range of pre-vailing rates charged by attorneys with similar skill and experience." [*6] Id. (citations omitted). Moreover, the current market rate is the rate at the time of the fee peti-tion, not the rate when the services were performed. Lanni v. State of New Jersey, 259 F.3d 146, 149 (3d Cir. 2001)("To take into account delay in payment, the hourly rate at which compensation is to be awarded should be based on current rates rather than those in effect when the services were performed")(quoting Rendine v. Pantzer, 141 N.J. 292, 661 A.2d 1202 (1995)); see Rode v. Dellarciprete, 892 F.2d 1177, 1188-89 (3d Cir. 1990) (describing petition based on current rates as premised on a theory of "delay compensation"). "A current market rate is exactly that - a reasonable rate based on the cur-rently prevailing rates in the community for comparable legal services." Lanni, 259 F.3d at 150. Once the hourly rate is set, then that rate is multiplied by the numbers of hours reasonably expended to arrive at the amount of the fee award. Id.

Significantly, the Court may not reduce an award sua sponte; rather, it can only do so in response to spe-cific objections made by the opposing party. Bell v. United Princeton Properties, Inc., 884 F.2d 713, 719 (3d Cir. 1989). But once the opposing party has made a spe-cific [*7] objection, the burden is on the plaintiff to justify the size and reasonableness of her request. Inter-faith Cmty. Org. v. Honeywell Int'l, Inc., 426 F.3d 694, 713 (3d Cir. 2005). In reviewing a fee application, a dis-trict court must conduct a "thorough and searching anal-ysis" to identify such charges. Evans v. Port Auth. of N.Y. & N.J., 273 F.3d 346, 362 (3d Cir. 2001). As noted above, Defendant objects to Plaintiff's fee request on


three separate grounds; the Court will address each con-tention below. A. Hourly Rate

Plaintiff is seeking an hourly rate of $ 400 for Ms. Zuckerman and Mr. George W. Fisher, Esq., $ 375 for Mr. Richard Yaskin, Esq., 2 and $ 125 for Ms. Priya Vimalassery, a paralegal. Defendant claims that the hourly rate for Ms. Zuckerman and Mr. Fisher is unrea-sonable. It reasons that the record establishes that Plain-tiff retained Ms. Zuckerman and her firm at a "top" rate of $ 300 per hour, see Zuckerman Aff., P 4, and this billing rate is the best evidence of the market rate. To this end, Defendant has parsed through Plaintiff's exhib-its and certifications and discredits each of Plaintiff's supporting documents.

2 Mr. Yaskin is an attorney who assisted Ms. Zuckerman at the [*8] inception of this case. The Court notes that Defendant does not object to Mr. Yaskin's hourly rate or the number of hours he spent in this litigation.

In 2005, Plaintiff signed a Retainer Agreement with Zuckerman & Fisher, LLC. The Agreement provided that the then hourly rate for Ms. Zuckerman and Mr. Fisher was $ 300. Zuckerman Aff., P 4. A couple of years later, the Zuckerman Firm's billing rate increased to $ 350. Id., P 8. However, effective January 1, 2010, the billing rate increased again to $ 400 - Plaintiff is requesting this amount as the hourly rate. Id. While the hourly rate quoted in Plaintiff's Retainer Agreement is helpful in determining a reasonable hourly rate, the Third Circuit has instructed courts to look to the applicant attorneys' customary billing rate for fee-paying clients at the time the fee petition was filed. Lanni, 259 F.3d at 150; PIRGNJ, 51 F.3d at 1185. In that regard, in the first in-stance, the Court finds the $ 400 hourly rate unreasona-ble. At the time this application was filed in December 2009, the Firm's hourly rate was $ 350. Therefore, there is no basis for the Court to permit a $ 400 hourly rate when all of the work performed by Ms. Zuckerman and [*9] Mr. Fisher, up to and including the filing of this request, are prior to the rate increase in 2010.

Rather, the Court finds the hourly rate of $ 350, which was the Firm's hourly rate at time this petition was filed, reasonable. The starting point in determining a reasonable rate is the experience of the attorneys. See Tenafly Eruv Ass'n v. Borough of Tenafly, 195 Fed. Appx. 93, 97 (3d Cir. 2006). There is no dispute that Plaintiff's attorneys are experienced lawyers in the field of employment discrimination. Indeed, Ms. Zuckerman has cited to many published cases in which she has rep-resented plaintiffs, and she has been representing plain-tiffs in employment disputes since 1990. Mr. Fisher also

has substantial trial experience in both state and federal courts. Plaintiff's evidence -- a survey of cases discussing hourly rates and the Declaration of Mr. Gross 3 -- support the reasonableness of the $ 350 hourly rate, which falls within the norm of New Jersey attorneys with similar positions and experience. Id.; Zuckerman Aff., PP 12(e)-(f); see also Gross Decl.

3 Defendant contests the probative value of Mr. Gross' Declaration because it maintains that there is no showing that Ms. Zuckerman's [*10] experience and expertise are similar to Mr. Gross or other counsel discussed by him. The Court disagrees. Mr. Gross, an attorney who practices in New Jersey, attests to the range of prevailing rates charged by other employment attorneys in the State. In fact, Mr. Gross specifically deline-ates the rates of attorneys who work in employ-ment boutique firms, such as Zuckerman & Fish-er. According to Mr. Gross' Declaration, the $ 350 hourly rate falls within the low-end of the reasonable range of the rates charged by other at-torneys with similar experience. See Gross' Decl., PP 17-23.

Although Defendant criticizes Plaintiff's supporting evidence, Defendant neither presents any contrary evi-dence nor cites to a single authority that stands for the proposition that this Court is bound by the rate negotiat-ed in the Retainer Agreement at the inception of this case in 2005. Smith, 107 F.3d at 225 ("Once the plaintiff has carried this burden [i.e., submitting evidence of the ap-propriate hourly rate], [the] defendant may contest that prima facie case only with appropriate record evidence . . ."). Instead, the Court notes that this case spans more than five years. While the Retainer Agreement set forth [*11] a $ 300 hourly rate, the majority of the attorney's billable hours occurred after the rate increased to $ 350, particularly since the bulk of the time charged was in 2008-2009, when Ms. Zuckerman and Mr. Fisher pre-pared and conducted trial, and filed pre- and post-trial motions. Accordingly, pursuant to Lanni, the Court is satisfied that Plaintiff has demonstrated that the hourly rate of $ 350 is reasonable. B. Associate-Level Work

At the outset, Defendant does not take issue with ei-ther the number of hours or the hourly rate of the parale-gal. Rather, Defendant contends that 159.12 of the attor-neys' billable hours, which include time for legal re-search and drafting certain correspondence, should have been performed by an associate or other less experienced attorney, and thus, these hours should not be compen-sated at the lead-attorney hourly rate applicable to Ms. Zuckerman and Mr. Fisher. The Court disagrees.


Although a court must exclude hours that reflect "the wasteful use of highly skilled and highly priced talent for matters easily delegable to non-professionals or less ex-perienced associates," delegation is neither always possi-ble in a small firm nor always desirable. Ursic v. Bethle-hem Mines, 719 F.2d 670, 677 (3d Cir. 1983); [*12] Sheffer v. Experian Information Solutions, Inc., 290 F. Supp. 2d 538, 550 (E.D. Pa. 2003). Here, Defendant's argument with regard to the duty to delegate presupposes that Plaintiff's lead attorneys readily have junior associ-ates at their disposal. See Poston v. Fox, 577 F. Supp. 915, 919-20 (D.N.J. 1984) (finding that it is not always possible to delegate in small office); see also Roldan v. Phila. Hous. Auth., Civ. A. No. 95-6649, 1999 U.S. Dist. LEXIS 19093, at *14-15 (E.D. Pa. Dec. 7, 1999) (hold-ing that reduction in rates is unwarranted in office that is understaffed and where no less experienced attorney was available to perform tasks). Although Plaintiff was rep-resented by attorneys from a law firm, Zuckerman & Fisher, that firm has no access to junior associates. See Zuckerman Supp. Aff. P 3. (indicating that Zuckerman & Fisher only consists of two founding partners). Given the unavailability of junior attorneys to work on this litiga-tion, "this Court does not find Plaintiff's attorneys' non-delegation of responsibilities unreasonable." Sheffer, 290 F.Supp.2d at 550.

Furthermore, "it is reasonable for lead trial counsel to desire to expend his or her own time on some activi-ties [*13] that, although within the competency of less highly paid associates, are better performed by the lead counsel to ensure the smooth functioning at trial." Id. Having reviewed Defendant's chart which consists of billable hours that it contends should have been delegat-ed to associates, the Court can only find two instances, totaling .30 billable hour for faxing, that are not other-wise research tasks and drafting legal correspondence. However, these instances of non-delegation are not fre-quent enough to mandate reducing the number of hours that will be computed in the lodestar. See Poston, 577 F. Supp. at 920 ("The court will not reduce the number of hours worked on this basis for it finds that the hours of work that could have been effectively delegated are de minimis"). C. Hours Spent on Motion to Disqualify Defense Counsel

Defendant posits that the portion of Plaintiff's fee application, which consists of time for the filing of a motion to disqualify defense counsel, should be excluded merely because that motion was not successful and was not necessary to Plaintiff prevailing on her ADA claim. Importantly, Defendant does not contend that the time spent preparing the motion was excessive. [*14] In support of its position, Defendant cites to case law which

addresses unsuccessful claims. Indeed, courts should not reduce a fee award "simply because the plaintiff failed to prevail on every contention raised in the lawsuit." Hens-ley v. Eckerhart, 461 U.S. 424, 435, 103 S. Ct. 1933, 76 L. Ed. 2d 40 (1983). Child Evangelism Fellowship of New Jersey v. Stafford Township School District, No. 02-4549, 2006 U.S. Dist. LEXIS 62966, at *62 (D.N.J. Sep. 5, 2006)("there mere fact that the Motion to Enforce the Preliminary Injunction was unsuccessful . . . does not require this Court to reduce [CFE's] fee award"). To that end, the Third Circuit has instructed that "[t]he mere failure of certain motions or the failure to use depositions is insufficient to warrant a fee reduction . . . ." Blum v. Witco Chemical Corp., 829 F.2d 367, 378 (3d Cir. 1987). Rather, the inquiry should be focused on whether the filed motion was "necessary" and "useful." See, e.g., Planned Parenthood v. AG, 297 F.3d 253, 270-71 (3d Cir. 2002)(while the motion for summary judgment was not filed, the work on the motion was 'necessary' and 'useful'").

Here, the Court finds that the filing of the motion to disqualify in this case was necessary. At the time, [*15] Plaintiff filed the motion because she believed that she was a former client of defense counsel's firm McElroy, Mulvaney, Deutsche and Carpenter in a matter substan-tially similar to the present case. Plaintiff contended that defense counsel's representation of Defendant in this case was contrary to the prohibition against representing cur-rent clients with adverse interests to former clients. While defense counsel was not disqualified, the Magis-trate Judge rendered a lengthy opinion resolving certain intricate issues of attorney conduct pursuant to New Jer-sey's Rules of Professional Conduct. Having reviewed the motion and that court's opinion on this matter, this Court is satisfied that filing of the motion was necessary to resolve allegations of possible conflict of interest. Accordingly, time billed for this motion will be included in the fee award. Davis v. Advanced Care Techs., Inc., No. 06-2449, 2007 U.S. Dist. LEXIS 74728, at *13-14 (E.D. Ca. Sep. 26, 2007) ("The motion to remand, how-ever, was part of the hours reasonably spent in litigating the underlying declaratory relief matter and was not a separate claim, but rather a method of pursuing Davis' ultimately successful claim"); [*16] James v. Chiches-ter Sch. Bd., No. 96-7683, 1999 U.S. Dist. LEXIS 2831, at *4-5 (E.D. Pa. Mar. 2, 1999). D. Calculation of Fees and Costs

The Court now calculates the fee award consistent with the rulings herein. First, the Court has reviewed Plaintiff's fee schedule. Because the Court has rejected Defendant's contention regarding delegation of duties to associates, all of the billable hours of Ms. Zuckerman and Mr. Fisher will be credited accordingly. The Court


remarks that Defendant did not object to the amount of time billed by the attorneys in this litigation. Indeed, the Court's review did not reveal any excessive or redundant billable hours. 4 To that end, Ms. Zuckerman's and Mr. Fisher's total billable hours accrued during the represen-tation of this case are 932.45. Mr. Yaskin's total billable hours are 26.22. Next, because the Court finds $ 350 is the reasonable hourly rate for Ms. Zuckerman and Mr. Fisher, and Defendant does not object to Mr. Yaskin's hourly rate of $ 375, the lodestar amount is therefore $ 336,190.10. In addition, Ms. Vimalassery, the paralegal, billed a total of 37.35 hours at an hourly rate of $ 125, which yields a total of $ 4,668.75 -- this calculation was [*17] not contested by Defendant. Accordingly, the total fee award is $ 340,858.85.

4 Indeed, Ms. Zuckerman certifies, and the record reflects, that most of Mr. Fisher's time spent in this litigation was not billed to Plaintiff.

Finally, Defendant did not object to Plaintiff's re-quest for expenses and costs in this litigation. Plaintiff has documented expenses in the amount of $ 37,926.50. 5 Having reviewed this documentation, the Court finds the full amount to be reasonable and compensable.

5 This amount includes $ 35,176.50 set forth in Ms. Zuckerman Affidavit, which Defendant did not contest, and an additional $ 2750.00 for the expert cost of John Vlasac, CPA. Because the Court instructed Plaintiff to include certain cal-culations in connection with the back pay award, which required the assistance of an expert, the Court finds this additional amount reasonable.

II. Back Pay Award and Motion to Amend Judgment

To begin, pursuant to the Court's instructions in its Opinion dated November 13, 2009, Plaintiff sought the assistance of an expert in: (1) calculating prejudgment interest for the back pay award of $ 42,400; adjusting the award to present value; and adding an amount to account for negative [*18] tax consequences. At the outset, the expert, John Vlasac, certifies that based on his analysis, there is no adverse tax consequence attributable to the lump sum receipt of Plaintiff's back pay award. Next, Plaintiff proposes that the Court modify the back pay award by assuming a 4.85% increase in salary that Plain-tiff projects that she hypothetically would have earned at Ethicon from October 21, 2001 to October 20, 2004. The Court rejected such a proposal previously "because Plaintiff did not produce any evidence at trial with re-spect to bonuses or fringe benefits that she would have received had she stayed at Ethicon, the Court will not speculate as to the amount of these benefits, and thus, will not consider them in calculating back pay." Here,

Plaintiff does not point to any evidence that the Court overlooked, or produce any other newly discovered evi-dence to support her proposal. Accordingly, Plaintiff's request on this basis is denied.

With respect to prejudgment interest and an upward adjustment of the back pay award to present value, De-fendant asks the Court to amend its previous ruling. 6 A motion to alter or amend a judgment is governed by Rule 59(e) of the Federal Rules of Civil Procedure, [*19] which allows a party to move to alter or amend a judg-ment within twenty-eight days of entry. Fed. R. Civ. P. 59(e). The purpose of this Rule is to correct manifest errors of law or fact or to present newly discovered evi-dence. Harsco Corp. v. Zlotnicki, 779 F.2d 906, 909 (3d Cir. 1985); see Livingston v. United States, No. 09-546, 2009 U.S. Dist. LEXIS 97539 (D.N.J. Oct. 20, 2009). To that end, a judgment may be altered or amended if the party seeking reconsideration establishes at least one of the following grounds: (1) an intervening change in con-trolling law; (2) the availability of new evidence that was not available when the Court entered judgment; or (3) the need to correct a clear error of law or fact or to prevent manifest injustice. Max's Seafood Cafe, by Lou-Ann, Inc. v. Quinteros, 176 F.3d 669, 677 (3d Cir. 1999) (citing North River Ins. Co. v. CIGNA Reinsurance Co., 52 F.3d 1194, 1218 (3d Cir. 1995)); Holsworth v. Berg, 322 Fed. Appx. 143, 146 (3d Cir. 2009). "To support reargument, a moving party must show that dispositive factual mat-ters or controlling decisions of law were overlooked by the court in reaching its prior decision," and that over-sight negatively affected [*20] the movant. Assisted Living Associates of Moorestown, L.L.C., v. Moorestown Tp, 996 F. Supp. 409, 442 (D.N.J. 1998). By contrast, mere disagreement with the district court's decision is inappropriate on a motion to alter judgment, and should be raised through the appellate process. Id. (citing Bermingham v. Sony Corp. of America, Inc., 820 F. Supp. 834, 859 n.8 (D.N.J. 1992), aff'd. 37 F.3d 1485 (3d Cir. 1994); G-69 v. Degnan, 748 F. Supp. 274, 275 (D.N.J. 1990)). "The Court will only entertain such a motion where the overlooked matters, if considered by the Court, might reasonably have resulted in a different conclusion." Assisted Living, 996 F. Supp. at 442.

6 Motion to alter or amend the judgment "must be filed no later than 28 days after the entry of the judgment." Fed. R. Civ. P. 59(e). On November 30, 2009, Defendant timely filed its Rule 59(e) motion after the entry of the Court's Order on November 16, 2009.

Defendant urges that combining a present value ad-justment on past loss with prejudgment interest would be improperly duplicative. Defendant reasons that both cal-culations address the same time value of money. Plaintiff


does not substantively respond. Rather, she relies on the [*21] Court's previous Opinion in calculating the back pay award. The Court, however, agrees that this Court's prior ruling would result in an error of law because of the duplicative remedy, and therefore, will reconsider this issue.

"[A]djusting to present value is equivalent to awarding prejudgment interest." Sokol Crystal Products, Inc. v. DSC Communications Corp., 15 F.3d 1427, 1434 (7th Cir. 1994)). That is because an award of prejudg-ment interest itself adjusts an award for past loss to pre-sent value: "Not all portions of a verdict are economic in character, and only the sum that represents past econom-ic loss is properly adjusted to present value through an interest calculation. [Past economic loss requires an] adjustment for the time the successful plaintiff's money was out of the market which prejudgment interest pro-vides." Poleto v. Consolidated Rail Corp., 826 F.2d 1270, 1278 n.14 (3d Cir. 1987), abrogated on other grounds, Kaiser Aluminum & Chemical Corp. v. Bon-jorno, 494 U.S. 827, 110 S. Ct. 1570, 108 L. Ed. 2d 842 (1990); Dominator, Inc. v. Factory Ship Robert E. Resoff, 768 F.2d 1099, 1106 (9th Cir. 1985) ("[p]rejudgment interest is awarded so that the award will reflect the present value of plaintiff's claim"); [*22]

Chace v. Champion Spark Plug Co., 725 F. Supp. 868, 872 (D. Md. 1989) ("And it makes no difference whether plaintiffs characterize the value of losing the benefit of money as prejudgment interest or they simply bring back pay to present value, since the amounts so computed are compensatory in nature").

Indeed, having recalculated the numbers, the Court finds that both present value and prejudgment interest do precisely the same thing: apply a rate of return to account for the time value of money -- that is, the "loss of the use of [Plaintiff's] investment or [plaintiff's] funds from the time of the loss until judgment is entered." Arco Pipeline Co. v. SS Trade Star, 693 F.2d 280, 281 (3d Cir. 1982). Simply put, present valuation and prejudgment interest both are a measure of the time value of money, they are duplicative, and only one type is permitted. In that re-gard, the Court amends its previous ruling on this issue so as to correct an error of law.

In considering this issue, the Court need not credit Plaintiff's proposed methods because she applies the present value of the back pay award in calculating the amount of prejudgment interest. Since the Court has re-jected this approach [*23] as duplicative here, the Court will recalculate the back pay award as follows:

________________________________________________________________________________ Back Pay Period Back Pay Average Time to Interest on November 30, Back Pay at 4% 2009 10/22/01 - 12/15/01 $ 13,369 8.03 year $ 4,294.12 12/17/01 - 12/31/01 $ 322 7.94 years $ 102.27

2002 $ 10,605 7.42 years $ 3147.56 2003 0 6.42 years 0

1/1/04 - 8/4/04 0 5.63 years 0 8/4/04 - 10/20/04 $ 18,104 5.23 years $ 3,787.36

TOTAL $ 42,400 $ 11,331.31 ________________________________________________________________________________

As an explanation, the Court previously used the above-delineated Back Pay Periods in which Plaintiff was entitled to an award and calculated the amount of back pay in each of the prescribed periods. Accordingly, the total amount of back pay is $ 42,400. Next, the Court utilized the 4% interest rate, which was decided in the Court's previous Opinion, to calculate the prejudgment interest in each of the periods wherein back pay was awarded. The Court also must calculate the number of years from the midpoint of the applicable back pay peri-od to November 30, 2009. The Court then applies the

following formula to arrive at the appropriate interest for each year back pay is awarded:

(the back pay amount) x (.04) x (num-ber of years) = interest

In that regard, the total prejudgment interest is $ 11,331.31. Accordingly, [*24] Plaintiff's back pay award is $ 53,731.31. 7


7 Indeed, Plaintiff proposes that the present value of the back pay award of $ 42,4000 in 2009 is $ 51,618, which is substantially similar to the back pay award including prejudgment interest. However, for the reasons state above, applying both the present value and prejudgment interest will be duplicative. As such, the Court's award for back pay will be consistent with the calcula-tions herein.

Conclusion

For the reasons set forth above, Plaintiff's motion is granted in part, denied in part. Defendant's motion is granted. Plaintiff shall be awarded $ 53,731.31 in back pay; $ 340,858.85 in fees and $ 37,926.50 in expenses and costs.

DATED: March 1, 2010

/s/ Freda L. Wolfson

FREDA L. WOLFSON

United States District Judge

Page 1

6 of 14 DOCUMENTS

JOHN H. HOLZHAUER, Plaintiff, v. HAYT, HAYT & LANDAU, LLC, Defendant.

Civil Action No. 11-2336


2012 U.S. Dist. LEXIS 112740

August 10, 2012, Decided August 10, 2012, Filed

NOTICE: NOT FOR PUBLICATION COUNSEL: [*1] For JOHN H HOLZHAUER, Plain-tiff: AMY LYNN BENNECOFF, JACOB U. GINS-BURG, KIMMEL AND SILVERMAN P.C., CHERRY HILL, NJ. For HAYT, HAYT & LANDAU LLC, Defendant: KA-REN S. WACHS, LEAD ATTORNEY, Law Offices of Hayt, Hayt & Landau, Eatontown, NJ; KENNETH R. EBNER, LEAD ATTORNEY, HAYT HAYT & LAN-DAU LLC, EATONTOWN, NJ. JUDGES: Freda L. Wolfson, United States District Judge. OPINION BY: Freda L. Wolfson OPINION

WOLFSON, United States District Judge:

Presently before the Court is a motion by Plaintiff John H. Holzhauer ("Holzhauer" or "Plaintiff") for an award of attorney's fees pursuant to Fed. R. Civ. P. 54(d) and 15 U.S.C. §1692k(a)(3). Counsel for Plaintiff, Kim-mel & Silverman, P.C. ("K&S" or "Plaintiff's Counsel"), seeks fees in the amount of $8,421.50 for 37.2 hours of work. Defendant ("Hayt, Hayt and Landau" or "Defend-ant") opposes Plaintiff's calculation and contends that the proper award for fees should be $2,929.00. For the rea-sons set forth below, the Court will grant Plaintiff's mo-tion, in part, and award attorney's fees in the amount of $7,536.50. I. BACKGROUND

On April 22, 2010, Plaintiff filed a Complaint alleg-ing violations under the Federal Debt Collection Practic-es Act ("FDCPA"), 15 U.S.C. § 1692 et seq. Defendant [*2] filed an Answer to Plaintiff's Complaint on July 5, 2011. On January 9, 2012, the parties settled this matter for $2,500.00, and agreed that Plaintiff was entitled to reasonable attorney's fees. 1 On January 10, 2012, the parties discussed the issue of reasonable attorney's fees during a conference with the Honorable Douglas E. Alpert, U.S.M.J. Judge Alpert gave Plaintiff until Febru-ary 10, 2012, to file a fee petition if the parties were una-ble to resolve the matter. On February 10, 2012, K&S filed the instant motion seeking attorney's fees in the amount of $8,769. Pl. Pet. for Attorney's Fees & Costs. K&S subsequently reduced the amount it seeks to $8,421.50 for 37.2 hours of work. Pl. Reply at 15.

1 K&S notes it does not seek $350 it incurred in costs. Pl. Br. at 4.

II. DISCUSSION a. Standard

The parties do not dispute that Plaintiff is entitled to reasonable attorney's fees. Pursuant to the FDCPA, a prevailing plaintiff is entitled to "the costs of the action, together with a reasonable attorney's fee as determined by the court." 15 U.S.C. § 1692k(a)(3). The award of attorney's fees is "mandated . . . as a means of fulfilling Congress's intent that the FDCPA should be enforced by debtors [*3] acting as private attorneys general." Gra-ziano v. Harrison, 950 F.2d 107, 113 (3d Cir. 1991).

Nor do the parties dispute that Plaintiff is a prevail-ing party under § 1692(k). As the Supreme Court found

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in Hensley v. Eckerhart, 461 U.S. 424, 103 S. Ct. 1933, 76 L. Ed. 2d 40 (1983), "plaintiffs may be considered 'prevailing parties' for attorney's fees purposes if they succeed on any significant issue in litigation which achieves some of the benefit the parties sought in bring-ing suit." Id. at 433. This District has adopted the Hens-ley definition in assessing FDCPA claims and agrees that Plaintiff is a prevailing party. See Norton v. Wilshire Credit Corp., 36 F. Supp. 2d 216, 218-19 (D.N.J.1999).

The Supreme Court has also explained how to cal-culate an award of attorney's fees: "The most useful starting point for determining the amount of a reasonable fee is the number of hours reasonably expended on the litigation multiplied by a reasonable hourly rate. The calculation provides an objective basis on which to make an initial estimate of the value of the lawyer's services." Hensley, 461 U.S. at 433. The calculation produces what is referred to as the lodestar amount. See Blum v. Sten-son, 465 U.S. 886, 888, 104 S. Ct. 1541, 79 L. Ed. 2d 891 (1984). The prevailing [*4] party bears the burden of proving, through competent evidence, the reasonableness of the hours worked and rates claimed. Washington v. Phila. Cnty. Court of Common Pleas, 89 F.3d 1031, 1035 (3d Cir. 1996). Any party may oppose a fee appli-cation by objecting with "sufficient specificity." Inter-faith Cmty. Org. v. Honeywell Int'l., Inc., 426 F.3d 694, 703 n.5 (3d Cir. 2005) (citing Hensley, 461 U.S. at 433). Once opposed, "the party requesting fees must demon-strate to the satisfaction of the court that its fee request is reasonable." Interfaith Cmty. Org., 426 F.3d 694 at 703 n.5.

While the lodestar is presumed to yield a reasonable fee, Washington, 89 F.3d at 1035, either party may seek an adjustment of the lodestar amount, but bears the bur-den of showing that an adjustment is necessary. Rode v. Dellarciprete, 892 F.2d 1177, 1180 (3d Cir. 1990); Mo-said Techs, Inc., v. Samsung Elecs. Corp., 224 F.R.D. 595, 597 (D.N.J. 2004). In deviating from the lodestar, courts may consider numerous factors, such as the time spent and labor required; the novelty and difficulty of the legal issues; the customary fee in the community; whether the fee is fixed or contingent; the nature and length of the [*5] professional relationship with the client; and awards in similar cases. See Pub. Interest Research Grp. of N.J. v. Windall, 51 F.3d 1179, 1185 n.8 (3d Cir. 1995) (citing Hensley, 461 U.S. at 434 n.9)

The district court ultimately "retains a great deal of discretion in deciding what a reasonable fee award is." Bell v. United Princeton Props., 884 F.2d 713, 721 (3d Cir. 1989). "[I]n determining whether the fee request is excessive . . . the court will inevitably engage in a fair amount of 'judgment calling' based upon its experience with the case and the general experience as to how much

a case requires." Evans v. Port Auth. of N.Y. & N.J., 273 F.3d 346, 362 (3d Cir. 2001). b. Analysis

Plaintiff seeks $8,421.50 in attorney's fees. In re-sponse, Defendant contends that $2,929.00 is the appro-priate fee award. Specifically, Defendant argues that: (1) the hourly rates sought by Plaintiff are unreasonable and excessive; (2) the calculation of fees includes hours not reasonably expended because they were duplicative, ex-cessive, or non-compensable intra-office communication; (3) Plaintiff seeks to recover fees incurred in bad faith after settlement; 2 and (4) the Court should adjust the lodestar [*6] amount to reflect what Defendant argues is the limited success of Plaintiff. Def. Opp. at 3-11.

2 Defendant provides the Court with no docu-mentation or evidence to support its claim that K&S failed to negotiate in good faith regarding attorney's fees, nor does it cite any authorities to support its position that failure to negotiate a set-tlement should lead to a reduction in the attor-ney's fee awarded to counsel. The Court notes that "[a] party entitled to an award of attorney's fees is also entitled to reimbursement for the time spent litigating its fee application." Planned Parenthood v. AG, 297 F.3d 253, 268 (3d Cir. 2002). K&S claims only 4.8 hours for time spent after the January 2, 2012, settlement agreement (of which the Court strikes 0.2 hours for other reasons, stated below), and does not bill for work spent preparing its Reply Brief.

i. Hourly Rates

In evaluating the reasonableness of the hourly rates asserted by Plaintiff, the relevant inquiry is the prevailing rate for comparable legal services in the forum of litiga-tion. See, e.g., Interfaith Comm. Org., 426 F.3d at 705. Plaintiff bears the burden "of producing sufficient evi-dence of what constitutes a reasonable market rate [*7] for the essential character and complexity of the legal services rendered in order to make out a prima facie case." Smith v. Phila. Hous. Auth., 107 F.3d 223, 225 (3d Cir. 1997). A reasonable rate is determined by "as-sess[ing] the experience and skill of the prevailing party's attorneys and compar[ing] the rates to the rates prevail-ing in the community for similar services by lawyers of reasonably comparable skill, experience and reputation." Loughner v. Univ. of Pittsburgh, 260 F.3d 173, 180 (3d Cir. 2011) (quoting Rode, 892 F.2d at 1183). The Court has broad discretion to determine an appropriate hourly rate. See Bell, 884 F.2d at 721.

In the instant matter, Plaintiff requests compensation for its legal professionals based on their experience: Mr.


Kimmel, a named partner, at $325 per hour; Ms. Bennecoff, an associate, at $250 per hour; Ms. Young, an associate, at $200 per hour; Mr. Ginsburg, an associate, at $200 per hour; Mr. Ferris, a law clerk, at $130 per hour; Ms. Sunchych, Ms. O'Connell, Mr. Ryan, and Ms. Grob, paralegals, at $125 per hour each. 3 K&S notes that these rates are reduced from what they contend are their standard rate, perhaps in order to comport with previous [*8] decisions from this District and the Eastern District of Pennsylvania. In support of its proposed hourly rates, K&S provides the following: (1) affidavits signed by attorneys Kimmel, Bennecoff, and Ginsburg detailing their respective qualifications and participation in the present case; Pl. Br. Ex. B; (2) statements in its motion of the qualifications of each of the legal professionals who billed hours in this case, including law clerks and paralegals; id. at 16-23; (3) citations to cases in which Courts have approved hourly rates for K&S similar to the rates K&S proposes in the present case; id. at 26-27; (4) citations to cases in which Courts have awarded similar hourly rates to similarly qualified attorneys from other firms in other FDCPA cases; id. at 27-28; and (5) a print-out from its website which provides the qualifica-tions of some of the legal professionals who billed hours in the present case. Pl. Br. Ex. C.

3 Plaintiff claims that when the parties disagree as to the reasonableness of attorney's fees, the Court should conduct a hearing. Pl. Br. at 26 n.7. Plaintiffs cite Lanni v. New Jersey, 259 F.3d 146, 149 (3d Cir. 2001), which states that if there is a dispute over what [*9] are the "reasonable mar-ket rates" then the Court must hold a hearing. The Third Circuit has also said that "[a] hearing must be held only where the court cannot fairly decide disputed questions of fact without it." Blum v. Witco Chem. Corp., 829 F.2d 367, 377 (3d Cir. 1987); see also Drelles v. Metro Life Ins. Co., 90 Fed. Appx. 587 (3d Cir. 2004). Lanni is inappo-site because I am not determining the reasonable market rate, but the reasonableness of K&S's ac-tual rates. As the Court may determine the rea-sonableness of these hourly rates based on the information on the record, no hearing is neces-sary.

The Court finds that the hourly rates proposed by K&S are reasonable. In cases in the District of New Jer-sey and the Eastern District of Pennsylvania, equal or greater hourly rates for K&S have been approved for similar work in similar cases. 4 E.g., Conklin v. Pressler & Pressler LLP, No. 10-3566, 2012 U.S. Dist. LEXIS 21609 (D.N.J. Feb. 21, 2012); Brass v. NCO Fin. Sys., No. 11-1611, 2011 U.S. Dist. LEXIS 98223 (E.D. Pa. July 22, 2011); Cassagne v. Law Offices of Weltman, Weinberg & Reis. Co., LPA, No. 11-271, 2011 U.S. Dist.

LEXIS 135207 (D.N.J. Nov. 23, 2011); Levy v. Global Credit & Collection Corp., No. 10-4229, 2011 U.S. Dist. LEXIS 124226 (D.N.J. Oct. 27, 2011); [*10] Weed-Schertzer v. Nudelman, No. 10-6402, 2011 U.S. Dist. LEXIS 108928 (D.N.J. Sept. 23, 2011). Additional-ly, comparable rates for similarly experienced attorneys have been approved in other FDCPA cases. E.g., Harlan v. NRA Group LLC, No. 10-0324, 2011 U.S. Dist. LEXIS 26841 (E.D. Pa. Mar. 2, 2011); (approving rate of $555 per hour for a partner with a national reputation in con-sumer law, and a rate of $245 per hour for a fourth-year associate); Holliday v. Cabrera & Assocs., P.C., No. 05-0971, 2007 U.S. Dist. LEXIS 161 (E.D. Pa. Jan. 3, 2007) (approving rate of $380 per hour for a partner, and a rate of $275 per hour for another attorney). Conse-quently, the reduced rates proposed by K&S are con-sistent with the market rates for similar legal services.

4 In previous cases, Mr. Ginsburg was a law clerk, and his services were billed at a lower rate. As he is now an associate, an increase to $200 per hour is not unreasonable.

In arguing that the rates proposed by K&S are un-reasonable, Defendant relies heavily upon Levy, 2011 U.S. Dist. LEXIS 124226. Def. Opp. at 5-7. Levy in-volved another motion brought by K&S. There the court found the following compensation to be reasonable: Mr. Kimmel, [*11] at $310 per hour; Ms. Bennecoff, at $210; Ms. Young, at $200; Ms. Sunchych, at $110; Mr. Ryan, at $110; and Mr. O'Connell, at $110. Id. at *25. There are slight differences between the rates here and the rates allowed in Levy. Ms. Bennecoff's is $40 more here and all other rates, except Ms. Young's, are $15 more. Ms. Young's rate is the same. Such deviations are expected, given the broad discretion the Court has in determining an hourly rate, as well as the fact that rates potentially increase slightly over time as attorneys be-come more experienced or as inflation pressures rates higher. See Bell, 884 F.2d at 721.

Additionally, Defendant argues that K&S's hourly rates are unreasonable and should be reduced due to the similarity of K&S's filings in the present case and in pre-vious cases, and because the present case was "straight-forward and did not involve complex legal issues or analysis, and the case was not litigated in any significant way." Def. Opp. at 6-8. This argument is applicable to the number of hours billed, not to the hourly rate. If an attorney has done similar work in the past, she may use a template to aid her in a similar matter and would there-fore spend fewer hours [*12] completing a given task. But the value of her time does not necessarily decrease. To so hold would mean that an attorney would become less valuable with more experience. This is a paradoxical result that the Court will not endorse.


Furthermore, Defendant attempts to weaken the value of the cases in which courts have approved rates similar to the rates that K&S claims in the present case, arguing that the defendants in those cases recommended the hourly rates, not K&S. Courts, not litigants, make law. Whether K&S reduced its rates in the present case because it independently came to the conclusion that its rates were too high--or because it was repeatedly ad-monished for proposing inflated rates--has little bearing on the reasonableness of the rates before me now.

For the reasons stated above, the Court finds that the hourly rates proposed by K&S, which have been ap-proved for K&S in similar cases and are consistent with the market rates for similar services, are reasonable. ii. Hours Billed

A court must "decide whether the hours set out were reasonably expended for each of the particular purposes described and then exclude those that are excessive, re-dundant or otherwise unnecessary." Pub. Interest Re-search Grp. of N.J., 51 F.3d at 1188 [*13] (quoting Hensley, 461 U.S. at 433). Counsel certifies that it has expended a total of 37.2 hours of attorney and support staff time on this case. This reflects Plaintiff Counsel's voluntary reduction of its time by 1.6 hours. Specifically, Plaintiff's Counsel states that it has expended the follow-ing hours on this case: Mr. Kimmel (3.9 hours); Ms. Bennecoff (15.8 hours); Ms. Young (4.4 hours); Mr. Ginsburg (4.4 hours); Mr. Ferris (1.3); Ms. Sunchych (0.5 hours); Ms. Grob (5.4 hours); Ms. O'Connell (0.2 hours); and Mr. Ryan (1.3 hours). Pl. Br. at 2-3. The Court finds the number of hours expended to be reasona-ble in some aspects and unreasonable in others and will reduce the hours billed pursuant to the analysis below. 1. Fees for Potentially Duplicative Work

Defendant identifies nine entries by K&S that it be-lieves are duplicative, and provides explanations for three of these entries. Def. Opp. at 9-10; Ex. B. First, Defendant argues that the 0.2 hours that Ms. Bennecoff spent on April 22, 2011, reviewing the facts of the case with Plaintiff and confirming their accuracy is duplica-tive of the April 11, 2011, entry in which Ms. Young reviewed the facts of the case with Plaintiff to confirm [*14] their accuracy. Def. Opp. at 9-10. The Court disa-grees. There are a number of reasons that two attorneys would need to review the facts. For example, Federal Rule of Civil Procedure 11(b) demands that counsel conduct a "reasonable inquiry" to ensure that the repre-sentations it makes are accurate. The Court finds that spending 0.2 hours to double check the facts is not un-reasonable. Among other reasons, it helps ensure com-pliance with Rule 11 and avoids the possibility of either

party wasting time acting upon inaccurate information, and is therefore not unreasonable.

Next, Defendant claims that the 0.6 hours that K&S billed for Mr. Ferris's drafting of the discovery request is excessive, since Mr. Ferris used a template to draft the letter, and simply had to change the caption. 5 Def. Opp. at 10. While templates can reduce the time it takes to produce a document, it still takes time to review a tem-plate and tailor the template based on the specifics of a case. 6 Mr. Ferris presumably had to review the letter to ensure that each request was applicable to the present case. Failure to do so could lead to Defendant wasting time providing unnecessary discovery, and could expose Plaintiff [*15] to sanctions under Fed. R. Civ. P. 26(g)(1)(B). Consequently, the Court finds that the 0.6 hours that Mr. Ferris spent completing this task is rea-sonable, and will not reduce this entry.

5 Similarly, Defendant identifies the April 5, 2011 entry in which Ms. Young spent 1.1 hours drafting the Complaint as an entry that it claims should be reduced due to the similarity of the Complaint in the present case and the complaints in Weed-Schertzer and Levy. Def. Opp. at 8. De-fendant claims that because of similarities among these complaints, it should not have taken K&S 1.1 hours to draft the Complaint. Several of the paragraphs are identical or nearly identical, and concern allegations regarding things such person-al jurisdiction, venue, background of the FDCPA, and construction of applicable law. The Court notes that it would be unreasonable for K&S to start from scratch and draft new paragraphs re-garding, for example, venue, and finds that 1.1 hours is a reasonable amount of time to spend drafting, reviewing, and editing the Complaint. 6 K&S has recently sought fees in numerous other FDCPA actions using similar filings as those submitted in this matter; in those cases, the various courts reduced [*16] both the proposed hourly rates as well as the number of hours ex-pended. See, e.g., Conklin, 2012 U.S. Dist. LEXIS 21609 (reducing K&S's fees from $28,005.70 to $16,387); Freid v. Nat'l Action Fin. Services, Inc., No. 10-2870, 2011 U.S. Dist. LEXIS 149668 (D.N.J. Dec. 29, 2011) (reducing K&S's fees from $97,028.59 to $11,944 ); Brass, 2011 U.S. Dist. LEXIS 98223 (reducing K&S's fees from $5,096.50 to $2,457.20). However, in the present case, K&S has billed fewer hours for tasks com-pleted with the aid of templates. Compare, e.g., Pl. Br. Ex. A at 3 (K&S claims 0.6 hours for drafting a discovery request and a Rule 26 dis-closure, and sending an E-mail), with Docket En-try 25 Ex. B at 5, Conklin, 2012 Dist. LEXIS


21609 (K&S billed 1.5 hours, which the Court reduced to one hour, for drafting a discovery re-quest).

Additionally, Defendant argues that the two August 5, 2011, entries by Mr. Kimmel which both read "Re-view file and discuss case with client to arrive at de-mand; Email to Karen Wachs demand," are duplicative of one another. Def. Br. at 10. The Court notes that K&S voluntarily struck the second of these entries, reducing its number of hours billed by 0.3. Pl. Reply at 15. The Court [*17] agrees that it was prudent for K&S to strike the second entry, but declines to reduce the first entry by 0.3 hours as Defendant requests.

Finally, Defendant identifies six entries that it claims are duplicative, but provides no explanation. Def. Opp. Ex. B. The Court has reviewed these entries and finds no reason why they should be considered duplicative. 2. Potentially Excessive Entries

Defendant identifies 22 entries by K&S that it be-lieves are excessive, and provides specific reasons for objecting to three of these entries. Def. Opp. at 8; Ex. B. First, Defendant argues that the one hour that Ms. Young billed for reviewing the file and preparing a pre-litigation letter to Defendant on February 16, 2011, is excessive because she used a template, and only had to write two or three original paragraphs. However, this argument fails to take into account the time that Ms. Young spent reviewing the file. One hour to draft and review a letter as well as review the file to prepare the letter is not ex-cessive.

Next, Defendant argues that on July 5, 2011, Ms. Bennecoff spent 0.5 hours reviewing the Answer and Corporate Disclosure and that this figure should be re-duced to 0.3 hours. Defendant's [*18] Answer is only eight pages long, and contains a significant amount of standard language. Thus, the Court finds that 0.3 hours is a reasonable amount of time for reviewing the Answer and the Corporate Disclosure. Thus, this entry will be reduced by 0.2 hours.

Defendant also argues that the 0.2 hours that Ms. Bennecoff spent on January 2, 2012, reviewing an eleven word email from ECF regarding the entry of appearance of Mr. Ginsburg is excessive, and should be reduced to 0.1 hours. This is a routine filing and requires little to no analysis. Therefore, the Court agrees, and this entry shall be reduced accordingly.

Finally, Defendant identifies 19 additional entries that it asks the Court to find excessive and reduce ac-cordingly, but provides no explanations as to why these entries should be deemed excessive, beyond its general objection that "Plaintiff has provided no evidence or

support that the amount of the time billed was reasona-ble." Def. Opp. at 8 (emphasis in original). Defendant asserts that because "Plaintiff merely submits itemized time entries declaring the amount billed, but nothing submitted supports the implied assertion that the entries themselves are reasonable," id. at 8-9, [*19] the Court should strike the entries identified by Defendant as ex-cessive. According to the Court in Bell:

[T]he adverse party's [objections] can-not merely allege in general terms that the time spent was excessive . . . . [Rather], they must generally identify the type of work being challenged . . . and . . . specif-ically state the adverse party's grounds for contending that the hours claimed . . . are unreasonable.

884 F.2d at 720.

Defendant is correct in its assertion that Plaintiff has the burden of proving the reasonableness of the fees it requests. However, Defendant's claim that Plaintiff has the burden of providing detailed explanations to justify each and every tenth of an hour it bills, see Def. Opp. at 8-9, is overstated. While a fee petition should include "some fairly definite information as to the hours devoted to various general activities . . . , it is not necessary to know the exact number of minutes nor the precise activ-ity to which each hour was devoted nor the specific at-tainments of each attorney." Washington, 89 F.3d 1031 at 1037-38 (internal quotation marks omitted) (quoting Rode, 892 F.2d at 1190)). To require a party seeking attorney's fees to provide a thorough [*20] explanation as to why, for example, it billed 0.2 hours speaking to Defense counsel, see Pl. Mot. Ex. A at 5, would be an onerous task, and would create more billable hours, an outcome that Defendant surely wishes to avoid. Never-theless, the Court has reviewed these entries and finds that none of these additional 19 entries is excessive, and makes no further reductions for excessive hours. 3. Intra-Office Communication

Defendant also argues that K&S has billed for ser-vices that are non-compensable because they relate to intra-office communication. In support of its position, Defendant cites Citibank, N.A. v. Hicks, 2004 U.S. Dist. LEXIS 30432, at *18 (E.D. Pa Aug. 24, 2004). 7 The court in Citibank said that "when several attorneys bill a large number of hours for strategy and conferencing, a reduction in the fee request may be appropriate," 2004 U.S. Dist. LEXIS 30432, at *18 (emphasis added), and relied on Daggett v. Kimmelman, 811 F.2d 793, 797 (3d Cir. 1987). Citibank, however, does not adequately sup-


port Defendant's argument. It does not hold that billing for intra-office communication is per se unreasonable and that attorneys may not bill any hours for intra-office communication. [*21] In fact, the court in Citibank "recognize[d] the value of attorney communication and conferencing in preparation and daily management of a lawsuit." Citibank, 2004 U.S. Dist. LEXIS 30432, at *17; see also Rodriguez-Hernandez v. Miranda-Velez, 132 F.3d 848, 860 (1st Cir. 1998) ("Careful preparation often requires collaboration and rehearsal...."). Nevertheless, courts may reduce the number of hours attorneys in a firm bill for communication with co-counsel if, based on the facts of a particular case, the court finds that the hours billed are unreasonable. Daggett, 811 F.2d at 797 (finding that excessive communication among Plaintiffs' attorneys was one factor which justified the District Court's decision to reduce the number of hours that each attorney billed by ten percent); Citibank, 2004 U.S. Dist. LEXIS 30432, at *17 (reducing the 114.4 hours billed by Plaintiff's Counsel for communication among attorneys by half, when 524.1 total hours were billed). In the pre-sent case, approximately 14.1 out of 37.2 hours billed by K&S relate to intra-office communication. Based on the numbers of hours billed for intra-office communication, Defendant asks the Court to strike all entries relating [*22] to intra-office communication, which the Court will not do.

7 The court in Citibank exercised diversity ju-risdiction and applied Illinois state law to resolve a dispute over attorney's fees provided for by contract, not by statute. Nevertheless, as the court in Citibank relies on Daggett, infra, in reducing the number of billable hours for intra-office communication, the case is instructive.

In both Daggett and Citibank, the courts focused on the number of hours billed for communication among attorneys, not between attorneys and other legal staff. See Daggett, 811 F.2d at 797-98; Citibank, 2004 U.S. Dist. LEXIS 30432, at *17-18. In the present case, only approximately 4.8 hours out of the 37.2 total hours are billed for communication between K&S attorneys. The remaining 9.3 hours billed for intra-office communica-tion are billed for communication between attorneys and paralegals. Communication between attorneys and para-legals facilitates delegation, which allows a law form to conduct its business at a lower cost, as paralegal services are billed at a significantly lower hourly rate. In fact, courts must not "approve [of] the wasteful use of highly skilled and highly priced talent for matters [*23] easily delegable to non-professionals or less experienced asso-ciates." Ursic v. Bethlehem Mines, 719 F.2d 670, 677 (3d Cir. 1983). Thus, the lodestar amount may be reduced when an experienced attorney bills hours for work that could have been completed by non-attorney staff. See id.

at 677 ("A Michelangelo should not charge Sistine Chapel rates for painting a farmer's barn.").

Consequently, the Court finds that it is reasonable that approximately 12% of K&S's billable hours involve communication between K&S's attorneys. Cf. Citibank, 2004 U.S. Dist. LEXIS 30432, at *17 (halving the num-ber of hours billed for communication among attorneys when 21.8% of the hours billed were billed for commu-nication among attorneys). As a result, no entries will be struck or reduced solely based on the rationale that they involve intra-office communication.

Nevertheless, numerous entries are non-compensable because they involve intra-office communication related to administrative tasks. 8 "As a general rule, time that would not be billed to a client cannot be imposed on an adversary. Thus, administrative tasks, which are not the type normally billed to a paying client, may not be recovered by a party through [*24] a fee petition." Alexander v. NCO Fin. Sys., 2011 U.S. Dist. LEXIS 64211, at *19 (E.D. Pa. June 16, 2011) (ci-tations omitted). Indeed, certain administrative tasks not normally billed to clients such as "opening a file in a database, mailing letters, and copying documents to a CD," may not be recovered by a party through a fee peti-tion. Id., at *20; see also Halderman v. Pennhurst State Sch. & Hospital, 49 F.3d 939, 942 (3d Cir. 1995) ("The fact that private lawyers may perform tasks other than legal services for their clients, with their consent and approval, does not justify foisting off such expenses on an adversary under the guise of reimbursable legal fees."). However, tasks such as "discussions with a cli-ent, creating a factual summary, and preparing an outline of linked events, have been included in calculations . . . even if performed by a paralegal." Brass, 2011 U.S. Dist. LEXIS 98223, at *16.

8 Defendant terms no entries "administrative." But an objection to a fee need only be sufficiently specific to "raise a material fact issue as to the accuracy of representations as to hours spent, or the necessity for their expenditure," so as to put the other party on notice that it must [*25] de-fend its fee position. Bell, 884 F.2d at 719-20 (quoting Cunningham v. City of McKeesport, 753 F.2d 262, 267 (3d Cir. 1985)). Defendant's char-acterization of certain entries as non-compensable intra-office communication was sufficient to put K&S on notice that it needed to defend its posi-tion. Furthermore, K&S is aware that it may not bill for administrative tasks, as it claims that it omitted administrative entries from its invoice. See Pl. Br. at 4 n.5.


Here, the Court finds that the following billed hours are administrative and will reduce the hours billed for the following entries by the amount noted: ________________________________________________________________________________ Date of Entry Entry Legal Profes-

sional Amount of Re-duction

Oct. 18, 2010 Prepare a note in Amicus Mr. Kimmel 0.1 Apr. 22, 2011 Receipt of email from Pay.gov confirming payment for

complaint, saved in Amicus Ms. Bennecoff 0.1 9

Apr. 22, 2011 Email to SY re: question regarding notation on file; Re-view response

Ms. Bennecoff 0.2

Apr. 22, 2011 Review and respond to ALB email regarding notation on file

Ms. Young 0.2

May 6, 2011 Prepare Copies of Complaint and Cover Sheet to send to Defendant, Prepare copies of Notice and Waiver for File

Ms. Sunchych 0.1

July 29, 2011 Email to DG to send to Defendant's Counsel and Calendar Ms. Bennecoff 0.1 July 29, 2011 Email correspondence to DG re: reserving conference

room for dep Ms. Bennecoff 0.1

July 29, 2011 Sent Discovery Requests to Defendant's Counsel via email and Regular US Mail; Copied to Amicus; Calendared re-sponse date; Reserve conference room

Ms. Grob 0.3

July 29, 2011 Review email from DG indicating discovery requests have been sent to Defendant

Ms. Bennecoff 0.1

July 29, 2011 Review email from DG indicating that the deposition no-tice was sent to Defendant and room reserved for dep

Ms. Bennecoff 0.1

Aug. 1, 2011 Calendar Deposition Date Ms. Grob 0.1 Aug. 3, 2011 email to DG to return her call Ms. Bennecoff 0.1 Sept. 12, 2011 Calendared follow-up Ms. Grob 0.1 Sept. 29, 2011 Email to DG adjourn or get via telephone die [sic] to pre-

planned vacation day Ms. Bennecoff 0.1

Oct. 7, 2011 Email to DG to follow-up with Defendant's counsel about the status of discovery responses and to reschedule dep

Ms. Bennecoff 0.1

Oct. 7, 2011 Email from ALB about following up on discovery re-sponses and rescheduling deposition in this matter

Ms. Grob 0.1

Nov. 15, 2011 Faxed continuance letter to court & defendant's counsel Ms. Grob 0.1 Jan. 18, 2012 Email to DG to make sure fee petition calendared Ms. Bennecoff 0.1 Jan. 18, 2012 Email communication from ALB re: calendaring fee peti-

tion due date; Calendar same Ms. Grob 0.1

Feb. 19, 2012 PDF motion, brief, COS, TOA, TOC; Efile Ms. Bennecoff 0.2 TOTAL RE-

DUCTION 2.5

________________________________________________________________________________

9 In [*26] this entry, K&S bills 1.5 hours at a rate of $250 per hour. This should total $375, but Plaintiff's Counsel only bills $300. Whether a mistake or a reflection of what K&S believes is reasonable, the Court will award K&S only $300 for this entry.

As a result, this time will be subtracted from the time submitted by K&S as indicated above. iii. Proportionality of Attorney's Fees to Settlement Amount


Defendant contends that the Court should reduce the lodestar amount to reflect what Defendant argues is a proportional discrepancy between the attorney's fees that K&S requests and the $2,500 settlement amount. The Court disagrees. In Hensley, the Supreme Court held that under 42 U.S.C. § 1988 (remedies for violations of the Civil Rights Act of 1964), "the extent of a plaintiff's success is a crucial factor in determining the proper amount of an award of attorney's fees." 461 U.S. at 440. This holding also applies when determining attorney's fees under the FDCPA. Graziano, 950 F.2d at 114; see also Hensley, 461 U.S. at 424 ("[T]he standards set forth in this opinion are generally applicable in all cases in which Congress has authorized an award of fees to a 'prevailing party.'"). However, in Riverside v. Rivera, 477 U.S. 561, 106 S. Ct. 2686, 91 L. Ed. 2d 466 (1986), [*27] the Court declined to extend Hensley to "adopt a strict rule that attorney's fees . . . be proportionate to damages recovered." Id. at 483-84.

In general, reasonable attorney's fees are "adequate to attract competent counsel, but . . . do not produce windfalls to attorneys." Student Pub. Interest Research Grp. of N.J. v. AT&T Bell Labs., 842 F.2d 1436, 1448 (3d Cir. 1988) (citations omitted). Congress' inclusion of the attorney's fee provision of the FDCPA sought to en-sure that "the Act . . . be enforced by debtors acting as private attorneys general." Graziano, 950 F.2d at 107.

Absent the attorney's fees provision, attorneys would be less inclined to take on FDCPA cases, and the rights of debtors wronged by creditors in violation of the FDCPA would not be protected. Consequently, the purpose of the statute, deterring abusive debt collection practices, see 15 U.S.C. 1692(e), would be frustrated.

Additionally, in the present case, the ratio of attor-ney's fees to the award amount, 3.0 to 1, is consistent with other FDCPA cases in this District and the Eastern District of Pennsylvania involving K&S. E.g. Conklin, 2012 Dist. LEXIS 21609 (7.8 to 1); Brass, 2011 U.S. Dist. LEXIS 98223 (2.4 [*28] to 1); Cassagne, 2011 U.S. Dist. LEXIS 135207 (5.4 to 1); Levy, 2011 U.S. Dist. LEXIS 124226 (5.8 to 1); Weed-Schertzer, 2011 U.S. Dist. LEXIS 108928 (3.4 to 1).

Consequently, the Court finds that Defendant has not met its burden of proving that the lodestar amount is unreasonable, see Rode, 892 F.2d at 1180, and declines to adjust the lodestar amount based on the amount of Plaintiff's recovery. iv. Lodestar Calculation

Based on the above analysis, the Court finds that the following hourly rates and the following number of hours are reasonable:

________________________________________________________________________________ Legal Professional Hourly Rate Hours Worked Total Fee Mr. Kimmel $325 3.8 $1,235 Ms. Bennecoff $250 14.4 $3,600 Ms. Young $200 4.2 $840 Mr. Ginsburg $200 4.4 $880 Mr. Ferris $130 1.3 $169 Ms. Sunchych $125 .4 $50 Ms. Grob $125 4.6 $575 Ms. O'Connell $125 .2 $25 Mr. Ryan $125 1.3 $162.50 TOTAL 34.6 $7,536.50 ________________________________________________________________________________

As a result, the total amount to be awarded is $7,536.50 in attorney's fees. III. CONCLUSION

Based on the foregoing, the Court will grant in part and deny in part Plaintiff's Motion for Attorney's Fees. An appropriate order shall follow.

Dated: August 10, 2012


Freda L. Wolfson, U.S.D.J.

Page 1

1 of 14 DOCUMENTS

IN RE JOHNSON & JOHNSON DERIVATIVE LITIGATION

Civil Action No. 10-2033(FLW),Civil Action No. 11-4993(FLW),Civil Action No. 11-2511(FLW)


2013 U.S. Dist. LEXIS 167066; Fed. Sec. L. Rep. (CCH) P97,742

November 25, 2013, Decided November 25, 2013, Filed

NOTICE: NOT FOR PUBLICATION SUBSEQUENT HISTORY: Judgment entered by In re Johnson & Johnson Derivative Litig., 2013 U.S. Dist. LEXIS 172545 (D.N.J., Nov. 25, 2013) PRIOR HISTORY: In re Johnson & Johnson Deriva-tive Litig., 2013 U.S. Dist. LEXIS 180822 (D.N.J., June 13, 2013) COUNSEL: [*1] ROBERT D. STUART (3:10-cv-02033-FLW-DEA, 3:11-cv-04993-FLW-DEA, 3:11-cv-02511-FLW-DEA), Objector, Pro se, AR-LINGTON, VA. THOMAS C. KEEGAN (3:10-cv-02033-FLW-DEA, 3:11-cv-04993-FLW-DEA, 3:11-cv-02511-FLW-DEA), Objector, Pro se, ERIE, PA. MERTON S. ROTHMAN (3:10-cv-02033-FLW-DEA, 3:11-cv-04993-FLW-DEA, 3:11-cv-02511-FLW-DEA), Objector, Pro se, WOODBURY, NY. JOHN HENN (3:10-cv-02033-FLW-DEA, 3:11-cv-04993-FLW-DEA, 3:11-cv-02511-FLW-DEA), Objector, Pro se, BOSTON, MA. JOHN E. NOTESTEIN (3:10-cv-02033-FLW-DEA, 3:11-cv-04993-FLW-DEA, 3:11-cv-02511-FLW-DEA), Objector, Pro se, FOUNTAIN HILLS, AZ. BRENT CLIFTON (3:10-cv-02033-FLW-DEA, 3:11-cv-04993-FLW-DEA, 3:11-cv-02511-FLW-DEA), Objector, Pro se, DALLAS, TX.

KIMBERLY J. CLIFTON (3:10-cv-02033-FLW-DEA, 3:11-cv-04993-FLW-DEA, 3:11-cv-02511-FLW-DEA), Objector, Pro se, DALLAS, TX. For JEANNE M. CALAMORE, Derivatively on behalf of JOHNSON & JOHNSON (3:10-cv-02033-FLW-DEA), Plaintiff: AUDRA ELIZ-ABETH PETROLLE, CARELLA BYRNE CECCHI OLSTEIN BRODY & AGNELLO, ROSELAND, NJ; DONALD A. ECKLUND, CARELLA, BYRNE, CEC-CHI, OLSTEIN, BRODY & AGNELLO, P.C., ROSE-LAND, NJ; LISA J. RODRIGUEZ, NICOLE M. AC-CHIONE, Schnader Harrison Segal & Lewis LLP, Cherry Hill, NJ; JAMES [*2] E. CECCHI, CARELLA BYRNE CECCHI OLSTEIN BRODY & AGNELLO, P.C., ROSELAND, NJ. For M.J. COPELAND, Individually and Derivatively on Behalf of Johnson & Johnson; Consolidated from 10-cv-6251 (3:10-cv-02033-FLW-DEA), Plaintiff: JAMES E. CECCHI, LEAD ATTORNEY, CARELLA BYRNE CECCHI OLSTEIN BRODY & AGNELLO, P.C., ROSELAND, NJ; JAMES C. SHAH, SHEPHERD, FINKELMAN, MILLER & SHAH, LLP, COL-LINGSWOOD, NJ. For MINNEAPOLIS FIREFIGHTERS' RELIEF ASSO-CIATION, CONSOLIDATED FROM 10-3215, NE-CA-IBEW WELFARE TRUST FUND, CONSOLI-DATED FROM 10-3215, NECA-IBEW PENSION TRUST FUND, CONSOLIDATED FROM 10-3215 (3:10-cv-02033-FLW-DEA), Consol Plaintiffs: JAMES E. CECCHI, LEAD ATTORNEY, CARELLA BYRNE

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Page 2 2013 U.S. Dist. LEXIS 167066, *; Fed. Sec. L. Rep. (CCH) P97,742

CECCHI OLSTEIN BRODY & AGNELLO, P.C., ROSELAND, NJ; DONALD A. ECKLUND, CAREL-LA, BYRNE, CECCHI, OLSTEIN, BRODY & AGNELLO, P.C., ROSELAND, NJ; LINDSEY H. TAYLOR, CARELLA, BYRNE, CECCHI, OLSTEIN, BRODY & AGNELLO, ROSELAND, NJ. For HAWAII LABORERS PENSION FUND, DERIV-ATIVELY ON BEHALF OF JOHNSON & JOHNSON, CONSOLIDATED FROM 10-2516 (3:10-cv-02033-FLW-DEA), Consol Plaintiff: PETER S. PEARLMAN, LEAD ATTORNEY, COHN, LIFLAND, PEARLMAN, HERRMANN & KNOPF, LLP, SADDLE BROOK, NJ; DONALD A. ECKLUND, CARELLA, BYRNE, CECCHI, OLSTEIN, BRODY [*3] & AGNELLO, P.C., ROSELAND, NJ; JAMES E. CEC-CHI, CARELLA BYRNE CECCHI OLSTEIN BRODY & AGNELLO, P.C., ROSELAND, NJ. For CARPENTERS PENSION FUND OF WEST VIR-GINIA, DERIVATIVELY ON BEHALF OF JOHNSON & JOHNSON, CONSOLIDATED FROM 10-2275 (3:10-cv-02033-FLW-DEA), Consol Plaintiff: JAMES E. CECCHI, LEAD ATTORNEY, CARELLA BYRNE CECCHI OLSTEIN BRODY & AGNELLO, P.C., ROSELAND, NJ; LINDSEY H. TAYLOR, LEAD ATTORNEY, CARELLA, BYRNE, CECCHI, OL-STEIN, BRODY & AGNELLO, ROSELAND, NJ; DONALD A. ECKLUND, CARELLA, BYRNE, CEC-CHI, OLSTEIN, BRODY & AGNELLO, P.C., ROSE-LAND, NJ. For WALTER E. RYAN, JR., DERIVATELY ON BE-HALF OF JOHNSON & JOHNSON, CONSOLIDATED FROM 10-3147 (3:10-cv-02033-FLW-DEA), Consol Plaintiff: DONALD A. ECKLUND, CARELLA, BYR-NE, CECCHI, OLSTEIN, BRODY & AGNELLO, P.C., ROSELAND, NJ; JAMES E. CECCHI, CARELLA BYRNE CECCHI OLSTEIN BRODY & AGNELLO, P.C., ROSELAND, NJ. For ALBERT L. FELDMAN, DERIVATELY ON BE-HALF OF NOMINAL DEFENDANT JOHNSON & JOHNSON, CONSOLIDATED FROM 10-2386 (3:10-cv-02033-FLW-DEA), Consol Plaintiff: DONALD A. ECKLUND, CARELLA, BYRNE, CECCHI, OL-STEIN, BRODY & AGNELLO, P.C., ROSELAND, NJ; JOSEPH J. DEPALMA, LITE, DEPALMA, GREEN-BERG, LLC, NEWARK, NJ; JAMES E. CECCHI, CARELLA BYRNE [*4] CECCHI OLSTEIN BRODY & AGNELLO, P.C., ROSELAND, NJ. For MARY SUE COLEMAN, RUSSELL C. DEYO, NICHOLAS VALERIANI, ALEX GORSKY, JOSEPH C. SCODARI, ROBERT N. WILSON, JAMES T. LE-

NEHAN, HENRY B. SCHACHT, ANN DIBBLE JORDAN, ROBERT J. DARRETTA, STEVEN S. REINEMUND, CHRISTINE A. POON, WILLIAM C. WELDON, DAVID SATCHER, CHARLES O. PRINCE, III, WILLIAM D. PEREZ, LEO F. MULLIN, SUSAN L. LINDQUIST, ARNOLD G. LANGBO, MICHAEL M.E. JOHNS, JAMES G. CULLEN (3:10-cv-02033-FLW-DEA), Defendants: EDWIN F. CHOCIEY, JR., LEAD ATTORNEY, RIKER, DAN-ZIG, SCHERER, HYLAND & PERRETTI LLP, MOR-RISTOWN, NJ. For JOHNSON & JOHNSON, A NEW JERSEY COR-PORATION (3:10-cv-02033-FLW-DEA), Defendant: DONALD A. ROBINSON, LEDA DUNN WETTRE, LEAD ATTORNEYS, KEITH J. MILLER, ROBIN-SON, WETTRE & MILLER LLC, NEWARK, NJ. For RALPH S. LARSEN, CONSOLIDATED FROM 10-2516, 10-2275, PETER LUTHER, CONSOLIDAT-ED FROM 10-3215, ANNE M. MULCAHY, CON-SOLIDATED FROM 10-3147, 10-2386, 10-3215, JOHN W. SNOW, CONSOLIDATED FROM 10-2275, MAX-INE F. SINGER, CONSOLIDATED FROM 10-2275, JOHN S. MAYO, CONSOLIDATED FROM 10-2275, JOAN G. COONEY, CONSOLIDATED FROM 10-2275, GERARD N. BURROW, CONSOLIDATED FROM 10-2275 (3:10-cv-02033-FLW-DEA), Consol Defendants: EDWIN F. [*5] CHOCIEY, JR., LEAD ATTORNEY, RIKER, DANZIG, SCHERER, HYLAND & PERRETTI LLP, MORRISTOWN, NJ. For LISA J. RODRIGUEZ, ESQ., CONSOLIDATED FROM 10-2516, 10-2275, 10-3147, 10-2386, 10-3215 (3:10-cv-02033-FLW-DEA), Interested Party: LISA J. RODRIGUEZ, Schnader Harrison Segal & Lewis LLP, Cherry Hill, NJ. STEPHEN R. LINDEMOOD (3:11-cv-04993-FLW-DEA), Objector, Pro se, SAN ANTONIO, TX. For M.J. COPELAND, individually and derivatively on behalf of Johnson & Johnson (3:11-cv-04993-FLW-DEA), Plaintiff: JAMES C. SHAH, SHEPHERD, FINKELMAN, MILLER & SHAH, LLP, COLLINGSWOOD, NJ. For LESLIE KATZ, CONSOLIDATED FROM 11-4994 (FLW) (3:11-cv-04993-FLW-DEA), Consol Plaintiff: GARY S. GRAIFMAN, KANTROWITZ, GOLD-HAMER & GRAIFMAN, ESQS., MONTVALE, NJ. For CHARLES O. PRINCE, III, RUSSELL C. DEYO, NICHOLAS VALERIANI, ALEX GORSKY, JOSEPH


C. SCODARI, ROBERT N. WILSON, JAMES T. LE-NEHAN, HENRY B. SCHACHT, ANN DIBBLE JORDAN, ROBERT J. DARRETTA, STEVEN S. REINEMUND, CHRISTINE A. POON, WILLIAM C. WELDON, DAVID SATCHER, TED TORPHY, WIL-LIAM D. PEREZ, LEO F. MULLIN, SUSAN L. LINDQUIST, ARNOLD G. LANGBO, MICHAEL M.E. JOHNS, JAMES G. CULLEN, MARY SUE COLE-MAN, ANNE M. MULCAHY (3:11-cv-04993-FLW-DEA), Defendants: EDWIN F. CHOCIEY, [*6] JR., LEAD ATTORNEY, RIKER, DANZIG, SCHERER, HYLAND & PERRETTI LLP, MORRISTOWN, NJ. For JOHNSON & JOHNSON (3:11-cv-04993-FLW-DEA), Defendant: DONALD A. ROBINSON, LEDA DUNN WETTRE, LEAD AT-TORNEYS, ROBINSON, WETTRE & MILLER LLC, NEWARK, NJ. For DOMINIC J. CARUSO, CONSOLIDATED FROM 11-4994 (FLW), ROBERT MILLER, CONSOLIDATED FROM 11-4994 (FLW), ASHLEY A. MCEVOY, CONSOLIDATED FROM 11-4994 (FLW), PETER B. LUTHER, CONSOLIDATED FROM 11-4994 (FLW), RALPH S. LARSEN, CONSOLIDATED FROM 11-4994 (FLW), COLLEN GOGGINS, CONSOLI-DATED FROM 11-4994 (FLW), SETH FISCHER, CONSOLIDATED FROM 11-4994 (FLW), MICHAEL J. DORMER, CONSOLIDATED FROM 11-4994 (FLW) (3:11-cv-04993-FLW-DEA), Consol Defendants: EDWIN F. CHOCIEY, JR., LEAD ATTORNEY, RIKER, DANZIG, SCHERER, HYLAND & PERRETTI LLP, MORRISTOWN, NJ. For SANDRA WOLLMAN, CYNTHIA DIAMOND, CONSOLIDATED FROM 11-2652, JOSEPH CAFARO, CONSOLIDATED FROM 11-2652, GILA HEIMOWITZ, Derivatively on Behalf of Johnson & Johnson (3:11-cv-02511-FLW-DEA), Plaintiffs: PETER S. PEARLMAN, COHN, LIFLAND, PEARLMAN, HERRMANN & KNOPF, LLP, SADDLE BROOK, NJ. For MARY SUE COLEMAN, WILLIAM C. WELDON, DAVID SATCHER, CHARLES PRINCE, WILLIAM D. PEREZ, LEO F. MULLIN, ANNE M. MULCAHY, SUSAN L. [*7] LINDQUIST, MICHAEL M.E. JOHNS, IAN E.L. DAVIS, JAMES G. CULLEN (3:11-cv-02511-FLW-DEA), Defendants: EDWIN F. CHOCIEY, JR., RIKER, DANZIG, SCHERER, HY-LAND & PERRETTI LLP, MORRISTOWN, NJ. For JOHNSON & JOHNSON, a New Jersey Corporation (3:11-cv-02511-FLW-DEA), Defendant: LEDA DUNN WETTRE, LEAD ATTORNEY, DONALD A. ROB-

INSON, ROBINSON, WETTRE & MILLER LLC, NEWARK, NJ. JUDGES: Freda L. Wolfson, United States District Judge. OPINION BY: Freda L. Wolfson OPINION

WOLFSON, United States District Judge:

The Court has previously approved the parties' set-tlement in this consolidated shareholder derivative ac-tion, which includes suits brought by both De-mand-Futility and Demand-Refused Plain-tiffs-Shareholders (collectively, "Plaintiffs"). The re-maining determination in this case is the amount of at-torneys' fees and costs to be awarded to Plaintiffs' coun-sel.1 Plaintiffs' counsel 2 seek in excess of $6.5 million in attorney's fees and approximately $450,000 in costs, as well as a multiplier of 1.5. Presented with a multitude of attorneys and voluminous time entries, this Court, ap-pointed a Special Master to assist in making the lodestar calculations and determining compensable costs, pursu-ant to Fed. R. Civ. P. 53.3 The issue of [*8] whether a multiplier is appropriate and if so, in what amount, was left for this Court following the Special Master's Report on the lodestar.

1 In this Court's prior Opinion dated October 26, 2012 (the "October Opinion"), the Court, inter alia, approved the final settlement reached be-tween Defendant Johnson & Johnson Corp. and Plaintiffs. In Re Johnson & Johnson Derivative Litig., 900 F.Supp. 2d 467 (D.N.J. 2012) ("Octo-ber Opinion"). In addition, the Court found that awarding attorneys' fees and costs to Plaintiffs' counsel is appropriate. Id. at 496. I note that de-fendants do not object to Plaintiffs' attorneys' fees up to a maximum of $10 million. 2 The law firms which represent the De-mand-Futility plaintiffs are: Carella, Byrne; Rob-bins, Geller; Bernstein Litowitz; and Morris and Morris. The Demand-Refused plaintiffs are rep-resented by: Kantrowitz, Goldhamer; and Abra-ham Fruchter. 3 In an Order dated October 22, 2012, this Court appointed the Hon. Harriet Derman, J.S.C. (Ret.), as the Special Master.

In her well-reasoned and thorough, 138-page Report and Recommendation (the "Report"), the Special Master recommends that this Court award counsel $5,383,905.76 in fees, and $416,305.73 in [*9] costs. As discussed below, objections were filed challenging various aspects of the Report concerning the lodestar


calculations. This Opinion reflects the Court's final de-termination of the fee application. For the reasons set forth below, the Court ADOPTS in full the Special Master's Report as follows: counsel are awarded fees in the total amount of $5,383,905.76, and expenses in the amount of $416,305.73. Furthermore, the Court denies counsel's request for a multiplier. BACKGROUND

The underlying facts and procedural history of this case have been fully set forth by this Court in its October Opinion and in the Report; as such, to promote judicial economy, the Court incorporates those facts herein, and will only delineate additional facts that are necessary and relevant to the issues addressed here.

Briefly, these derivative suits essentially accused J&J, inter alia, of failing to comply with product recalls, lack of good manufacturing practices, off-label drug marketing and violating federal and state statutes. Plain-tiffs allege that based on various wrongdoings, J&J breached its fiduciary duty to its shareholders.

After the resolution of J&J's motions to dismiss,4 the parties reached [*10] a settlement, and as a result, the Court held a fairness hearing, wherein I heard the parties' respective positions on the settlement terms, as well as objections from the public. On October 26, 2012, this Court issued its Opinion and Order approving the settle-ment and also approved, in principle, an award of attor-neys' fees and costs to counsel for Plaintiffs. In that con-nection, I determined that to calculate the amount of the fees, a traditional lodestar analysis must be undertaken. However, as I have explained previously, counsel's fee declarations and time records were not sufficiently de-tailed in order for this Court to engage in the searching and thorough inquiry that a lodestar analysis requires. And, more importantly, the time records produced in support of the fee application were voluminous. Accord-ingly, I instructed Plaintiffs' attorneys to supplement the record, and further, to assist the Court in its review, I appointed a Special Master to recommend the appropri-ate lodestar amount.

4 At the time the settlement discussion began, the Demand-Futility Plaintiffs' complaint had been dismissed without prejudice, and a motion

to dismiss the Demand-Refused Plaintiffs' com-plaint [*11] was pending.

Summary of Special Master's Report

Plaintiff's counsel, collectively, seek fees for over 12,500 hours of work spent on litigating these cases, and the documents purportedly supporting the appropriate-ness of those hours are substantial and extensive. As the thoroughness of the Report reflects, the Special Master carefully and scrupulously evaluated the records, as well as requested counsel to produce additional documenta-tion, and on several occasions, met with counsel. I will only briefly summarize the Report's conclusions.

The Special Master was tasked with determining the appropriate hourly rate for each counsel, and the time expended by various Plaintiffs' attorneys in this matter was reasonable. She first conducted the lodestar analysis by examining the 12,797.70 hours spent by the six plain-tiffs' firms. In that process, the Special Master com-mented on the divisiveness of the firms representing the separate plaintiffs at the inception of these matters, in-cluding the rancor between Demand-Futility and De-mand-Refused Plaintiffs. However, when the possibility of a settlement became a reality, the firms combined their resources and pursued a common goal - to amicably end litigation. [*12] Nonetheless, as the Special Master found, and this Court agrees, the firms' efforts were plagued by inefficiencies, billing errors, and in some instances, inflated hourly rates.

As the Special Master noted, the number of hours and concomitant fees in this application are "extraordi-nary" when there has been very limited discovery in these matters, and the cases were in their infancy. Fur-thermore, the Special Master was concerned with the manner in which the hours were billed, and indeed, this Court shared the same views when reviewing the settle-ment and the application for fees. More particularly, the Special Master found that some of the time records failed to provide sufficient details as to the type of task or ac-tivity being billed. Coupled with attorneys' inefficiencies and billing for unnecessary work, were duplication of efforts, bloated hourly rates and the billing of lawyers at partner rates for low level tasks. Thus, the Special Master reduced the total requested fees to $5,383,905.76. The chart below represents the breakdown of the recom-mended lodestar awarded to each firm:

________________________________________________________________________________ FIRM Hours Requested Recommended Expended Lodestar Lodestar Demand-Futility


FIRM Hours Requested Recommended Expended Lodestar Lodestar Carella Byrne 1,701.50 $927,997.95 $777,265.00 Berstein Litowitz 2,305.50 $1,084,585.55 $676,630.63 Robbins Geller 1,158.00 $564,067.50 $487,718.75 Morris and Morris 4,074.50 $2,181,711.54 $1,946,323.75 Demand-Refused Abraham Fruchter 2,755.25 $1,607,587.59 $1,032,173.13 Kantrowitz Goldhamer 802.95 $520,901.76 $463,794.50 TOTAL $5,383,905.76 ________________________________________________________________________________ Summary [*13] of Objections

Pursuant to Fed. R. Civ. P. 53(f)(2), the Court di-rected the parties, including objectors, to submit objec-tions to the Special Masters' recommendations, if any. One of the objectors, Mark G. Petri (the "Objector"), principally challenges the aspect of the Report that ad-dresses the reduction of fees resulting from "internal warfare" of Plaintiffs' counsel. More specifically, the Objector argues that the Special Master committed a legal error on the issue whether $1.15 million of lodestar spent on "fighting" amongst the groups of Plaintiffs' at-torneys to become lead counsel is billable to the share-holders.5

5 After the issuance of the Report, I directed the Special Master to submit a separate spread-sheet which enumerates the hours she subtracted for counsel's time spent on three specific catego-ries: (1) motions for appointment of lead counsel and any opposition thereto; (2) Demand-Refused counsel's motion for, and complaint in, interven-tion; and (3) opposition to the motion for inter-vention.

The Morris Firm also objects to the Report. While the firm does not take issue with the recommended lode-star amount, it does object on the basis that the Special Master erred when she suggested [*14] that the risks of counsel's contingency fee business model should not be shifted to the defendant. The Morris Firm is concerned because it argues that in a common benefit case, such as this matter, J&J is funding the award of attorneys' fees as the beneficiary of the benefits achieved by Plaintiffs' counsel, not as an unsuccessful defendant. And, the Mor-ris Firm submits that this distinction is important when evaluating whether a multiplier is appropriate.

In addition, the Bernstein Firm objects to certain le-gal and factual errors allegedly made in the Report; however, it does not seek to change the overall recom-mended lodestar award. First, like the Morris Firm, the

Bernstein Firm argues that the Court's fee award, partic-ularly in the multiplier context, must not be based on the law of fee shifting for the benefit of a prevailing litigant, but rather, this type of fee award should be based on a corporate benefit analysis. Furthermore, the Bernstein Firm takes issue with the Special Master's treatment of certain hourly rate declarations from other New Jersey attorneys. Lastly, the Firm disagrees with some of the findings and comments made by the Special Master re-garding the manner in [*15] which the Bernstein Firm litigated these matters.

The Abraham and Kantrowitz Firms collectively ask this Court to reject the Report's recommended reductions in their requested fees. In their objections, both firms generally disagree with the Special Master's finding that some of the firms' billings were excessive, vague or re-lated to work that was unnecessary. In an attempt to once again justify their hourly billing, the firms delineate the reasons why the reductions of their billable hours by the Special Master were not warranted. I will discuss those contentions more fully below. As a final note, both the Carella and Robbins Firms do not object to the recom-mendations made by the Special Master, and no one has objected to the Special Master's recommendation as to the compensable expenses. DISCUSSION I. The Lodestar Amount A. Standard of Review

Federal Rule of Civil Procedure 53 sets forth the standard this Court applies when reviewing the Special Master's Report and Recommendation. See Fed. R. Civ. P. 53(f)(3)-(5). In that connection, with respect to the Special Master's decisions, the Court "may adopt or af-firm, modify, wholly or partly reject or reverse, or re-submit to the master with [*16] instructions." Fed. R. Civ. P. 53(f)(1). It is clear that "[t]he court must decide de novo all objections to conclusions of law made or


recommended by a master." Fed. R. Civ. P. 53(f)(4). Similarly, all objections to the master's findings of fact, unless the parties stipulate otherwise, are reviewed de novo. Fed. R. Civ. P. 53(f)(3). On the other hand, "[t]he Special Master's rulings on procedural matters are re-viewed under the abuse of discretion standard." Honey-well Int'l, Inc. v. Nikon Corp., 2009 U.S. Dist. LEXIS 17115, at *1 (D. Del. Mar. 4, 2009) (citing Fed. R. Civ. P. 53(f)(5)).

With the above standards in mind, I acknowledge that it is the role of this Court to review de novo the Spe-cial Master's conclusions of law and fact. Indeed, I have thoroughly reviewed the Report and the accompanying exhibits, as well as the parties' declarations in support of their fees; having done so, I agree with the Special Mas-ter's assessment of the lodestar analysis. Therefore, in this Opinion, I will only address the specific objections raised by the parties. B. Petri's Objection

The Objector asks this Court to exclude any hours billed by the various Plaintiffs' attorneys in their efforts to become [*17] the lead counsel for both the De-mand-Futility and Demand-Refused plaintiffs in this consolidated matter. Indeed, the Objector made the same argument to the Special Master. According to the Objec-tor's calculations, the number of hours expended in those efforts amounted to approximately $1.15 million in fees. Specifically, the Objector identifies three categories of fees that should be excluded:

1. 592.5 hours ($361,800) for the four law firms' fight over who would become Demand-Futility lead counsel.

2. Demand Refused counsel claims 755.75 hours ($495,280.75) for its motion to intervene and motion to appoint lead and liaison counsel in the demand refused actions, as well as 334.9 hours

($194,554.00) on a complaint in interven-tion.

3. Demand Futility counsel seeks to include 153.5 hours ($98,363.75) for time spent in opposing Demand Refused counsel's motion to intervene.

The nature of the "internal warfare" among counsel was summarized in the Report. The Special Master re-marked that combative exchanges between Plaintiffs' attorneys at one time were "intense." See Report at p. 91. Suffice to say, "tension by and among the competing Demand-Futility attorneys and the competing De-mand-Refused [*18] attorneys, as well as the tension between the Demand-Futility and Demand-Refused at-torneys, necessitated the expenditure of over 1,500.00 hours or almost twelve percent (12%) of the hours sought." Id. at p. 92. The Special Master did not treat the "in-fighting" lightly. She acknowledged that "[a] great deal of time and money was spent to secure a spot on the team." Id. In that regard, the Special Master questioned whether "this internal dispute brought any value to the shareholders of J&J." Id.

Having made that assessment, however, the Special Master declined to exclude wholesale the $1.15 million in fees identified by the Objector as hours related to "in-ternal warfare." Rather, the Master reasoned that she had already deducted some of the hours objected to on other grounds, i.e., that they were excessive or vague. The re-maining hours, the Special Master explained, were not otherwise objectionable since those efforts - even if they were related to the appointment of lead counsel - con-ferred some benefit to the class. See Report at p. 95.

While the Objector did not have the benefit of a breakdown of the subtractions taken by the Special Mas-ter in these categories, pursuant to my request, [*19] the Special Master recently submitted a separate spreadsheet outlining the deductions taken. The following chart summarizes those reductions.

________________________________________________________________________________ Category Amount Amount of % of Billed Deduction Reduction Taken Motions for $361,800.00 $103,079.38 28.46% Appointment of Lead Counsel and Any Oppositions thereto, filed by Demand


Futility Counsel Motion for $689,834.75 $217,037.50 31.46% Intervention; Motion to Appoint Lead Counsel; and Complaint in Intervention Opposition to Motion $98,363.75 $23,194.38 11.61% for Intervention ________________________________________________________________________________

The standard which the Court applies to determine whether fees should be deducted is straightforward: it is axiomatic that hours not reasonably expended must be excluded from the fee calculation, Hensley v. Eckerhart, 461 U.S. 424, 434, 103 S. Ct. 1933, 76 L. Ed. 2d 40 (1983), and hours are not reasonablely extended "if they are excessive, redundant or otherwise unnecessary." Rode v. Dellarciprete, 892 F. 2d 1177, 1183 (3d Cir. 1990). "Time expended is considered 'reasonable' if the work performed was 'useful and of a type ordinarily nec-essary to secure the final result obtained from the litiga-tion.'" Public Interest Research Group of N.J., Inc. v. Windall, 51 F.3d 1179, 1188 (3d Cir. 1985).

With that in mind, I reject the Objector's [*20] broad assertion that all hours spent by Plaintiffs' counsel related to the appointment of lead counsel or intervention were not necessary or did not secure the results reached in this case. First, the lead counsel selection process is necessary and appropriate in order to secure competent counsel for the class. See In re Lucent Techs. Sec. Litig., 194 F.R.D. 137, 156 (D.N.J. 2000). Indeed, the motion practice involved in selecting counsel ultimately led to an organizational plan, agreed to by the parties, concern-ing which law firms would represent plaintiffs in both Demand Futility and Demand Refused actions. While the process may have been contentious at times, the efforts expended by these firms were beneficial in reaching the outcome. Likewise, the Court finds that the Demand Re-fused counsel's filing of its motion to intervene was nec-essary to protect the interests of the demand refused plaintiffs. Thus, I reject the Objector's position that counsel should not be compensated for any work related to those efforts.

That said, however, I do find excessive the hours spent on motion practice related to the above-referenced three categories of fees. Having independently reviewed the billing [*21] entries and corresponding hours billed for each category, I concur with the Special Master's observations that some of the hours are excessive, vague or otherwise not necessary, and therefore, reductions are appropriate. In that regard, I further find that the reduc-tions taken by the Special Master, as outlined in the

above chart, are sufficient to account for hours billed that were not "reasonable" or "useful" in achieving the final result reached in this case. C. The Morris and Bernstein Firms' Objections

Both the Morris and Bernstein Firms disagree with the Special Master's comments regarding the nature of contingency fees. More specifically, both Firms argue that the Special Master should not have applied a fee-shifting analysis because this case should be ana-lyzed under the common benefit doctrine, and this dis-tinction is important to the determination whether a mul-tiplier is appropriate. I disagree with the Firms' charac-terization of the Special Master's reasoning, particularly since she was not tasked with, nor did she engage in, an analysis of fees vis-a-vis whether a multiplier should be applied. Rather, her analysis was limited to a lodestar calculation, and she appreciated [*22] that this is a common fund case.

At the outset, I note that while the attorney's fees sought in this case are not based upon statutory or con-tractual fee-shifting, in a common benefit case where there is no monetary benefit conferred through litigation, the lodestar formula is a method commonly used to de-termine attorney's fees. Lindy Bros. Builders Inc. of Philadelphia v. American Radiator & Standford Corp., 487 F.2d 161 (3d Cir. 1973); In re Scher-ing-Plough/Merck Merger Litig., No. 09-1099, 2010 U.S. Dist. LEXIS 29121, at *53 (D.N.J. Mar. 26, 2010);" Joy Mfg. Corp. v. Pullman-Peabody Co., 742 F. Supp. 911, 913 (W.D. Pa. 1990). The lodestar method involves mul-tiplying the number of hours expended by the attorneys' reasonable hourly rate. See In re Johnson and Johnson, 900 F.Supp. 2d. at 496. In that regard, the Special Master appropriately analyzed counsel's hourly rates using the lodestar analysis, which is not disputed by the parties.

The language from the Report with which the Firms take issue read as follows:

I have also never understood why the element of contingency should generate a higher rate for taking the risk; it would


seem to me that practitioners who have undertaken an [*23] uphill legal battle would be happy to settle for some com-pensation - unless it was not uphill at all and was in actuality almost a certainty. In this contingent matter, with J&J as a de-fendant, a dozen firms were "falling all over themselves" to participate. In any event, the possibility of losing one con-tingent case and therefore compensating with higher rates in another matter is not the problem of the defendant in the sec-ond matter.

Report at p. 117. However, the Special Master was re-sponding to counsel's position that they should receive their substantial requests for fees because counsel un-dertook the prosecution of this matter entirely on a con-tingency basis and assumed significant risks in bringing these claims. The Special Master clarified that in deter-mining the lodestar, the focus is on the appropriate hour-ly rate for each counsel and the reasonableness of the time expended. In other words, it is only after the lode-star is calculated that the Court then determines whether to decrease or increase the amount by applying a multi-plier, which "attempts to account for the contingent na-ture and risk involved in a particular case and the quality of the attorneys' work." In re Diet Drugs, 582 F.3d 524, 540 n.33 (3d Cir. 2009). [*24] Indeed, the Special Master appropriately focused on a traditional lodestar analysis as opposed to whether an enhancement is war-ranted based upon risk and contingency.6 Therefore, the Firms' objection to the Special Master's comments about fees and contingencies appears to misapprehend the im-port of her observations.7 Finally, the risk and contingent nature of a case are factors to be considered in determin-ing whether an enhancement or multiplier applies, which will be decided by me, infra, and were not a part of the Special Master's Report.

6 It is appropriate to consider if the issues in this case are novel and complex - neither of these criteria account for an increased hourly rate here. 7 The Special Master's comments are, howev-er, well taken. As this Court has observed in other matters, the setting of hourly rates by firms, such as the Morris and Bernstein Firms, whose clients are almost exclusively contingent fee clients, does not necessarily reflect a reasonable fee for lodestar analysis.

Next, the Court addresses the Bernstein Firm's sug-gestion that the Special Master erred when she "disre-garded" the hourly rate declarations from prominent New Jersey attorneys ("Rate Declarations").8 [*25] The Firm

argues because the hourly rates set forth in the Rate Declarations are consistent with rates approved by courts around the country, there was no basis for the Special Master to discount them. The Court disagrees. The Spe-cial Master had an independent obligation to determine whether the Rate Declarations were appropriate and suf-ficient to support the hourly rates requested in this case. The Special Master found several deficiencies in those declarations. First, the Special Master explained that the declarations failed to "comment on the fact that their billing rates may be applicable for periodic non-contingent clients while the clients in this matter are not contractually obligated to ever pay the designated rate - or any other rate." Report, p. 109. Moreover, the declarants did not "offer any specific comparisons or provide specific references." Id. Another deficiency, the Special Master noted, was the lack of information re-garding whether the "requested rates are commensurate with this District's prevailing market rates." Id. Addi-tionally, "the Affidavits do not cite to a single specific case where counsel's proposed rates were awarded in a shareholder derivative action." [*26] Id. at 110. Thus, the Special Master concluded that the Rate Declarations were not helpful to her in determining reasonable hourly rates for the relevant market. Given the explanations, this Court agrees with the Special Master's conclusions, and I find that she properly gave less weight to the Rate Dec-larations.

8 Plaintiffs' Counsel submitted the following declarations from attorneys in New Jersey: (1) Michael D. Sirota, Esq., co-managing shareholder of Cole, Scholtz, Meisel, Forman & Lenoard, P.A.; (2) Stephen M. Greenberg, Esq., counsel to McElroy, Deutsch, Mulvaney & Carpenter LLP; and (3) John A. McGahren, Esq., a partner at Patton Boggs LLP.

Finally, the Bernstein Firm requests this Court not to repeat or adopt certain "unnecessary criticism of coun-sel" in the Report. Having carefully reviewed the con-tents of the Report, I do not find that the Special Master has overstated or inappropriately remarked upon the at-torneys and their billing practices. Indeed, the Master was tasked by this Court to compare the work performed by each of the lawyers with the number of hours billed in order to determine the appropriateness of the requested fees. Necessarily, in order to make that determination, [*27] the Special Master was well within her authority to support the recommended deductions with her explana-tions. D. The Abraham and Kantrowitz Firms' Objections

Before the Special Master, the Abraham and Kantrowitz Firms requested a total of $2,128,489.35 for


a combined 3558.20 hours billed. Based on various - and indeed, extensive - reasons, the Special Master reduced both firms' fees to $1,495,967.63. Unsurprisingly, the Abraham Firm takes issue with the Special Master's rea-soning for reducing its fees. In its view, the majority of the work performed was appropriate and justified. In that regard, the Abraham Firm insists that hours billed for the following four categories of work should not have been so drastically reduced: 1) obtaining, reviewing and ana-lyzing documents relating to DePuy's metal hip replace-ment and other factual updates; (2) reviewing transcripts and exhibits from the civil trials relating to the alleged improper sale of Risperdal; (3) drafting a books and rec-ords action which was not filed; and (4) working on the complaint in intervention and the Katz Complaint. Be-cause I agree with the Special Master's deductions in these categories, I will only briefly comment on [*28] the Abraham Firm's objections.

As to the first category, the Special Master correctly determined that some of the hours the Abraham Firm billed reviewing documents relating to the DePuy metal hip replacement were excessive, while others produced no value to the class. The deductions taken in this cate-gory of fees were necessary because, as the Special Master found, some of the hours are plainly excessive. To highlight this problem, the Abraham Firm routinely over-billed for sending emails. In one example, the firm charged over 2.5 hours for sending a routine email to co-counsel. And, in other instances, the Abraham Firm simply designated the work performed as "Doc review" without indicating what documents, or even the subject matter, being reviewed. In those specific instances, the Special Master appropriately reduced all of the hours, which amounted to over 50 hours. I need not go through the entries one by one since that task was competently performed by the Special Master, and because I agree with her observations, I reject the Abraham Firm's objec-tion on this issue.

Next, I am in complete agreement with the Special Master's reductions in the hours billed for Risperdal transcript [*29] review. While the Abraham Firm ar-gues that it was necessary to review the transcripts, I find excessive that the firm dedicated well over 180 hours to that routine task. Accordingly, a deduction of 125.25 hours in this category is more than reasonable; had I re-viewed those hours in the first instance, I might have taken an even greater deduction. Likewise, the Abraham Firm's billing related to drafting a "book and records action" was excessive. Furthermore, because such an action was never initiated, the significant amount of time spent on preparing the complaint added no value to the benefit of the corporation and the shareholders. Finally, as to the last category, I have already addressed, supra,

the reasonableness of the hours that both firms spent on the Complaint in Intervention.

In sum, I do not find convincing the objections made by the Abraham and Kantrowitz Firms. Accordingly, having addressed, and rejected, all of the objections made by the parties, the Court adopts in full the Special Master's report and recommendation. II. Multiplier

Before I assess whether an award of a multiplier is appropriate, I clarify, as I did in my previous Opinion, that an award of attorneys' fees [*30] in this case is based on the substantial benefit conferred upon the shareholders through corporate governance reforms achieved by the settlement, and not based upon a mone-tary award to the sharholders. Indeed, this is not the clas-sic type of common fund case wherein a monetary fund is created for the benefit of a class. As a result, "a lode-star analysis is fitting where there is no monetary com-ponent to the settlement and no valuation of the non-monetary award upon which the Court could base a percentage." In re Johnson & Johnson, 900 F.Supp. 2d at 498; see In re Rite Aid Corp. Sec. Litig., 396 F.3d 294, 300 (3d Cir. 2005). With that distinction, I turn, next, to the issue whether a multiplier is warranted. In that con-nection, notwithstanding the fact that the Special Master, in her lodestar analysis, recommended reducing the re-quested fees to $5.38 million, counsel continue to request that this Court award fees in the amount of $10 million, which results in a multiplier of approximately 1.86.

After determining the appropriate lodestar figure for attorney's fees, the court may either increase or decrease the lodestar amount through the use of a multiplier. Id. A multiplier "attempts [*31] to account for the contingent nature or risk involved in a particular case and the quali-ty of the attorneys' work." Id. (quoting In re Diet Drugs, 582 F.3d 524, 540 n. 33 (3rd Cir. 2009)).9 Further, in order to receive an upward adjustment, the fee applicant must show some basis that such an adjustment is neces-sary to provide fair and reasonable compensation. See In Re: Prudential Ins. Co. Am. Sales Practice Litig., 148 F.3d 283, 340 (3d Cir. 1998).

9 In a classic lodestar valuation, it is presumed that the lodestar figure represents the "reasonable fee." As such, a multiplier is only warranted in special circumstances. Perdue v. Kenny A., 559 U.S. 542, 552-53, 130 S. Ct. 1662, 176 L. Ed. 2d 494 (2010).

An upward adjustment generally may not based on factors already accounted for in determining the original lodestar figure. See Blum v. Stenson, 465 U.S. 886, 898-99, 104 S. Ct. 1541, 79 L. Ed. 2d 891 (1984). To


illustrate, a multiplier cannot be based on the "novelty and complexity of the issues" because those factors have been accounted for in determining the "number of billa-ble hours" and the "reasonable hourly rate." Id.; see, e.g., McLendon v. Continental Group, Inc. 872 F. Supp. 142, 162 (D.N.J. 1994) (rejecting a lodestar enhancement based on the quality [*32] of the representation because that factor was accounted for in petitioners' hourly rate); Bagel Inn, Inc. v. All Star Dairies, 539 F. Supp. 107, 113 (D.N.J. 1982) (denying a petition for lodestar enhance-ment for one of the firms involved in the litigation be-cause the "quality of services . . . is reflected in the hourly rate"); Lake v. Nationwide Bank, 900 F. Supp. 726 (E.D. Pa. 1995) (declining to apply a quality multi-plier even though the attorneys "shepherd[ed] this case efficiently"); Cerva v. E.B.R. Enterprises, Inc. 740 F. Supp. 1099, 1106 (E.D. Pa. 1990) (declining to apply a quality multiplier because petitioner's skill was already reflected in his high rate); Orson Inc. v. Miramax Film, Corp., 14 F. Supp. 2d 721, 726 (E.D. Pa. 1998) (denying enhancement of lodestar because petitioner's only basis for such a request was the "novelty of the issues"); Cic-carone v. B.J. Marchese, Inc. 03-CV-1600, 2004 U.S. Dist. LEXIS 25747, 2004 WL 2966932, at *4 (December 22, 2004 E.D. Pa) (holding that an enhancement multi-plier was inappropriate because the work was "adequate, but not outstanding" and the settlement was for far less than initially sought).

Nevertheless, courts have noted that since one of the goals of performing [*33] the lodestar analysis is to "assure that counsel undertaking socially beneficial liti-gation receive an adequate fee irrespective of the mone-tary value of the final relief achieved for the class," mul-tipliers can be applied to compensate attorneys who take on risky, but socially beneficial litigation. In re Scher-ing-Plough Corp. S'holders Derivative Litig., No. 01-1412, 2008 U.S. Dist. LEXIS 2569, 2008 WL 185809, at *5 (D.N.J January 14, 2008) (citing In re GMC Pick-up Truck Fuel Tank Prods. Liab. Litig., 55 F.3d 768, 821 (3d Cir. 1995)). In sum, "[m]ultipliers may re-flect the risks of non[-]recovery facing counsel, may serve as an incentive for counsel to undertake socially beneficial litigation, or may reward counsel for an ex-traordinary result. By nature they are discretionary and not susceptible to objective calculation." In re Pruden-tial, 148 F.3d at 340.

In this case, I do not find that a multiplier is war-ranted for several reasons. Counsel argues, at the outset, that in common fund cases where the lodestar method is used to cross check percentage-of-recovery awards, the Third Circuit has approved multiples ranging from one to four. See In re Prudential, 148 F.3d at 341. However, this is not a common fund [*34] case, and therefore, it is not appropriate for this Court to rely on the line of

cases that deals with multipliers in that context. Rather, as the case law instructs, I can only award a multiplier in this case if I find that the lodestar insufficiently accounts for the risks of litigation, the contingent nature of the case, the results achieved and the quality of representa-tion. These factors, however, do not always compel en-hanced fees. See Goldberger v. Integrated Res., 209 F.3d 43, 54 (2d Cir. 2000).

I begin with the premise that I find the lodestar amount of approximately $5.38 million more than ade-quately compensates Plaintiffs' counsel for the work they performed. While counsel, collectively, purportedly spent over 12,000 hours litigating these matters, these consolidated actions were still in their infancy. Little discovery had occurred, and more importantly, for the Demand-Futility Plaintiffs, the Complaint had been dis-missed without prejudice. As for the Demand-Refused Plaintiffs, the Court stayed Defendants' motion to dis-miss pending the outcome of the settlement discussions. For cases that have not progressed beyond the motion to dismiss stage, $5.38 million in fees is a [*35] substan-tial award. In fact, because the lodestar is substantial, an additional multiplier cannot be justified.

In my view, the lodestar properly accounts for the results achieved and the quality of representation. The hourly rates awarded in this case range from $125 to $750. Indeed, most of the partners of the law firms charged well over $600 an hour. In light of the signifi-cant hourly rates, counsel are sufficiently compensated for the quality of their work, which recognizes the vari-ous attorneys' skills and experience. These factors were already taken into account by the Special Master when she made her recommendations. In addition, I disagree with counsel's position that the complexity of this case warrants a multiplier. I find that the degree of complexity involved with the issues in these cases is more than ade-quately reflected in the number of hours billed. See Dis-cussion, infra.

Moreover, whether Plaintiffs would ultimately pre-vail is a factor that this Court weighed heavily, not only in finding the settlement reasonable, but also in my de-termination that an award of attorneys' fees is appropri-ate. See In re Johnson & Johnson, 900 F.Supp. 2d at 484. Indeed, the Special Master [*36] discussed the results achieved through the settlement, and how counsel should properly be compensated for those results. Ac-cordingly, because the lodestar calculations took into account those considerations, I need not provide a further enhancement in this regard. See Pa. v. Del. Valley Citi-zens' Council for Clean Air, 483 U.S. 711, 753, 107 S. Ct. 3078, 97 L. Ed. 2d 585 (1987) ("a multiplier[] is not designed to be a 'windfall' for the attorney").


Nor is an enhancement necessary to compensate counsel for the contingent nature of this case. I doubt that the contingency nature and the risk of nonpayment dis-couraged Plaintiffs' counsel from pursuing this litigation. See Report, p. 116. Indeed, that conclusion is bolstered by the number of attorneys seeking to be first in the door in filing lawsuit on behalf of shareholders, and the in-tense level of competition litigating who would become lead counsel. In my view, from counsel's perspective, this was a "promising" case, holding the prospect of a large fee recovery from solvent defendants. See Gold-berger v. Integrated Res., 209 F.3d 43, 53-54 (9th Cir. 2000)(refusing to award a multiplier when the contingent nature of the case was in doubt). My conclusion rests on the observations [*37] that: (1) counsel benefitted from the spadework done by federal authorities, whose inves-tigations had progressed substantially at the time of the filing, and during, the litigation; (2) there was no groundbreaking issue which loomed significant in this case; (3) the likelihood of non-payment was slim, be-cause J&J, a well-established public entity, is solvent, and the individual directors and officers were the benefi-ciaries of an insurance policy; (4) use of current hourly billing rates compensated counsel for delay in payment; and (5) use of high hourly billing rates compensated counsel for the quality of their efforts, and what risk there was in the case. See, e.g., Charles v. Goodyear Tire and Rubber Co., 976 F. Supp 321, 325 (D.N.J. 1997)("a positive multiplier is not warranted as the fee award is more than reasonable and already accounts for the risks of litigation, the contingent nature of the case, the results achieved and the quality of representation.").

Having considered all of the factors, I find that an award of a multiplier is not warranted since enhancing fees above the already generous rates included in the lodestar would result in overcompensation and thus, a windfall [*38] to counsel to the detriment of the share-holders. III. CONCLUSION

For the foregoing reasons, the Special Master's Re-port and Recommendation is ADOPTED in its entirety. Plaintiffs' counsel are awarded fees in the total amount of $5,383,905.76, and expenses in the amount of $416,305.73. Counsel's request for a multiplier is DE-NIED.

Dated: 11/25/2013


Freda L. Wolfson,

United States District Judge ORDER

THIS MATTER having been opened to the Court by both Demand-Futility and Demand-Refused Plain-tiffs-Shareholders (collectively, "Plaintiffs"), on an ap-plication for attorneys' fees and costs; it appearing that defendants do not object to attorneys' fees up to a maxi-mum of $10 million; it appearing that the Court appoint-ed a Special Master to recommend the appropriate fees and expenses; it appearing that the following law firms made objections to the Report and Recommendation: Bernstein Litowitz; Morris and Morris; Kantrowitz, Goldhamer; and Abraham Fruchter; it appearing that Mark G. Petri, an objector, also objected; it appearing that the Court having reviewed the Report and Recom-mendation and all the objections filed thereto, for the reasons set for the in the Opinion filed [*39] on even date, and for good cause shown,

IT IS on this 25th day of November, 2013,

ORDERED that the Report and Recommendation is ADOPTED in full;

ORDERED that Plaintiffs' counsel are awarded a total amount of $5,383,905.76 in attorneys' fees as fol-lows:

1. Carrella Byrne is awarded $777,265.00

2. Bernstein Litowitz is awarded $676,630.63

3. Robbins Geller is awarded $487,718.75

4. Morris and Morris is awarded $1,946,323.75

5. Abraham Fruchter is awarded $1,032,173.13

6. Kantrowitz Goldhamer is awarded $463,794.50

ORDERED that Plaintiffs' counsel are awarded a total amount of $416,305.73 in costs;

ORDERED that Plaintiffs' counsel request for a multiplier is DENIED; and it is further

ORDERED that this case shall be marked as CLOSED.


Freda L. Wolfson,

United States District Judge

Rutgers School of Law

http://njlaw.rutgers.edu/collections/courts/supreme/a-105-94.opn.html[5/4/2015 3:18:12 PM]

Original WP 5.1 VersionThis case can also be found at 141 N.J. 292.

SYLLABUS

(This syllabus is not part of the opinion of the Court. It has been prepared bythe Office of the Clerk for the convenience of the reader. It has been neitherreviewed nor approved by the Supreme Court. Please note that, in the interestsof brevity, portions of any opinion may not have been summarized).

CANDY RENDINE, ET AL. V. EDWARD PANTZER, d/b/aPANTZER MANAGEMENT COMPANY (A-105-94)

(NOTE: This is a companion case to Szczepanski v. NewcombMedical Center, Inc., et al. also decided today.)

Argued March 13, 1995 -- Decided July 24, 1995

STEIN, J., writing for a unanimous Court.

Candy Rendine and Bernadette Lorestani (plaintiffs) brought an actionpursuant to the New Jersey Law Against Discrimination (LAD), seekingdamages primarily on the basis that their employment was wrongfullyterminated by Pantzer because they had become pregnant. Plaintiffs claimswere tried jointly and the jury found that Pantzer had violated the LAD. BothRendine and Lorestani recovered substantial judgments, consisting ofcompensatory and punitive damages, prejudgment interest, counsel fees andcosts.

Under the LAD's fee-shifting provision, the losing party must payreasonable attorney's fees to the attorney for the prevailing party. In February1988, plaintiffs had entered into a retainer agreement with their attorney thatprovided for a fee that was the greater of: 1) a specific hourly billing plustwenty-five percent of plaintiffs' recovery; or 2) the amount of attorney's feesawarded by court pursuant to the fee-shifting provision of the LAD. In supportof an application for counsel fees, plaintiffs' counsel certified that the totalhours expended on the litigation was 646.65, which was multiplied by thereasonable hourly rates of the participating attorneys, resulting in a "lodestar"fee of $114,334.25. Counsel also set a fee of $28,634 for post-judgment servicesand reimbursement for out-of-pocket disbursements.

To support the reasonableness of the lodestar fee, plaintiffs' counselsubmitted certifications by several lawyers in the firm to attest to the fact thatthe hourly rates used to calculate the lodestar were consistent with the standardhourly rates for the participating lawyers. In addition, plaintiffs' counselsubmitted certifications from three experienced employment-law practitionerswho provided estimates of the hours required to litigate a plaintiff'semployment-discrimination case. Those estimates either exceeded orapproximated the hours expended by plaintiffs' counsel.

The trial court found counsel's lodestar fee reasonable. In addition, the trialcourt determined that plaintiffs had established their entitlement toenhancement of the lodestar fee, based on Lorestani's affidavit concerningplaintiffs' difficulty in finding counsel, the affidavits of three unaffiliated

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attorneys attesting to the need for contingent-fee enhancement, and theaffidavit of plaintiffs' retained expert. Accordingly, the trial court applied amultiplier of 2.0 to the lodestar fee, resulting in a prejudgment counsel-feeaward of $228,668.50.

Defendant moved for reconsideration of the trial court's decision toenhance the lodestar fee, relying on the U.S. Supreme Court decision in City ofBurlington v. Dague, which held that enhancement for a contingency is notpermitted under fee-shifting statutes. The trial court denied defendant'smotion, declining to adhere to Dague. The court reasoned that this Court, ifpresented with the same issue, would adopt the reasoning of Justice Blackman'sdissenting opinion in Dague that asserted that a statutory fee may includeadditional compensation for contingency and still qualify as reasonable.

The Appellate Division affirmed the judgment of the trial court, althoughone member of the panel dissented only from the court's affirmance of theportion of the judgment reflecting the jury's award of

punitive damages. The Appellate Division affirmed the counsel fee award,agreeing with the trial court's conclusion that the reasoning of JusticeBlackman's dissent in Dague was more consistent with the objectives of theLAD.

Pantzer appeals as of right from the judgment awarding punitive damagesto Lorestani and Rendine. The Court also granted Pantzer's petition forcertification on the issues of joinder, adequacy of jury instructions, emotional-distress damages, and the counsel-fee award.

HELD: In determining a reasonable fee under a fee-shifting statute, a trialcourt, after having carefully established the amount of the lodestar fee, properlymay enhance the lodestar fee in cases in which the prevailing party's attorney'sfee arrangement was predominantly contingent on a successful result.

1. The trial court's determination to deny severance of Lorestani's andRendine's claims was a reasonable exercise of its discretion; the jury charge,considered as a whole, constitutes a clear, understandable and correctexplanation of the applicable legal principles; and the Appellate Divisionproperly concluded that the trial court's evaluation of the compensatory damageaward should not be disturbed since the emotional-distress-damage award wasnot excessive. (pp. 17-25)

2. In a discrimination suit under the LAD, to obtain a punitive damageaward, plaintiff must prove actual participation in or willful indifference to thewrongful conduct on the part of upper management; and proof that theoffending conduct was especially egregious. In this case, the trial courtadequately charged the jury with regard to punitive damages and the proofswere sufficient to sustain the punitive-damages award. (pp. 25-30)

3. Under the LAD and other fee-shifting statutes, the most important step inthe fee-setting process is to determine the lodestar, which is the number ofhours reasonably expended, multiplied by a reasonable hourly rate. Thatrequires the trial court to carefully evaluate the aggregate hours and specifichourly rates advanced by counsel for the prevailing party to support the feeapplication, and in its discretion to exclude excessive hours from the lodestarcalculation. In addition, federal fee-shifting statutes do not requireproportionality between damages recovered and counsel fee awards, althoughdamages recovered are a factor bearing on the reasonableness of counsel feeawards. (pp. 35-60)



4. As a matter of economic reality and simple fairness, a counsel fee awardunder a fee-shifting statute cannot be "reasonable" unless the lodestar,calculated as if the attorney's compensation were guaranteed regardless ofresult, is adjusted to reflect the actual risk that the attorney will not receivepayment if the suit does not succeed. The Court adopts standards to guide theaward of contingency enhancements that will address concerns aboutoverpayment and double counting. Those standards will serve as a limit on theamount of contingency enhancements and will require a relationship betweenthe amount of the enhancement awarded and the extent of the risk ofnonpayment assumed by counsel for the prevailing party. (pp. 60-64)

5. The trial court must determine whether a case was taken on a contingentbasis, whether the attorney was able to mitigate the risk of nonpayment in anyway, and whether other economic risks were aggravated by the contingency ofpayment. It is the actual risk or burden that the lawyer bears that determineswhether an upward adjustment is called for. Attorneys who are paid a portionof their reasonable hourly fee irrespective of the result, as well as attorneys whoentered into contingency fee agreements with clients, have partially mitigatedthe risk of non-payment. The trial court may take into account the likelihood ofsuccess and, if the likelihood of success is unusually strong, a court mayproperly consider the inherent strength in the prevailing party's claim indetermining the amount of contingency enhancement. Moreover, there neednot be evidence in the record that without risk enhancement plaintiff wouldhave faced substantial difficulties in finding counsel in the local market. (pp.64-68)

6. Contingency enhancements in fee-shifting cases ordinarily should rangebetween five and fifty-percent of the lodestar fee, with the enhancement intypical contingency cases ranging between twenty and thirty-five percent of thelodestar. Here, the Court exercises original jurisdiction and modifies thecounsel-fee award. The lodestar fee is reasonable but the award of double thelodestar is excessive. Strong evidence supported the jury's finding of unlawfuldiscrimination, suggesting that the risk of non-payment was also somewhatmitigated by the strength of plaintiffs' case. Thus, a contingency enhancementequal to one-third of the lodestar fee is appropriate. (pp. 68-72)

As MODIFIED, judgment of the Appellate Division is AFFIRMED.

CHIEF JUSTICE WILENTZ and JUSTICES HANDLER,POLLOCK, O'HERN, GARIBALDI and COLEMAN join in JUSTICESTEIN's opinion.

A- 105 September Term 1994

CANDY RENDINE andBERNADETTE LORESTANI,

Plaintiffs-Respondents,

v.

EDWARD PANTZER, d/b/aPANTZER MANAGEMENT COMPANY,

Defendant-Appellant.

SUPREME COURT OF NEW JERSEY



Argued March 13, 1995 -- Decided July 24, 1995

On appeal from and on certification to the Superior Court, Appellate Division,whose opinion is reported at 276 N.J. Super. 398 (1994).

Paul A. Rowe argued the cause for appellant (Greenbaum, Rowe, Smith,Ravin & Davis, attorneys; Harriet F. Klein and Bruce D. Greenberg, on thebriefs).

Nancy Erika Smith argued the cause for respondents (Smith Mullin,attorneys; Ms. Smith, Christopher P. Lenzo, and Jon W. Green, on the briefs).

Matthew R. Gabrielson, Deputy Attorney General, argued the cause foramicus curiae, Attorney General of New Jersey (Deborah T. Poritz, AttorneyGeneral, attorney; Joseph L. Yannotti, Assistant Attorney General, of counsel).

The opinion of the Court was delivered by STEIN, J.

Plaintiffs, Candy Rendine and Bernadette Lorestani, brought this actionpursuant to the Law Against Discrimination (LAD), N.J.S.A. 10:5-1 to -42,seeking damages primarily on the basis that their employment wrongfully wasterminated because they had become pregnant. Their claims were tried jointly.See R. 4:29-1. After a jury verdict, Rendine recovered a judgment of $460,000,consisting of $225,000 in compensatory damages and $250,000 in punitivedamages; Lorestani's judgment of $475,000 consisted of $225,000 incompensatory damages and $250,000 in punitive damages. Both plaintiffs alsorecovered prejudgment interest, counsel fees, and costs. The Appellate Divisionaffirmed the judgment in all respects, 276 N.J. Super. 398 (1994), one memberof the panel dissenting only from the court's affirmance of the portion of thejudgment reflecting the jury's award of punitive damages. Defendant, EdwardPantzer, owner and president of Pantzer Management Company, appeals as ofright from the judgment awarding punitive damages to plaintiffs. R. 2:2-1(a)(2). We granted Pantzer's Petition for Certification raising issues concerningjoinder, adequacy of jury instructions, emotional-distress damages, andcounsel fees. 138 N.J. 272 (1994).

I

We adopt and set forth the comprehensive summary of the trialtestimony included in the Appellate Division opinion: Plaintiff Rendine earned a degree in accounting in 1979 andthen worked as an

auditor and financial analyst with a bank for four years. In 1983 she accepteda position with defendant as assistant controller. Defendant Edward Pantzerwas the president and owner of the company and Michael Pantzer (Michael),his brother, was the executive vice-president. In 1985 they hired SteveWeinerman as controller; he was Rendine's immediate superior.

When defendant first interviewed Rendine, he asked her if she hadplans to marry and have children "within five years of being married." Rendineanswered that she "hoped to be married," but had no plans for children. Asassistant controller of residential properties, Rendine supervised "a staff ofaccountants for accounts receivable, accounts payable, security refund ... [and]payroll." There were about twenty employees at the central office in Tenafly,plus others who worked at the various properties. Rendine was a member of theexecutive committee, which met weekly and made "all the major decisions of

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the company." The other members of the committee were the defendantEdward Pantzer, Michael Pantzer, Weinerman, who was Michael's assistant,and Bill Bodger, head of acquisitions.

When Rendine began work, her first assignment was to revamp a six-month old computer system, verifying information about thousands of tenantsat numerous properties. She spent some three months visiting the properties inNew Jersey, Pennsylvania and Delaware, collecting the information, and thenentering it into the computer. She worked every evening until six or seven andsometimes until nine. Rendine also prepared a manual explaining theprocedure for entering information into the computer.

In 1984, after Rendine announced her engagement to marry, she saidthat defendant called her into his office and asked her to polish some silver forhim. "[H]e said that since I was getting married and probably going to havesilver once I was married, that it would be good practice for me to polish hissilver." Rendine politely declined. Defendant denied that this occurred.

With her November annual performance reviews, Rendine received afourteen-percent salary increase in 1984, fourteen percent in 1985, and elevenpercent in 1986. She also received Christmas bonuses for these years of $2500,$1500, and $2500. In January 1986 Michael wrote Rendine a letter, thankingher for doing a good job. Suzanne Rivera, one of the employees whom Rendinesupervised, corroborated her competence and ability, and her patience andfairness in dealing with those who worked under her.

Lorestani was hired as a staff accountant to assist Rendine in June1984. She had five years' experience in bookkeeping or accounting and sheearned an accounting degree in 1985. In her job interview, defendant asked herwhether she was married, and she said she was engaged. He also asked if sheplanned to have children. She answered that she "wasn't really thinking at thatpoint about children." Rivera, who was hired in June 1987, was also asked inher job interview about plans to have children.

Lorestani monitored the apartments occupied by defendant'semployees, met with Michael each month to review them, and assisted Rendinewith the preparation of financial reports. Rendine, who trained Lorestani,thought she was "a very good employee.... She executed all her functions well."Rivera corroborated Lorestani's competence and excellent job performance.Weinerman was also very happy with Lorestani's job performance. Five monthsafter she was hired, Lorestani, whose starting salary was $19,000 a year,received an eleven-percent increment. The following year, 1986, she againreceived an eleven-percent increment, and in 1987 she received a twelve-percent increment. She also received Christmas bonuses in the amounts of$500 in 1984, and $1000 in 1985 and 1986.

Lorestani's responsibilities increased during the time she worked fordefendant. She assumed responsibility for dealing with

the managers in the field and took over the cash reconciliations and money-market account activity on about twenty properties. She worked long hours,arriving early in the morning, frequently staying until 7 p.m., and also workingon weekends when needed.

Plaintiffs were "inundated" with work, including new properties, andRendine decided that a bookkeeper should be hired. After consultations withWeinerman and defendant, the bookkeeper position was created. Pam Gaetano



was hired in 1987; she worked under Lorestani, who trained her. Rendineevaluated Gaetano, and found her to be "an okay employee." With no math oraccounting background, Gaetano "continually had problems understanding ... abank reconciliation, doing anything that really had to do with math." Althoughboth Rendine and Lorestani "kept on trying to train her extensively," Rendinefelt that Gaetano was unable "to take on staff accountant responsibilities."

Another staff accountant, Dominic Battista, was hired in 1985 or 1986but he left after about a year. When Lorestani began working with defendant,she was assigned to clean the kitchen. However, when Battista was hired, she"noticed that he did not have kitchen duty. So, I talked to Mr. Michael Pantzerand I asked why that was, and he took me off of the kitchen duty instead ofputting Dominic on."

Before Battista was hired, Weinerman told Rendine that "he wanted tohire a male for that position, that they really would not consider a female at thattime." He told her that:

[I]t would be in the best interests of the company to look for a malebecause Bernadette and I had recently been married and we were of childbearing age and our, what do they call it, our biological clock was ticking to havechildren, our time was running out because we were getting older.

The issue of the gender of the new accountant was discussed at anexecutive committee meeting, where everyone except Rendine agreed withWeinerman's theory. Weinerman denied making this comment.

Rendine was married in December 1984 and purchased a home with asubstantial mortgage in October 1985. Her husband's salary was about the sameas hers. Both salaries were needed to carry the home. Lorestani was married inMay 1985, and purchased a home, with a mortgage, in November 1985. BothLorestani and her husband had substantial student loans to repay and weresupporting her husband's younger sister. Lorestani and her husband were bothearning the same salary; both incomes were needed for their support.

In late December 1986 or early January 1987 Lorestani told MichaelPantzer that she was pregnant. She told him that she planned to return to work,and that her sister would take care of her child. "He was very happy for me. Hecongratulated me." When asked when she would return, Lorestani answered infour or five weeks with a regular delivery, or six to eight weeks if she needed aCaesarean. Lorestani discussed her maternity leave many times with defendant,his brother, Michael, and Weinerman. She repeatedly told each that sheplanned to return to work when she was physically able. They each assured herthat her job would be available on return. Rendine also announced herpregnancy in January 1987 and defendant, Michael and Weinerman all"appeared to be happy for me." She advised them from the outset that sheplanned to take at least three months' maternity leave, and then return to work.On several occasions, she was assured that "your job will be waiting for you."Rendine testified about an executive committee meeting while she waspregnant, at which her colleagues said that she looked like a "beached salmon."However, defendant and Michael denied that they or anyone else made

any jokes or comments about pregnancy in general or about Rendine inparticular. Defendant said that he would not tolerate any such remarks, ordiscrimination in his company.

Dean Delianites, a CPA as of 1985, with four years' experience in public



accounting, was hired as commercial accounting manager in November 1986.Rendine saw him leave work early, at 4 p.m. every day, to attend law school.Rivera corroborated that Delianites left work early, adding that Delianites toldthe staff that he would make up the time "by working through his lunch hour,"but Rivera saw him studying law while eating at his desk.

Rendine's duties were divided between Delianites and Weinermanwhile she was on maternity leave. She had attempted to train Delianites but hewas "too busy" and uninterested. Rendine worked with residential buildings, anarea in which Delianites had no experience or training. Lorestani and Rendinetrained Gaetano to take over Lorestani's duties but Gaetano had difficultylearning the work.

Lorestani started her maternity leave on June 15, 1987, on the advice ofher doctor. This was two weeks earlier than planned because she developedtoxemia. On her last day of work, she talked to defendant "and he wished meluck, he said he hoped everything worked out fine and he gave me a hug and hetold me my job would be waiting for me."

Lorestani delivered by Caesarean on July 13, 1987. Her husband calledher office that day, and she called a few days later. Weinerman congratulatedher and told her to take as much time off as she needed and said her job wouldbe waiting. Michael also congratulated her, told her that a return to work in sixto eight weeks would not be a problem, and also said her job was waiting forher.

Weinerman called her at home the day she was discharged from thehospital, and asked her for a date of return. She told him it would be six to eightweeks, and "[h]e said fine and when I was ready, my job was there for me."Lorestani talked to someone in the office at least once a week during hermaternity leave. Weinerman always asked her when she would return, and shealways told him six to eight weeks.

In August, when eight weeks passed, Lorestani arranged anappointment with Weinerman to discuss her return. She had made her child-care arrangements, was excited about returning, and brought her baby with herfor the appointment with Weinerman. Weinerman "told me that things wererunning very smoothly and that there was no longer a place for me and he wasfiring me." Weinerman denied terminating Lorestani on this particular day;rather, when she called in early September to say she was ready to return, hetold her on the telephone that he had no job for her. However, Rivera sawLorestani that day at the office, arriving happy and showing off her new baby.When she left Weinerman's office, she approached Rivera; she was upset andcrying, and "she told me she had just been fired."

Meanwhile, Rendine's last day of work was July 24, 1987, and she gavebirth early, on July 26. About a week later, Weinerman called and told her thatthey were promoting Gaetano from bookkeeper to staff accountant. In August1987 Rendine received a memo from Michael, dated August 19, to alldefendant's personnel, advising that as of August 12 Delianites was promoted tothe position of assistant controller, and Gaetano was promoted to the positionof staff accountant. The memo also announced that Rendine had given birth toa baby girl, and Lorestani to a baby boy. "As soon as their maternity leaves areover, we enthusiastically welcome the return of both Candy and Bernadette tothe accounting department."

Rendine was shocked. In her conversation with Weinerman a weekbefore, he had not mentioned Delianites's promotion. She felt that her positionwith the company was endangered, since there was no need for two assistant



controllers. "I was being replaced and I had only been out of work for threeweeks." She immediately called Weinerman, who "said that they felt the need topromote these two people."

About a week later Rendine called the office "just to see how everythingwas going, if anybody needed me." She discovered that "Dean had taken overmy desk," including "access to all my personal belongings." She then calledMichael, who was "very cold." She was upset because she had always had a finerelationship with Michael, who attended her wedding with his wife.

In October 1987 Rendine met with Michael and Weinerman to discussher return; she was given a memo entitled "Candy's Responsibilities." She wastold that she would retain her title but would no longer have the responsibilitiesand authority she had before. Her new job was to work on special projects.However, she had already worked on the special projects listed, and theyrequired very little time. Rendine's new job duties were "practically nothing"compared to "the responsibilities I had before I went on maternity leave" andwould have taken her about three days a month to complete.

Rendine returned to work on November 11, 1987, after an absence ofthirteen or fourteen weeks. Her desk was "isolated from the other employees."It was "right next to the men's bathroom," noisy and filthy dirty. She spent thefirst day cleaning it. There were no office supplies and no access to thecomputer. Her "personal belongings were scattered all over the office." No workwas assigned to her the first day.

Defendant, who had expressed appreciation for her work just a monthbefore she left, was now very cold toward her, "and I felt like a stranger."Michael, with whom

she had worked closely and had a "wonderful working relationship," was alsocold. Weinerman, with whom she had had "a friendly, amicable workingrelationship," was now "very short," talking to her only when necessary. Thepeople in the office whom Rendine had supervised, and whose questions shespent most of her day answering, "wouldn't even talk to me."

Rivera corroborated Rendine's account of her return to work. Accordingto Rivera, Rendine had more knowledge about the residential accountingfunctions, but Weinerman and Delianites told the staff that Delianites would behandling their questions. Delianites admitted that in November 1987, whenRendine returned from maternity leave, he was still learning her job.Nevertheless, Weinerman reprimanded Rivera and two others for taking theirquestions to Rendine rather than Delianites.

According to Weinerman, Delianites complained about Rendine'ssocializing and her job performance. Once, Rendine went onto the computerwithout checking first, "and it caused a minor problem." On another occasion,when Delianites asked her to correct some journal entries that she had workedon, "she told him she was too busy." Rendine explained that routine officeprocedure, to return journal entries to the person who wrote them, to review foraccuracy, had not been followed.

Early the following week, Weinerman called Rendine into his office. Hetold her that he had complaints about her, that she had a bad attitude, and thatshe had better change. He told her that "things ran smoothly when I wasn'tthere" and that "people were complaining that I was socializing." He talked forfive minutes, refusing to listen to anything Rendine had to say. Rendinebecame angry, because "people had a bad attitude toward me." Weinerman"kept on yelling." Rendine said "I can't take this any more," and "this is not



fair." She got up and walked out. Weinerman "told me that if I left, that wouldbe it." When Rendine asked, "does this mean you're firing

me?" Weinerman answered "yes," and discharged her.

Weinerman basically corroborated Rendine's account of their verbalencounter, and asserted that he terminated her because she was insubordinate.Defendant, Michael and Weinerman denied any prior discussion, plans orintent to terminate Rendine. Weinerman and Michael denied that their attitudetoward Rendine was cold when she returned from her leave, and denied tellingstaff not to speak with her.

Defendant, Michael and Weinerman all considered Rendine a valuableemployee. However, they said she lacked supervisory experience; herinterpersonal skills were mediocre; she had difficulty dealing with people; shewas unnecessarily "demanding and short with her people," and had conflictswith them.

According to Weinerman, when Delianites took over Rendine's job, thesituation in the office improved. Delianites was capable of handling Rendine'sresponsibilities and did so effectively. "People started working more closelytogether without problems.... [A] very good working rapport developed in theoffice. Everybody respected Dean" Delianites.

However, on cross-examination Weinerman admitted that in his lastevaluation of Rendine, in 1986, he rated her above average in effectiveness indealing with others, and in all of the other specific review factors. In contrast,Delianites was not rated any higher than Rendine, and was rated lower than herin leadership. Rivera, who worked under Delianites for four months, thoughtthat "he did not have enough knowledge to run the department well," and she"had to train him" in her field, security deposit refunds.

Weinerman admitted that he agreed to keep Rendine's job open for her,but never "discussed a time frame," and never promised her that her responsibilities would be the same. According to Weinerman,Rendine told

him that she was having difficulty finding child care.

Defendant and Michael Pantzer said that the company had a maternityleave policy providing twenty-eight days with pay. The policy was "flexibleenough" to allow for a longer leave, but it would be without pay. A maternityleave "would never be open-ended." The employee must advise the company ofthe date of her return. Defendant was "certain that either Michael Pantzer andSteve Weinerman and or myself made it clear to Candy that she was going to geta paid four weeks maternity leave and we expected her to be back at the end ofthat." Rendine denied that she was ever told about this policy.

According to Weinerman, if both Rendine and Lorestani had returnedto work within thirty days, they would have been given their prior jobs.However, Weinerman did not intend to demote Delianites and Gaetano.Weinerman explained that since defendant acquired four commercial propertiesin 1987 and wanted "to bring all of our accounting and management in-house,"he determined to create a second assistant controller position, with oneassistant responsible for commercial and the other for residential. Rendine andDelianites would be the two assistants. However, Weinerman admitted that henever told Rendine about this plan; he only told her that she would be workingon "special projects." Weinerman originally testified that his plan was neverimplemented because Rendine was terminated. On cross-examination, he said



that he abandoned this plan before his meeting with her in October.

Weinerman admitted that he had supervised Delianites elsewherebefore coming to work for defendant, that they had stayed in touch, that hebrought Delianites into the company, and wanted a chance to promote him. Healso admitted that he kept Delianites's promotion a secret from Rendine, thatDelianites and Gaetano were the only two people who worked for defendantwho were promoted before their annual performance reviews, and that Rendine's jobfunctions were so small when she returned from leave

that "it was not a hardship" for the company to discharge her.

As to Lorestani, Weinerman admitted promising her that her job wouldbe kept open but never mentioned any particular period of time, and neverpromised that it would be kept open indefinitely. Weinerman complained thatLorestani would not give a definite date for her return to work, since she was"still working on" child care.

Weinerman explained that Gaetano was doing both Lorestani'saccounting job and her own bookkeeping job, so that there was no need forLorestani to return. However, he admitted that he hired a new bookkeeper,Lynn Rochford, just days after he discharged Lorestani. Weinerman ratedLorestani higher than Gaetano in their performance reviews, explaining thatthis was only because Lorestani had more experience.

However, Rivera, who helped train Gaetano, found that she haddifficulty with simple bookkeeping and accounting concepts. Gaetano"constantly needed assistance ... to do her job." Gaetano had difficulty dealingwith the property managers, and Rivera frequently took their calls andcorrected Gaetano's mistakes. Rochford also criticized Gaetano's jobperformance. Weinerman nevertheless concluded that Gaetano "was as good orbetter as the staff accountant" than Lorestani.

Defendant claimed Rendine was an insubordinate and unsuitableemployee. Defendant claimed that Lorestani was not reinstated because herservices were not needed, failed to inform defendant of the time of her plannedreturn, delayed coming back to work, and the operation ran more smoothlywithout her because of "bad relations with her coworkers."

The defense contended, through defendant Edward Pantzer andWeinerman, that its unwritten policy fixed the length of paid maternity leave atfour weeks (plus sick and vacation days) but that it did not limit the allowablelength of unpaid leave. In

contrast, defendant gave no paid leave for disability beyond sick and vacationdays. Weinerman testified that exceptions for unpaid maternity leave were"invariably granted," if an employee provided defendant with a return date andkept him advised of developments.

Defendant produced as witnesses four of his resident managers andthree of his leasing agents who took maternity leaves of absence andsuccessfully returned to their positions with defendant. Although three tooktheir maternity leaves after defendant was served with the summons andcomplaint in July 1989, the other four took their leaves earlier. All seven ofthese women took no more than six weeks leave, consisting of thirty days withpay plus accrued vacation or personal leave, and all seven worked at the sites ofdefendant's properties; none worked in the central office. Jeanette Croce, anassistant controller, who did not work in the central office, was allowed to take



a maternity leave of eleven weeks in 1991, which included five weeks of unpaidleave. In contrast, plaintiffs' witness, Rivera, took a five-month maternity leavein 1988. Upon her return she found she had much less responsibility thanbefore, and she resigned after two weeks.

Defendant also admitted that he terminated his personal secretary,Kathy Rega, in part because she was unable to work after 5 p.m. Defendantexplained that Rega could not work later because she had a part-time job in theevenings. However, at a prior deposition, defendant testified that Rega wasunable to work after 5 p.m. because of her family obligations. Defendant'scurrent personal secretary, Mary Beth Chvisuk, had one child when he hiredher, and discovered she was pregnant some sixty days later. Nevertheless, hewanted her to return to work after a maternity leave. On cross-examination, headmitted that this occurred after he was served with the summons andcomplaint in the present case.

The defendant company had four employees in the past few years whowere injured or

ill; defendant held their jobs open for them, one as long as six months, anddid not require them to specify their dates of return. Michael admitted that thedifference between defendant's policies for maternity leave and sick leave wasthat those out on sick leave were not required to come back at a specific timebut those on maternity leave were. Also, the employees who were allowedextended sick leave were treated differently from Rendine, in that they wereallowed to return to their same positions, with their same responsibilities andauthority.

Rendine applied for unemployment compensation benefits. Defendantcontested her application. Unrepresented by counsel, she attended a shorthearing on her claim. She did not raise her discrimination claim at that hearingbecause "I didn't think that that was the place to discuss it." The hearing dealtonly with her dispute with Weinerman resulting in her termination. Thedecision was adverse to Rendine, and she took an administrative appeal butlost. She did not appeal further because it would have cost her more than thevalue of the six weeks of benefits at stake.

Michael refused to give Rendine a reference because she wasterminated. Nevertheless, she began looking for a new accounting positionimmediately after her discharge. She described an extensive job search,consisting of contacting employment agencies, sending out thirty resumes in1987 and one hundred in 1988, making telephone calls, responding to want ads,and using personal contacts. She was looking for any reasonable salary,including one lower than her earnings from defendant. In 1988 she becamepregnant again and stopped looking for work in October of that year. Sheresumed her job search in January 1989 sending out sixty or seventy resumes,contacting employment agencies, and reviewing want ads. She would haveaccepted around $25,000 per year, down from the $38,000 she had earnedwith defendant. Finally, in February 1991, she stopped looking for work,frustrated that she could not find anything. The employment agencies "said theeconomy was bad, there

weren't jobs." Rendine could not afford to accept the minimum wage,because of her child care and other expenses. She intended to resume her jobsearch when her children, ages four-and-a-half and three at the time of trial,went to school.

Rendine described the hardship of losing fifty percent of her family'sincome. She and her husband had to refinance their mortgage with an



adjustable rate. They could no longer pay their bills. Their social life,entertainment, vacations and clothing purchases were adversely affected. Theydepleted their savings, and borrowed money from Rendine's parents. Rendinesaid that she changed from "laid back" and "relaxed" to "uptight." She wasalways worried about paying bills. She and her husband constantly had fightsabout money. She was sometimes unable to sleep, and had nightmares abouther employment experience. She was frustrated, angry and depressed. Rendinelost her self-confidence and self-esteem, and was unable to face her friends.Even at the time of trial, she was still "having a very difficult time just copingwith the situation."

Weinerman provided Lorestani with an "okay" but not "great" letter ofrecommendation and she immediately began looking for work after hertermination. She registered with employment agencies, sent out about twelveresumes each month, and looked at the want ads every day. In 1987 she hadthree or four interviews, but was not offered any work. She became pregnantagain in late 1987, but continued to look for work until May 1988. She resumedher job search about two months after her delivery; she again had a Caesarean,and gave birth to twins. Later in 1988 she was hospitalized and unable to lookfor work. She did not claim lost earnings in this case for her periods ofdisability.

In 1990 she turned down a job offer for $7 per hour. Later in 1990 sheaccepted a position as a part-time bookkeeper with a law firm, for $13,000 ayear. However, she encountered difficulties there with a hostile co-worker andwas forced to resign. In late

1991 Lorestani began working thirty hours per week for $4.50 an hour, andcontinued at that job through trial.

Lorestani's husband took a second job as a waiter, Monday throughFriday nights, and Saturday and Sunday. He went directly from his full-timejob, as an engineer, to the second job, arriving home after midnight. Lorestani"felt like I was a single mother" but "was very thankful that he was willing towork that hard." Lorestani's family members purchased clothes and shoes forthe children. She was embarrassed and humiliated, "but we needed it." Shegained a lot of weight and lost her self-confidence. Before she lost her job, sheand her husband frequently entertained in their home. She explained: "After Iwas fired ... I was just very bitter and very angry and I resented our friends.They all worked and they had kids and they weren't fired.... I became ... not anice person to be around...."

The jury obviously resolved the conflicting evidence about whetherdefendant's sick and maternity leave and employment policy wasdiscriminatorily administered in plaintiffs' favor.

[ 276 N.J. Super. 407-20.]

II

Both before trial, and in his motion for a new trial, defendantcontended that prejudicial error had been committed because of thedenial of his motion to sever the claims of the two plaintiffs. Indenying defendant's new-trial motion, the trial court rejected theclaim that the joint trial had prejudiced defendant, observing thatexcept for two witnesses, all of the other witnesses' testimony hadbeen relevant to the claims of both plaintiffs and, accordingly, the




jury would have

heard their testimony whether the trials had been joint or separate. TheAppellate Division agreed with the trial court's conclusion that defendant hadnot demonstrated that joinder of the claims had resulted in undue prejudice,noting that the trial court had carefully admonished the jury "that each plaintiffhad a separate complaint," which the jury must consider "on its own merits."276 N.J. Super. at 425. Before us, defendant acknowledges that if the cases hadbeen tried separately each plaintiff would have attempted to offer evidence ofthe circumstances surrounding the other plaintiff's termination, althoughcontending that such evidence would not necessarily have been admissible.Essentially, defendant argues that irrespective of the likelihood that separatetrials would result in virtually the same evidence being twice presented to twojuries, the prejudice that resulted from a joint trial of plaintiffs' claims wasirremediable, denying defendant a fair trial. Rule 4:29-1(a), which authorizes joinder of claims asserted by multipleparties, provides in part: [A]ll persons may join in one action as plaintiffs or be joined as defendantsjointly, severally, in the alternative, or otherwise, if the right to relief assertedby the plaintiffs or against the defendants arises out of or in respect of the sametransaction, occurrence, or series of transactions or occurrences and involvesany question of law or fact common to all of them.

The Rule's objective has been described as intending

(1) to foster the virtually unrestricted joinder of persons interested in anycapacity in the same claim, whether as plaintiffs or

defendants, and (2) to license the joinder of multiple claims, by or againstmultiple parties, where the claims have the requisite common origin and thenecessary common issue of law or fact.

[Morris M. Schnitzer & Julius Wildstein, New Jersey Rules Service 1954to 1967 AIV-1037 (special reprint ed. 1982).]

Defendant does not appear to challenge the trial court's conclusion thatplaintiffs' claims satisfy the Rule's requirement of a common origin, and theinvolvement of common issues of law and fact. Both plaintiffs informeddefendant's management that they were pregnant at approximately the sametime, Lorestani in late December 1986 or early January 1987, and Rendine inJanuary 1987. Their maternity leaves overlapped, Lorestani remaining at homefrom June 15 to late August 1987, and Rendine's leave extending from July 24to November 11, 1987. Rendine was terminated approximately one week afterreturning to work; Lorestani was terminated in early September 1987,according to her testimony on the day she visited the office to makearrangements to return to work. Both plaintiffs alleged that they had beenterminated because defendant had discriminated against female employees whobecame pregnant. Defendant contends that the trial court should have granted his motion tosever to avoid the risk of prejudice, relying on Rule 4:29-2 and Rule 4:38-2(a).We do not underestimate the concern that the joint trial of similar claimsasserted by several parties against the same defendant can present a risk thatthe jury might use the evidence cumulatively, reaching

conclusions from the aggregate of the evidence that it might not have reachedin assessing the claims separately. We have noted that potential for prejudice inconsidering the question of severance in the context of criminal prosecutionsinvolving multiple offenses allegedly committed by one defendant. See State v.Pitts, 116 N.J. 580, 600-03 (1989). As with civil joinder, our resolution of




severance issues in criminal trials is informed by considering whether"assuming the charges were tried separately, evidence of the offenses sought tobe severed would be admissible under [N.J.R.E. 404(b)] in the trial of theremaining charges." Id. at 601-02. Both the trial court and the Appellate Division addressed the severance issuepreliminarily by considering whether severance would result in excludingevidence relating to the severed claim, and both courts concluded that virtuallythe same evidence would have been proffered whether the cases had been triedseparately or jointly. 276 N.J. Super. at 425, 428. As noted by the AppellateDivision, a number of federal courts have ruled that testimony by employeesabout discriminatory actions by the defendant-employer similar to thosealleged by the plaintiff is admissible to prove the employer's motive or intent todiscriminate. See Spulak v. K Mart Corp., 894 F.2d 1150, 1156 (10th Cir. 1990);Estes v. Dick Smith Ford, Inc., 856 F.2d 1097, 1102-05 (8th Cir. 1988); Conwayv. Electro Switch Corp., 825 F.2d 593, 597-98 (1st Cir. 1987); Hunter v. Allis-Chalmers Corp., 797 F.2d 1417, 1423-24 (7th Cir. 1986); Stumph v. Thomas &Skinner,

Inc., 770 F.2d 93, 97 (7th Cir. 1985); Phillips v. Smalley Maintenance Servs.,Inc., 711 F.2d 1524, 1532 (11th Cir. 1983); Morris v. Washington Metro. AreaTransit Auth., 702 F.2d 1037, 1045-46 (D.C. Cir. 1983). Defendant relies on federal court decisions that have excluded testimony ofother employees claiming discriminatory treatment analogous to that assertedby the plaintiff. Schrand v. Federal Pac. Elec. Co., 851 F.2d 152, 155-56 (6th Cir.1988); Haskell v. Kaman Corp., 743 F.2d 113, 120-22 (2d Cir. 1984);Moorhouse v. Boeing Co., 501 F. Supp. 390, 393-94 (E.D. Pa.), aff'd, 639 F.2d774 (3d Cir. 1980). We are in accord with the Appellate Division's observationsthat the testimony in Haskell and Schrand was held inadmissible because itlacked relevance. 276 N.J. Super. at 427. In Haskell, testimony of formerofficers of the defendant was offered to prove a pattern and practice of agediscrimination, but was held inadmissible because the evidence was statisticallyinsignificant. 743 F. 2d at 121. In Schrand, testimony alleging age discriminationby two officers of the defendant was held to be irrelevant because they hadworked in offices distant from the plaintiff and under different managers. 851 F.2d at 156. In Moorhouse, the trial court exercised its discretion to exclude age-discrimination testimony by five former employees of the defendant, who wereplaintiffs in separate actions, on the grounds of prejudice and possibleconfusion, noting that had the cases been consolidated the trial would haveinvolved six plaintiffs and sixteen individual

defendants, as well as the corporate defendant. 501 F. Supp. at 392. Prejudice to a defendant resulting from the joint trial of claims by multipleplaintiffs cannot easily be quantified, particularly if separate trials would notmaterially alter the evidence offered to support and defeat the claims.Accordingly, our Rules vest the determination whether or not to sever claims tothe sound exercise of a trial court's discretion. See R. 4:38-2(a). Other courts,confronted with the issue, have determined that the advantages of a joint trialoutweigh the risk of undue prejudice. Duke v. Uniroyal Inc., 928 F.2d 1413,1420-21 (4th Cir.), cert. denied, 502 U.S. 963, 112 S. Ct. 429, 116 L. Ed.2d 449(1991); Mosley v. General Motors Corp., 497 F.2d 1330, 1334 (8th Cir. 1974);Blesedell v. Mobil Oil Co., 708 F. Supp. 1408, 1422 (S.D.N.Y. 1989); cf.Hammons v. Adams, 786 F.2d 1253, 1253 (5th Cir. 1986) (finding no abuse ofdiscretion in serving claims of three plaintiffs involving different incidents ofdiscrimination as well as different pretexts for discharge). We are fully in accord with the Appellate Division's conclusion that the trialcourt's determination to deny severance was a reasonable exercise of thatcourt's discretion. 276 N.J. Super. at 431.

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III

Defendant contends that errors in the jury charge, although notobjected to at trial, are sufficiently prejudicial as to constitute plainerror, requiring reversal of the judgments. See R. 2:10-2. Specifically,defendant argues that the jury charge misstated the standard ofillegality by which plaintiffs' claims were to be evaluated; that thetrial court's instructions erroneously shifted the burden of proof of"pretext" from plaintiffs to defendant; and that the jury chargeexplaining the mixed motives defense was erroneous. We havecarefully reviewed the trial court's instructions to the jury, and arepersuaded by the Appellate Division's careful analysis that the jurycharge considered as a whole constitutes a clear, understandable,and correct explanation of the applicable legal principles. 276N.J. Super. at 431-38.

IV

Defendant contends that the portion of the jury's compensatory-damage award that represents emotional-distress damages toplaintiffs is so lacking in evidential support as to be excessive as amatter of law. Defendant acknowledges that the jury's allocation ofcompensatory damages between economic loss and emotional-distress damages cannot be ascertained. Nevertheless, the AppellateDivision opinion assumed that Rendine's award includedapproximately $105,000 in emotional

distress damages, and Lorestani's award approximately $125,000 in suchdamages, based on the difference between the jury's total compensatory damageawards and the claimed economic damages of each plaintiff. 276 N.J. Super. at439. Defendant contends that the absence of expert testimony and otherindependent evidence corroborating the claimed emotional distress damagesdemonstrates the excessiveness of the jury award. The Appellate Divisionspecifically rejected the contention that expert testimony or independentcorroboration was a prerequisite to a pain and suffering award in adiscrimination case, characterizing defendant's assertions as unsupported. 276N.J. Super. at 442; see also Bolden v. Southeastern Pa. Transp. Auth., 21 F.3d29, 34 (3d Cir. 1994) (agreeing "that the approach taken by our sister circuits[that] have dispensed with a requirement of expert testimony to corroborate aclaim for emotional distress is more consistent with the broad remunerativepurpose of the civil rights laws"). We also note that a 1990 amendment to the LAD, L. 1990, c. 12, § 51,specifically authorized recovery of emotional-distress damages, and theaccompanying Committee Statement noted that the amendment emphasizedthat the LAD is to be liberally construed so that all common-law remedies areavailable to persons protected by the LAD. Assembly Judiciary, Law & PublicSafety Committee, Statement to Bills Nos. 2872, 2118 & 2228 (1990) (reprintedat N.J.S.A. 10:5-3).

Essentially, defendant contends that the trial court's failure to find theemotional-distress-damage award excessive was an abuse of discretion.However, the general principle that trial courts should not interfere with jury-damage awards unless so disproportionate to the injury as to shock theconscience, Baxter v. Fairmont Food Co., 74 N.J. 588, 596-97 (1977), applies






with equal force to awards of emotional distress damages in LAD cases. We findunassailable the Appellate Division's conclusion that the trial court's evaluationof the compensatory damage award should not be disturbed: Although defendant's discriminatory treatment did not cause plaintiffs torelocate or suffer illness or homelessness, both plaintiffs described in detailtheir inconvenience and economic loss, physical and emotional stress, anxietyin searching for reemployment, uncertainty, career and family disruption andother adjustment problems. Plaintiffs' problems seem precisely the type forwhich the Legislature intended compensation.

. . . The trial judge here was not shocked by compensatory awards; hedid not consider them excessive in view of the evidence. His determination aswell as that of the jury, are entitled to considerable appellate deference.

[276 N.J. Super. at 440-41 (citations omitted).]

V

Defendant asserts that the trial court erred in submitting the issueof punitive damages to the jury, contending that to sustain an awardof punitive damages on this record would be

tantamount to adopting a rule that punitive damages may be awarded inevery case in which a violation of the LAD has been established. Defendantobserves that "[t]he worst interpretation that can be placed upon defendant'sactions is that he desired to avoid disruptions to his business caused byabsences due to pregnancy, particularly in positions that were critical to thedaily functioning of the company," arguing that such conduct does not rise tothe level of willfulness, malice, or reckless disregard for consequences requiredto sustain an award of punitive damages. Our case law has established two distinct conditions that must be met asprerequisites to the award of punitive damages in a discrimination suit underthe LAD. The first was recently set forth in Lehmann v. Toys 'R' Us, Inc., 132N.J. 587 (1993), to distinguish punitive damage awards from our holding thatin the context of a sexual harassment claim an employer will be liable incompensatory damages for a supervisor's sexual harassment of anotheremployee if the employer "contributed to the harm through its negligence,intent, or apparent authorization of the harassing conduct . . . [or] if theemployer negligently or recklessly failed to have an explicit policy that banssexual harassment." Id. at 624. However, with respect to punitive damageawards, we held that "a greater threshold than mere negligence should beapplied to measure employer liability. Punitive damages are to be awarded'when the wrongdoer's conduct is especially egregious.' Hence, the employershould be liable

for punitive damages only in the event of actual participation by uppermanagement or willful indifference." Id. at 624-25 (citation omitted). In addition to the requirement of actual participation in or willful indifferenceto the wrongful conduct on the part of upper management, we also impose arequirement of proof that the offending conduct be "especially egregious."Leimgruber v. Claridge Assocs., 73 N.J. 450, 454 (1977). Our cases haveattempted to describe conduct that is sufficiently egregious to warrant apunitive-damage award. In Nappe v. Anschelewitz, Barr, Ansell & Bonello, 97N.J. 37 (1984), we observed: To warrant a punitive award, the defendant's conduct must have beenwantonly reckless or malicious. There must be an intentional wrongdoing in








the sense of an "evil-minded act" or an act accompanied by a wanton and wilfuldisregard of the rights of another. . . . The key to the right to punitive damagesis the wrongfulness of the intentional act.

. . . Moreover, it is especially fitting to allow punitive damages foractions such as legal fraud, since intent rather than mere negligence is therequisite state of mind.

[Id. at 49-50 (citations omitted).]

Similarly, we noted in Berg v. Reaction Motors Division, 37 N.J. 396,414 (1962): "Our cases indicate that the requirement [of willfulnessor wantonness] may be satisfied upon a showing that there has beena deliberate act or omission with knowledge of a high degree ofprobability of harm and reckless indifference to consequences." InHerman v. Sunshine Chemical Specialties, Inc., 133 N.J. 329, 337(1993), we stated that proof of actual malice

was "[a] condition precedent to a punitive-damages award." We also notethat the Third Circuit in reviewing our LAD and punitive-damages decisionshas expressed its certainty that this Court "would in some cases find thatemployment discrimination was wantonly reckless or malicious conductreflecting intentional wrongdoing in the sense of an evil-minded act or adisregard of the rights of another, the type of conduct [that] it has held mayjustify an award of punitive damages." Levinson v. Prentice-Hall, Inc., 868 F.2d558, 562 (1989); see also Weiss v. Parker Hannifan Corp., 747 F. Supp. 1118,1135 (D.N.J. 1990) ("Under New Jersey law, the exceptional nature of a givencase and the wanton or malicious nature of the defendant's conduct arequestions for the finder of fact."). As the Appellate Division noted, the trial court's instruction to the jury,consistent with our decisions, used the terms "actual malice . . . intentionalwrongdoing, and evil minded act . . . wanton and willful disregard of the rightsof others" in characterizing the findings required of the jury as a condition toimposing a punitive damage award. 276 N.J. Super. at 444. In addition, the trialcourt "carefully charged the jury that punitive damages could not be assessedagainst defendant for the acts of his employees, unless defendant himselfauthorized or directed them, or at least agreed with and acquiesced to them."Ibid. We have no doubt that the proofs were sufficient to sustain a punitive-damages award. Defendant argues that at worst the

evidence portrays a company desirous of avoiding the inconvenience thatmight result from female members of its executive staff assuming the burden ofparenting a new-born child. As the Appellate Division opinion explains indetail, however, the evidence also would have permitted the jury to concludethat defendant's decision to terminate plaintiffs' employment was accompaniedby conduct that was malicious and intentionally wrongful. Id. at 444-46.Despite unqualified promises to plaintiffs that their positions would be availableon their return from disability leave, both plaintiffs were discharged within amatter of days after they had prepared to return to work. Other employees werepromoted to fill their positions while plaintiffs were on leave. Moreover, theAppellate Division observed that "[t]here was ample evidence for the jury toconclude that the dismissal of Rendine for insubordination was intentionallyand maliciously contrived." Id. at 445. Our review of the record firmly supportsthat inference, the evidence persuasively suggesting that the carefullyorchestrated steps that prompted Rendine's confrontation with Weinerman and








her resultant dismissal was developed with defendant's full knowledge,participation, and authorization. Similarly, the jury could have concluded thatdefendant never had intended to permit Lorestani to return to work, and thatthe expressions of concern for her well being during her pregnancy were part ofa strategy designed to facilitate her discharge without consequence todefendant.

Significant evidence of malice and reckless misconduct permeated the record.Plaintiffs offered substantial proof not only that they had been dischargedbecause they had become pregnant and bore children, but that defendant neverhad intended that they return to work after their disability leave and, throughhis subordinates, had embarked on a course of conduct designed to misleadplaintiffs and other company employees into believing that the company'smotives and intentions were honorable and lawful. We agree with the AppellateDivision's conclusion that "[t]he jury had ample evidence to support itsdetermination that the discrimination against both plaintiffs was not onlyintentional wrongdoing but also malicious or 'evil-minded.'" Id. at 446.

VI

Finally, we address an issue that heretofore has evaded our reviewbut that has generated a veritable deluge of reported federal courtopinions including two relatively recent United States Supreme Courtdecisions, as well as a generous outpouring of legal commentary. Thequestion concerns the calculation of a "reasonable attorney's fee,"payable under fee-shifting statutes such as the LAD, see N.J.S.A.10:5-27.1, to the prevailing party. Specifically, we consider whethercalculation of a reasonable attorney's fee under fee-shifting statutesshould be limited by the "lodestar" fee--determined by multiplyingthe number of hours

reasonably expended by the prevailing party's attorneys during the litigationby the attorneys' reasonable hourly rate--or whether a trial court properly mayenhance the lodestar fee in cases in which the prevailing party's attorney's feearrangement was predominantly contingent on a successful result, to take intoaccount the contingent nature of the attorney's compensation agreement indetermining the statutory "reasonable attorney's fee" to be paid to theprevailing party. In addressing the issue, our primary goals are to arrive at arule that is faithful to the Legislature's objective in enacting fee-shiftingprovisions, while at the same time sharply discouraging collateral litigation of"reasonable fee" issues under fee-shifting statutes by setting forth standardsthat inform the exercise of discretion by trial courts called on to determine suchfees. Our expectation is that future fee determinations by trial courts will bedisturbed only on the rarest occasions, and then only because of a clear abuse ofdiscretion.

A

We first set forth the facts relevant to the trial court's award ofcounsel fees. In February 1988, plaintiffs entered into a retaineragreement with their attorney, Elliot Baumgart. The agreementprovided for a fee measured by the greater of (1) hourly billings atthe rate of seventy-five dollars for Baumgart and sixty-two dollarsand fifty cents for his associate, Ira Weiner (which amounted to fiftypercent of Baumgart's and Weiner's regular billing rates), plus

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twenty-five percent of

plaintiffs' recovery or (2) the amount of attorneys fees awarded by the courtpursuant to the fee-shifting provisions of the LAD. (Baumgart subsequentlymerged his firm with Rabner, Allcorn and Widmark, which later becameRabner, Allcorn and Meislik, the firm that represented plaintiffs at trial.) Theagreement required plaintiffs to pay a nonrefundable retainer of five thousanddollars, and to reimburse counsel for disbursements pursuant to periodicinvoices. According to the post-trial certification of plaintiffs' counsel, after theretainer had been applied to the reimbursement of counsel's initialdisbursements, plaintiffs were able to pay only an additional $2,750, which wasapplied toward counsel's additional out-of-pocket expenses. According tocounsel's certification, if plaintiffs had not prevailed in the litigation they wouldundoubtedly have been unable to pay their attorneys' fees and disbursements asrequired by the agreement. The certification suggests the probability that ifcounsel had attempted to collect the unpaid fees and disbursements plaintiffswould have sought the protection of the Bankruptcy Act. Nevertheless, counselelected to continue the representation "on what had in reality become acompletely contingent basis." The trial court agreed, characterizing counsel'sarrangement with plaintiffs as "if not by design but certainly [as a matter of]practicality, on a contingent fee basis." In support of their application for counsel fees, plaintiffs' counsel certifiedthat after eliminating 38.95 hours of duplicative or unproductive time, theirtotal hours expended

on the litigation was 646.65, which when multiplied by the reasonable hourlyrates of the participating attorneys resulted in a "lodestar" fee of $114,334.25.Counsel also sought a fee of $28,634 for postjudgment services, as well asreimbursement for out-of-pocket disbursements incurred before and afterjudgment. To support the reasonableness of their lodestar fee, plaintiffs' counselsubmitted certifications by several lawyers in their own firm attesting that thehourly rates used to calculate the lodestar were consistent with the standardhourly rates for the participating lawyers. In addition, plaintiffs' counselsubmitted certifications from three experienced employment-law practitionersfrom other law firms who had provided estimates of the hours required tolitigate a plaintiff's employment-discrimination case, and the estimates eitherexceeded or approximated the hours expended by plaintiffs' counsel. Thoseunaffiliated lawyers also certified that the hourly rates billed by the attorneysthat had worked on the litigation appeared to be reasonable and consistent withrates charged by lawyers of comparable seniority and experience. Althoughdefendant did not specifically challenge the reasonableness of the hourly ratesused to calculate plaintiffs' counsel's lodestar fee, defendant contended that thehours expended, especially those devoted to pretrial discovery and preparation,were excessive and should be reduced significantly. The trial court concluded,however, that the total number of hours expended by plaintiffs' counsel wasreasonable, as were the

hourly rates, which resulted in the trial court's acceptance of the lodestar feeof $114,334.25. The court also found reasonable counsel's prejudgmentdisbursements of $11,861.25. In considering whether the award of a "reasonable attorney's fee" under theLAD warranted enhancement of plaintiffs' counsel's lodestar fee to reflect theessentially contingent nature of the counsel-fee arrangement, the trial courtobserved that the Rules of Professional Conduct (RPC) required considerationof several factors in determining a reasonable fee, one of which is "whether thefee is fixed or contingent." RPC 1.5(a)(8). Concluding that plaintiffs' feeagreement with counsel had evolved into a predominantly contingent-fee



arrangement because of plaintiffs' limited resources, the court characterized thefee arrangement as one that "qualifies for possible enhancement." The trialcourt relied initially on Justice O'Connor's concurring opinion in Pennsylvaniav. Delaware Valley Citizens' Council for Clean Air, 483 U.S. 711, 107 S. Ct. 3078,97 L. Ed.2d 585 (1987), (Delaware Valley II) (four-one-four decision), which itrecognized as the "holding" of the case. See Fadhl v. City & County of SanFrancisco, 859 F.2d 649, 650 n.1 (9th Cir. 1988) ("Justice O'Connor'sconcurring opinion constitutes the Court's holding in the case."). The trial courtadopted two conditions for lodestar-fee enhancement set forth in JusticeO'Connor's concurrence. First, "that no enhancement for risk is appropriateunless the applicant can establish that without an adjustment for risk theprevailing party 'would have faced substantial

difficulties in finding counsel in the local or other relevant market.'" Id. at733, 107 S. Ct. at 3091, 97 L. Ed. 2d at 603 (quoting plurality opinion, 483 U.S.at 731, 107 S. Ct. at 3089, 97 L. Ed. 2d at 601. Second, "the fee applicant bearsthe burden of proving the degree to which the relevant market compensates forcontingency." Id. at 733, 107 S. Ct. at 3090-91, 97 L. Ed. 2d at 603. In addition,the trial court adopted Justice O'Connor's observation that "compensation forcontingency must be based on the difference in market treatment of contingentfee cases as a class, rather than on an assessment of the 'riskiness' of anyparticular case." Id. at 731, 107 S. Ct. at 3089-90, 97 L. Ed. 2d at 601. Based onthose criteria, the trial court determined that plaintiffs had established theirentitlement to enhancement of the lodestar fee. In reaching that conclusion, the trial court referred to the affidavit of plaintiffLorestani that stated that plaintiffs had telephoned ten or twelve attorneys andhad met with two or three law firms, all of whom were either not interested inrepresenting them, not qualified, or too expensive. One firm requested aretainer of $30,000. In addition, the trial court favorably referred to thecertifications of three attorneys in large and mid-size law firms withresponsibility for determining whether their firm should assume representationof plaintiffs in employment-discrimination cases on a contingent-fee basis.Those attorneys certified that their firms rarely accept such contingent-feecases, and then only if the likelihood of proving

liability is high, the potential damage recovery is substantial, and the firm cananticipate a fee at the conclusion of the litigation that would approximate two totwo-and-one-half times the fee payable based on the hours expendedmultiplied by the regular hourly rates of the participating lawyers. One suchattorney certified that his firm has not been accepting any plaintiff-employmentdiscrimination cases on a contingent-fee basis, and expressed the belief thatmost qualified and experienced attorneys in the field had a similar policy. Heexpressed the view that attorneys who successfully litigate such cases on acontingent-fee basis should receive enhanced compensation. Based on plaintiffLorestani's affidavit concerning plaintiffs' difficulty in finding counsel, theaffidavits of the three unaffiliated attorneys attesting to the need for contingent-fee enhancement, and the affidavit of plaintiffs' retained expert, the trial courtdetermined that the criteria set forth in Justice O'Connor's concurrence inDelaware Valley II had been satisfied. Accordingly, the trial court applied amultiplier of 2.0 to the lodestar fee of $114,334.25, resulting in a prejudgmentcounsel-fee award of $228,668.50. Defendant moved for reconsideration of the trial court's decision to enhancethe lodestar fee, relying on the United States Supreme Court's decision in Cityof Burlington v. Dague, 505 U.S. ___, 112 S. Ct. 2638, 120 L. Ed.2d 449 (1992),decided one day before the trial court had rendered its decision on counsel fees.In Dague, the Court held that "enhancement for

contingency is not permitted under the fee-shifting statutes at issue," 505









U.S. at ___, 112 S. Ct. at 2643, 120 L. Ed. 2d at 459, but the rationale of theCourt's holding apparently applies to all federal fee-shifting statutes. The trialcourt, however, declined to adhere to the reasoning of the Supreme Court inDague, forecasting that this Court, if presented with the same issue, wouldadopt the reasoning of Justice Blackmun's dissenting opinion in Dagueasserting "that a statutory fee may include additional compensation forcontingency and still qualify as reasonable." Id. at ___, 112 S. Ct. at 2644, 120L. Ed. 2d at 460. (Blackmun, J., dissenting). Accordingly, the trial court denieddefendant's motion for reconsideration of the counsel fee award. The Appellate Division affirmed the trial court's counsel fee award, observingthat [i]n view of the unrefuted attorneys' affidavits submitted, together with thedifficulties plaintiffs had in obtaining counsel in this very case, a feeenhancement based on contingency considerations appears essential to theenforcement of the LAD. . . . We conclude that a liberal construction of N.J.S.A.10:5-27.1, to promote the goal of ending discrimination, includes contingencyfee enhancement in appropriate cases.

[276 N.J. Super. at 458 (citations omitted).]

The Appellate Division agreed with the trial court's conclusion that thereasoning of Justice Blackmun's dissent in Dague was more consistent with theobjectives of the LAD than was the rationale of the Dague majority. In addition,the Appellate Division observed that even the enhanced lodestar fee awarded by

the trial court was approximately $50,000 less than the fee to whichplaintiffs' attorneys were entitled under their fee agreement, calculated bymultiplying the hours expended by one-half the attorneys' regular hourly rateplus twenty-five percent of the recovery. Thus, the Appellate Division explained,"the use of the multiplier here clearly served the statutory purpose of enablingplaintiffs to obtain counsel, where plaintiffs may still be called upon to bear partof the bargained-for reasonable expense of representation." Id. at 461.

B

Under the so-called "American Rule," adhered to by the federalcourts and by the courts of this state, "the prevailing litigant isordinarily not entitled to collect a reasonable attorneys' fee from theloser." Alyeska Pipeline Serv. Co. v. Wilderness Society, 421 U.S.240, 247, 95 S. Ct. 1612, 1616, 44 L. Ed.2d 141, 147 (1975); Gerhardtv. Continental Ins. Cos., 48 N.J. 291, 301 (1966); Janovsky v.American Motorists Ins. Co., 11 N.J. 1, 7 (1952); cf. R. 4:42-9 (settingforth specific instances in which courts are authorized to awardcounsel fees). As an exception to the American Rule, Congress and the statelegislatures have authorized courts pursuant to specific statutoryenactments to order the losing party to pay a "reasonable" attorney'sfee to the attorney for the prevailing party. Less than a decade agoover 100 separate federal fee shifting statutes had been enacted. SeePennsylvania v. Delaware

Valley Citizens' Council for Clean Air, 478 U.S. 546, 562, 106 S. Ct. 3088,3096, 92 L. Ed.2d 439, 454 (1986), (Delaware Valley I). In addition to theprovision of the LAD at issue here, N.J.S.A. 10:5-27.1, our Legislature also has
















passed a substantial number of statutes authorizing an award of a reasonablecounsel fee to the attorney for the prevailing party. See, e.g., N.J.S.A. 56:8-19(consumer-fraud actions); 113 N.J. 594 (1989), Justice O'Hern referred to theStatement of the sponsor of 42 U.S.C.A. §1988, the Civil Rights Attorney's FeeAwards Act of 1976 (Fee-Awards Act or section 1988), enacted in response tothe Supreme Court's decision in Alyeska, supra, to explain the rationale for theadoption of fee-shifting statutes by Congress and our State Legislature: "The problem of unequal access to the courts in order to vindicatecongressional policies and enforce the law is not simply a problem for lawyersand courts. Encouraging adequate representation is essential if the laws of thisNation are to be enforced. Congress passes a great deal of lofty legislationpromising equal rights to all.

Although some of these laws can be enforced by the Justice Departmentor other Federal agencies, most of the responsibility for enforcement has to restupon private citizens, who must go to court to prove a violation of law. * * * Butwithout the availability of counsel fees, these rights exist only on paper. Privatecitizens must be given not only the rights to go to court,

but also the legal resources. If the citizen does not have the resources, his dayin court is denied him; the congressional policy [that] he seeks to assert andvindicate goes unvindicated; and the entire Nation, not just the individualcitizen, suffers. [ 122 Cong. Rec. 33,313 (1976) (Statement of Sen. Tunney).]"

[Coleman, supra., 113 N.J. at 597.] The federal courts have developed various methodologies for determining areasonable counsel fee pursuant to fee-shifting statutes. An early approachadopted by the Fifth Circuit in Johnson v. Georgia Highway Express, Inc., 488F.2d 714 (1974), advocated reliance on twelve somewhat subjective factorsderived from guidelines recommended by the American Bar Association Codeof Professional Responsibility, Disciplinary Rule 2-106: (1) the time and laborrequired; (2) the novelty and difficulty of the question; (3) the skill requisite toperform the legal service properly; (4) the preclusion of other employment bythe attorney due to acceptance of the case; (5) the customary fee; (6) whetherthe fee is fixed or contingent; (7) time limitations imposed by the client or thecircumstances; (8) the amount involved and the results obtained; (9) theexperience, reputation, and ability of the attorney; (10) the "undesirability" ofthe case; (11) the nature and length of the professional relationship with theclient; and (12) awards in similar cases. Johnson, supra, 488 F. 2d at 717-19. A different, less subjective approach was adopted by the Third Circuit inLindy Bros. Builders v. American Radiator & Standard Sanitary Corp., 487 F.2d161, 167-69 (1973) (Lindy I).

That court's methodology was first to calculate the "lodestar" fee based on thehours spent on the case multiplied by the attorneys reasonable hourly rate ofcompensation. That amount was then subject to adjustment on the basis of "(1)the contingent nature of the case, reflecting the likelihood that hours wereinvested and expenses incurred without assurance of compensation and (2) thequality of the work performed as evidenced by the work observed, thecomplexity of the issues and the recovery obtained." Merola v. Atlantic RichfieldCo., 515 F.2d 165, 168 (3d Cir. 1975); Lindy Bros. Builders v. American Radiator& Standard Sanitary Corp., 540 F.2d 102, 117 (3d Cir. 1976) (Lindy II). The United States Supreme Court first addressed the question of calculatingreasonable attorney's fees under fee-shifting statutes in Hensley v. Eckerhart,461 U.S. 424, 103 S. Ct. 1933, 76 L. Ed.2d 40 (1983), in which the principalissue presented was "whether a partially prevailing plaintiff may recover anattorney's fee for legal services on unsuccessful claims." Id. at 426, 103 S. Ct. at1935-36, 76 L. Ed. 2d at 46. In Hensley the Court adopted a hybrid



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methodology, combining the lodestar approach of Lindy Brothers with thetwelve-factor test endorsed in Johnson. The Court observed: The most useful starting point for determining the amount of areasonable fee is the number of hours reasonably expended on the litigationmultiplied by a reasonable hourly rate. This calculation provides an objectivebasis on which to make an initial estimate of the value of a lawyer's services.The party seeking an award of fees should

submit evidence supporting the hours worked and rates claimed. Where thedocumentation of hours is inadequate, the district court may reduce the awardaccordingly.

[Id. at 43, 103 S. Ct. at 1939, 76 L. Ed. 2d at 50.]

The Court noted, however, that the inquiry does not end with the lodestar feeand that other factors, including the result obtained, may induce a trial court toadjust the lodestar fee upward or downward. The Court added that "[t]hedistrict court also may consider other factors identified in Johnson v. GeorgiaHighway Express, Inc., [supra, 488 F. 2d at 717-19], though it should note thatmany of these factors usually are subsumed within the initial calculation ofhours reasonably expended at a reasonable hourly rate." Id. at 434, n.9, 103S. Ct. at 1940 n.9, 76 L. Ed. 2d at 51 n.9. Concluding that "the extent of aplaintiff's success is a crucial factor in determining the proper amount of anaward of attorney's fees," Id. at 440, 103 S. Ct. at 1943, 76 L. Ed. 2d at 54, theCourt remanded the matter to the district court because its opinion "did notproperly consider the relationship between the extent of success and theamount of the fee award." Id. at 438, 103 S. Ct. at 1942, 76 L. Ed. 2d at 54.Justice Brennan sharply disagreed with the Court's decision to remand,observing that appellate courts should hesitate to prolong litigation over attorney's fees after the merits of acase have been concluded. * * *

If a district court has articulated a fair explanation for its fee award in agiven case, the court of appeals should not reverse or remand the judgmentunless the award is so

low as to provide clearly inadequate compensation to the attorneys on thecase or so high as to constitute an unmistakable windfall.

[Id. at 454-55, 103 S. Ct. at 1950, 76 L. Ed. 2d at 64, (Brennan, J.,concurring in part and dissenting in part).]

In Blum v. Stenson, 465 U.S. 886, 104 S. Ct. 1541, 79 L. Ed.2d 891 (1984),the Court considered whether an application for a counsel-fee award to anonprofit legal-service organization under the Fee-Awards Act should becalculated on the basis of cost or prevailing market rates, and also addressedthe circumstances under which an upward adjustment of the lodestar fee ispermissible under section 1988. Concerning the first issue, the Court concludedthat "[t]he statute and legislative history establish that 'reasonable fees' undersection 1988 are to be calculated according to the prevailing market rates in therelevant community, regardless of whether plaintiff is represented by private ornon-profit counsel." Id. at 895, 104 S. Ct. at 1547, 79 L. Ed. 2d at 899-900. In respect of the district court's fifty percent upward adjustment of thelodestar fee, the Court acknowledged that circumstances might occur "in whichthe basic standard of reasonable rates multiplied by reasonably expended hoursresults in a fee that is either unreasonably low or unreasonably high." Id. at897, 104 S. Ct. at 1548, 79 L. Ed. 2d at 901. Nevertheless, the Court observedthat when "the applicant for a fee has carried his burden of showing that theclaimed rate and






number of hours are reasonable, the resulting product is presumed to be thereasonable fee contemplated by § 1988." Ibid. Elaborating on its observation in Hensley, supra, that many of the so-calledJohnson factors are subsumed within the lodestar fee, the Court held in Blumthat the "novelty and complexity of the issues," "the special skill and experienceof counsel," the "quality of representation," and the "results obtained"presumably are fully reflected in the lodestar amount, and thus cannotordinarily serve as an independent basis for increasing the basic fee award. Id.at 898-900, 104 S. Ct. at 1549-50, 79 L. Ed. 2d at 901-03. The Court added,however, that quality of representation "may justify an upward adjustment onlyin the rare case where the fee applicant offers specific evidence to show that thequality of service rendered was superior to that one reasonably should expect inlight of the hourly rates charged and that the success was 'exceptional,'" astandard not met by the award before the Court. Id. at 899, 104 S. Ct. at 1549,79 L. Ed. 2d at 902. Accordingly, the Court modified the district court's feeaward by reinstating the lodestar-fee amount and eliminating the fifty-percentenhancement. Id. at 901-02, 104 S. Ct. at 1550, 79 L. Ed. 2d at 903-04. TheCourt expressly declined to consider whether enhancement of the lodestarbased on the contingent nature of counsel's representation was permissible. Id.at 901 n.17, 104 S. Ct. at 1550 n.17, 19 L. Ed. 2d at 903 n.17.

In Delaware Valley I, supra, the Court reversed an enhancement of thelodestar fee by a factor of two that was based on the superior quality ofcounsel's work and the outstanding result. The Court stated: "Becauseconsiderations concerning the quality of a prevailing party's counsel'srepresentation normally are reflected in the reasonable hourly rate, the overallquality of performance ordinarily should not be used to adjust the lodestar, thusremoving any danger of 'double counting.'" 478 U.S. at 566, 106 S. Ct. at 3099,92 L. Ed. 2d at 457. The Court did not address in Delaware Valley I whether thelodestar fee amount could be increased to compensate for the contingent natureof counsel's compensation, and restored the case to the docket for argument ofthat issue. Id. at 568, 106 S. Ct. at 3100, 92 L. Ed. 2d at 458. The Court in Delaware Valley II, however, was sharply divided over whetherenhancement of the lodestar fee to reflect contingency was consistent withcongressional intent in enacting fee-shifting statutes. The suit had beeninstituted to compel Pennsylvania to comply with a district court consentdecree, entered pursuant to the Clean Air Act, that obligated Pennsylvania toestablish inspection and maintenance programs for vehicle emission systems.Because Pennsylvania failed to comply with the consent decree, protractedlitigation ensued resulting in a new deadline for commencement of theinspection and maintenance program. As the prevailing party, plaintiff soughtan attorney's fee award pursuant to section 304(d) of the Clean

Air Act, 42 U.S.C.A. §7604(d). After dividing counsel's work into nine phasesand computing the lodestar fee for each phase, the district court doubled thelodestar for three phases of the litigation to take into account the contingency ofsuccess. Delaware Valley II, supra, 483 U.S. at 714, 107 S. Ct. at 3081, 97 L. Ed.2d at 591. Reversing the Court of Appeals for the Third Circuit which had affirmed thecontingency enhancement of the fee award, 762 F.2d 272, 283 (1985), fivemembers of the Court concluded that enhancement of the lodestar fee on thebasis of contingency was improper, although on different grounds. The fourJustices joining in the plurality opinion (Chief Justice Rehnquist and JusticesWhile, Powell, and Scalia), concluded that enhancement of a statutorilyauthorized counsel fee to reflect contingency was inappropriate, adding thateven if the Clean Air Act were construed to permit increasing the lodestar fee toreflect contingency, such enhancement would be unsupported by the record

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before the Court. Id. at 727-31, 107 S. Ct. at 3087-89, 97 L. Ed. 2d at 599-601.Justice O'Connor, concurring in part and concurring in the judgment, agreedwith the plurality opinion that enhancement was not warranted in this case. Id.at 734, 107 S. Ct. at 3091, 97 L. Ed. 2d at 603. The plurality opinion based itsrejection of contingency enhancement on three principal factors: First, becausestatutorily authorized counsel fees are limited to successful cases, contingencyenhancement clashes with the legislative direction in that its effect is tocompensate

counsel sufficiently in successful cases to offset the economic loss sustainedin unsuccessful cases; second, contingency enhancement could result inawarding the highest fees in cases least likely to succeed, which encourages thefiling of high-risk cases, while simultaneously penalizing those defendantswhose conduct was least culpable; and third, because all cases present somedegree of risk, the plurality expressed concern that contingency enhancementwould be awarded in almost all successful fee-shifting cases. Id. at 724-25, 107S. Ct. at 3086, 97 L. Ed. 2d at 597. The four dissenting members (Justices Blackmun, Brennan, Marshall, andStevens) and Justice O'Connor agreed that statutory attorney's fees may beenhanced for contingency. Responding to the plurality's concerns, the dissentemphasized that enhancement for contingency is not generally to beconditioned on the degree of risk presented by specific cases, but rather isdesigned "to place contingent employment as a whole on roughly the sameeconomic footing as noncontingent practice." Id. at 745-46, 107 S. Ct. at 1097,97 L. Ed. 2d at 611 (Blackmun, J., dissenting). Justice O'Connor agreed,observing that "compensation for contingency must be based on the differencein market treatment of contingent fee cases as a class, rather than on anassessment of the 'riskiness' of any particular case." Id. at 731, 107 S. Ct. at3089-90, 97 L. Ed. 2d at 601. However, Justice O'Connor insisted thatuniformity in the degree of enhancement for risk was essential, disagreeingwith the dissent's analysis

that extra enhancement for exceptional cases was permissible. Id. at 732-33,107 S. Ct. at 3090, 97 L. Ed. 2d at 602. In the dissent's view "the likelihood ofsuccess may appropriately be taken into account" in those unusual cases inwhich the risks are so apparent and significant that they will constitute aneconomic disincentive independent of that created by the basic contingency inpayment. When the result achieved in such a case is significant and of broadpublic interest, an additional enhancement is justified in order to attractattorneys to take such cases, which otherwise might suffer from lack ofrepresentation. Extra enhancement for such cases, however, should be awardedin exceptional cases only.

[Id. at 751, 107 S. Ct. at 3100, 97 L. Ed. 2d at 614.]

Although in Delaware Valley II five members of the Supreme Courtconcluded that contingency enhancements of a lodestar fee were permissibleunder fee-shifting statutes based primarily on the fact of contingency ratherthan its degree, that view was rejected by the Court five years later in Dague,supra, 505 U.S. ___, 112 S. Ct. 2638, 120 L. Ed.2d 449. Dague owned propertyadjacent to a landfill operated by the City of Burlington, and retained attorneyson a contingent-fee basis to institute suit against Burlington because of itsimproper operation of the landfill. The district court determined thatBurlington had violated provisions of the Solid Waste Disposal Act and FederalWater Pollution Act, ordering Burlington to close the landfill by January 1,1990. Concluding that Dague was a prevailing party entitled to counsel feesunder those Acts, the district court calculated the lodestar fee to be$198,027.50. It then determined





that that fee should be enhanced by twenty-five percent because of Dague'ssubstantial risk of not prevailing and because in the absence of an enhanced feeDague would have encountered difficulty in retaining counsel. The court ofappeals affirmed. 935 F.2d 1343, 1359-60 (2d Cir. 1991). The Supreme Courtreversed in a six-to-three decision, holding that the fee-shifting statutes atissue did not permit enhancement of the lodestar fee on the basis ofcontingency, a holding that obviously applied to all federal fee-shifting statutes.See Charles Silver, Incoherence & Irrationality in the Law of Attorneys' Fees, 12Rev. Litig. 301, 319 n.69 (1993); 2 Mary Frances Derfner & Arthur D. Wolf,Court Awarded Attorney Fees ¶ 16.04[4][b], at 16-164 to -166 (rev. ed. 1990). The Court determined that "enhancement for contingency would likelyduplicate in substantial part factors already subsumed in the lodestar," id. at___, 112 S. Ct. at 2641, 120 L. Ed. 2d at 456, observing that the difficulty ofestablishing the merits of a risky claim are reflected in the lodestar fee, either bythe higher number of hours required or by the higher hourly rate of theattorney skilled enough to litigate the claim. Ibid. The Court also expressed theconcern noted by the plurality in Delaware Valley II, that "[t]o award acontingency enhancement under a fee-shifting statute would in effect pay forthe attorney's time (or anticipated time) in cases where his client does notprevail." Id. at ___, 112 S. Ct. at 2643, 120 L. Ed. 2d at 458. Finally, the Courtconcluded that "the interest in ready

administrability that has underlain our adoption of the lodestar approachand the related interest in avoiding burdensome satellite litigation * * * counselstrongly against adoption of contingency enhancement." Id. at ___, 112 S. Ct. at2643, 120 L. Ed. 2d at 459 (citations omitted). Justices Blackmun, Stevens and O'Connor dissented. In her separatedissenting opinion Justice O'Connor observed: As Justice Blackmun cogently explains, when an attorney must choosebetween two cases--one with a client who will pay the attorney's fees win orlose and the other who can only promise the statutory compensation if the caseis successful--the attorney will choose the fee-paying client, unless thecontingency-client can promise an enhancement of sufficient magnitude tojustify the extra risk of nonpayment. Thus, a reasonable fee should be one thatwould "attract competent counsel," and in some markets this must include theassurance of a contingency enhancement if the plaintiff should prevail. Itherefore dissent from the Court's holding that a "reasonable" attorney's fee cannever include an enhancement for cases taken on contingency.

[Id. at ___, 112 S. Ct. at 2648, 120 L. Ed. 2d at 465 (citations omitted).]

Although overruled by the Supreme Court's decision in Dague, thepre-Dague dispositions of the issue by federal circuit courts of appeals arenevertheless pertinent to our assessment of the propriety of contingencyenhancements of lodestar fees under New Jersey's fee-shifting statutes. Whilethe rationales were not identical and subsequent decisions in some circuits havealtered earlier holdings, during the decade before the Supreme Court's 1987decision in Delaware Valley II, "the federal courts [of

appeals] were unanimous in awarding increased fees or in holding that thefee for contingent litigation may be increased to account for the risk thatcounsel will recover no fee at all." 2 Derfner & Wolf, supra, ¶ 16.04, at 16-155;see, e.g., Copeland v. Marshall, 641 F.2d 880, 892-93 (D.C. Cir. 1980);Wildman v. Lerner Stores Corp., 771 F.2d 605, 611-14 (1st Cir. 1985); Lewis v.Coughlin, 801 F.2d 570, 575-76 (2d Cir. 1986); Hall v. Borough of Roselle, 747F.2d 838, 842-43 (3d Cir. 1984); Vaughns v. Board of Educ., 770 F.2d 1244,1245-46 (4th Cir. 1985); Graves v. Barnes, 700 F.2d 220, 222-24 (5th Cir.


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1983); Kelley v. Metropolitan County Bd. of Educ., 773 F.2d 677, 683-86 (6thCir. 1985), cert. denied, 474 U.S. 1083, 106 S. Ct. 853, 88 L. Ed.2d 893 (1986);Kamberos v. GTE Automatic Elec., Inc., 603 F.2d 598, 604 (7th Cir. 1979), cert.denied, 454 U.S. 1060, 102 S. Ct. 612, 70 L. Ed.2d 599 (1981); Craik v.Minnesota State Univ. Bd., 738 F.2d 348, 350-51 (8th Cir. 1984); LaDuke v.Nelson, 762 F.2d 1318, 1332-33 (9th Cir. 1985), modified, 796 F.2d 309 (9thCir. 1986); Ramos v. Lamm, 713 F.2d 546, 557-58 (10th Cir. 1983); Hall v.Board of School Comm'rs., 707 F.2d 464, 465-66 (11th Cir. 1983); Crumbaker v.Merit Sys. Protection Bd., 781 F.2d 191, 196-97 (Fed. Cir. 1986), modified, 827F.2d 761 (Fed. Cir. 1987). Although several of the courts of appeals apparentlyviewed contingency of recovery alone as a sufficient basis to warrantenhancement of the lodestar fee, a number of courts emphasized theimportance of the degree of risk present in the specific

case. For example, in Lewis, supra, the Court of Appeals for the SecondCircuit observed: In and of itself, contingency is not a sufficient basis for awarding alodestar bonus. Rather, it is the evaluation of the odds against success thatultimately determines whether an enhancement is merited. We haveconsistently viewed the risk of loss on the legal issues as an importantconsideration in any award of attorneys' fees above an hourly rate.

[801 F. 2d at 575.]

Similarly, in Craik, supra, the Eighth Circuit, in approving a twenty-five-percent enhancement for contingency, noted: Counsel for plaintiffs undertook this case, which they must have knownwould require a massive expenditure of time and energy in the face of the veryreal possibility that no fee at all would be obtained. The risk here went beyondthe normal contingent-fee situation. In Mr. Quiggle's case, for example,substantially all of his professional time between December 1982 and June1983 was spent on this appeal. The investment of that much time out of one'slaw practice with no real hope of compensation if the appeal should proveunsuccessful is indeed a major risk, one that we think should be taken intoaccount in setting a reasonable fee.

[738 F. 2d at 350-51.]

The scholarly commentary on the issue, both post- and pre-Dague, is fairlyuniform in favor of contingency enhancements of lodestar fees, with predictablevariations in approach and rationale. See, e.g., Silver, supra, 12 Rev. Litig. at315 ("The argument for contingency enhancements is that they encouragelawyers to gamble. It is predictable that the lodestar method- the reigningmethod of calculating fees--will not have this

effect without contingency enhancements because the lodestar method basesfee awards on the hourly rates lawyers charge when payment is certain.")(footnote omitted); The Supreme Court, 1991 Term--Leading Cases, 106 Harv.L. Rev. 163, 344 (1992) ("Contingency enhancements, however, are an essentialcomponent of the market. * * * Barring contingency enhancements requireslawyers to run a substantial risk of nonpayment for the same return that theyreceive from clients who pay in advance."); Report of the Third Circuit TaskForce, Court Awarded Attorney Fees (Oct. 1985), reprinted in 108 F.R.D. 237,265 (1985) ("[T]he Task Force feels that the contingency factor, which it definessimply as 'the risk of winning or losing,' should be considered in all cases.Plaintiffs' attorneys always face the prospect of receiving no compensation in



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statutory fee cases. Accordingly, even modest risks in cases in which liability isreasonably certain to be established should be recognized in the fee-settingprocess.") (footnote omitted); Thomas D. Rowe, Jr., The Legal Theory ofAttorney Fee Shifting: A Critical Overview, 1 982 Duke L.J. 651, 673-76; JohnLeubsdorf, The Contingency Factor in Attorney Fee Awards, 90 Yale L.J. 473,480 (1981) ("A lawyer who both bears the risk of not being paid and provideslegal services is not receiving the fair market value of his work if he is paid onlyfor the second of these functions."); Samuel R. Berger, Court AwardedAttorneys' Fees: What is "Reasonable"? 126 U. Pa. L. Rev. 281, 324-26 (1977);Developments in the Law--Class Actions, 89 Harv. L. Rev. 1318, 1615-17 (1976);Comment, Court

Awarded Attorney's Fees and Equal Access to the Courts, 122 U. Pa. L. Rev.636, 708-11 (1974); The Committee on Legal Assistance, Committee Report:Counsel Fees in Public Interest Litigation, 39 Record of NYCBA 300, 317(1984); cf. James D. Kole, Nonpayment Risk Multipliers: Incentives orWindfalls?, 53 U. Chi. L. Rev. 1074, 1106-07 (1986) (arguing for abandonmentof contingency enhancements); Rochelle C. Dreyfuss, Note, Promoting theVindication of Civil Rights Through the Attorney's Fees Awards Act, 80 Colum.L. Rev. 346, 375 (1980) (urging that contingency factor be ignored in settingreasonable counsel fees).

C

Aside from the careful and insightful approaches to the questionafforded by the trial court's and Appellate Division's rulings, we writeon a relatively clean slate in addressing the issue of contingencyenhancement of lodestar fees under the LAD. Although we oftenhave incorporated the reasoning of federal cases construinganalogous federal statutes in our interpretation of the LAD, we havenot been reluctant to depart from federal precedent when wedetermined it to be inappropriate. See Grigoletti v. OrthoPharmaceutical Corp., 118 N.J. 89, 107 (1990). Nor have wepreviously had occasion to consider calculation of a reasonableattorneys fee under the LAD. In Singer v. State, 95 N.J. 487, cert.denied, 469 U.S. 832, 105 S.

Ct. 121, 83 L. Ed.2d 64 (1984), construing the federal Fee-Awards Act, weconcluded that the plaintiffs in that litigation were entitled to be considered"prevailing parties" under the Fee-Awards Act and thereby entitled to an awardof a reasonable attorney's fee. Id. at 496. Although remanding the matter to thetrial court to determine a reasonable fee, id. at 501-02, we referred to federalprecedents construing analogous federal fee-shifting statutes to provideguidance to the trial court. We noted that the Supreme Court in Hensley, supra,461 U.S. at 433, 103 S. Ct. at 1939, 76 L. Ed. 2d at 50, had confirmed that theappropriate starting point under federal law for establishing a reasonable fee isto determine the lodestar, "the number of hours reasonably expended on thelitigation multiplied by a reasonable hourly rate." Id. at 499. We noted that thelodestar may be adjusted upward or downward to reflect the twelve factorsrelied on in Johnson, supra, 488 F. 2d at 717 (citing Hughes v. Repko, 578 F.2d483 (3d Cir. 1978)) to support that proposition. We characterized Hughes asholding that "adjustments to amount of counsel fees may be made to reflect thequality of the attorney's work, the complexity of the issues presented and thecontingent nature of success." Ibid. (emphasis added). Because we wereaddressing attorney's fees under the Fee-Awards Act, our reference to theappropriateness of enhancing the lodestar fee to reflect contingency did not

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signal any predisposition concerning that question in the context of the LAD.

Our review of the extraordinary volume of federal litigation on the questionof contingency enhancements in determining a reasonable fee under federalfee-shifting statutes demonstrates the need for a clear rule, one that can readilyand definitively be applied by trial courts, a rule that will end, not perpetuate,litigation of the issue. We note that in the period between the Supreme Court'sdecisions in Delaware Valley II and Dague some courts of appeals adoptedJustice O'Connor's concurring opinion as establishing the governing standard,see, e.g., Fadhl, supra, 859 F. 2d at 650 n.1, whereas other circuit courtsconcluded that Delaware Valley II "provides no controlling legal holding." Kingv. Palmer, 950 F.2d 771, 784 (D.C. Cir. 1991), cert. denied, ___ U.S. ___, 112S. Ct. 3054, 120 L. Ed.2d 920 (1992); Homeward Bound, Inc. v. HissomMemorial Ctr., 963 F.2d 1352, 1358 (10th Cir. 1992); see also Dague, supra, 935F. 2d at 1360 (recognizing "the anomaly of the views of one justice, with whomno one concurs, being the law of the land, where the Court is so divided on anissue and where there is no majority opinion at all"), rev'd, 505 U.S. ___, 112S. Ct. 2638, 120 L. Ed.2d 449 (1992). Our objectives in this murky area ofcounsel-fee awards are clarity, simplicity, and finality, to the extent they areattainable. Under the LAD and other state fee-shifting statutes, the first step in the fee-setting process is to determine the "lodestar": the number of hours reasonablyexpended multiplied by a reasonable hourly rate. In our view, the trial court's

determination of the lodestar amount is the most significant element in theaward of a reasonable fee because that function requires the trial court toevaluate carefully and critically the aggregate hours and specific hourly ratesadvanced by counsel for the prevailing party to support the fee application.Trial court's should not accept passively the submissions of counsel to supportthe lodestar amount: Compiling raw totals of hours spent, however, does not complete theinquiry. It does not follow that the amount of time actually expended is theamount of time reasonably expended. In the private sector, "billing judgment"is an important component in fee setting. It is no less important here. Hoursthat are not properly billed to one's client also are not properly billed to one'sadversary pursuant to statutory authority. Thus, no compensation is due fornonproductive time. For example, where three attorneys are present at ahearing when one would suffice, compensation should be denied for the excesstime.

[Copeland, supra, 641 F. 2d at 891.]

The Court of Appeals for the Third Circuit made the following observationsabout the proposed lodestar: The district court should exclude hours that are not reasonably expended.Hours are not reasonably expended if they are excessive, redundant, orotherwise unnecessary. Further, the court can reduce the hours claimed by thenumber of hours "spent litigating claims on which the party did not succeed andthat were 'distinct in all respects from' claims on which the party did succeed."Institutionalized Juveniles [v. Secretary of Pub. Welfare, 758 F.2d 897, 919 (3dCir. 1985)] (quoting Hensley, 461 U.S. at 440, 103 S. Ct. at 1943). The court alsocan deduct hours when the fee petition inadequately documents the hoursclaimed.

[Rode v. Dellarciprete, 892 F.2d 1177, 1183 (3d Cir. 1990)(citationsomitted).]

Concerning the trial court's obligation to exclude from the proposedlodestar calculation hours not reasonably expended by the prevailing party's













attorney, we consider in Szczepanski v. Newcomb Hospital Medical Center, ___N.J. ___ (1995), also decided today, the question whether and to what extent inawarding counsel fees under state fee-shifting statutes a trial court should takeinto account the relationship between the damages recovered and the hoursexpended. In City of Riverside v. Rivera, 477 U.S. 561, 106 S. Ct. 2686, 91L. Ed.2d 466 (1986), a plurality of the Supreme Court upheld a counsel-feeaward of $245,456.25 in a suit alleging civil-rights violations in which theplaintiffs had been awarded compensatory and punitive damages of $33,350.The plurality opinion concluded that although damages recovered were a factorbearing on the reasonableness of counsel fee awards, federal fee-shiftingstatutes did not require proportionality between damage recoveries andcounsel-fee awards, observing that "[u]nlike most private tort litigants, a civilrights plaintiff seeks to vindicate important civil and constitutional rights thatcannot be valued solely in monetary terms." Id. at 574, 106 S. Ct. at 2694, 91L. Ed. 2d at 479. Although Justice Rehnquist's dissent did not reject theprinciple underlying the plurality opinion's holding, it concluded that "this caseshares none of the special aspects of certain civil rights litigation which theplurality suggests . . . would justify an award of attorney's fees totally

divorced from the amount of damages awarded by the jury. Id. at 595, 106S. Ct. at 2704, 91 L. Ed. 2d at 492. Our view of the issue is substantially inaccord with the analysis set forth in Justice Brennan's plurality opinion.Nevertheless, if the specific circumstances incidental to a counsel-feeapplication demonstrate that the hours expended, taking into account thedamages prospectively recoverable, the interests to be vindicated, and theunderlying statutory objectives, exceed those that competent counselreasonably would have expended to achieve a comparable result, a trial courtmay exercise its discretion to exclude excessive hours from the lodestarcalculation. Similarly, a trial court should reduce the lodestar fee if the level of successachieved in the litigation is limited as compared to the relief sought. "If . . . aplaintiff has achieved only partial or limited success, the product of hoursreasonably expended on the litigation as a whole times a reasonable hourly ratemay be an excessive amount. This will be true even where the plaintiff's claimswere interrelated, nonfrivolous, and raised in good faith." Hensley, supra, 461U.S. at 436, 103 S. Ct. at 1941, 76 L. Ed. 2d at 52; see, e.g., Scales v. J.C.Bradford & Co., 925 F.2d 901, 910 (6th Cir. 1991) (reducing lodestar by forty-five percent to reflect plaintiff's partial success). In addition, the attorney's presentation of billable hours should be set forth insufficient detail to permit the trial

court to ascertain the manner in which the billable hours were divided amongthe various counsel: To this end the first inquiry of the court should be into the hours spent bythe attorneys--how many hours were spent in what manner by which attorneys.It is not necessary to know the exact number of minutes spent nor the preciseactivity to which each hour was devoted nor the specific attainments of eachattorney. But without some fairly definite information as to the hours devotedto various general activities, e.g., pretrial discovery, settlement negotiations,and the hours spent by various classes of attorneys, e.g., senior partners, juniorpartners, associates, the court cannot know the nature of the services for whichcompensation is sought.

[Lindy I, supra, 487 F. 2d at 167.]

The trial court must then determine whether the assigned hourly rates forthe participating attorneys are reasonable: Generally, a reasonable hourly rate is to be calculated according to the








prevailing market rates in the relevant community. Thus, the court shouldassess the experience and skill of the prevailing party's attorneys and comparetheir rates to the rates prevailing in the community for similar services bylawyers of reasonably comparable skill, experience, and reputation.

[Rode, supra, 892 F. 2d at 1183 (citation omitted).]

That determination need not be unnecessarily complex or protracted, but thetrial court should satisfy itself that the assigned hourly rates are fair, realistic,and accurate, or should make appropriate adjustments. To take into accountdelay in payment, the hourly rate at which compensation is to be awardedshould be based on current rates rather than those in

effect when the services were performed. See Delaware Valley II, 483 U.S. at716, 107 S. Ct. at 3082, 97 L. Ed. 2d at 592 ("In setting fees for prevailingcounsel, the courts have regularly recognized the delay factor, either by basingthe award on current rates or by adjusting the fee based on historical rates toreflect its present value.") (plurality opinion); Ramos, supra, 713 F. 2d at 555. We hold that the trial court, after having carefully established the amount ofthe lodestar fee, should consider whether to increase that fee to reflect the riskof nonpayment in all cases in which the attorney's compensation entirely orsubstantially is contingent on a successful outcome. We understand andcarefully have evaluated the various objections advanced to contingencyenhancements, including the often repeated admonition that "[t]hese statueswere not designed as a form of economic relief to improve the financial lot of[attorneys]." Dague, supra, 505 U.S. at ___, 112 S. Ct. at 2642, 120 L. Ed. 2d at457 (quoting Delaware Valley I, supra, 478 U.S. at 565, 106 S. Ct. at 3098, 92L. Ed. 2d at 456). Both as a matter of economic reality and simple fairness, wehave concluded that a counsel fee awarded under a fee-shifting statute cannotbe "reasonable" unless the lodestar, calculated as if the attorney's compensationwere guaranteed irrespective of result, is adjusted to reflect the actual risk thatthe attorney will not receive payment if the suit does not succeed. The reasoningunderlying

our holding often has been explained, and most effectively in simple terms.As the late Judge Charles Wyzanski once observed: No one expects a lawyer to give his services at bargain rates in a civilmatter on behalf of a client who is not impecunious. No one expects a lawyerwhose compensation is contingent upon his success to charge, when successful,as little as he would charge a client who in advance had agreed to pay for hisservices, regardless of success.

[Cherner v. Transitron Elec. Corp., 221 F. Supp. 55, 61 (D. Mass. 1963).]

See also Blum, supra, 465 U.S. at 903, 104 S. Ct. at 1551, 79 L. Ed. 2d at 905("Lawyers operating in the marketplace can be expected to charge a higherhourly rate when their compensation is contingent on success than when theywill be promptly paid, irrespective of whether they win or lose.") (Brennan, J.,concurring); Berger, supra, 126 U. Pa. L. Rev. at 324-25 ("The experience of themarketplace indicates that lawyers generally will not provide legalrepresentation on a contingent basis unless they receive a premium for takingthat risk."); 2 Derfner & Wolf, supra, ¶ 15.01[2][c], at 15-16 ("Most courts realizethat where payment of a fee is contingent on success an attorney should receivea larger overall fee than where payment is guaranteed regardless ofoutcome....") (footnote omitted). We are unpersuaded by Justice Scalia's suggestion in Dague, supra, thatawarding contingency enhancement under a fee-shifting statute "would ineffect pay for the attorney's time (or anticipated time) in cases where his client




does not prevail."

505 U.S. at ___, 112 S. Ct. at 2643, 120 L. Ed. 2d at 458. In our view the casefor contingency enhancement has nothing to do with the amount of time lawyers invest in losing cases. Itrests on the desire to enable parties to compete for legal services in the privatemarket. In that market, parties who can offer only fee awards contend withparties who can offer certain hourly payments and with parties who can offercontingent percentage fees from damage awards. To bid for services effectively,parties with only fee awards to offer must be able to pay market rates. Theycannot do that when they are denied contingency enhancements because theycannot cover the nonpayment risk. A lawyer given a choice between anunenhanced hourly rate in a fee award case and an equal rate in a case wherepayment is certain will have a strong incentive to decline the fee award case.

[Silver, supra, 12 Rev. Litig. at 331-32 (footnote omitted).]

We acknowledge the concerns about overpayment and double-countingexpressed in Dague, supra, 505 U.S. at ___, 112 S. Ct. at 2641-42, 97 L. Ed. 2dat 456-57, and Delaware Valley II, 483 U.S. at 726-27, 107 S. Ct. at 3087, 97L. Ed. 2d at 598, and address those concerns by the standards that we adopt toguide the award of contingency enhancements. Those standards will serve aslimits on the amount of contingency enhancements and will require arelationship between the amount of the enhancement awarded and the extentof the risk of nonpayment assumed by counsel for the prevailing party. In thatrespect, we do not adopt the view espoused in Justice O'Connor's concurrencein Delaware Valley II that "a court should not award any enhancement based on'legal' risks or risks peculiar to the case," 483 U.S.

at 734, 107 S. Ct. at 3091, 97 L. Ed. 2d at 603, which rests on the assumptionthat all contingent-fee cases should be treated as a class, without distinctionbased on their specific circumstances. We think the more practical approach isthat outlined in the Delaware Valley II dissent, which observes that "a court'sjob simply will be 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 ofpayment," and notes that 'it is the actual risks or burdens that are borne by thelawyer or lawyers that determine whether an upward adjustment is called for.'"483 U.S. at 747, 107 S. Ct. at 3098, 97 L. Ed. 2d at 612 (Blackmun, J., dissenting)(quoting Wildman, supra, 771 F. 2d at 613). As the American Bar Association advocated in its brief in Delaware Valley II,"[i]n adjudicating claims of enhancement, therefore, courts should evaluateboth the extent to which the attorney has been able to mitigate the basic risk ofnonpayment and the extent to which other factors may have aggravated it."Brief for American Bar Association as Amicus Curiae at 19. Thus, attorneys whoare paid a portion of their reasonable hourly fee irrespective of result havepartially mitigated the risk of non-payment. Similarly, "[a]n attorney who hasentered into a contingent fee contract in a suit seeking substantial damages hasalso significantly reduced his risk, for he has obtained, in exchange for hisacceptance of the risk of nonpayment, the

prospect of compensation greater than the prospective 'lodestar' amount." Id.at 20. Nevertheless, even in cases in which an attorney has negotiated acontingent-fee payment, the risk of nonpayment might remain substantialbecause of the specific problems of proof and the hazards inherent in alllitigation. Moreover, in a wide variety of fee-shifting cases attorneys will beunable to mitigate the risk of nonpayment. In many cases, a client will be unable to pay for counsel or will be unwilling



to assume the risk of liability for attorney's fees, even if the public interest maybe significantly aided by the private litigation. Other cases simply will notgenerate significant funds, even if they are successful. Many actions seek onlydeclaratory or injunctive relief, many are hampered by immunity doctrines andspecial defenses available to the defendants, and many will generate only smallawards.

[Delaware Valley II, supra, 483 U.S. at 749, 107 S. Ct. at 3099, 97 L. Ed.2d at 613 (Blackmun, J., dissenting).]

Although we authorize the award of contingency enhancements based onthe risk of nonpayment, that principle does not preclude a trial court, inexercising its discretion to award a reasonable attorney's fee, from also takinginto account in certain cases the likelihood of success. Sometimes, the "legal" risks facing a case may be so apparent andsignificant that they will constitute an economic disincentive independent ofthat created by the basic contingency in payment. When the result achieved insuch a case is significant and of broad public interest, an additionalenhancement is justified in order to attract attorneys to take such cases, whichotherwise might suffer from lack of representation.

Extra enhancement for such cases, however, should be awarded inexceptional cases only.

[Id. at 751, 107 S. Ct. at 3100, 97 L. Ed. 2d at 614 (Blackmun, J.,dissenting).]

Similarly, in cases in which the likelihood of success is unusually strong, acourt may properly consider the inherent strength of the prevailing party'sclaim in determining the amount of contingency enhancement. Cf. Hall, supra,747 F. 2d at 843-44 ("[O]ne can fairly conclude that from the outset the plaintiffhad a very strong case and 'objectively viewed, the risk that plaintiff['s] counselwould come away empty handed was remote.'" (quoting McMullan v.Thornburgh, 570 F. Supp. 1070, 1076 (E.D. Pa. 1983)). We decline to adopt the condition on the award of contingency enhancementsadvocated by the plurality opinion in Delaware Valley II that there be "evidencein the record * * * that without risk enhancement plaintiff would have facedsubstantial difficulties in finding counsel in the local or other relevant market."483 U.S. at 731, 107 S. Ct. at 3089, 97 L. Ed. 2d at 601 (plurality opinion). Wefind the condition insufficiently related to the primary rationale for contingencyenhancements, which is to assure that counsel for the prevailing party is paid areasonable fee by the nonprevailing party. Whether counsel is readily availableto a plaintiff by virtue of the prospect of receiving a substantial contingent feeout of the recovery, or difficult to retain because the claim seeks only equitablerelief, the justification for enhancement is the same:

The recognition that in either case the lodestar amount is not a reasonablefee to be charged to the nonprevailing party because it does not reflect the riskof nonpayment. The Bar's knowledge that contingency enhancements areawarded in litigation instituted under fee-shifting statutes surely will increasethe availability of attorneys to prosecute those claims, but proof by a plaintiff ofdifficulty in hiring an attorney is not and should not be a prerequisite tocontingency enhancement under New Jersey's fee-shifting statutes. Determination of the amount by which a lodestar fee should be enhanced toreflect the risk of nonpayment is conceptually difficult because there is "no suchthing as a market hourly rate in contingent litigation." 2 Derfner & Wolf, supra,¶ 16.04 [4][a], at 16-153. We note that plaintiffs' application for counsel feesrelied in part on certifications from three attorneys specializing in employment-discrimination cases who stated that contingency enhancements of two to two-




and-one-half times the lodestar is required to induce competent attorneys toundertake to represent plaintiffs in comparable cases. We are skeptical aboutwhether the size of contingency enhancements can responsibly be predicatedsolely on the certifications of attorneys who practice in the field, and note thatother courts have arrived at the same conclusion. Cf. Kelly v. Matlack, Inc., 903F.2d 978, 986-87 (3d Cir. 1990) (affirming trial court's determination to denycontingency enhancement despite submission of eight attorney affidavitsadvocating doubling of lodestar);

Rode, supra, 892 F. 2d at 1184-85 (rejecting attorney affidavits submitted tosupport fee application as insufficient to establish relevant market's treatmentof contingency cases); Blum v. Witco Chem. Corp., 888 F.2d 975, 983-84 (3dCir. 1989) (confirming district court's conclusion that eight attorney affidavitssupporting contingency enhancement were inadequate to quantify amount bywhich lodestar fee should be increased). We also discern from our review of the extensive litigation concerningcontingency enhancements that fee awards of double the lodestar represent thehigh end of attorney fee awards under fee-shifting statutes: Before the Supreme Court began to address contingent multipliers, thesize of contingency enhancements varied both according to the type of litigationand the degree of risk involved in the individual lawsuit. Although the lowercourts' tendency to fail to spell out precisely how much of a fee enhancementwas due to contingency and how much to other factors makes any breakdowninherently imprecise, a total multiplier of 2, representing all enhancing factors,appears typically to have been applied as a ceiling in public interest litigation,see, e.g., Kelley v. Metropolitan County Board of Educ., 773 F.2d 677 (6th Cir.1985) (en banc) cert. denied, 474 U.S. 1083, 106 S. Ct. 853, 88 L. Ed. 2d 893(1986) (multiplier of 1.25 for contingency); Vaughns v. Board of Educ. of PrinceGeorge's County, 770 F.2d 1244 (4th Cir. 1985) (multiplier of 1.075 forcontingency); Sierra Club v. Clark, 755 F.2d 608 (9th Cir. 1985) (multiplier of1.3 for contingency, difficulty and results); Craik v. Minnesota State Univ.Board, 738 F.2d 348 (8th Cir. 1984) (multiplier of 1.25 for contingency). . . .

[2 Derfner & Wolf, supra, ¶ 16.04[4][a], at 16-157 n.151.]

The American Bar Association expressed a similar view concerning the size ofcontingency enhancements: Further, the degree of enhancement actually awarded by the courts incivil rights case has been far from extravagant. Of the 26 post-Blum v. Stensoncases awarding risk-based enhancement under Section 1988 discussed in thepreceding paragraph, enhancement of 100" is the maximum reported, and theunweighted average of all enhancement factors employed was onlyapproximately 32%. Similarly, in Wildman v. Lerner Stores Corp., 771 F.2d 605,613 (1st Cir. 1985), the First Circuit observed that during 1980-1985, for civilrights cases, enhancement of 100" was the maximum reported, and thatenhancements of such magnitude had been awarded only three times.

[Brief for American Bar Association as Amicus Curiae, supra, at 17.]

We conclude that contingency enhancements in fee-shifting casesordinarily should range between five and fifty-percent of the lodestar fee, withthe enhancement in typical contingency cases ranging between twenty andthirty-five percent of the lodestar. Such enhancements should never exceedone-hundred percent of the lodestar, and an enhancement of that size will beappropriate only in the rare and exceptional case in which the risk ofnonpayment has not been mitigated at all, i.e., where the "legal" risk constitutes"an economic disincentive independent of that created by the basic contingencyin payment * * * [and] the result achieved * * * is significant and of broad public




http://barratry.law.cornell.edu:5123/cgi-bin/sup-choice.cgi?474+1083


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http://njlaw.rutgers.edu/cgi-bin/caselink.cgi?cite=88%20L.�Ed.�2d%20893

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interest." Delaware Valley II, supra, 483 U.S. at 751, 107 S. Ct. at 3100, 97 L. Ed.2d at 614 (Blackmun, J., dissenting). Enhancements of that magnitude will bereserved for cases of that

description in which no prospect existed for the attorney to be compensatedby payment of a percentage of a large damages award, and in which the reliefsought was primarily equitable in nature. Obviously, we remain willing torevisit the issue if presented with compelling evidence that our perception ofthe proper range of contingency enhancements is inconsistent with the relevantmarket and therefore is obstructing the availability of competent counsel toconduct fee-shifting litigation. Our desire to avoid ancillary litigation over counsel-fee awards prompts us toexercise our original jurisdiction and modify the counsel-fee award fixed by thetrial court, which was made without the benefit of the guidelines established inthis opinion. On this record, defendant having asserted only a generalizedchallenge, in the course of argument on the application for counsel fees, to thenumber of hours expended by plaintiffs' counsel in pretrial preparation anddiscovery, we accept the trial court's determination that the lodestar fee isreasonable. In view of the substantial verdict recovered by plaintiffs, noquestion exists about whether the level of success achieved is sufficient towarrant an award of the entire lodestar fee amount. See Hensley, supra, 461U.S. at 435-36, 103 S. Ct. at 1940-41, 76 L. Ed. 2d at 52. The guidelines we haveadopted, however, suggest that the fee award of double the lodestar-representing a contingency enhancement of one hundred percent of thelodestar--is excessive. As the Appellate Division noted, the partially contingent-fee agreement between plaintiffs and counsel

"provided for compensation of about $278,207 for the services rendered bycounsel before judgment. (This is 25" of the recovery of $935,000 plus anhourly-rate calculation based on 50" of the median rate, or $68.75 per hour forpartners and associates, times 646.65 hours.)" 276 N.J. Super. at 460. Pursuantto that agreement, although counsel would have borne the practical risk ofnonpayment because of plaintiffs' limited financial resources if the suit hadbeen unsuccessful, that risk was somewhat offset by the prospect of substantialcompensation, independent of the court-awarded fee, in the event of a largerecovery. In addition, without diminishing the burdens borne by plaintiffs'counsel in overcoming a vigorous defense and persuading the jury to awardsubstantial compensatory and punitive damages, our assessment of the record,consistent with those of the trial court and Appellate Division, is that strongevidence supported the jury's finding that unlawful discrimination was acontributing factor in the termination of Rendine and Lorestani, whichsuggests that the risk of nonpayment was also somewhat mitigated by thestrength of plaintiffs' case. "The jury had ample evidence to support itsdetermination that the discrimination against both plaintiffs was not onlyintentional wrongdoing but also malicious or 'evil-minded.'" Id. at 446. Although we assess plaintiffs' counsel's risk of nonpayment as moderate, thatrisk increased during the course of the litigation by virtue of defendant'svigorous resistance to each

element of plaintiffs' claims. We lack the intimate familiarity with the recordand feel for the case possessed by the trial court. Nevertheless, based on ourcareful review of the trial record we have concluded that a contingencyenhancement equal to one-third of the lodestar fee, or $38,111.42, isappropriate. We therefore modify the judgment and reduce the prejudgmentcounsel fee award from $228,668.50 to $152,445.67. Based on the AppellateDivision's calculation that plaintiffs' counsel are entitled to a fee of $278,207pursuant to their contingent-fee agreement, our modification of the judgmentapparently will increase plaintiff's obligation for prejudgment counsel fees from



$49,538.50 to $125,761.33. Although the adoption of guidelines for determining reasonable counsel feesmandated our intervention to modify the fee set by the trial court, we reiterateour assumption that in the future the need for appellate supervision of counsel-fee awards under fee-shifting statutes will be infrequent.

D

Defendant's amended Petition for Certification encompassed theAppellate Division's order entered September 7, 1994, awardingcounsel fees, costs, and disbursements on appeal. By virtue of ourgrant of the petition, defendant's challenge to the AppellateDivision's order is before us. We decline to disturb that order in anyrespect.

VI

Except for the modification of the counsel-fee award, we affirm thejudgment of the Appellate Division. Chief Justice Wilentz and Justices Handler, Pollock, O'Hern, Garibaldi andColeman join in Justice Stein's opinion.

SUPREME COURT OF NEW JERSEY

NO. A-105

ON APPEAL FROM

ON CERTIFICATION TO

CANDY RENDINE andBERNADETTE LORESTANI,

Plaintiffs-Respondents,

v.

EDWARD PANTZER, d/b/aPANTZER MANAGEMENT COMPANY,

Defendant-Appellant.

DECIDED

Chief Justice Wilentz

SEPTEMBER TERM 1994

Appellate Division, Superior Court

Appellate Division, Superior Court

July 24, 1995

PRESIDING



OPINION BY

CONCURRING OPINION BY DISSENTING OPINION BY

CHECKLIST

MODIFY & AFFIRM

CHIEF JUSTICE WILENTZ X JUSTICE HANDLER X JUSTICE POLLOCK X JUSTICE O'HERN X JUSTICE GARIBALDI X JUSTICE STEIN X JUSTICE COLEMAN X

TOTALS

7

This archive is a service of Rutgers School of Law - Camden.

Justice Stein

http://www-camlaw.rutgers.edu/

NOT FOR PUBLICATION

UNITED STATES DISTRICT COURT

DISTRICT OF NEW JERSEY

UNITED STATES OF AMERICA, Plaintiff, v. NCH CORPORATION, et al., Defendants.

Civil Action No. 98-5268 (SDW)(MCA)

N.J. DEPARTMENT OF ENVIRONMENTAL PROTECTION, and THE ADMINISTRATOR OF THE N.J. SPILL COMPENSATION FUND, Plaintiffs, v. HIGGINS DISPOSAL, INC., et al., Defendants.

Civil Action No. 05-881 (SDW)(MCA) OPINION

September 10, 2010

WIGENTON, District Judge. Before the Court is Third Party Defendant Sun Pipe Line Company Inc.’s (“Sun”)

application for attorneys’ fees and costs (the “Application”) pursuant to this Court’s June 24,

2009 Order granting Sun’s Motion for Summary Judgment on Indemnification from Third Party

Defendant Sheehan Pipe Line Construction Company (“Sheehan”). This Court has jurisdiction

pursuant to 28 U.S.C. § 1331. Venue is proper pursuant to 28 U.S.C. § 1391(b). The

Application is decided without oral argument pursuant to Federal Rule of Civil Procedure 78.

USA v. NCH CORPORATION, et al Doc. 497

Dockets.Justia.com

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http://dockets.justia.com/

2

FACTUAL AND PROCEDURAL BACKGROUND

This application arises out of a decade-plus long dispute concerning the correct

distribution of clean-up costs for the subsurface water contamination at the Higgins Farm

Superfund Site (“Higgins Farm” or the “Site”). The Court will not recite the entire history of the

case as the alleged facts have been laid out clearly in the extensive procedural history, but a brief

summary is appropriate.

Higgins Farm is a seventy-five (75) acre farm that has been the subject of United States

Environmental Protection Agency (“EPA”) and New Jersey Department of Environmental

Protection (“DEP”) regulatory action since the late 1980s. For many years, the Site served as a

dump for drums containing, among other things, byproducts of chemical manufacturing and

toxic waste. Neither Sun nor Sheehan dispute that the estimated amounts of EPA and DEP’s

past and future cleanup costs could exceed thirty-six (36) million dollars.1

In 1998, the EPA commenced an action pursuant to the Comprehensive Environmental

Response, Compensation and Liability Act, 42 U.S.C. § 9601 et seq. (“CERCLA”) with respect

to Higgins Farm. The EPA named Lisbeth Higgins, the Site owner, and Third-Party Plaintiffs

FMC Corporation (“FMC”) and NCH Corporation (“NCH”) as defendants and alleged that they

were potentially responsible parties based upon their alleged disposal of hazardous waste at the

Site. In June 2000, FMC and NCH filed third party actions against various parties, including

Sheehan and Sun. Specifically, FMC and NCH alleged that a puncture in Sun’s pipeline by a

backhoe in 1956 contributed to the subsurface water contamination at Higgins Farm. The claims

against Sheehan and Sun did not include CERCLA counts, but rather were framed under the

1 The parties, however, do disagree on the maximum potential liability risk to Sun and Sheehan and whether they were jointly and/or severally liable for the ultimate cleanup costs. (See Sheehan’s Mem. in Opp. to Sun’s Mot. for Fees 8-10 (“Sheehan Opp. Mem.”); Sun’s Reply Mem. in Supp. of Fees 5-7 (“Sun Reply”).)

3

New Jersey Spill Compensation and Control Act. N.J. STAT. ANN. § 58:10-23.11. (“Spill Act”).

NCH further asserted a tort claim against them.

On October 31, 2008, Sun filed for summary judgment on its cross-claims against

Sheehan for indemnification pursuant to the 1956 contract between Sun and Sheehan under

which Sheehan installed a fourteen (14) inch pipeline for Sun. In its June 24, 2009 Order, this

Court, among other things, granted Sun’s motion for summary judgment on its contractual

indemnity claim against Sheehan and ordered that Sheehan pay Sun its attorneys’ fees and costs

pursuant to the indemnity agreement. The Court left it to the parties to “negotiate and agree on a

reasonable sum” for Sun’s fees and also made itself available to assist, if necessary. (June 24,

2009 Order.)2

Ultimately, the parties failed to reach an agreement on the amount of fees and costs.

Pursuant to Local Civil Rule 54.2 and as authorized by this Court’s December 17, 2009 and

January 25, 2010 Orders, Sun submitted a detailed affidavit by Sun’s lead counsel Harold L.

Segall, with accompanying exhibits, setting forth the fees and costs it sought from Sheehan

pursuant to the indemnity agreement (the “Affidavit”). Sun seeks a total of $3,399,449 in

addition to the reasonable costs associated with its current application for attorneys’ fees and

costs. Sheehan opposes the fee petition and asks for a substantial reduction3 based upon alleged

inefficiencies in Sun’s billing practices and what it claims are unreasonable charges.

DISCUSSION

“Attorneys’ fees and expenses may be awarded to a prevailing party in a federal litigation

where authorized by statute, court rule or contract.” Apple Corps. Ltd. v. Int’l Collectors Soc’y,

2 The Court also asked for periodic updates on the status of the settlement negotiations and, on more than one occasion, extended the parties’ deadlines to come to an agreement. 3 Sheehan repeatedly asks that this Court “substantially reduce” Sun’s fee request; however, Sheehan neglects to provide the exact reduction it feels would be appropriate. (See Sheehan Opp. Mem. 1. 31.)

4

25 F. Supp. 2d 480, 484 (D.N.J. 1998). “The most useful starting point for determining the

amount of a reasonable fee is the number of hours reasonably expended on the litigation

multiplied by a reasonable hourly rate.” Hensley v. Eckerhart, 461 U.S. 424, 433 (1983). “The

product of this calculation is called the lodestar,” Apple Corps., 25 F. Supp. 2d at 484, and it

“provides an objective basis on which to make an initial estimate of the value of a lawyer’s

services.” Hensley, 461 U.S. at 433; see also Washington v. Phila. County Ct. of Com. Pl., 89

F.3d 1031, 1035 (3d Cir. 1996) (“The lodestar is strongly presumed to yield a reasonable fee.”).

However, the lodestar calculation requires that the court “‘carefully and critically’ evaluate the

hours and the hourly rate put forth by counsel.” Blakey v. Cont’l Airlines, Inc., 2 F. Supp. 2d

598, 602 (D.N.J. 1998) (citations omitted).

The party seeking attorneys’ fees has the burden of establishing the reasonableness of the

fees by “submit[ting] evidence supporting the hours worked and rates claimed.”4 Rode v.

Dellarciprete, 892 F.2d 1177, 1183 (3d Cir. 1990) (internal quotations omitted) (citing Hensley,

461 U.S. at 433). In other words, Sun’s counsel must “produce satisfactory evidence -- in

addition to [their] own affidavits -- that the requested rates are in line with those prevailing in the

community for similar services by lawyers of reasonably comparable skill, experience and

reputation.” Blum v. Stenson, 465 U.S. 886, 896 n.11 (1984). In this case, Sun’s fee application

request is supported in great detail by the Affidavit of Harold L. Segall, Esq., in which the hours

and tasks of the attorneys, paralegals and support staff who worked on the matter are set forth.

The amount of fees sought by Sun can be calculated by multiplying the hours submitted for each

4 In addition, L. Civ. R. 54.2(a) requires that the fee applicant submit an affidavit detailing: “(1) the nature of the services rendered, the amount of the estate or fund in court, if any, the responsibility assumed, the results obtained, any particular novelty or difficulty about the matter, and other factors pertinent to the evaluation of the services rendered; (2) a record of the dates of services rendered; (3) a description of the services rendered on each of such dates by each person of that firm including the identity of the person rendering the service and a brief description of that person’s professional experience; (4) the time spent in the rendering of each of such services; and (5) the normal billing rate for each of said persons for the type of work performed.”

5

professional by the rate listed for the respective professional. The product of these numbers

yields a total figure of $2,944,160.63. Additionally, B&D provided a courtesy discount to Sun in

the amount of $50,908.87. Thus, Sun seeks a total of $2,893,251.76 for the fee portion of its

claim, not including the fees it will seek for work done on the pending fee request.

Once the applicant has produced satisfactory evidence, the burden shifts to “the party

opposing the fee to contest the reasonableness of the hourly rate requested or the reasonableness

of the hours expended.” Apple Corps., 25 F. Supp. 2d at 485. “If the party opposing the fee

petition meets its burden of proving that an adjustment is necessary, the court has wide discretion

to adjust the attorneys’ fee.” Id. (internal quotations omitted).

I. The Lodestar

The first step in calculating the lodestar is determining whether the number of hours

expended was reasonable. Any “hours that were not reasonably expended” must be excluded

from the fee calculation. Hensley, 461 U.S. at 434 (internal quotations omitted). “Hours are not

reasonably expended if they are excessive, redundant, or otherwise unnecessary.” Rode, 892

F.2d at 1183. After the Court determines whether the hours expended were reasonable, it must

then assess the hourly rate charged for that work. A “reasonable hourly rate is calculated

according to the prevailing market rates in the community.” Washington, 89 F.3d at 1035. “The

starting point in determining a reasonable hourly rate is the attorneys’ usual billing rate, but this

is not dispositive.” Pub. Interest Research Group v. Windall, 51 F.3d 1179, 1185 (3d Cir. 1995).

Once the lodestar has been computed, the “court can adjust the lodestar downward if the

lodestar is not reasonable in light of the results obtained.” Rode, 892 F.2d at 1183. A court may

not, however, decrease a fee award based on factors that were not raised at all by the opposing

party. Id. To that end, Sheehan does not challenge the reasonableness of the hourly rates

6

claimed by Sun5 and therefore, the Court need only consider whether the number of hours

expended by B&D was reasonable.6 See id.

II. Reasonableness of hours

Sun seeks attorneys’ fees for a total of 10,044 hours worked by B&D professionals.

Sheehan challenges the reasonableness of those hours on several grounds. First, Sheehan

provides twelve examples of what it alleges are specific billing abuses committed by B&D.7

Second, Sheehan challenges B&D’s use of “Block Billing”. Finally, Sheehan argues that B&D’s

fees should be reduced because they were billed in increments of .25 hours instead of what it

believes to be the industry standard of .1 increments.

The “district court has a great deal of discretion to adjust the fee award in light of those

objections.” Rode, 892 F.2d at 1183; see also Bell v. United Princeton Prop., Inc., 884 F.2d 713,

721 (3d Cir. 1989) (noting that “the court will inevitably be required to engage in a fair amount

of ‘judgment calling’ based upon its experience with the case and its general experience as to

how much time a case requires”). The Court addresses each of Sheehan’s arguments below.

a. Sun’s Specific Challenges and Block Billing

Among other things, Sheehan points to twelve specific instances in which it contends that

Sun’s attorney hours are too high. Those examples are: 1.) Sun’s Motion to Dismiss Third Party

Claims; 2.) Sun’s Motion to Dismiss Cross Claims; 3.) Sun’s Pro Hac Vice Applications; 4.)

5 Sun seeks compensation at 2009 rates for all time worked on this case since 2000. This is the law in the Third Circuit (See Lanni v. N.J., 259 F.3d 146, 150 (3d Cir. 2001) (“‘To take into account delay in payment, the hourly rate at which compensation is to be awarded should be based on current rates rather than those in effect when the services were performed.’”) (quoting Rendine v. Pantzer, 141 N.J. 292, 337 (N.J. 1995)). 6 Sheehan never challenges the specific hourly rates charged by Sun’s counsel’s - Beveridge & Diamond, P.C.’s (“B&D”) - professionals. Sheehan, however, does challenge the hourly rate insomuch as they argue that B&D failed to properly allocate work amongst its paralegals, associates and partners. Nevertheless, this Court construes those challenges as better subsumed within the reasonableness of hours analysis. See infra Section II., c. 7 Sheehan argues that the examples provided “are merely illustrative and by no means exhaustive of the billing abuses by B&D.” (Sheehan Opp. Mem. 15.) However, a court is precluded from decreasing a fee award based on factors that were not raised by the opposing party and thus this Court deems any other specific examples waived. Rode, 892 F.2d at 1183.

7

Sun’s Motion for Limited Discovery; 5.) Sun’s Motion to Strike Expert Report of Dale Jensen;

6.) Sun’s Motion to Bifurcate; 7.) Sun’s Motion for Indemnification from Sheehan; 8.) Spill

Action Motion Drafted and Filed by Sheehan; 9.) Sun’s Preparing for and Taking Deposition of

Frank Rovers; 10.) Sun’s Preparing for and Defending Deposition of Kathryn Johnson; 11.)

Sun’s Preparing for and Defending Deposition of Thomas Gillespie; and 12.) Sun’s General

Deposition Preparation. Sheehan alleges that B&D professionals spent a total of 2,415.25 hours

on the twelve challenged examples. However, in its Reply to Sheehan’s Opposition, Sun argues

that they only worked 1,722 hours on those very same tasks. (See Sun Reply 10-19; Sun Suppl.

Aff. in Supp. of Fees ¶¶ 19-67 (“Sun Suppl. Aff.”).) As will be explained infra, this discrepancy

is due in large part to B&D’s use of block billing and is a significant reason for the fee dispute in

the first place.

“Block billing is a time-keeping method by which each lawyer and legal assistant enters

the total time daily spent working on a case, rather than itemizing the time expended on specific

tasks.” Brown v. City of Pittsburgh, No. 06-393, 2010 WL 2207935, at *8 n.12 (W.D. Pa. May

27, 2010) (quoting Welch v. Met. Life Ins. Co., 480 F.3d 942, 945 (9th Cir. 2007)). In this

Circuit, “[b]lock billing is a common practice which itself saves time in that the attorney

summarizes activities rather than detailing every task” and such billing will be upheld as

reasonable if the listed activities reasonably correspond to the number of hours billed. United

States of America ex rel. Doe v. Pa. Blue Shield, 54 F. Supp. 2d 410, 415 (M.D. Pa. 1999).

While a substantial number of vague entries may be a reason to exclude hours, it is not a reason

to exclude the entire entry. This Court believes the more appropriate approach would be to look

at the entire block, comparing the listed activities and the time spent, and determining whether

the hours reasonably correlate to all of the activities performed.

8

In Rode v. Dellarciprete, 892 F.2d 1177 (3d. Cir. 1990), the Court of Appeals addressed

the proper degree of specificity required of a party seeking attorneys’ fees, and stated that

specificity should only be required to the extent necessary for the court “to determine if the hours

claimed are unreasonable for the work performed.” Id. at 1190. “It is not necessary to know the

exact number of minutes spent nor the precise activity to which each hour was devoted nor the

specific attainments of each attorney.” Id. (citing Lindy Bros. Builders, Inc. of Phila. v. Am.

Radiator & Standard Sanitary Corp., 487 F.2d 161, 167 (3d Cir. 1973)).

When looking at the time entries for tasks not specifically challenged by Sheehan,

B&D’s fees seem reasonable. The entries for each attorney from B&D on each day are

sufficiently specific for this Court to make a determination as to the reasonableness of the tasks

themselves and, in the majority of the cases, the time allotted for each task. While individual,

line item billing records are always preferred by a court forced to evaluate the time expended in

determining an appropriate fee award, the total amount of time attributed to these block activities

in this instance does not strike this Court as unreasonable or inconsistent with the time one would

expect to expend on the activities described in those entries. Thus, while not necessarily ideal,

B&D’s time entries do not suggest that anything is amiss.8 The block billings all describe

necessary tasks in this case, performed on a given date. Hence, given this Court’s background

and experience, Sheehan’s general challenge to the block-style billing employed by Sun’s

counsel in this litigation is rejected. See Brown, 2010 WL 2207935, at *9 (overruling the

defendant’s general objection based on block billing after finding that billing entries were

sufficiently specific).

8 In light of the extremely detailed affidavits and exhibits submitted by Sun, including B&D’s time entries, this Court is generally less skeptical than Sheehan’s counsel appears to be about the billing records Sun presents in its fee petition and supporting exhibits for days when multiple tasks in this case were performed and the time combined into one total for the day.

9

As applied to the specific challenges raised by Sheehan, however, this Court finds

problems with B&D’s block billing method. As stated above, there are significant discrepancies

between the amount of time the parties believe B&D professionals spent on the twelve

challenged examples. This confusion arises from B&D’s failure to task bill because the parties

now have to estimate, after the fact, how much time was spent on a particular task within a block

billing description. Whereas Sheehan apportions most, if not all, of the time listed in a block

billed time entry to the specific task it is challenging, Sun’s lead counsel, Mr. Segall, has

submitted a Supplementary Affidavit, with exhibits, breaking down the entries and allotting time

in a much more favorable light. Unfortunately, neither method is accurate.

The use of Sheehan’s method is misleading and would result in inflated hours.

Specifically, Sheehan’s proposed calculations would result in the same disputed time being

apportioned to multiple tasks because in calculating the hours for a given task, Sheehan included

other tasks appearing in that day’s time entry. (See Sheehan Opp. 24 n.33.) For example, in its

Opposition, Sheehan claims that B&D spent 17.5 billable hours preparing pro hac vice

applications in August 2000. (Id. 17.) Included in that time is 11.25 hours spent by Kathleen

Lennon, a former environmental litigation associate at B&D, on August 1, 2000, “prepar[ing]

pro hac vice motions.” (See Sun’s Suppl. Aff., Ex. 4.) However, Ms. Lennon’s time entry

description for those 11.25 hours also includes “research and preparation of motion to dismiss”

and a “telephone conference with H. Segall.” (Id.) Those same hours could have been – and

probably were – utilized by Sheehan in its calculation of the amount of time B&D lawyers spent

on Sun’s August 2000 Motion to Dismiss Third Party claims, which Sheehan also challenges.

This double billing/counting is not a reliable method to challenge Sun’s fee request.

10

Sun’s Supplemental Affidavit fairs no better.9 In his Supplemental Affidavit, Mr. Segall

would have the Court believe that he is able to review ten year old B&D invoices and calculate

the exact amount of time spent on any task, on any day, by any B&D professional, based upon

his eighteen years of experience as a billing attorney. (See Sun’s Suppl. Aff. ¶ 6.) Despite this

Court’s faith in Mr. Segall’s qualifications and expertise, it would be virtually impossible for any

person to recall, based on memory alone, the exact amount of time another professional spent on

a specific task over ten years ago – at least with sufficient accuracy to satisfy this Court.10

At the end of the day, however, both Sun and Sheehan’s inability to correctly identify

time entries stems directly from B&D’s failure to task bill. Courts within this Circuit have held

that a party “block bills at his own peril.” See Estate of Schultz v. Potter, No. 05-1169, 2010 WL

883710, at *7 n.14 (W.D. Pa. Mar. 5, 2010). This Court agrees and holds that when there is

confusion due to block billing, the blame lies on the party seeking fees because they were in the

best position to mitigate any confusion by task billing. As explained above, the Court does not

expect minute by minute entries by counsel. However, the significant amount of “block billing”

employed by B&D, in this instance, thwarts the Court in the performance of its review

obligations and does not reasonably meet Sun’s obligation to provide “some fairly definite

information as to the hours devoted to various general activities” and by whom. Keenan v. City

of Phila., 983 F.2d 459, 473 (3d Cir. 1992). The Court will now look at the twelve challenged

examples listed by Sheehan and, where necessary, reduce the fee amount sought by an

appropriate percentage in response to the impediments caused by B&D’s use of block billing.

9 Shortsightedly, Sun criticizes Sheehan’s Opposition papers for misrepresenting the fees Sun seeks and failing to accurately calculate the hours spent by B&D professionals on specific tasks. Significantly, however, much of the information that Sun has provided to clarify the amount of time billed for specific tasks (such as which professional’s time was excluded as a discount to Sun or Sheehan) was not provided until Sun filed its Supplemental Affidavit. 10 If Sun has notes or other documentation which prove the specific amount of time each B&D individual spent completing specific tasks, they should have been attached to Sun’s fee request.

11

i. Sun’s Motion to Dismiss Third Party Claims

Sheehan opposes fees for work done relating to Sun’s October 2, 2000 Motion to

Dismiss. In its Motion to Dismiss, Sun sought dismissal of FMC and NCH’s contribution claims

on the grounds that 1.) FMC and NCH had not engaged in the clean up and thus couldn’t recover

costs under the Spill Act; 2.) FMC and NCH were not responsible for the same injury as Sun;

and 3.) FMC and NCH’s claims did not meet the pleading requirements of Rule 14. The papers

submitted by Sun in support of its motion included an 11-page moving brief and a 16-page reply.

Ultimately, the motion was denied.

According to Sheehan’s calculations, Sun billed 294 hours for this motion. (See Sheehan

Opp. 16.) Sheehan then uses a blended rate of $360 per hour (partner rate of $445 per hour and

associate rate of $275 per hour) to calculate that Sun seeks to recover $105,840.00 ($360 x 294

hours) for time spent on this motion. As is the case with respect to all of Sheehan’s challenges,

Sun disagrees with Sheehan’s figures. Sun asserts that B&D spent 280 hours on the motion.

(See Sun Reply 10.) Furthermore, Sun does not use a blended rate to determine the final cost.

Instead, as explained above, Mr. Segall estimates the precise amount of time spent on the motion

by each professional and calculates the overall fee by using their respective 2009 billing rates.11

Consequently, Sun claims that B&D’s invoices reflect fees in the amount of $89,070 for its work

on the Motion to Dismiss. Using either calculation, this Court agrees with Sheehan; the amount

of time spent by B&D professionals on this relatively non-complex motion was excessive. The

excessiveness is illustrated, in part, by Sun’s straightforward and concise 11-page moving brief.

Thus, Sun’s fees sought for this motion will be reduced by 20%.

11 B&D’s 2009 rates for Partners, Associates, Paralegals and Paralegal Assistants were $445.00, $275.00, $166.50 and $117.00 per hour, respectively.

12

Because B&D block billed, there is no way for this Court to segregate the exact amount

of time spent on the Motion to Dismiss from other services listed in those block billing entries.

Consequently, as will be the case in all of the examples successfully challenged by Sheehan, the

Court will split the difference between the parties’ respective estimation of Sun’s fees. For the

Motion to Dismiss, that number equals $97,455.00 and a 20% fee reduction would amount to

$19,491.00.

ii. Sun’s Motion to Dismiss Cross Claims

Sheehan also opposes fees for B&D’s work done relating to Sun’s Motion to Dismiss

Cross Claims by Third-Party Defendant Firmenich (“Firmenich”). In support of its Opposition,

Sheehan claims that B&D spent 66 hours researching and preparing an uncomplicated motion

that included a 9-page brief – which was ultimately denied. (See Sheehan Opp. 16-17.) Even if

this Court agreed with Sheehan’s calculation of the time spent on this Motion, this Court

disagrees that the time billed was excessive.12 First, based upon this Court’s experience, the time

in and of itself seems reasonable. Secondly, though the Motion was denied, Firmenich stipulated

that if Sun prevailed against FMC and NCH, it would dismiss its claims against Sun.

Consequently this Court will not grant Sheehan’s request for a deduction.

iii. Sun’s Pro Hac Vice Applications

Sheehan next seeks reduction for fees relating to B&D’s preparation of pro hac vice

applications for Harold Segall, Justin Savage and James Parkinson in August of 2000 and April

of 2005. Sheehan claims that B&D spent 28.75 hours on these applications for a total fee

amount of $10,350.00. (See Sheehan Opp. 17.) Sun counters that it only spent a total of 10

billable hours and that its fees amount to only $2,877.50. This difference is rather staggering and

is indicative of the problems caused by block billing. In fact, the Court is particularly troubled

12 Sun claims that it only spent 48.5 hours on the motion. (See Sun Reply 11.)

13

by this instance of block billing by B&D. Not only is the amount of time sought excessive, but

the number of days spent on the applications is unwarranted as well. For example, for Sun’s

August 2000 pro hac vice applications, B&D professionals worked on the applications for at

least six (6) consecutive business days spanning both the months of July and August. (See Sun

Suppl. Aff., Ex. 4.) Additionally, Sun’s April 2005 pro hac vice applications were worked on for

three (3) consecutive business days even though, presumably, there should have been saved

drafts in an electronic database from Sun’s earlier filings. (See id.) It should not take a firm as

sophisticated as B&D nine (9) business days to create and finalize pro hac vice applications.

The Court realizes that some of this time was discounted; however, the fact that it was entered by

B&D and billed to Sun in the first place is problematic. Two specific entries in which R.

Pomeroy13 spent the same amount of time completing what looks to be the same tasks, on back

to back days,14 is particularly disconcerting. (See id.) Though Sun claims those fees were

eventually discounted, this Court believes they indicate the excessiveness of B&D’s billing

practices in this instance. Consequently, the Court will eliminate the fees sought by Sun for the

pro hac vice applications in their entirety. See Employers Ins. Co. of Wausau v. Harleysville

Inc., No. 05-4900, 2008 WL 5046838, at *2-3 (D.N.J. Nov. 20, 2008) (significantly reducing

hours billed for filing a pro hac vice motion). While the court in Harleysville did not completely

disallow time billed for filing pro hac vice motions, it reduced the time in half. The Court

reasoned that because these types of motions did not involve the filing of a legal brief or legal

research, and are generally standard form motions, 4.1 hours for one motion was excessive. Id.

The court further noted that such motions are normally saved on a firm’s computers and updated

13 None of the parties’ supporting documentation provided R. Pomeroy’s first name. 14 April 19, 2005 and April 20, 2005.

14

as necessary. Id. Here, once the Court splits the difference between the parties, the amount of

fees that will be eliminated is $6,613.75.

iv. Sun’s Motion for Limited Discovery

Sheehan opposes fees relating to Sun’s Motion for Limited Discovery. Sheehan argues

that the hours spent on the motion (174) and total fees claimed ($62,640.00) were excessive in

light of the simplicity of the issues. Sun, on the other hand, claims that it spent only 128.25

hours on the motion for attorneys’ fees totaling $38,626.25. After the Court’s review of the

hours spent by B&D professionals, the Court does not find that Sun’s fees for this motion were

excessive and no reduction will be imposed. Of particular note is the fact that Sheehan joined

Sun’s Motion and that the motion was successful – FMC and NCH were required to supplement

their prior document productions. See Hensley, 461 U.S. at 434-36 (holding that the “degree of

success” or the “results obtained” should be adequately accounted for in the lodestar).

v. Sun’s Motion to Strike Jensen Expert Report

On October 9, 2007, Sun filed a motion to strike the expert report of Dale Jensen.15

Sheehan argues that fees relating to this motion are excessive in light of Sun’s alleged failure to

confer with Sheehan before filing the motion – in breach of the Joint Defense Agreement

between Sun, Sheehan and the other third-party defenses – and Sun’s violation of Local Civil

Rule 37.1(b) which requires Court permission and conference between the opposing parties’ in

an attempt to solve their dispute. In its defense, Sun does not challenge its alleged violation of L.

Civ. R. 37.1, but instead argues that it “agreed to withdraw the motion only in exchange for a

valuable discovery stipulation [from FMC and NCH] . . . .” (See Sun Suppl. Aff. ¶ 34.) Sun’s

rebuttal fails. L. Civ. R. 37.1(b) was intended to discourage this very type of conduct, where

negotiations occur after valuable time and resources (both by the parties and the Court) are

15 Mr. Jensen was an expert for FMC and NCH.

15

wasted. Additionally, Sun’s failure to seek judicial permission, though ultimately excused by

Magistrate Judge Arleo, led to additional filings by Sun and fees incurred by B&D which are

reflected on its invoices and they now seek to recoup. (See Sun Corrected Aff., Ex. 8.)

Consequently, Sun’s requested fees for this motion will be eliminated.

Sheehan claims that B&D spent 150 hours preparing the motion for a total fee amount of

$54,000.00. (See Sheehan Opp. 18.) Sun counters that it only spent a total of 42.50 billable

hours and that the fees relating to the motion amount to only $13,302.50. (See Sun Suppl. Aff. ¶

33.) When the Court splits the difference, the amount that will be eliminated from Sun’s fee

petition is $33,651.25.

vi. Sun’s Motion for Bifurcation

Sheehan also opposes Sun’s request for fees relating to Sun’s preparation of a motion to

bifurcate in October 2007. Once again, Sheehan argues that Sun failed to obtain permission

from the Court prior to completing work on its motion. Ultimately, the Court informed the

parties that it would not entertain the motion and Sun’s efforts were wasted. Sun’s arguments in

defense of its preparation of the motion are unconvincing. Though Sun might have been able to

use part of its work product at later stages in the litigation, at the end of the day, Sun was

dismissed as a party and the motion was unnecessary. Consequently, Sun’s fees for this motion

will be eliminated. After averaging the amounts claimed by the parties in their Opposition and

Reply, the Court will reduce Sun’s fee request by $7,631.25.16

vii. Sun’s Motion for Indemnification

Next Sheehan opposes Sun’s fee request relating to Sun’s successful motion for

indemnification from Sheehan. Sheehan argues that the motion did not involve complex legal

16 Sheehan claims that B&D spent 26.5 hours preparing the motion for a total fee amount of $9,540.00. (See Sheehan Opp. 19.) Sun counters that it only spent a total of 20.50 billable hours and that the fees relating to the motion amount to only $5,722.50. (See Sun Suppl. Aff. ¶ 37.)

16

issues and did not warrant the 500 hours (give or take)17 spent on it by Sun. Though the hours

and fees relating to this motion might appear steep at first glance, this Court disagrees that the

fees are overly excessive. Sun’s motion was successful and, as a result, Sun was indemnified

from millions of dollars in liability and fees. Given the significance of the stakes, and Sun’s

ultimate outcome, the fee request is reasonable. Furthermore, after reviewing Sun’s invoices for

the motion, the Court believes that Sun was prudent and diligent in its time keeping practices

relating to this motion. Consequently, this Court will not reduce Sun’s fee request relating to its

Motion for Indemnification.

viii. Spill Action Motion Drafted and Filed by Sheehan

Sheehan next claims that “B&D billed 403 hours to a motion that it did not even draft or

file.” (See Sheehan Opp. 20.) This motion was a joint motion by Sheehan and Sun for summary

judgment under the Spill Act. Sun claims that B&D only spent 229.75 hours on the motion.

Once again, the disagreement on the amount of hours spent by B&D on the motion is significant.

After reviewing the invoices, the Court notes that if Sun spent 229.75 hours on the motion, it

would not necessarily be excessive, notwithstanding the fact that Sun was not ultimately

responsible for the drafting or filing the motion. Substantial input by Sun could very well

warrant the amount of hours Sun claims it spent on the motion. 403 hours, however, is not

warranted, and because Mr. Segall did not engage in a contemporaneous review of B&D’s

invoices, and for the reasons stated in our analysis above, this Court cannot merely take his word

for it.

17 Sheehan argues that B&D spent 539 hours ($194,040.00) on the Motion while Sun counters with a total preparation time of 490 hours ($145,842.50).

17

Consequently, Sun’s fee request for this motion will be reduced by 50%. After the Court

averages the fees claimed by the parties, this amount totals $53,744.06.18

ix. Sheehan’s Remaining Examples

Sheehan’s four remaining challenges fail. After reviewing the invoices, this Court is

satisfied that Sun’s remaining fee requests were not excessive and need not be reduced.

Specifically, none of Sun’s work in preparation for the Frank Rover, Kathryn Johnson or Thomas

Gillespie depositions seem unreasonable in light of their importance to Sun’s overall defense of

this case. Additionally, though some of Sun’s entries relating to its deposition preparations do

not identify the deponent who was the subject of the preparation, after reviewing Sun’s invoices

this Court can still discern the subject of many of the time entries through common sense.

Furthermore, in this instance, this Court believes the hours are reasonable notwithstanding Sun’s

lack of specificity. See Rode, 892 F.2d at 1190 (holding that specificity should only be required

to the extent necessary for the court “to determine if the hours claimed are unreasonable for the

work performed”).

b. Billing in .25 Increments

Sheehan also challenges Sun’s method of billing in .25 increments. Sheehan argues that

rounding to the nearest .25 (i.e., 15 minutes), instead of the industry standard .1 (i.e., 6 minutes)

has inflated Sun’s invoices. This Court agrees. As stated by one bankruptcy court in this

Circuit, “minimum charges of .10-hour increments more fairly reflect actual time involved, than

do quarter hour segments.” In re Jefsaba, Inc., 172 B.R. 786, 801 (Bankr. E.D. Pa. 1994)

(quoting In re Corporacion de Servicios Medico-Hospitalarios de Fajardo, Inc., 155 B.R. 1, 2

(Bankr. D.P.R. 1993). Additionally, in In re St. Joseph’s Hospital, the Court referred to billing

18 Sheehan claims that the total fee amount claimed by Sun for this motion is $145,080.00. (See Sheehan Opp. 20.) Sun, on the other hand, claims it seeks $69,896.25 for the motion. (See Sun Suppl. Aff. ¶ 44.)

18

in one-tenth of an hour increments as “normal” and stated that to do otherwise “suggests the

opportunity for padding on short tasks.”19 102 B.R. 416, 418 (Bankr. E.D. Pa. 1989); see also

Williams v. Sullivan, No. 89-3285, 1991 WL 329581, at *2 (D.N.J. Feb. 7, 1991) (holding that

billing in 15 or 30 minute increments was unwarranted and reducing billable hours by 12

percent); Lopez v. S.F. Unified Sch. Dist., 385 F. Supp. 2d 981, 993 (N.D. Cal. 2005) (holding

that “billing by the quarter-hour, not by the tenth is a deficient practice because it does not

reasonably reflect the number of hours actually worked”) (internal citations and quotations

omitted); Zucker v. Occidental Petroleum Corp., 968 F. Supp. 1396, 1403 (C.D. Cal. 1997)

(demonstrating that attorney with $300 hourly rate who works 6 minutes on a matter would

charge $30 if he bills by the tenth of an hour and $75 if he bills by the quarter hour); Preseault v.

United States, 52 Fed.Cl. 667, 680-81 (2002) (reducing fee by 20% and citing cases where fees

based on quarter-hour billings were reduced).

We have no reason to discredit Mr. Segall’s certification that time spent in increments of

less than 15 minutes was not billed. (See Sun Suppl. Aff ¶ 69). However, there may have been

instances where B&D professionals billed 30 minutes for work which actually took 20 minutes.

As stated above, this Court believes that billing in increments of .1 leads to a more accurate

record of the services performed. Therefore, without imposing an overly undue or harsh penalty

on counsel for its choice in time recording practices, this Court will impose a 12.5% fee

reduction to Sun’s request, after the deductions related to Sheehan’s challenges have already

been subtracted.

19 Judge Scholl further stated that billing in increments greater than one-tenth of an hour often causes the court to make an overall downward adjustment to the requested fees. In that particular case, Judge Scholl did not make a downward adjustment notwithstanding the fact that time was billed in quarter hour increments because his other reductions were so substantial. Id.

19

c. Allocation of Billable Work Amongst B&D Professionals

Along with the arguments above, Sheehan also argues that B&D failed to appropriately

allocate work among its professionals. Specifically, Sheehan argues that: 1.) B&D partners

micromanaged and billed for the same tasks that had already been completed by lower-billing

professionals; 2.) associates billed for work that should have been completed by paralegals; and

3.) multiple professionals worked on tasks that could have been completed by one. This Court

disagrees. Tellingly, in an attempt to provide an example of B&D’s overbilling, Sheehan

provides a brief overview of the typical use of “pyramid billing” by most law firms (pyramid

billing is where hours spent on a matter are distributed in a pyramid structure with the bulk of

hours being spent by lower-billing professionals and less billable hours spent by partners).

Sheehan then goes on to criticize B&D for not following this model and uses Mr. Segall’s 2000

plus billable hours on this litigation as an example. Significantly, however, Mr. Segall is the

only B&D partner Sun seeks compensation for and Mr. Segall’s hours accounted for only 22

percent of the total hours for which Sun seeks compensation (2,214 out of 10,044 hours). (See

Sun Suppl. Aff., Ex. 6.) Consequently, Sheehan’s arguments based upon its belief that B&D

failed to use a “pyramid structure” are unavailing.

Sheehan also attempts to provide other examples of B&D’s alleged failure to allocate

work properly, including B&D’s use of four professionals at document productions by NCH and

FMC. First, Sun fails to challenge (or even list) the total hours/fees accrued by these

professionals during those productions. Secondly, only two of the B&D professionals at the

productions were attorneys (associates). (See Sun. Suppl. Aff ¶ 78.) In light of the significance

of the production and the attendance by some partners of the law firms hired by parties in the

litigation, including Sheehan, this Court does not find B&D’s allocation wasteful. (See id. ¶ 79.)

20

Consequently, Sheehan’s request for a fee reduction based upon a failure of B&D to properly

allocate work is denied.

III. Proposed Adjustments to Lodestar

Once the lodestar is calculated, it is presumed to be the reasonable fee. Blum, 465 U.S. at

897. The district court, however, has the discretion to make certain adjustments to the lodestar.

Rode, 892 F.2d at 1183. The party seeking adjustment has the burden of proving that an

adjustment is necessary. Id.

a. Doctrine of Laches

Sheehan asks for an adjustment to the lodestar under the doctrine of laches. Specifically,

Sheehan argues that Sun is barred by the doctrine of laches for not filing its summary judgment

motion on the indemnification issue until over a year and a half after the Court gave it

permission to do so. This argument is also unavailing. Laches contains two essential elements:

“(1) inexcusable delay in instituting suit; and (2) prejudice resulting to the defendant from such

delay.” Kepner-Tregoe, Inc. v. Executive Dev., Inc., 79 F. Supp. 2d 474, 486 (D.N.J. 1999).

Sheehan can prove neither.

Significantly, Sheehan could have resolved the indemnity issue at any time, thus Sun’s

timing neither “prejudiced” Sheehan nor was an inexcusable delay. Sheehan was well aware that

Sun had an indemnification claim against it and could have accepted its indemnity options at any

time during the case in an effort to control Sun’s litigation costs and choice of counsel.

Additionally, if it was confident in its position and in an effort to mitigate risks, Sun was also

free to file its own motion for summary judgment on the indemnity issue after the Court gave it

permission to do so. Simply put, Sheehan’s laches argument is without merit.

21

b. Insurance

Finally, Sheehan appears to ask that Sun’s fees be offset by any monies paid by Sun’s

insurance carrier so as to avoid “double recovery.” (See Sheehan Opp. 30.) Sheehan made this

same argument in its summary judgment briefing relating to its indemnification dispute with

Sun. However, this Court did not consider and thus implicitly rejected this argument in its June

24, 2009 Order granting Sun’s Motion for Summary Judgment. Furthermore, Sheehan merely

asks that the Court keep this “settlement in mind” when “consider[ing]” Sun’s fee request. (Id.)

Sheehan fails to ask for any specific relief, and as it did in its Order granting Sun

indemnification, this Court will reject Sheehan’s argument.

IV. Reasonableness of Litigation Costs and Expenses

Sun is also seeking $191,328 in disbursements and $314,869 in expert charges. Sheehan

neither brings any separate challenge to,20 nor does the Court find any unreasonableness with

Sun’s request for these expenses. See Apple Corps., 25 F. Supp. 2d at 497 (awarding expenses as

separate and distinct from attorneys’ fees calculated under the lodestar). Thus, these costs will

be awarded in full.

V. Fees and Costs for Fee Request

Finally, this Court will not award Sun any fees in connection with the preparation of its

pending fee request. This fee dispute is caused, in part, because of confusions arising out of

B&D’s billing practices. This Court will not reward any ambiguity associated with B&D’s

invoices by awarding fees or costs for this application.

20 Sheehan does challenge the fees and costs associated with Sun’s billing practices to the extent they are related to the twelve (12) specific challenges above. The Court, however, addressed these specific examples above and need not analyze them again.

22

CONCLUSION

For the reasons set forth above, Sun will be awarded attorneys’ fees in the amount of

$2,425,605.39. That amount reflects Sun’s original request for attorneys’ fees minus reductions

of $19,491.00, $6,613.75, $33,651.25, $7,631.25, and $53,744.06 for work performed in

connection with Sun’s Motion to Dismiss Third Party Claims, Sun’s Pro Hac Vice Applications,

Sun’s Motion to Strike the Jensen Report, Sun’s Motion for Bifurcation and Sun and Sheehan’s

Joint Motion for Summary Judgment under the Spill Act, respectively. Sun’s attorneys’ fees also

reflect an additional 12.5% reduction after the above reductions based upon B&D’s method of

billing in .25 increments. Finally, Sun will be awarded $191,328 in expenses and $314,869 for

fees relating to its expert charges, bringing Sun’s total fee award to $2,931,802.39.

s/ Susan D. Wigenton Susan D. Wigenton, U.S.D.J.

cc: Madeline Cox Arleo, U.S.M.J.

WADE v. COLANER | Leagle.com

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WADE v. COLANERCIVIL ACTION NO. 06-3715-FLW.

GARY S. WADE, Plaintiff, v. MICHAEL COLANER, Defendant.

OPINION

FREDA L. WOLFSON, District Judge.

This case was tried to a jury from April 19 to April 26, 2010. On the last day, the jury returned a verdictin favor of Plaintiff Gary S. Wade ("Plaintiff" or "Wade") and against Defendant State Trooper MichaelColaner, ("Defendant" or "Colaner") on Plaintiff's claim of excessive force under 42 U.S.C. § 1983.1 Thejury awarded Plaintiff $500,000 in compensatory damages and $4.5 million in punitive damages. Colanernow moves for judgment under FED. R. CIV. P. 50(b) or, in the alternative, for a new trial under FED. R.CIV. P. 59. Defendant's Rule 50(b) motion is premised on his assertions that (1) he should have beenheld immune from the excessive force claim under the doctrine of qualified immunity; (2) the question ofwhether his conduct constituted excessive force should have been decided by the Court; (3) the result ofthis case impermissibly conflicts with findings made during the state court proceedings surroundingPlaintiff's criminal charges; and (4) the issue of punitive damages should not have been submitted to thejury because the evidence could not support a rational finding that Colaner acted with reckless or callousdisregard of Plaintiff's rights. In the alternative, Defendant requests a new trial pursuant to Rule 59,contending that the jury's determination was the result of emotion and passion, and is not rationallysupported by the trial record. Defendant also advances seven trial errors that he contends entitle him to anew trial. Finally, Defendant seeks a substantial remittitur of both the compensatory and punitive damageawards.

For the reasons set forth below, Colaner's Rule 50(b) and Rule 59 motions are DENIED. The motion forremittitur is DENIED as to the jury's compensatory damage award, but GRANTED as to punitivedamages.

I. BACKGROUND — FACTS AND PROCEDURAL HISTORY

A. DEFENDANT'S USE OF FORCE

The account of the incident, upon which Plaintiff's claims arose, is based on a videotape of the stop andarrest involving Wade and Colaner, (See Doc. No. 73-3, Ex. A-1),2 and the testimony of the witnesses.The Court remarks at the outset, that the video, which was audio and video taped by a recorder attachedto the dashboard of Defendant's state police vehicle, is the most potent and best evidence that

3

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United States District Court, D. New Jersey.December 28, 2010.

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accurately portrays the incident at issue. In fact, Defendant, in his earlier-filed summary judgmentpapers, conceded this fact, and urged the Court to view the video tape in resolving his motion. Indeed,because of that tape, the Court denied Defendant's motion based on qualified immunity and allowedPlaintiff's excessive force claim to proceed to trial. At trial, the jury had the opportunity to repeatedly viewthe tape; the jury not only saw what transpired between Colaner and Wade, but it was able to hear theverbal exchange between the parties, including their tones and inflections. The recitation of most thesalient evidence follows.

On August 17, 2004, Wade, a detective with the Borough of Tinton Falls police department, wastraveling northbound on the Garden State Parkway in Tinton Falls in an unmarked police car whenDefendant pulled him over for speeding. (4/19/10 Tr. at 16:13-23; 42:6-8). After initiating the stop,Colaner turned on his dash-mounted video and audio recording system which recorded the stop.(4/21/10 Tr. at 40:17-19; Doc. No. 83, Stipulated Fact E). The Court notes that defendant Trooper Ryanwas present at all times during the arrest. However, as shown on the recording, Ryan walked to, andremained, at the passenger side of Wade's car, and his demeanor contrasted Colaner's behavior. In fact,because the Court found at trial that Ryan remained claim and under control throughout the arrest —even during the confrontation between Colaner and Wade — and that Ryan did not employ, or aid orabet Colaner in the use of, any excessive force, the Court granted him judgment as a matter of law. Inthat regard, the following facts will focus on the exchange between Colaner and Wade.

When Colaner approached Wade's car, Wade repeatedly asked why he had been pulled over. (See Doc.No. 77-3, Keoskey Cert., Ex. A(1); Video at 09:08:50; 4/19/10 Tr. at 52:17-18). Without responding,Colaner demanded Plaintiff produce his license, registration, and insurance card. (See Video at 09:08:53;4/19/10 Tr. at 52:19-23). Wade requested that a supervisor be sent out and told Colaner he had noreason to pull Wade over in his own town. (See Video at 09:08:57-09:05; 4/19/10 Tr. at 53:6-7, 93:14-17). In response, Colaner advised Wade that he was placing him under arrest for disorderly conduct.(See Video at 09:09:06-10; 4/19/10 Tr. at 53:8-14). Wade then requested a Tinton Falls supervisor overhis radio, which Wade contends was in compliance with the policy of his police department. (See Videoat 09:09:11-30; 4/19/10 Tr. at 53:19-54:7).

While Wade was on the radio, Colaner asked Wade if he was a police officer and if he was carrying aweapon. (See Video at 09:09:13-20; 4/19/10 Tr. at 55:13-20). Wade did not immediately respond.According to Plaintiff, Colaner next pulled out his handgun and pointed it at Wade's face. (See Video at09:09:20; 4/19/10 Tr. at 56:24-57:3). However, according to Colaner, he brandished his weapon "aftergaining the acknowledgement of the presence of a weapon by Mr. Wade." (Doc. No. 77-3, KeoskeyCert., Ex. B at 4). When Wade got off the radio, he told Colaner that he had a supervisor coming out tothe scene, (see Video at 09:09:32; 4/19/10 Tr. at 56:4-10), and that he was a police officer. (See Videoat 09:09:44; 4/19/10 Tr. at 57:7-13). When Colaner asked where his weapon was, Wade told him it wason his ankle. (See Video at 09:09:48; 4/19/10 Tr. at 57:17-25). Colaner then asked Wade to identify thelocation of his ID, but told Wade not to retrieve it. (See Video at 09:09:52; 4/19/10 Tr. at 58:17-20).Wade responded that his ID was in his bag and that his badge was on his belt. (See Video at 9:09:53-55; 4/19/10 Tr. at 58:21-23). Throughout this exchange, Colaner maintained his weapon pointed in thedirection of Wade's vehicle. (See Video at 9:09:20-09:10:10).

Colaner then proceeded to open the driver's side door of Plaintiff's vehicle, while at the same time askingagain the location of Plaintiff's weapon. (See Video at 09:10:02-05; 4/19/10 Tr. at 60:7-10). Plaintiff, forthe second time, responded that it was on his ankle. (See Video at 09:10:05). When Colaner reached forWade's weapon, Wade asked Plaintiff not to touch it, a request Plaintiff claims was consistent with hispolice training, as well as his own safety fears because the weapon, a Glock, does not have a safety.(See Video at 09:10:06; 4/19/10 Tr. at 60:9-25). Both parties dispute whether Wade brushed Colaner'sarm away at this point. (4/19/10 Tr. at 62:18-21; 4/21/10 Tr. at 61:1-10). Colaner then placed his firearmback in its holster, took out his handcuffs, reached into Plaintiff's vehicle, and grabbed Plaintiff to handcuffhim. (See Video at 09:10:10-17; 4/19/10 Tr. at 62:22-63:4; 64:11-15). During this effort, Wade repeatedlyasked Colaner to "[r]elax," and told Colaner that he would let Colaner handcuff him. (See Video at09:10:15-21; 4/19/10 Tr. at 63:7-22).

Colaner then ordered Wade out of the car and tried to forcibly pull him out, but, as Wade pointed out toColaner, his seatbelt was still latched. (See Video at 09:10:22-24; 4/19/10 Tr. at 64:11-19). Nevertheless,Colaner continued to order Wade out of the car and again tried to pull him out, and Wade asked him tounclip the seatbelt. (See Video at 09:10:24-26). Plaintiff then asked Colaner to let his arm out of theseatbelt so he could exit the car. (See Video at 09:10:27-31). Without any apparent resistance fromWade, Colaner placed the handcuff on his left wrist. (See Video at 09:10:31-39; 4/19/10 Tr. at 63:2-4).Wade exited the vehicle while Colaner held onto the handcuff that was clasped around Plaintiff's leftwrist. (See Video at 09:10:41-43; 4/19/10 Tr. at 66:18-67:19). The videotape clearly shows that whilePlaintiff was exiting the vehicle, Colaner was rigorously shaking a can of pepper spray in his right hand.(See Video at 09:10:42; 4/21/10 Tr. at 154:16-18). Wade got out of the car, turned his back to Colaner,and dropped his right hand down behind his back. (See Video at 09:10:43-46; 4/19/10 Tr. at 67:10-23).Colaner then directed Wade to get on the ground next to his car, which was parked along the Parkway.However, Wade refused to drop down because, as he testified at trial, the car was parked too close toincoming traffic. Next, rather than finish the handcuffing of Wade, Colaner drew back his right fist — witha can of pepper spray in that hand — and struck Wade in the back of his head. (See Video at 09:10:46;4/19/10 Tr. at 123:14-25). Wade, staggered by the force of the blow, was dragged by Colaner and thesecond trooper on the scene, Ryan, to the ground, while Colaner sprayed Wade in the back of the headwith pepper spray. (See Video at 09:10:47-52; 4/19/10 Tr. at 70:6-71:16). Once Wade was on theground, Colaner placed the second handcuff on Plaintiff's right wrist. (See Video at 09:10:52-9:11:17).

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With no apparent resistance from Wade, Colaner yelled numerous times at Wade to "stop resisting," whoimmediately and calmly responded to each declaration, "I'm not resisting." (See Id.; 4/19/10 Tr. at 72:12-20).

B. PLAINTIFF'S STATE COURT PROCEEDINGS

On March 9, 2006, after a full trial by the Borough of Freehold Municipal Court, Plaintiff was convicted ofcareless driving and obstruction, but acquitted of resisting arrest. (See Doc. No. 26-2, Ex. D). Plaintiffappealed his convictions to the Superior Court of New Jersey, Law Division, and the Superior Court ofNew Jersey, Appellate Division. Both courts affirmed. (See Doc. No. 73-2, Ex. C(3); Doc. No. 73-2, Ex.F).

C. EXCESSIVE FORCE CLAIM TRIED TO A JURY

This action was initiated by Plaintiff on August 1, 2006.4 On January 22, 2010, Colaner and Ryan filed amotion for summary judgment limited to the issue of whether they were entitled to qualified immunity inconnection with Plaintiff's excessive force claim. (Doc. No. 77). On March 19, 2010, following oralargument, this Court denied that motion and, on April 13, 2010, issued an opinion setting forth the basisfor that ruling. See Wade, 2010 U.S. Dist LEXIS 36210 at *1-*2. (Doc. No. 88). In evaluating the meritsof the claims by Colaner and Ryan for qualified immunity, using the two-prong test that requires aplaintiff claiming excessive force to have alleged both the violation of a Constitutional right and that theright was `clearly established' at the time of the violation, the Court found that Plaintiff had sufficientlypled the claim against Colaner and Ryan. Id. at *1. On April 19, 2010, the matter proceeded to a jury trialon the excessive force issue. (Doc. No. 93).

At trial, Plaintiff's expert witness James A. Williams ("Williams"), a specialist in police procedures, policepolicy, and the use of force — whose qualifications Colaner did not object to at trial — concluded thatColaner's use of force was excessive. (4/20/10 Tr. at 18:15-22, 22:18-23:8). Williams testified that Wadewas under Colaner's complete control at the time Wade exited the vehicle and Colaner struck him, andthat Wade had turned his back to Colaner in an act of submission. (Id. at 35:20-36:17). Williams furthertestified that Colaner's blow to the back of Wade's head was excessive and "unreasonable, unnecessaryand potentially dangerous." (Id. at 40:4-21). Because Wade was under the control of both Colaner andRyan, who were taking Wade to the ground, Williams testified that the use of pepper spray was similarlyinappropriate. (Id. at 44:09-19).

Moreover, Williams testified that striking a person in the base of the head with a closed fist, with anobject in the fist to strengthen it, indicates that the strike was intended as a punitive measure to causepain, and not for a legitimate law enforcement purpose. (Id. at 41:17-42:21; 43:12-44:3). Further, henoted that Ryan never acted as though there was a threat and never pulled his own weapon. (Id. at33:22-34:5; 38:19-21). This comports with Williams' conclusion that, under the circumstances, neitherbelligerence nor the fact that Wade had a weapon justified Colaner's excessive use of force. (Id. at44:23-45:13).

The jury also heard evidence regarding Colaner's non-compliance with the New Jersey AttorneyGeneral's Use of Force Policy ("the Attorney General's Policy" or "the Policy"). The Policy calls for lawenforcement officers to exercise "utmost restraint," and to "exhaust all other reasonable means beforeresorting to the use of force." (Doc. No. 77-4, Keoskey Cert., Ex. E at 38).5 The Policy requires lawenforcement officers to complete both an underlying incident report and a use of force report "[i]n allinstances when physical, mechanical, or deadly force is used." (Id. at 45). During the trial, the jury heardevidence that although Colaner submitted both reports, each time he disclosed only his use of pepperspray, leaving out that he punched Wade in the back of his head. In the incident report, he wrote, "I notonly stood my ground but pressed forward to achieve a lawful objective [-] overcoming [Defendant's]physical resistance[,]" but did not mention the blow he delivered to Wade's head. (Doc. No. 77-3,Keoskey Cert., Ex. B at 17). Indeed, in his Use of Force Report, Colaner checked "chemical" force, andnot physical force, even though the form expressly requires the trooper to "check all that apply." Whenquestioned about this, Colaner first answered that he only needed to check the "highest level" of forcethat he used. (4/21/10 Tr. at 178:10-13). He also claimed that the force he used to handcuff Wade didnot constitute a reportable use of force because he thought Wade was only offering "minimal resistance."(Id. at 103:6-9; 176:11-177:7).

Plaintiff presented evidence at trial to demonstrate the physical harm he suffered at the time of theincident, as well as the continuing psychological effects. The jury heard evidence of Wade suffering twosprained wrists and a lump in the back of his head that gave him headaches for a week following theincident. (4/19/10 Tr. at 74:7-17). Additionally, the pepper spray caused Plaintiff to suffer burning andirritation of his eyes, back, and head. (Id. at 74:18-21; 4/21/10 Tr. at 10:4-13). Psychologically, Wadeclaimed to still suffer anxiety that leads to difficulty breathing (4/19/10 Tr. at 75-76), as well as persistentflashbacks (Id. at 76:3-6, 80-81), nightmares (Id. at 75:7-13, 80:11-24), recurring headaches (Id. at 80:3-10), and difficulty with sleeping and eating. (Id. at 79:1-80:2). Wade also testified that the incident left himafraid of the police (Id. at 75:7-17, 78:3-20) and of driving long distances (Id. at 75:7-20, 77:25-78:2),caused him to lose interest in friends (Id. at 82:4-15) and the enjoyment of life (Id. at 81:13-82:15), andleft him vigilant and aware. (Id. at 82:16-22). Plaintiff testified that he changed the license plates on his



personal car out of fear that the vanity tags he used previously would allow state police to identify him.(Id. at 83:2-15).

Wade's wife, Bonnie, also testified to the psychological impact that Colaner's conduct has had on Wade,changing him from a very outgoing person to someone who no longer wants to be around people andprefers to stay inside (4/21/10 Tr. at 5:19-6:10, 21:19-22:2), negatively impacting his sleeping and eatinghabits (Id. at 14:22-15:7, 18:20-19:17), and triggering symptoms of anxiety such as difficulty breathingwhen driving on highways. (Id. at 15:8-16:18). The psychological injuries Wade continues to suffer fromhave also had a negative impact on Wade's relationship with his wife. (Id. at 22:3-8).

Wade also presented evidence that, approximately two years after the incident, he sought counselingwith Dr. Koppel, a licensed social worker, as a result of the high levels of anxiety. (4/22/10 Tr. at 3:24-25, 5:8-17). Dr. Koppel also noticed the psychological injuries that Colaner's conduct inflicted uponWade, and diagnosed Wade with post-traumatic stress syndrome. (Id. at 8:1-5). During his testimony,Koppel referenced Wade's emotional problems, which included his fear of the police and anxiety, as wellas issues relating to the litigation process, having a gun pointed at him by Colaner, and his fall-out withhis employer. (Id. at 6-7, 11-12, 15-16). Plaintiff only saw Dr. Koppel once. (Id. at 11:14-15). Dr. DawsonShoemaker, who saw Wade the day after the attack, diagnosed Wade with "acute anxiety disorder."(4/20/10 Tr. at 81:21-24).

Colaner offered the testimony of Mickie McComb, a sergeant first class in the New Jersey State PoliceTraining Academy and the assistant unit head of the Firearms Self-Defense Unit. As a trainer, McCombtestified that, according to the Standard Use of Force Legal Preamble for all New Jersey State Police,police recruits are taught to treat an armed driver with an "extreme heightened awareness and caution[.]"(4/22/10 Tr. at 22, 26). More specifically, McComb testified that: "We teach that anyone with a weapon,you should have an extreme heightened awareness and caution, and take proper approaches, and be onyour guard because you don't know what could transpire. So you are very alert and you never takeanything for granted. So until you could rule out certain aspects of the stop, they have to be completely— treat them differently, like a high risk situation." (Id. at 26). On cross, McComb testified that statepolice should "use force only when and to the extent necessary and use only force that is reasonable inrelation to the harm [one seeks] to prevent." (Id. at 32). In addition, consistent with the policy, McCombtestified that state police would have to report every incident of use of force during an arrest subject to afew exceptions, such as "handcuffing with no or minimal resistance" or "pushing, pulling or blocking thesubject to counter minimal resistance." (Id. at 36-37).6

Defendant also offered the testimony of psychiatrist Dr. Jeffrey Berman ("Berman"), who testified aboutthe contents of a written report he prepared for the Court. (4/22/10 Tr. at 100:4-8). The report was basedupon a two-and-a-half-hour psychiatric evaluation Berman had conducted on Plaintiff approximately twomonths prior to the report. (Id. at 100:9-15, 101:6-8). Berman reviewed the symptoms of post-traumaticstress disorder, and concluded that Plaintiff was not suffering from the disorder. (Id. at 101-104). Whenquestioned by Defendant's counsel, Berman conceded that Wade's symptoms were consistent withgeneralized anxiety disorder. (4/22/10 Tr. at 108:5-9).

D. POST-TRIAL MOTIONS AND JURY VERDICT

Following the conclusion of the evidence, Colaner and Ryan moved for judgment as a matter of lawpursuant to Federal Rule of Civil Procedure 50(a). (See 4/22/10 Tr. at 129, 132, 137). This Court grantedRyan's motion for judgment as a matter of law, finding that testimony in the case "demonstrate[d] that nojury could reasonably find a sufficient evidentiary basis to find that [Ryan] aided and abetted in thismatter." (See Id. at 136-38). This Court did not grant Colaner's motion, explaining:

I need not belabor this. I entered a ruling in this matter. Indeed, based on the testimony at trial, frankly, it'sonly strengthened I believe what my finding was based on the testimony I've heard and what has transpired attrial. There is certainly at this point no basis for dismissing these charges; that I could in no way find that areasonable jury would not have a legally sufficient evidentiary basis to find there was excessive force usedhere.

(See Id. at 137:16-25).

Before closing arguments, the Court had a lengthy conference with counsel to discuss the jury chargeand jury verdict form. Neither party objected to the final charge or verdict form. (4/23/10 Tr. at 3:7-20).The purpose of the verdict form, as it related to punitive damages, was to inquire whether the jury foundthat punitive damages should be awarded. (Id. at 3:8-4:6). If the jury answered in the affirmative, thenthe Court planned to allow the parties to introduce additional evidence, after which the Court would layout instructions for the jury to consider before quantifying an award. (Id. at 80:16-80:25). However, whenthe jury deliberated and filled out the verdict form, instead of only answering `yes' or `no' to the punitivedamages question, the jury responded in the affirmative and awarded $7.5 million in punitive damages tothe Defendant. (Id. at 83:5-12). The Court explained that the jury had made a mistake by calculating thedamages before hearing further instructions. (Id.). Defendant moved for judgment notwithstanding theverdict, arguing that the $7.5 million punitive damages award showed that the jury had been "prejudicedand inflamed," and as such, the verdict should be disregarded, or a new jury should be impaneled sothat a non-prejudiced group could decide punitive damages. (Id. at 82:14-83:12). The Court denied this



motion, stating, "[w]hen you say they have been inflamed, they've heard nothing other than the facts, asto whether making a determination that [Defendant's conduct] was malicious and wanton. . ." (Id. at83:13-84:12).

The Court reconvened the jury and provided a supplemental instruction on punitive damages. (Id. at87:13-89:3). Defendant then produced evidence, through the testimony of Colaner, concerningDefendant's net worth, namely that he had a $300,000 mortgage on a home worth approximately$400,000. (Id. at 89:16-90:15). During the jury's deliberations on the punitive damages award, the juryposed the following question to the Court: "Is [Colaner] the only source to pay the punitive award?" (Doc.No. 98) The Court responded, with the concurrence of counsel, by instructing, "You are to consider onlythe evidence presented in this case and not whether there is an additional source to pay the punitiveaward." (Doc. No. 98). Thereafter, the jury returned with a punitive award in the amount of $4.5 million.

Following the jury's verdict in favor of Plaintiff, which found that Defendant used excessive force againstPlaintiff, and that Defendant was liable for the sum of $500,000 in compensatory damages and $4.5million in punitive damages, (Doc. No. 99), on May 21, 2010, Defendants filed the instant renewedmotion for judgment as a matter of law pursuant to Federal Rule of Civil Procedure 50(b) or, in thealternative, a new trial pursuant to Federal Rule of Civil Procedure 59 or remittitur of the damage awards.(Doc. No. 110, "Def.'s Br.").

II. DEFENDANT'S RENEWED MOTION FOR JUDGMENT AS A MATTER OF LAWPURSUANT TO FEDERAL RULE OF CIVIL PROCEDURE 50(B).

At the conclusion of the jury trial, the Court denied Colaner's motion for judgment as a matter of lawpursuant to Rule 50(a) of the Federal Rules of Civil Procedure. The Court explained that it had already"entered a ruling in this matter[,]" and that the testimony heard at trial had only strengthened itsconclusion. (See 4/22/10 137:16-22). "[This Court] could in no way find that a reasonable jury would nothave a legally sufficient evidentiary basis to find there was excessive force used here." (See Id. at137:22-25). The ruling referenced by the Court was the denial of the summary judgment motion inWade, 2010 U.S. Dist LEXIS 36210, wherein the Court found that a "reasonable factfinder couldconclude that Colaner used excessive force against Plaintiff" and that "there is no room for reasonablelegal mistake" about the legality of Defendant's use of force. Id. at *28, *35. Because "[t]he standard forgranting summary judgment under Rule 56 mirrors the standard for a directed verdict under FED. R. CIV.P. 50(a)[,]" Glenn Distribs. Corp. v. Carisle Plastics, Inc., 297 F.3d 294, 299 (3d Cir. 2002) (quotingAnderson v. Liberty Lobby, Inc., 477 U.S. 242, 250 (1986)), this Court now again applies those standardsto the evidence presented in connection with Defendant's use of force to deny his renewed motion forjudgment as a matter of law under Rule 50(b).

A. STANDARD OF REVIEW — RULE 50(B)

Rule 50(a) provides that "[i]f a party has been fully heard on an issue during a jury trial," a court maygrant a motion for judgment as a matter of law where the "the court finds that a reasonable jury wouldnot have a legally sufficient evidentiary basis to find for the [nonmoving] party . . ." See FED. R. CIV. P.50(a). If the motion made under Rule 50(a) is denied by the court, the party may file a renewed motionfor judgment as a matter of law under Rule 50(b) no later than ten days after judgment is entered. SeeLevine v. Voorhees Bd. of Educ., No. 07-1614, 2010 WL 2735303 at *1 (D.N.J. July 9, 2010) (citing FED.R. CIV. P. 50(b)). Rule 50(b) provides that, in deciding a 50(b) motion, the court may: "(1) allowjudgment on the verdict, if the jury returned a verdict; (2) order a new trial; or (3) direct the entry ofjudgment as a matter of law." See FED. R. CIV. P. 50(b).

Judgment as a matter of law under Rule 50 "should only be granted if the record is critically deficient ofthat minimum quantity of evidence from which a jury might reasonably afford relief." Levine, 2010 WL2735303 at *1. (quoting Raiczyk v. Ocean County Veterinary Hospital, 377 F.3d 266, 269 (3d Cir. 2004)(internal quotation marks omitted) (citing another source)). "The question is not whether there is literallyno evidence supporting the unsuccessful party, but whether there is evidence upon which a reasonablejury could properly have found its verdict." Id. (quoting Johnson v. Campbell, 332 F.3d 199, 204 (3d Cir.2003) (internal quotations marks omitted) (citing another source)).

B. DISCUSSION

In the instant motion for judgment as a matter of law, Defendant again argues that Plaintiff's excessiveforce claim fails to meet both prongs of the qualified immunity test. Defendant further asserts that theCourt erred in finding that the question of excessiveness was a factual one for the jury, rather than alegal one for this Court. Defendant next argues that the result in this case impermissibly conflicts withfindings made by the state court during Plaintiff's criminal proceedings following his arrest. Lastly,Defendant contends that the issue of punitive damages should not have been submitted to the jury. Forthe reasons set forth below, Defendant's motion is denied.

I. QUALIFIED IMMUNITY

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In its summary judgment ruling, this Court explained the doctrine of qualified immunity and its two-prongtest:

`The doctrine of qualified immunity protects government officials `from liability for civil damages insofar astheir conduct does not violate clearly established statutory or constitutional rights of which a reasonableperson would have known'. Bayer v. Monroe County Children & Youth Servs., 577 F.3d 186, 191 (3d Cir.2009) (quoting Pearson v. Callahan, ___U.S. ___, ___, 129 S.Ct. 808, 815 (2009)). More simply stated,qualified immunity is àn entitlement not to stand trial or face the other burdens of litigation . . ..' Mitchell v.Forsyth, 472 U.S. 511, 526 (1985). This defense strikes a balance, shielding those officers from liability thatmistakenly, but reasonably, believed their actions were lawful while permitting a plaintiff to recover againstthose defendants that knowingly violated the plaintiff's rights. Curley v. Klem, 499 F.3d 199, 206-07 (3d Cir.2007).

In assessing whether qualified immunity applies, courts consider two inquiries: (i) whether the facts alleged,when viewed in the light most favorable to the party asserting the injury, show the officer's conduct violated aconstitutional right; and (ii) whether the right that was [allegedly] violated was clearly established, i.e .,whether it would be clear to a reasonable officer that his conduct was unlawful in the situation he confronted.Saucier v. Katz, 533 U.S. 194, 201 (2001) (overruled, in part, by a unanimous Court in Pearson, 129 S.Ct. at818, which relaxed the rigid two-step application of the Saucier analysis in favor of a more flexible approachthat permits judges of district courts and courts of appeals `to exercise their sound discretion in decidingwhich of the two prongs of the qualified immunity analysis should be addressed first'). Accordingly, inassessing whether [Colaner and Ryan] are entitled to qualified immunity, the Court examines whether Plaintiffhas alleged the violation of a constitutional right and whether that right was clearly established. As previouslynoted, the Supreme Court made clear in Pearson, that it is within the discretion of this court which of the twoprongs of the qualified immunity test to address first. However, `[i]f the answer to either question is `no,' theanalysis may end there.' Matos v. City of Camden, No. 06-205(NLH), 2009 WL 737101, *3 (D.N.J. Mar. 18,2009) (citing Pearson, 129 S.Ct. at 823).

Wade, 2010 U.S. Dist LEXIS 36210 at *20-*22. The same analysis applies to Defendant's presentargument.

A. PRONG ONE: DEPRIVATION OF A CONSTITUTIONAL RIGHT

The use of excessive force is an unlawful seizure under the Fourth Amendment and constitutes aconstitutional violation. See Graham v. Connor, 490 U.S. 386, 395 (1989); Couden v. Duffy, 446 F.3d483, 496 (3d Cir. 2006); Estate of Smith v. Marasco, 430 F.3d 140, 150 (3d Cir. 2005). Claims allegingthe use of excessive force in the course of an arrest "should be analyzed under the Fourth Amendmentand its `reasonableness' standard," under which a court inquires if the officer's "actions are òbjectivelyreasonable' in light of the facts and circumstances confronting them." Graham, 490 U.S. at 395, 397. InGraham, the Supreme Court explained that the reasonableness inquiry "requires careful attention to thefacts and circumstances of each particular case, including the severity of the crime at issue, whether thesuspect poses an immediate threat to the safety of the officer or others, and whether he is activelyresisting arrest or attempting to evade arrest by flight." Since the Graham decision, the Third Circuit hasnoted other relevant factors that a court should consider, including: "[whether] the physical force appliedwas of such an extent as to lead to injury[;] . . . the possibility that the persons subject to the policeaction are themselves violent or dangerous[;] the duration of the action[;] whether the action takes placein the context of effecting an arrest[;] the possibility that the suspect may be armed[;] and the number ofpersons with whom the police officers must contend at one time." Estate of Smith, 430 F.3d at 150(quoting Sharrar v. Felsing, 128 F.3d 810, 822 (3d Cir. 1997), abrogated on other grounds by Curley, 499F.3d 199).

The Supreme Court has cautioned, however, that in weighing these factors to determine thereasonableness of a particular use of force, an officer's conduct

must be judged from the perspective of a reasonable officer on the scene, rather than with the 20/20 vision ofhindsight . . . Not every push or shove, even if it may later seem unnecessary in the peace of a judge'schambers, violates the Fourth Amendment. The calculus of reasonableness must embody allowance for thefact that police officers are often forced to make split-second judgments-in circumstances that are tense,uncertain, and rapidly evolving-about the amount of force that is necessary in a particular situation.

Graham, 490 U.S. at 396-97 (citations omitted) (internal quotation marks omitted).

Defendant argues that, as a matter of law, the force he used against Plaintiff was not excessive underthe circumstances. First, Defendant contends that from the moment Plaintiff responded in the affirmativeto his queries about whether Plaintiff was in possession of a weapon, as a matter of law Defendant was"entitled to disarm [P]laintiff, and was entitled to reasonable cooperation from him in the disarmingprocess; and . . . in the event of non-cooperation, [Defendant] was entitled to use force to immobilize[P]laintiff and neutralize the weapon." (Def.'s Br. at 10). Defendant characterizes Plaintiff's refusal to turnover his weapon as a display of "defiance, of a most unambiguous nature." (Def.'s Br. at 10). Second,Defendant claims that the jury's finding of excessive force puts the case in conflict with established case


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law.

With regard to Defendant's first argument, that he was entitled to use force to immobilize Plaintiff becausehe was armed and non-cooperative, this Court's previous analysis is still applicable.

The problem with [Colaner and Ryan's] analysis is that it fails to account for the fact that at the time Colanerstruck Plaintiff, Plaintiff was already out of his vehicle and standing with his back to Colaner, with one wristhandcuffed and his free hand dropped behind his back so that Colaner could finish handcuffing him. AsPlaintiff points out, at the time that Colaner struck Plaintiff, he already had a firm grip on Plaintiff's handcuffedleft hand and Plaintiff had already indicated that he would let Colaner handcuff him. The events depicted bythe videotape, which indisputably captured the events, do not, as [Colaner and Ryan] suggest, contradictPlaintiff's version of events such that no reasonable jury could find that [Colaner and Ryan] violated the FourthAmendment. Indeed, the videotape is consistent with Plaintiff's version of events. The video does not depictthe sort of tense, uncertain events that [Colaner and Ryan] contend transpired. Ryan's conduct during thecourse of the arrest bolsters Plaintiff's contention that Plaintiff posed no immediate threat to the troopers. Atno time did Ryan brandish his weapon. Significantly, as Colaner was extracting Plaintiff from his vehicle, Ryancan be viewed on the videotape walking at a normal gait around the vehicle, without even a glance in thedirection of Colaner and Plaintiff until he approached them. The events that transpired on video belieColaner's contention that the use of pepper spray and blunt force was required to subdue Plaintiff.

Wade, 2010 U.S. Dist LEXIS 36210 at *25-*27. This previous finding of the Court was furtherstrengthened when Colaner was cross-examined during trial. Colaner admitted that, at the time of thearrest, he "believe[d] [Plaintiff] was offering minimal resistance." (4/21/10 Tr. at 103:8-9). Additionally,when shown the videotape and questioned, Colaner admitted that he "didn't tell him until four secondsafter his arm was out from behind his body . . . to stop resisting[.]" (4/21/10 Tr. at 173:20-175:3). As aresult, this argument is unconvincing.

Defendant's second argument on this point, that the result in this case conflicts with binding case law, issimilarly unavailing. Defendant consistently asserts that the use of force against an armed, non-cooperative suspect has been approved by courts. However, no case cited by Defendant lends itself to afinding that Defendant's use of force did not constitute excessive force.7

As Defendant points out, the Third Circuit has recognized that officers facing individuals who aresuspected to be violent and known to be armed are of special concern in the Graham analysis. Thus, inMellot v. Heemer, 161 F.3d 117, 122-123 (3d Cir. 1998), cert. denied, 526 U.S. 1160 (1999), wheredeputy marshals effecting a court-ordered eviction pointed loaded firearms at persons in the house andtwice pushed an evictee into a chair, the court found the employed methods objectively reasonablebased on several factors, including: the lack of physical injury to any plaintiff; the presence of fewer thanten officers to contend with the five individuals who were on the property; and the fact that the "themarshals had significant reason to fear armed confrontation" in light of an evictee's ownership ofnumerous firearms and his previous threats to shoot any federal agent who came onto his property. Seealso Sharrar, 128 F.3d at 816, 821-22 (finding that police's actions, in response to a violent domesticassault that involved the use of a gun, to surround house containing four suspects with twenty policeofficers - including a SWAT team armed with machine guns — and then force the compliant suspects toexit the house and lie face-down in the dirt, at which point the officers held guns to their heads whileyelling obscenities and threatening to "blow [their] heads off if they moved," while "Rambo-type behavior .. . [that came] close to the line, [the] circumstances, in totality, [did] not rise to a Fourth Amendmentviolation.").

Defendant's use of force is not justified under this argument. Here, unlike in Mellot, there was nouncertainty regarding the location of Plaintiff's weapon, Defendant had no reason to believe that Wadewas potentially violent, Wade did suffer injuries, and Colaner and Ryan had no other suspects with whomto contend. Further, at the time Colaner struck his blow, Colaner was already aware that Plaintiff was apolice officer and not an armed felon on the road. It was not reasonable for Colaner to have fearedarmed confrontation. Indeed, Ryan testified on cross-examination that he never pulled out his weapon orpepper spray during the incident, and also confirmed previous testimony he'd given in municipal court,wherein he stated it was belief that, "you are not going to get a bad guy that says, [']My weapon ishere.[']" as Wade did. (Tr. 4/21/10 at 212-13, 220:2-4).

The Third Circuit has permitted police to use force on individuals who, unlike Wade, were actively andphysically resisting arrest. In Feldman v. Cmty. Coll. Of Allegheny, 85 Fed. App. 821, 826 (3d. Cir. 2004),in which the plaintiff alleged that an arresting police officer kicked him in the head while trying to removehim from a college campus as a trespasser, the court found that summary judgment was properlygranted in the defendants' favor because, even if the plaintiff's accusation was true, the kick to the headwas an objectively reasonable response to a plaintiff who was "actively struggling" against officers whowere attempting to remove him. In the same vein, in Brown v. Reinhart, 325 Fed. Appx. 47, 49 (3d Cir.2009), the plaintiff was being arrested on a disorderly conduct offense when he began "pulling away andlaying on his hands to avoid being handcuffed." Id. After a verbal warning, one police officer peppersprayed the plaintiff, allowing the officers to gain control of his left hand. In order to gain control ofplaintiff's right hand, the named defendant police officer "used his right knee to deliver a `'stun blow' to[the plaintiff's] right thigh," a tactic that allowed officers to handcuff the plaintiff. Id. The Court found thatthe defendant officer's use of force was objectively reasonable under the circumstances, "especially inlight of Brown's active resistance to arrest." Id. at 51.




The same result has been reached with suspects who offer passive resistance. See Thomas v. City ofErie, 236 Fed. Appx. 772, 776 (3d Cir. 2007) (excessive force not present when the plaintiff, whoadmitted to going limp and dropping to the ground with his hands underneath his body when officerswere trying to place him under arrest, was forced to the ground and later inadvertently hit his head onthe police van he was placed in); Cruz v. City of Wilmington, 814 F.Supp. 405, 412-13 (D. Del. 1993) (noexcessive force used during a traffic stop where, after a plaintiff refused orders and moved his handstoward his glove box, officers pulled him from his car, and then, after the plaintiff disobeyed twocommands to keep his hands on the hood of the vehicle and failed to remain still during a pat down, anofficer twisted plaintiff's arm to handcuff him). These courts approved the use of substantially less forceon arrestees who were offering more resistance than Plaintiff in this case at the time Defendant punchedand pepper sprayed him. Moreover, at the time of the use of force, Plaintiff was not resisting in anymanner and was permitting Defendant to handcuff him. Thus, these cases do not support Defendant'sposition here.

Defendant cites two cases from within this district for the proposition that "[t]he use of pepper spray ineffectuating an arrest has also repeatedly been found, in like circumstances, to be objectively reasonableunder the law." (Def.'s Br. at 16). An examination of the cases reveals that neither excuses Defendant'sbehavior. In a suit brought by the parents of a man who died while in police custody, Davis v. Twp. ofPaulsboro, 421 F.Supp.2d 835, 854-855 (D.N.J. 2006), the court found that the use of pepper spray onthe son at the time of his arrest did not constitute excessive force because the he was

visibly agitated, acting aggressively, and yelling profanities. [Plaintiffs' son] banged the walls in his house andshoved [an officer] three times before [that officer] used one spray of pepper spray on [plaintiffs' son]. Beforeresorting to the pepper spray, [the officer] told [plaintiffs' son] to relax or if he did not, he would be arrested.[Plaintiffs' son] responded by swinging his arms and yelling Ì aint [sic] going nowhere. Get the fuck off me.'Moreover, [p]laintiffs do not allege nor do we find any facts in the record establishing that [their son] sufferedany lasting injury from the spray. Given these circumstances, we conclude that [plaintiffs' son] posed animmediate threat to [the officer] and possibly others in the house, therefore spraying [him] once with pepperspray was objectively reasonable.

Even more distinguishable is Tofano v. Reidel, 61 F.Supp.2d 289, 305-06 (D.N.J. 1999), in which thecourt found that no excessive force had been used against a man who, among other acts, slashed anofficer's neck with a handcuff.

Here, Defendant has failed to demonstrate any active or passive resistance, violence, aggression, orurgent circumstance that would in any way make Defendant's conduct objectively reasonable.Accordingly, this Court again finds that a reasonable jury could conclude, and in fact did, that Colanerused excessive force against Plaintiff in violation of his Fourth Amendment rights. The Court must nowdetermine whether Colaner violated a clearly established right; if so, he cannot succeed on qualifiedimmunity.

B. PRONG TWO: CLEARLY ESTABLISHED RIGHT

Defendant argues that, even if this Court again finds that a reasonable jury could have found that he hadused excessive force under the Fourth Amendment, he is still entitled to qualified immunity because thefact that his conduct constituted excessive force was not `clearly established' at the time of the incident.(Def.'s Br. at 16-17, 22). Defendant also argues against his conduct being `clearly established' asexcessive force by asserting that the Attorney General's Policy, by which Trooper Colaner was trained,"includes wrestling a resisting subject to the ground as an example of the force that may be `necessaryto overcome a subject's physical resistance to the exertion of the law enforcement's authority." (Def.'s Br.at 22-23) (citing Wade, 2010 U.S. Dist LEXIS 36210).

A right is `clearly established' if "it would be clear to a reasonable officer that his conduct was unlawful inthe situation confronted." Curley, 499 F.3d at 207. A court determining whether a constitutional right isclearly established does not examine excessiveness under objective standards of reasonableness.Instead, "the right the official is alleged to have violated must have been `clearly established' in a moreparticularized, and hence more relevant, sense: The contours of the right must be sufficiently clear that areasonable official would understand that what he is doing violates that right." Saucier v. Katz, 533 U.S.at 201-02.

As this Court pointed out in Wade, 2010 U.S. Dist LEXIS 36210 at *32, "Plaintiff's claim can only survivethe second step of the qualified immunity analysis if, given his version of events, there is no room forreasonable disagreement among reasonable troopers as to the lawfulness of Colaner's actions." Thus, forexample, in Brosseau v. Haugen, 543 U.S. 194, 199-01 (2004), the Supreme Court found that althoughshooting a fleeing suspect may constitute excessive force, the officers who did so were entitled toqualified immunity because the conduct was not clearly established to be a violation of the FourthAmendment, as evidenced by varying responses to similar fact patterns by the courts at that time. See,e.g., Istvanik v. Rosen, 50 Fed. Appx. 533, 536-37 (3d Cir. 2002) (affirming a district court's post-trialentry of judgment in favor of a police officer, who was found by a jury to have used excessive force byover-tightening the handcuffs of a jailed arrestee, because, "at the time of the incident, the question ofwhether tight handcuffing constitutes a violation of Fourth Amendment rights . . . was not establishedeven in a general sense."); Leveto v. Lapina, 258 F.3d 156, 166 (3d Cir. 2001) (finding, despite facialviability of claims against Internal Revenue Service for alleged pat-downs, lengthy detentions, and

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closure of business in violation of the Fourth Amendment, the officers were entitled to qualified immunitybecause the law was not clearly established at the time).

In 2006, the Third Circuit fleshed out its standards for qualified immunity in Couden, 446 F.3d at 495.

A grant of qualified immunity may be upheld where a challenged police action presents an unusual legalquestion or `where there is àt least some significant authority' that lends support' to the conduct in question,even if the conduct was unconstitutional. Òn the other hand, the plaintiff need not show that there is a priordecision that is factually identical to the case at hand in order to establish that a right was clearly established.'

The Couden court found that reasonable police officers would not have jumped on a14-year-old boy, puta knee in his back, pointed guns at his head, handcuffed him, and sprayed him with mace on suspicionof burglary, where the police had no reason to believe the boy was violent and there were four officers tocontrol the boy. Id. at 497. In coming to this conclusion, the court reasoned:

[T]he constitutional right in question was clearly established under the qualified immunity test. The factorsrelevant to the excessive force analysis are well-recognized. . . See Sharrar, 128 F.3d at 822; cf. Estate ofSmith v. Marasco, 430 F.3d 140, 150 (3d Cir. 2005) (noting that a `reasonable officer would be guided by theSharrar factors in determining whether to use overwhelming force in a given situation,' and that ìf an officerapplies the Sharrar analysis in an unreasonable manner, he is not entitled to qualified immunity')). In thiscase, most of these factors — including the potential threat posed by the suspect, whether the suspect wasresisting arrest, armed, or attempting to flee, and the ratio of officers to suspects — clearly suggested the useof a low level of force.

Id.; see also Green v. N.J. State Police, 246 Fed. Appx. 158, 162 (3d. Cir. 2007) (recognizing that "[i]nthe context of excessive force claims, we have relied on the factors set forth in Graham and Sharrar inevaluating whether an officer made a reasonable mistake. We have stated that these factors àre well-recognized,' and that when an officer applies them in àn unreasonable manner, he is not entitled toqualified immunity.'").

Based on this standard, the Court finds that Defendant has not met his burden of showing the violation ofa clearly established right. First, as the Couden court explained, a prior decision of a court that isfactually identical is not needed for a right to be considered `clearly established.' Rather, because thefactors listed in Sharrar and Estate of Smith are `well-recognized,' an officer is not entitled to qualifiedimmunity if his use of force, evaluated by a weighing of those factors, was unreasonable. See Wade,2010 U.S. Dist LEXIS 36210 at *34-35 (citing Green, 246 Fed. Appx. at 162-63) (citations omitted). Thus,this Court, in Wade at *35, denied summary judgment on the following basis, which remains valid posttrial:

No reasonable application of the Graham and Sharrar factors could justify Colaner's use of force under thecircumstances here. The mere fact that Plaintiff was under arrest, coupled with the fact that the use of forcewas brief, and the fact that Plaintiff had his weapon holstered on his ankle are not enough for Colaner to havereasonably thought it was lawful to strike Plaintiff on the back of the head and administer pepper spraybecause Plaintiff, though subdued, refused to lie on the ground. There is no room for reasonable legalmistake about the matter.

Indeed, unlike the defendants in Brosseau and Istvanik, Defendant has also failed to show that there isconflict in the courts about the reasonableness of the force he used on Plaintiff.

Second, the Attorney General's Policy does not shield Defendant. The Policy permits officers to use forceonly to: (1) overcome resistance; (2) to protect the officer or a third party from unlawful force; (3) toprotect property; or (4) to effect other lawful objectives, such as to make an arrest. Despite Colaner'sfrequent description of Plaintiff as someone who was resisting arrest, the videotape, Colaner's owntestimony where he said Plaintiff was only "minimally" resisting, and the state court acquittal of Plaintiffon the charge of resisting arrest, provide adequate evidence that Colaner was neither overcomingresistance nor using proper force to arrest Wade. Defendant's noncompliance with the Policy cannotmake his `reliance' on that same policy reasonable.

At this point, Plaintiff has already met his burden to overcome a motion for judgment as a matter of law.However, the evidence adduced at trial supports Plaintiff's position that the actions of Colaner during andfollowing the arrest suggest that Colaner knew that his conduct had violated a `clearly established' right.First, despite Wade's acquittal on the resisting arrest charges filed by Colaner, Colaner continued toclaim that Wade resisted arrest by hiding his arm under his body. (Video at 09:10:52-09:11:17; 4/21/10Tr. 173:9-20, 175:13-16). The jury viewed that video of the incident, which showed Wade lying on theground with his arms behind his back for several seconds before Colaner repeatedly told Wade to "stopresisting," (see Video at 9:11:00-9:11:04), and the jury also heard Colaner admit that he "didn't tell himuntil four seconds after his arm was out from behind his body . . . to stop resisting[.]" (4/21/10 Tr. at173:20-175:3).

Indeed, following the arrest, the jury heard testimony that Colaner failed to note his striking of Plaintiff inhis Use of Force Report. (Id. at 98, 176-178). In his investigative report, which he filed after he watchedthe video of the incident, Colaner wrote, "I not only stood my ground but pressed forward to achieve a




lawful objective [-] overcoming [Defendant's] physical resistance." (Id. at 181). Additionally, the jury alsoheard testimony that Defendant struck Plaintiff with his pepper spray canister in his closed hand. The jurywas entitled to weigh the credibility of Colaner, particularly as judged against the facts as depicted in thevideo.

As the Supreme Court has recognized, the "jury's authority [is] to assess the credibility of witnesses,resolve genuine issues of fact, and make the ultimate determination[.]" See Tellabs, Inc. v. Makor issues& Rights, Ltd., 551 U.S. 308, 310 (2007); see also Kansas v. Ventris, 129 S.Ct. 1841, 1847 (2009)(recognizing that "[o]ur legal system . . . is built on the premise that it is the province of the jury to weighthe credibility of competing witnesses"); Edmonson v. Leesville Concrete Co., Inc., 500 U.S. 614, 624-25(1991) (stating that when a party "invoke[s] its Seventh Amendment right, the jury becomes the principalfactfinder, charged with weighing the evidence, judging the credibility of witnesses, and reaching averdict[,] . . . [and these] factual determinations as a general rule are final"). Prior to the jury trial, thisCourt had already found on a motion for summary judgment that there were sufficient facts for a jury tofind that Defendant had used excessive force on Plaintiff. Nothing occurred during the trial to strengthenDefendant's assertions. Clearly, as explained above, the jury had sufficient evidence from which toconclude that Colaner had used excessive force.

II. EXCESSIVENESS DECIDED BY JURY

Defendant dedicates a paragraph in his briefing to argue that "the Court erred in finding the question ofexcessiveness to be a factual one for the jury, rather than a legal one for the court." (Def.'s Br. at 12).Defendant appears to be trying to relitigate summary judgment, wherein this Court decided that, viewingthe facts in the light depicted by the videotape consistent with Scott v. Harris, 550 U.S. 380 (2007), itwas Defendant's version of the events that was contradicted by the videotape. Wade, 2010 U.S. DistLEXIS 36210 at *27-*28. This Court further found that "[a] jury could indeed view the videotape and findconsistent with Plaintiff's version of events that Colaner's conduct in striking Plaintiff on the back of thehead and using the pepper spray after Plaintiff had already been partially restrained and appearedcompliant was not objectively reasonable." Id. at *28.

The Court did not find that Defendant's conduct was objectively reasonable under the circumstances atthe summary judgment stage. Thus, it was appropriate for excessiveness to be a question of fact for thejury. See Abraham v. Raso, 183 F.3d 279, 290 (3d. Cir. 1999) (agreeing with the Ninth Circuit that "eventhough reasonableness traditionally is a question of fact for the jury, defendants can still win on summaryjudgment...") (citations omitted); see also Armstrong v. Sherman, No. 09-716, 2010 WL 2483911, *4(D.N.J. June 4, 2010) ("[S]ince there is no clearly-defined rule for determining reasonableness, excessiveforce claims will frequently raise a question of fact for a jury") (citing Abraham, 183 F.3d at 290).

III. STATE COURT FINDINGS

Defendant claims that the result in this case, as well as the Court's finding on summary judgment thatDefendant's "use of blunt force and pepper spray served no purpose other than to inflict discomfort andpain," Wade at *34, is irreconcilable with express findings made against Plaintiff in state courtproceedings." (Def's Br. at 18). Defendant made this argument in his motion to dismiss, and the Courtdisagreed, stating that "the fact that Plaintiff was acquitted of resisting arrest militates against [Heck v.Humphrey, 512 U.S. 477 (1994)] barring Plaintiff's excessive force claim." (Doc. No. 40 at 16). If Plaintiffhad been convicted in the state court of resisting arrest at the time Defendant used force to effectuate hisarrest, this Court could not have based its finding that Defendant used excessive force on Plaintiff's lackof resistance.8 See Gilles v. Davis, 538 F.Supp.2d 785, 789 (D.N.J. 2008) ("Under Heck, a § 1983 actionthat impugns the validity of the plaintiff's underlying conviction cannot be maintained unless theconviction has been reversed on direct appeal or impaired by collateral proceedings.").

However, Plaintiff was only convicted of careless driving and obstruction in state court. As a result,Plaintiff is correct when he states that "the jury [did not need to] find any facts in conflict with thosefindings in order to return a verdict of excessive force." (Pl.'s's Br. at 18). It is axiomatic that merelyhaving probable cause to arrest or charge someone with obstruction does not give a police officer carteblanche to use unlimited force. Additionally, as the jury heard, by the time Wade had one handcuff onand was compliantly waiting for Colaner to finish handcuffing him, only to be struck in the back of hishead by Colaner, Wade was no longer obstructing. He had already provided Colaner with his information,including the location of his gun and the fact that he was a police officer. (4/19/10 Tr. at 57:10-25).Moreover, as Plaintiff points out, none of the state court findings listed by Defendant are actually inconflict with the facts supporting the jury's verdict.

No court has found that Wade did not tell Colaner that he would let Colaner handcuff him. No court found thatColaner did not punch Wade in the back of the head and did not pepper spray him. No court found that Wadedid not have one hand handcuffed and submissively put the other behind his back waiting to be handcuffed.No court found that Wade attempted to retrieve his weapon or threatened Colaner. Thus, there is noinconsistency between the facts supporting the jury's verdict and the facts found by the state courts.

(Pl.'s Br. at 19).

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Finally, because the issue of excessive force was never before the State court, and Plaintiff wasacquitted of resisting arrest, it cannot be said that the State court proceedings embraced the question ofwhether Colaner used an appropriate amount of force. Thus, Colaner's argument that the jury verdictcontradicts the state court's findings is unconvincing and unavailing.

IV. SUBMISSION OF PUNITIVE DAMAGES TO JURY

Lastly, Defendant argues that the issue of punitive damages should not have been submitted to the jurybecause the evidence cannot support a rational finding that Defendant acted with reckless or callousdisregard of Plaintiff's rights. (Def.'s Br. at 24). Punitive damages are designed to "represent a limitedremedy, to be reserved for special circumstances," Savarese v. Agriss, 883 F.2d 1194, 1205 (3d. Cir.1989), "in which the defendant's conduct amounts to something more than a bare violation justifyingcompensatory damages or injunctive relief." Keenan v. City of Phila., 983 F.2d 459, 470 (3d Cir. 1992).Generally, "punitive damages should only be awarded if the defendant's culpability, after having paidcompensatory damages, is so reprehensible as to warrant the imposition of further sanctions to achievepunishment or deterrence." State Farm Mut. Auto. Ins. Co. v. Campbell, 538 U.S. 408, 419 (2003).Specifically, punitive damages are available in Section 1983 cases where a defendant has acted with a"reckless or callous disregard of, or indifference to, the rights and safety of others." Mitchell v. City ofPhila., 344 Fed. Appx. 775, 780 (3d Cir. 2009) (quoting Keenan, 983 F.2d at 469-70). Where there is noevidence that a defendant acted with the requisite bad intent, the issue should not be submitted to thejury. See Kolstad v. ADA, 527 U.S. 526, 538-39 (1999) ("W]here there is no evidence that gives rise toan inference of actual malice or conduct sufficiently outrageous to be deemed equivalent to actual malice,the trial court need not, and indeed should not, submit the issue of punitive damages to the jury")(citation omitted).

Plaintiff, in opposition, correctly claims that by not mentioning punitive damages in his pre-verdict motionfor judgment as a matter of law, Defendant did not preserve the issue for this Rule 50(b) motion. As theThird Circuit noted in Lightning Lube, Inc. v. Witco Corp., 4 F.3d 1153, 1173 (3d Cir. 1993), a post-trial"motion for judgment as a matter of law pursuant to Rule 50(b) must be preceded by a Rule 50(a) motionsufficiently specific to afford the party against whom the motion is directed with an opportunity to curepossible defects in proof which otherwise might make its case legally insufficient." Colaner's pre-verdictmotion for judgment as a matter of law did not address punitive damages, and when Colaner's counselmade the request, counsel stated that, "[w]ith regard to [Colaner], we merely repeat the arguments fromour qualified immunity in light of the evidence in this trial, your Honor." (See 4/22/10 Tr. at 137). Thiswas in reference to Defendant's earlier summary judgment motion, which the Court denied in Wade,2010 U.S. Dist LEXIS 36210. Colaner made no mention of punitive damages in his moving or reply briefin that action. (See Dkt. 77-1; Dkt. 86). Therefore, by failing to specify that he was also moving for pre-verdict judgment as a matter of a law on the issue of punitive damages, Defendant waived his right toraise this argument post-verdict. See Williams v. Runyon, 130 F.3d 568, 571-72 (3d. Cir. 1997) (citationsomitted).

Additionally, evidence introduced at trial lends sufficient support to the jury's ability to consider awardingpunitive damages. The jury repeatedly saw the video of the incident, which depicts Defendant violentlystriking Plaintiff in the back of the head, and then, after wrestling him to the ground, administering pepperspray to the back of Plaintiff's head. The jury also heard testimony regarding Defendant's failure tocomply with the Attorney's General's Policy regarding use of force. (4/21/10 Tr. at 176-180). Further,Plaintiff's expert, Williams, testified that the act of striking a person in the base of the head with a closedfist, with an object in the fist to strengthen it, indicates that the strike was intended as a punitive measureto cause pain, rather than for a legitimate law enforcement purpose. (See 4/20/10 Tr. at 41:17-42:21;43:12-44:3). Since the Court finds there was sufficient evidence to give rise to the jury's inference ofactual malice, it was therefore proper to submit punitive damages to the jury.

Defendant's motion for judgment as a matter of law is denied.

III. DEFENDANT'S MOTION FOR A NEW TRIAL PURSUANT TO FEDERAL RULE OF CIVILPROCEDURE 59

A. STANDARD OF REVIEW

Federal Rule of Civil Procedure Rule 59(a) provides, in relevant part, that:

A new trial may be granted to all or any of the parties and on all or part of the issues (1) in an action in whichthere has been a trial by jury, for any of the reasons for which new trials have heretofore been granted inactions at law in the courts of the United States....

See FED. R. CIV. P. 59(a). In the past, courts have been permitted to grant new trials under severalcircumstances, including when "the verdict is against the clear weight of the evidence; damages areexcessive; the trial was unfair; and [when] substantial errors were made in the admission or rejection ofevidence or the giving or refusal of instructions. . ." Lyles v. Flagship Resort Development Corp., 371F.Supp.2d 597, 602 (D.N.J. 2005) (quoting Lightning Lube, Inc., v. Witco Corp., 802 F.Supp. 1180, 1186












(D.N.J. 1992)) (aff'd, 4 F.3d 1153 (3d Cir. 1993)); Matos v. City of Camden, No. 06-205 (NLH), 2010 WL3199928, *1 (D.N.J. Aug. 12, 2010). In the absence of a finding that not granting a new trial wouldsanction a miscarriage of justice, the judge must respect the jury's verdict. See Levine, 2010 WL2735303 at *3 (citing Shanno v. Magee Indus. Enters., Inc., 856 F.2d 562, 567 (3d Cir. 1988); see alsoLyles, 371 F. Supp. 2d at 601-02 (citing Roebuck v. Drexel University, 852 F.2d 715, 736 (3d Cir. 1988))(citing another source). "A trial court may not grant a new trial because it would have come to a differentconclusion than that reached by the jury." Id. (citing Lightning Lube, Inc., 802 F.Supp. at 1186).

"A district court has broad latitude to order a new trial for prejudicial errors of law." Matos, 2010 WL3199928, at *1 (citing Klein v. Hollings, 992 F.2d 1285, 1289-90 (3d Cir. 1993)). "In evaluating a motionfor a new trial on the basis of trial error, the court must first determine whether an error was made in thecourse of the trial and then decide whether that error was so prejudicial that refusal to grant a new trialwould be inconsistent with substantial justice." Id. (quotations omitted). "By contrast, a court's discretionto order a new trial for a verdict contrary to the weight of the evidence is more limited." Id. (quotingPaolella v. Browning-Ferris, Inc., 973 F.Supp. 508, 511 (E.D.Pa 1997)). A court may not grant a new trialsimply because it would have reached a different verdict. Id. Rather, "new trials because the verdict isagainst the weight of the evidence are proper only when the record shows that the jury's verdict resultedin a miscarriage of justice or where the verdict, on the record, cries out to be overturned or shocks ourconscience." Greenleaf v. Garlock, Inc., 174 F.2d 352, 366 (3d Cir. 1999) (quotations omitted).

B. DISCUSSION

Defendant argues that a new trial is required. Defendant contends that the jury pre-judged the issue ofpunitive damages, and acted out of passion, rather than reason, in making its decision. Defendant alsoalleges seven trial errors that he argues entitle him to a new trial. For the reasons set forth below,Defendant's motion is denied in all respects.

1. THE JURY'S DECISION REGARDING PUNITIVE DAMAGES

Defendant now argues that the jury, by twice handing down a punitive verdict that "it well knew [Colaner]could not possibly pay[,]" either acted "irrational[ly]" or, if under the belief that Colaner would beindemnified, "acted on a patently improper consideration." (Def.'s Br. at 28). Defendant contends that"[t]his is clearly a case in which the jury lost track of the constraining principles that govern punitivedamage awards, and became enthralled with its own power." (Def.'s Br. at 30). In reply, Plaintiff assertsthat Colaner has presented no evidence of either passion or prejudice on the part of the jury. The Courtagrees with Plaintiff.

The Third Circuit has repeatedly stated that "[a] new trial is warranted only upon the showing that theverdict amounted from passion or prejudice, and yet the size of the award alone [is not] enough to proveprejudice and passion." See Bianchi v. City of Philadelphia, 80 Fed. Appx. 232, 237 (3d Cir. 2003) (citingEvans v. Port Authority of N.Y. and N.J., 273 F.3d 346, 352 (3d Cir. 2001)) (quoting Dunn v. Hovic, 1F.3d 1371, 1383 (3d Cir. 1992)); see also Hurley v. Atlantic City Police Dep't, 174 F.3d 95, 114 (3d. Cir.1999), cert. denied, 528 U.S. 1074 (2000) (citing Dunn, 1 F.3d at 1383). Colaner has only pointed tothree possible instances which evidence his assertion that the jury acted out of passion or prejudice: (1)the jury's premature attempt to award punitive damages; (2) the jury's question regarding the source ofpayment if Defendant was ordered to pay punitive damages; and (3) a sermon, posted on the internet byjuror Jeffrey Eaton ("Eaton"), in which Eaton discussed his experience serving on the jury and mentionedthat Plaintiff had lost his job following the incident with Defendant. None of these pieces of evidencesupport a finding of passion or prejudice.

First, Defendant has failed to explain how a premature award of punitive damages, which the juryreduced by $3,000,000 after hearing additional testimony and instructions, evidences passion orprejudice. As this Court explained when Defendant objected to the re-submission of the punitivedamages issue to the jury:

When you say [the jury has] been inflamed, they've heard nothing other than the facts, as to whether making adetermination that it was malicious and wanton, in coming into their determination the only new thing they willbe instructed upon is they may consider — and, by the way, the instruction reads they `do not have to, butthey may consider the assets of the defendant,' and the rest of the instruction in calculating says exactly whatthe original charge said as well:

In determining whether a finding of [punitive damages] is appropriate in considering, will it deter others? Will itdeter this defendant and is it punishing?

(4/23/10 Tr. at 83-84) (internal quotation marks omitted). Defendant has failed to convince the Court thatthis mistake on the jury's part demonstrates passion or prejudice in its later award of a smaller amount ofpunitive damages.

Second, the jury's decision to send a note to the Court asking whether, in the event punitive damageswere awarded, Colaner would be the only source of the funds, does not evidence passion or prejudice.












The Court provided an answer, instructing the jury to "consider only the evidence presented in this caseand not whether there is an additional source to pay the punitive award." Defendant assented to, and didnot object to the Court's answer, and in his moving brief admits it was right for the Court to instruct thejury "to consider only the evidence that had been presented." (Def.'s Br. at 28). Defendant has presentedno evidence, other than the size of the verdict, that this question supports a finding of prejudice orpassion.9

Lastly, Defendant argues that proof of prejudice or passion can be found in a sermon that was posted onthe internet several weeks after the conclusion of the trial by juror Eaton. (See Doc. No. 124, KeoskeyCert., Ex. A). According to Defendant, this sermon "provides objective evidence that the jury's awardencompassed issues and considerations that should have played no part in its deliberation." (Def.'s ReplyBr. at 14). However, Eaton's sermon only once references a fact that should not have been considered inmaking an award. In first describing the case he was impaneled to serve on, Eaton stated, "[Plaintiff]would ultimately be acquitted of the charge of resisting arrest, but in the end he lost his job with theTinton Falls police." (See Id.). After a sermon in which Eaton spoke about the Bible, criticized the "TeaParty Movement," and described the "spirit of democracy," Eaton concluded his sermon by explaining,"[w]e on the jury found [Colaner] guilty of using excessive force and awarded damages to [Plaintiff]. Itwas a certain kind of love in a world of less than perfect creatures. Amen." (See Id.). There is nothing inMr. Eaton's sermon to suggest that the award of punitive damages was supported by prejudice orpassion. If anything, by referencing "a world of less than perfect creatures[,]" Mr. Eaton reinforces thisCourt's belief that the jury awarded punitive damages because it believed Defendant acted with recklessor callous disregard for Plaintiff's rights.

Accordingly, a new trial is not warranted on the basis that the jury's award was tainted by prejudice orpassion.

2. EVIDENTIARY ISSUES

Defendant next identifies seven evidentiary errors that he believes deprived him of a fair trial. The first,third, and fourth alleged evidentiary errors stem from this Court's granting of pre-trial motions in limine,which were filed by Plaintiff to bar: the introduction of any evidence of Plaintiff's convictions for carelessdriving and obstruction of the administration of law; any testimony from former defendant Chief Turning;and any evidence that, in the eighteen months before the incident in this case, Plaintiff was stoppedfourteen other times by police. (See Doc. No. 61-63). Defendant contends that the Court erred ingranting the motions, as well as failing to adjust and correct those rulings at trial when it became evidentthat modifications were warranted. Defendant's other four alleged evidentiary errors stem from supposederrors made in the jury instructions, Plaintiff's cross-examination of Defendant, and Plaintiff's experttestimony. The Court is not persuaded that any of these alleged trial errors warrant ordering a new trialand will address each in turn.

A. THE EXCLUSION OF PLAINTIFF'S CONVICTIONS FOR CARELESS DRIVING ANDOBSTRUCTION

Defendant argues that he was deprived of a fair trial as a result of the Court's decision to grant Plaintiff'smotion in limine to exclude evidence of his criminal convictions for careless driving and obstruction of theadministration of law, and that even if the Court concludes that the evidence was properly excludedbefore the trial began, the Court's failure to reconsider its decision after Plaintiff made "repeated tacticaluse of his acquittal on [the resisting arrest] charge" was in error. (Def.'s Br. at 43). Defendant contendsthat the jury "was entitled to know . . . that plaintiff's non-cooperative conduct, as a matter of law, hadbeen determined to constitute a criminal offense[,]" and because they did not know of his convictions, thejury returned a verdict "flatly inconsistent with the findings made in the state court proceedings." (Id.).The Court disagrees. Introduction of Plaintiff's conviction for administration of law under N.J.S.A. 2C:29-1is barred by FED. R. EVID. 609(a)-(b) because it is neither a crime punishable by a term of imprisonmentin excess of one year, N.J.S.A. 2C:43-8, nor a crime involving dishonesty or false statement.

Nevertheless, Defendant relies on a series of unpersuasive cases. See United States v. One Assortmentof 89 Firearms, 465 U.S. 354, 361-362 (1984) (finding criminal acquittal of firearms charges did notpreclude subsequent forfeiture action because of different burdens of proof in criminal and civil actions);Wheeler v. Nieves, 762 F.Supp. 617, 625 (D.N.J. 1991) (holding that plaintiff in civil action wascollaterally estopped by findings in previous criminal action where "the wrongs alleged by [plaintiff] in the. . . civil action were also at issue in the prior criminal proceedings"). Defendant primarily relies uponNelson v. Jashurek, 109 F.3d 142 (3d Cir. 1997), in which the Third Circuit remanded an excessive forcecase in circumstances where the plaintiff, unlike here, had been convicted in state court of resistingarrest. The Nelson court found that, in the event the case reached trial, "the trier of fact must be awarethat [defendant] was justified in using `substantial force' in arresting [plaintiff][,]" because there was adanger that the jury would "base its verdict on findings not consistent with the conclusion the juryreached in the criminal case." Id. at 146.

At the outset, the Court notes that it has already ruled that the jury's finding did not conflict with anyfindings in the state court proceedings. Additionally, the Court finds Defendant's cited cases unavailing.One Assortment dealt with the issue of whether the government, after having failed in a criminal suit,was collaterally estopped from bringing a civil forfeiture action. It has no relevance to the case at hand.






Wheeler is unhelpful because no finding regarding excessive force was entered by the state court here.Lastly, this case is entirely inapposite of Nelson, as the Nelson court based its decision on the fact thatthe plaintiff had been convicted of resisting arrest in state court. Thus, in Nelson, it was important thatthe jury knew that the officer was justified in using reasonable force to arrest the resisting plaintiff.

Here, however, Plaintiff was not only acquitted of resisting arrest, but there was sufficient evidence forthe jury to find that he was no longer obstructing at the time Defendant employed force, includingColaner's own admission that he ""believe[d] [Plaintiff] was offering minimal resistance." (4/21/10 Tr. at103:8-9). As Plaintiff argues, "[t]he reasonableness of the use of force is assessed against the backdropof the circumstances presented from the point of view of the officer. At the time Colaner punched andsprayed Wade, he did not [and] could not know whether Wade would ultimately be convicted; all heknew was the underlying facts." (Pl.'s Br. at 43). As will be explained below, the underlying facts, such asPlaintiff having been pulled over for speeding and his untimely responses to Defendant's questions aboutwhether he was a police officer, were not disputed at trial. Thus, Plaintiff's convictions for carelessdriving and obstruction were irrelevant and there was no error in excluding this evidence.

B. FAILURE TO LATER PERMIT INTRODUCTION OF PLAINTIFF'S CONVICTIONS

Defendant argues that the doctrines of "opening the door" and "completeness" should have led to theadmission of Plaintiff's convictions into evidence during the trial. The Court disagrees.

The "opening the door" doctrine, sometimes referred to as curative admissibility, "provides that once aparty introduces inadmissible evidence, the opposing party may introduce otherwise inadmissibleevidence to rebut or explain the first offering." See U.S. v. Chinnery, 68 Fed. Appx. 360, 366 (3d Cir.2003) (holding that "[a]s the government does not argue that [a government witness's] testimony oncross-examination was inadmissible, the doctrine of curative admissibility is inapplicable.") (citingGovernment of Virgin Islands v. Archibald, 987 F.2d 180, 187 (3d Cir. 1993)). Other courts have foundthat the doctrine also allows admission of otherwise inadmissible evidence to contradict testimony ofparties who are attempting to mislead the trier of fact. See United States v. Antonakeas, 255 F.3d 714,724-725 (9th Cir. 2001) (holding that defendant, by denying any involvement in drugs, opened the doorto rebuttal testimony that he sold drugs in the past); United States v. Bailleaux, 685 F.2d 1105, 1110 (9thCir. 1982) (finding that defendant, by testifying that he had previously confessed to crimes he wasconvicted of in another state, allowed the government on cross-examination to introduce evidence ofunderlying facts of that conviction to rebut inference of innocence).

The doctrine of completeness is a related evidentiary doctrine that "states that a witness may bequestioned as to the basis, motive, or reasons for an opinion, elicited on cross-examination." Chinnery,68 Fed. Appx. at 367 (citing Archibald, 987 F.2d at 187-88) ("When a witness testifies on cross-examination as to part of a conversation, statement, transaction or occurrence, the principle ofcompleteness allows the party calling the witness to elicit on redirect examination `the whole thereof, tothe extent it relates to the same subject matter and concerns the specific matter opened up.'") (citationsomitted). The doctrine of completeness is codified in FED. R. EVID. 106, which provides that "[w]hen awriting or recorded statement or part thereof is introduced by a party, an adverse party may require theintroduction at that time of any other part or any other writing or recorded statement which ought infairness to be considered contemporaneously with it." U.S. v. Evans, 356 Fed. Appx. 580, 583 (3d Cir.2009). This codification "guards against the potential for evidence to be misleading when presented outof context. Admission of additional evidence is compelled ìf it is necessary to (1) explain the admittedportion, (2) place the admitted portion in context, (3) avoid misleading the trier of fact, or (4) insure a fairand impartial understanding.'" Id. (quoting United States v. Soures, 736 F.2d 87, 91 (3d Cir. 1984)).

Here, Defendant stipulated to the fact that Wade was acquitted of the resisting arrest charge filed againsthim. (Doc. No. 83, Stipulated Fact D). During trial, Plaintiff did not introduce any inadmissible evidencehimself, nor did he testify in any way that would have led the jury to believe he had been acquitted ofanything but the resisting arrest charges. In fact, if any statement was made during the trial thatconflicted with findings made in state court, it was Defendant's assertion that Wade had resisted arrestdespite his stipulation that Plaintiff was acquitted of that charge. (4/21/10 Tr. at 172-173). Further,Defendant distorts the record by claiming that Plaintiff testified contrary to his conviction for carelessdriving by stating at trial that Defendant "had no reason to pull me over. I didn't do anything[,]" and thusDefendant should have been permitted to reference that conviction. (Def.'s Reply Br. at 15). However, anexamination of the record reveals that Plaintiff, in response to a question about Plaintiff's actual responseat the time he was pulled over, stated "I'm upset, and I'm asking him that I want a supervisor out at thescene, and he had no reason to pull me over. I didn't do anything." (4/19/10 Tr. at 52:5-8). The otherinstances referenced by Defendant — namely Plaintiff's counsel's references to Plaintiff's acquittal onresisting arrest charges during his opening statement, closing statement, and cross-examination ofColaner — neither opened the door to introduction of his convictions nor required that they be introducedto give the jury the complete picture. (See 4/19/10 Tr. at 27; 4/21/10 Tr. at 175; 4/23/10 Tr. at 85).

C. EXCLUSION OF CHIEF TURNING'S TESTIMONY

In the Proposed Pretrial Order and Final Pretrial Order, Defendant listed Chief Turning, who had beenChief of Police for the Borough of Tinton Falls, as a liability witness, stating that Turning "has knowledgeregarding Plaintiff's employment with the Tinton Falls Police Department, his arrest, and ultimate







suspension[,] [and] will testify as to the Plaintiff's demeanor, attitude and general behavior as a policeofficer, to include his various discipline and anger issues." (Doc. No. 62-2, Cunniff Cert., Ex. A. at 11;Doc. No. 83 at 14). Plaintiff filed a motion in limine to exclude Turning's testimony, arguing Turning'stestimony should be barred: (1) pursuant to FED. R. EVID. 404(a)-(b) because it constitutes an improperattempt to use Wade's alleged character and prior acts to prove conduct in conformity therewith; (2)pursuant to FED R. EVID. 402 as irrelevant; and (3) pursuant to FED R. EVID. 403 because its prejudicialeffect would substantially outweigh its probative value. (Doc. No. 62-3 at 2). At a motion hearing onMarch 19, 2010, this Court granted the motion to exclude Turning's testimony. (Doc. No. 87). Defendantnow argues that this Court, "in barring [D]efendant from calling [Turning], failed to give any considerationto his status as a named defendant, and wrongly allowed plaintiff to argue that the testimony of anindividual he had himself chosen to sue was irrelevant." (Def.'s Br. at 47). Defendant also claims that,had Turning been called, he would have "offer[ed] testimony regarding [P]laintiff's medical condition priorto the stop, and to refute [P]laintiff's claims that he now suffers from psychological problems . . . thatstem from [Colaner's] actions." (Id.).

The Court finds Defendant's argument unavailing for the same reasons stated by this Court in grantingPlaintiff's motion in limine. FED. R. EVID. 404(a) and 404(b) bar Turning's testimony because it is anattempt by Defendant to use Wade's character and alleged prior acts to prove conduct in conformitytherewith during the traffic stop. (See Doc. No. 89). Moreover, there was no basis for the Court to findthat Turning would have testified in the manner suggested by Defendant. In Turning's sworn June 21,2007 deposition, he reported that Wade's performance evaluations were all excellent, that Wade was "anexcellent officer who performed his duties well, . . . worked very hard[,] . . . [and] was a very goodemployee." (Doc. No. 121, Dec. of Schramm, Ex A., Turning Dep 55:9-56:1). Indeed, while Turning wasinitially named as a defendant in this suit, the claims asserted against Turning were related to Plaintiff'semployment status at the Tinton Falls Police Department after Plaintiff's arrest; the excessive forceclaims were not asserted against Turning. In fact, Turning was not present during the incident and hadno knowledge of what transpired between Colaner and Wade. Ultimately, Turning was also dismissed asa defendant. Accordingly, Turning's testimony was properly excluded.

D. EXCLUSION OF EVIDENCE OF PLAINTIFF'S PREVIOUS VEHICLE STOPS

Defendant argues that CAD Abstract Reports, which showed that Plaintiff was stopped by police fourteentimes in the eighteen months before the traffic stop that gave rise to this action, were "relevant andadmissible for numerous permissible purposes," including to show that Plaintiff "had ample knowledge ofhow properly to conduct himself during a traffic stop . . . [and] was in the habit of disregarding trafficlaws." (Def.'s Br. at 48). Here, where the jury was charged with deciding whether the force used byDefendant was reasonable under the circumstances, such evidence is wholly irrelevant. See FED. R.EVID. 402. First, introducing evidence of whether Wade was in the "habit" of disregarding traffic lawswould constitute an improper attempt to show that his prior alleged bad acts were in conformity therewithin violation of Rule 404(b) of the Federal Rules of Evidence. See Spain v. Gallegos, 26 F.3d 439, 453(3d Cir. 1994) (finding that evidence may be excluded when its admission is likely to lead to litigation ofcollateral issues, thereby creating a side issue which might distract the jury from the main issues).Second, the state of mind of Plaintiff before and during the traffic stop was similarly immaterial.

Defendant also asserts that this evidence was relevant to refute Plaintiff's claim that he continues tosuffer psychological ailments, including nightmares and flashbacks, due to the attack. Defendantcontends that had the jury known about Wade's prior stops, they may have found that the flashbacksstemmed from those stops. This argument is wholly without merit. There is no link between the previousstops and the one at issue. There is simply no basis upon which to find that the previous stops had anyconnection whatsoever to Plaintiff's psychological injuries, as there is no indication that any of these stopswas anything other than routine stops. Absent some testimony linking the abstracts to Plaintiff's injuries,this evidence of Plaintiff's prior traffic stops was properly excluded.

E. PLAINTIFF'S COUNSEL'S CROSS-EXAMINATION OF DEFENDANT

Defendant next argues that he is entitled to a new trial because he was questioned on cross-examinationas to the veracity of the testimony of Plaintiff's wife, Bonnie Wade. Defendant contends his counselobjected on the grounds that such questioning was argumentative. However, an examination of thetranscript reveals that Defendant's counsel did not object to this question. He objected to an accusatoryhalf-question asked by Plaintiff's counsel to Defendant, and after the objection was made, did not objectagain when Plaintiff pursued a less argumentative style of questioning.

Q: You hit him in the shoulder. So you have no explanation why he had a bump on his head?

A: He's lying.

Q: You believe that he is not telling the truth?

A: I absolutely believe he is not telling the truth.




Q: Just like all the times you told different stories here, between now and the grand jury, between now andyour deposition, between now and —

[Defendant's Counsel]: Objection your Honor, Argumentative.

Q: Do you also believe Bonnie Wade is not telling the truth when she felt a bump on the back of his head? Doyou believe she's making that up?

A: He put it there possibly. She saw him after the event. There is a gap in time there.

Q: You believe that he deliberately put a bump on the back of his head to make you look bad?

A: I think he is absolutely capable of that, sir.

(4/21/10 Tr. at 167:4-23). It should also be noted that Plaintiff's counsel questioned Defendant about thelocation of the bump in response to Defendant's belligerent outburst, in which he accused Plaintiff oflying. In light of Defendant's accusation, which his counsel did not seek to strike, Plaintiff's counsel wasnot in error to question whether Defendant also believed Bonnie Wade, who corroborated her husband'sstory about the bump, was lying as well. Indeed, Colaner opened the door to being questioned aboutBonnie's Wade assertions by testifying that, contrary to Plaintiff's accusations, he actually hit Plaintiff inthe shoulder. (See 4/21/10 Tr. at 68:23-67:1, 70:2-5). It was not improper for Plaintiff's counsel toquestion Colaner about this fact, and once Colaner directly accused Plaintiff of lying, Plaintiff's counselwas not foreclosed from seeking clarification from Defendant.

Defendant's reliance on out-of-circuit authority is unconvincing. In United States v. Richter, 826 F.2d 206,208-209 (2d Cir. 1987), for instance, the court held that a prosecutor's line of questioning on cross-examination, which compelled the defendant to state that a law enforcement officer was lying, constitutedreversible error because, even though defense counsel had not objected to the question, there wasevidence that the prosecutor had also later misled the jury. In United States v. Sullivan, 85 F.3d 743,749-50 (1st Cir. 1996), the court stated that it was improper for counsel to ask one witness to commenton the veracity of the testimony of another witness, but declined to state that the "at most, rhetoricalpoints" scored by the government actually affected the outcome of the trial. More recently, in UnitedStates v. Geston, 299 F.3d 1130, 1136-37 (9th Cir. 2002), the court held that "it was plain error for thecourt to allow the prosecutor to persist in asking witnesses to make improper comments upon thetestimony of other witnesses," but did so only after determining that the prosecutor's actions "seriouslyaffected the fairness, integrity, or public reputation of judicial proceedings, or where failing to reverse aconviction would result in a miscarriage of justice." Id. (quoting United States v. Tanh Huu Lam, 251 F.3d852, 862 (9th Cir. 2001)) (citation omitted). Here, Defendant did not object to the question asked.Further, Plaintiff's counsel did not "persist" in asking witnesses to comment upon the credibility of otherwitnesses. The allegedly objectionable questioning of Colaner regarding the testimony of Bonnie Wadewas limited and provoked by Colaner's angry accusation that Plaintiff had lied about his injury. Mrs.Wade testified consistent with her husband. Obviously, Colaner's accusation called into question not onlyPlaintiff's testimony, but that of Mrs. Wade, as well. Thus, the exchange was not unduly prejudicial. TheCourt finds the cited case law unpersuasive, and finds no plain error in the Court's decision to notexclude the limited line of questioning by Plaintiff's counsel.

f. Failure to Instruct the Jury on Non-Compensable Issues

Contrary to Defendants' assertions, Defendant is not entitled to a new trial because the Court did notspecifically instruct the jury that Colaner's brandishing of his weapon, Wade's loss of employment, andstress related to the litigation process were not compensable injuries. Before giving jury instructions, thisCourt specifically noted, "for the record[,] we have spent the last day or so reviewing the jury charges aswell as the verdict form," and then asked if either party had any objections before they were submitted tothe jury. (4/23/10 Tr. at 3:7-13). Defendant raised no objections. (Id. at 3:14). Defendant made norequest that the instructions specifically identify the issues not to be considered by the jury in assessingdamages. Thus, Defendant failed to make a timely objection to the jury instructions under FED. R. CIV.P. 51(c), and the Court may only review the instructions for plain error. Hailey v. City of Camden, 631F.Supp.2d 528, 540 (D.N.J. 2009) ("[W]here . . . Defendants failed to object to the jury instructions . . .the Court reviews for `plain error in the instructions affecting substantial rights.'") (citing FED. R. CIV. P.51(d)(2); Franklin Prescriptions, Inc. v. New York Times Co., 424 F.3d 336, 339 (3d Cir. 2005)). Whenreviewing for plain error, courts will grant "a new trial only if the alleged error is fundamental and highlyprejudicial, such that the instructions failed to provide the jury with adequate guidance and our refusal toconsider the issue would result in a miscarriage of justice." Ryder v. Westinghouse Elec. Corp., 128 F.3d128, 136 (3d Cir. 1997) (citing Bereda v. Pickering Creek Indus. Park, Inc., 865 F.2d 49, 53 (3d Cir.1989)). The Court fails to find plain error in the instructions.

The jury was specifically instructed that its duty was to decide if Colaner's use of pepper spray and/or hisdecision to strike Plaintiff in the head constituted excessive force, and if so, they would have to calculatecompensatory damages by considering only injuries alleged by Plaintiff, which the Court described indetail. (4/23/10 Tr. at 25-27). Thus, the Court explicitly instructed the jury as to the only actions which it














could consider in reaching its decision. Indeed, the Court is not obligated to mention every conceivablefact that the jurors should not consider as opposed to instructing them as to what they may consider.During the entirety of Plaintiff's counsel's summation, he did not mention any non-compensable factors.For example, Plaintiff's counsel, when arguing for compensatory damages, stated:

The next question you are going to have to decide is damages. This is a tricky question. It's hard to put anumber on physical health. It's even harder to put a number on your mental health. You have to decide whatit's worth not to spend your life on high alert, anxious and afraid you are going to be attacked. What's it worthnot to have nightmares and flashbacks? What's it worth not to have trouble sleeping and eating? What's itworth not to have headaches? What's it worth not to be afraid to drive long distances and drive on statehighways? What's it's worth not to be afraid and get that pit in your stomach, we all know what that feeling is,and have trouble breathing every time you see the state police? What's it's worth not to think about it everyday? What's it worth not to be withdrawn from your friends and not to enjoy life?

(Id. at 66:15-67:6). The argument for damages revolved around the specific emotional harm suffered byPlaintiff. Additionally, throughout the trial, when testimony regarding non-compensable issues was elicited— often by Defendant's counsel in an attempt to show that Plaintiff's psychological injuries were not theresult of Colaner's use of excessive force — Defendant had countless opportunities to request a limitinginstruction pursuant to FED. R. EVID. 105, but failed to do so. (4/19/10 Tr. at 58:4-5; 4/20/10 Tr. at 53:3-9; 4/21/10 Tr. at 133:11-14; 4/22/10 Tr. at 7:5-6, 15:5-16:10). The instructions given do not constituteplain error.

G. STATEMENTS MADE BY PLAINTIFF'S EXPERT

Lastly, Defendant argues that he is entitled to a new trial because Plaintiff's expert, Williams, testifiedimproperly and erroneously. Defendant never objected to any of Williams' testimony. Thus, he waived hisobjections, and the Court reviews only for plain error. See Archibald, 987 F.2d at 184 (citations omitted).

Defendant identifies approximately twenty instances of improper testimony from Williams that Defendantcontends should have been stricken. For example, Defendant identifies five statements made by Williamsthat Defendant asserts were not based on Williams' personal knowledge, and therefore were in violationof FED. R. EVID 602. Defendant's counsel offered no objections to the testimony that he now challenges.Further, he identifies only two cases for his proposition that Williams' "testimony should have beenstricken as a series of impermissible net opinions having no capacity to enlighten, but tremendouscapacity to confuse and prejudice." (Def.'s Br. at 53). Both cases are from out-of-circuit and inapposite tothe present case because the parties made timely objections to the testimony in those cases, and thusthe courts were not reviewing for plain error. See Thompson v. City of Chicago, 472 F.3d 444, 458 (7thCir. 2006); White v. Geradot, 2008 U.S. Dist. LEXIS 72436, *14-*20 (N.D. Ind. 2008). Having reviewedeach instance of Williams' allegedly improper testimony, the Court finds that, even when taking thestatements in their totality after giving no credence to the arguments made in opposition by Plaintiff,Williams' testimony does not rise to the level of plain error.

Additionally, Defendant's argument that Williams erroneously "provided the jury with a flatly incorrect legalstandard by suggesting that [the Attorney General's Policy] serves as the ultimate test forreasonableness[,]" (Def.'s Br. at 53), is belied by the transcript of his testimony. Williams never held outthe Attorney General's Policy — the same policy that Defendant has attempted to use to justify his use offorce — as determinative of whether Defendant used excessive force as a matter of law. On redirect,Plaintiff's counsel read from the Policy, "It is the policy of the state of New Jersey that law enforcementofficers will use only that force which is objectively reasonable and necessary[,]" and asked Williams if heagreed with this standard, and if this was the standard to which he had testified. (4/20/10 Tr. at 76:8-17).Williams replied in the affirmative to both questions. (Id. at 76:14-17). When Plaintiff's counsel askedWilliams if, in his opinion, Colaner had complied with the Policy, he replied in the negative. (Id. at 76:18-20). The language "objectively reasonable and necessary" is either less broad or equivalent to the actualjury instructions, which instructed the jury to determined whether Defendant's actions were "objectivelyreasonable in light of the facts and circumstances confronting" him at the time. Indeed, that is thestandard the law requires; the fact that it was indicated in the State's Policy merely reflects the state ofthe law, and the Policy does not state a different standard. As an expert, Williams was permitted toanswer the question pursuant to FED. R. EVID. 704, and thus no plain error is evident in his testimony.

Defendant's motion for a new trial is denied.

3. DEFENDANT'S MOTION FOR REMITTITUR

Having denied Defendant's motions for judgment as a matter of law and a new trial, the Court addressesDefendant's last argument, which is that, on their face, both the jury's $500,000 award of compensatorydamages and $4.5 million award of punitive damages are excessive and conscience-shocking, and thusboth awards should be vacated or steeply remitted.

"[T]he remittitur is well established as a device employed when the trial judge finds that a decision of thejury is clearly unsupported and/or excessive." Cortez v. Trans Union, LLC, Nos. ___ F.3d ___, 08-2465,08-2466, 2010 WL 3190882, *18 (3d. Cir. 2010) (quoting Spence v. Bd. of Educ. of Christina Sch. Dist.,




806 F.2d 1198, 1201 (3d Cir. 1986)); see also Keenan, 983 F.2d at 469 ("We may grant a new trial orremittitur only if the verdict awarded by the district court is so grossly excessive as to shock the judicialconscience.") (citation omitted); Gumbs v. Pueblo Intern., Inc., 823 F.2d 768, 771-773 (3d. Cir. 1987)("[O]ur review of this question is severely limited . . . [While] [a] jury has very broad discretion inmeasuring damages[,] . . . a jury may not . . . treat an injury as though it were a winning lottery ticket.There must be a rational relationship between the specific injury sustained and the amount awarded.")

As the Third Circuit has explained, while the term `remittitur' is often used by courts "to refer to anyreduction in a damages award, including one which is imposed to satisfy constitutional due processconcerns, the term is actually far more specific." Id. If a court determines that a verdict is constitutionallyexcessive, it has no choice but to reduce the verdict "so that it conforms to the requirements of the dueprocess clause." Id. at *19 (quoting Johansen v. Combustion Engineering, Inc., 170 F.3d 1320, 1331(11th Cir. 1999)) (citation omitted). In contrast, a court imposes remittitur when it believes the jury'saward is unreasonable in light of the facts that were before them. Id. The Third Circuit has advised,however, that

the remedies available to a court when reducing a jury award based upon due process concerns are notnecessarily the same as those available when a court exercises its discretion because it believes the amountof the award is inconsistent with the evidence in a case. The latter is conditional, and the court must offer anew trial as an alternative to a reduction in the award in to avoid depriving the plaintiff of his/her SeventhAmendment right to a jury trial.

Id. (citing Hetzel v. Prince William Cnty., 523 U.S. 208, 211, 118 S.Ct. 1210, 140 L.Ed.2d 336 (1998) (percuriam)). When, however, a Court reduces a damages award that it finds constitutionally excessive, theaward is reduced as a matter of law without interference with the plaintiff's Seventh Amendment right tohave the jury determine the findings of fact. Id.

A. REMITTITUR OF COMPENSATORY DAMAGES

"Unlike punitive damages that are intended to punish and deter, `[c]ompensatory damages are intendedto redress the concrete loss that the plaintiff has suffered by reason of defendant's wrongful conduct.'"Cortez, 2010 WL 3190882, at *21. Defendant seeks substantial remittitur of the jury's award of $500,000in compensatory damages. Defendant argues that the damage award is far in excess of what courtshave upheld in similar excessive force cases, and largely cites cases from the Second Circuit that arecollected in DiSorbo v. Hoy, 343 F3d. 172, 184-185 (2d Cir. 2002). See Def. Br. at 34-36. Moreover,Defendant argues, in similar cases "involving emotional distress claims for minor physical injuries," courtswithin this district have been hesitant to uphold large awards. (Def.'s Br. at 37) (citing "Glass, supra, 2008U.S. Dist. LEXIS 71241 (in which Judge Simandle remitted a $250,000 emotional distress award to$50,000); Lyles, supra, 371 F.Supp.2d at 604-05; cf. Blakey, supra, 992 F.Supp. at 741 (remitting$500,000 emotional distress award to $250,000 where the plaintiff presented limited expert testimony andhad limited treatment for non-permanent emotional distress)."). Defendant argues that here, where thejury has awarded $500,000 in compensatory damages, "as compensation for trauma arising from a six-second tussle in which plaintiff was a very active participant, resulting in a knot on his head and stingingscalp, the award is shocking and excessive and should be vacated or remitted." (Pl.'s Br. at 37).

Plaintiff argues that the jury's compensatory damage award is supported by the evidence. This evidenceincludes proof of temporary physical harm he suffered at the hands of Plaintiff, as well as evidence of thepervasive psychological injuries he continues to suffer from, including persistent nightmares andflashbacks, recurring headaches, difficulty eating and sleeping, a loss of interest in friends and theenjoyment of life, a fear of police, and post-traumatic stress disorder. (Pl.'s Br. at 34). Plaintiff contendsthat, "[a]t only 36 years old, Wade will likely have to cope with these psychological symptoms for the restof his life." Plaintiff takes issue with Defendant's reliance on DiSorbo v. Hoy, 343 F.3d 172 (2d Cir. 2003)and the other Second Circuit cases discussed therein, noting that while the Third Circuit has made clearthat a "court may not require a reduction in the amount of the verdict to less than the `maximumrecovery' that does not shock the judicial conscience, Gumbs, 823 F.2d at 774, the law in the SecondCircuit permits remittitur of a jury award that falls "within a reasonable range" of awards, DiSorbo, 343,F.3d at 185-86. Pl.'s Br. at 36.

The Court finds Defendant's reliance on the out-of-circuit cases misplaced in light of the clear instructionfrom the Third Circuit that remittitur may only reduce the award to the maximum recovery that does notshock the judicial conscience. Clearly, the Second Circuit precedent cited by Defendant is inappositesince it uses a different standard. Moreover, upon review of amounts made and approved in the ThirdCircuit precedent, the Court finds that the record supports the compensatory damage award here. InEvans v. Port Authority of N.Y. and N.J., 273 F.3d 355 (3d Cir. 2001), an employment discriminationlawsuit, the Third Circuit approved a district court's decision to order remittitur of a $1.15 million award ofcompensatory damages to $375,000. As Plaintiff points out, the $375,000 compensatory damage awardin Evans, when adjusted for inflation, is approximately equal to $462,000 in current dollars. (Pl.'s Br. at35). See also, Gagliardo v. Connaught Labs., 311 F.3d 565, 573-74 (3d Cir. 2002) (affirming denial ofmotion for new trial and remittitur of $1.55 million damage award for pain and suffering based ontestimony that plaintiff, who was afflicted with MS, changed from "happy and confident" to "withdrawn andindecisive" as a result of employment discrimination); Ridley v. Costco Wholesale Corp., 217 Fed. App'x130, 136-37 (3d Cir. 2007) (affirming $200,000 emotional distress damages award based on testimony ofplaintiff and spouse that discrimination caused plaintiff to have difficulty sleeping, weight loss, social









withdrawal and loss of self-esteem).

In Glass v. Snellbaker, 2008 WL 4371760 (D.N.J. September 17, 2008), where a police officer's FirstAmendment rights were violated, the court remitted a $250,000 emotional distress to $50,000. Defendantargues that like the plaintiff in Glass, Wade suffered only minor physical injuries and non-permanentemotional distress. Unlike the Glass plaintiff, however, who "reported no changes in sleep or otheremotional effects," "did not testify that he suffered any lasting emotional distress or other non-economicinjury" and failed to provide testimony regarding the emotional impact of the defendants' conduct orcontinuing emotional harm, here, Plaintiff presented substantial testimony regarding the emotional impactthat Defendant's conduct has had on his daily life and that these effects continue today.

The Court has already determined that the record amply supports the jury's finding of excessive force.Clearly, in light of the damages awards, the jury found credible Wade's testimony, as corroborated by hiswife, that as a result of Defendant's use of excessive force Wade suffers persistent nightmares andflashbacks, suffers recurring headaches, has difficulty eating and sleeping, has lost interest in theenjoyment of life and is afraid to drive long distances. Viewing the facts in the light most favorable toWade, the Court finds that the jury could reasonably have attributed significant emotional distressresulting from the incident and found that he will likely continue to suffer from these symptoms. The Courtrecognizes that while the compensatory damage award was generous, it is supported by the evidenceand does not shock the judicial conscience.

B. REMITTITUR OF PUNITIVE DAMAGES

"The Due Process Clause of the Fourteenth Amendment prohibits the imposition of grossly excessive orarbitrary punishments on a tortfeasor." State Farm Mut. Auto. Ins. Co. v. Campbell, 538 U.S. 408, 416(2003) Defendant contends that the jury's $4.5 million punitive award is so grossly excessive that itviolates his right to due process. "In Campbell, the Supreme Court summarized the three guideposts acourt reviewing punitive damages should consider: "(1) the degree of reprehensibility of the defendant'smisconduct; (2) the disparity between the actual or potential harm suffered by the plaintiff and thepunitive damages award; and (3) the difference between the punitive damages awarded by the jury andthe civil penalties authorized or imposed in comparable cases." Cortez, 2010 WL 3190882, at *26(quoting Campbell, 538 U.S. at 418).

1. DEGREE OF REPREHENSIBILITY

"The Supreme Court has recognized that the degree of reprehensibility of the defendant's conduct is"[t]he most important indicium of the reasonableness of a punitive damages award." CGB OccupationalTherapy, Inc. v. RHA Health Services, Inc., 499 F.3d 184, 190 (3d Cir. 2007) (quoting Campbell, 538U.S. at 419). In evaluating a jury's punitive damage award under this first guidepost, courts "mustconsider whether: "[1] the harm caused was physical as opposed to economic; [2] the tortious conductevinced an indifference to or reckless disregard of the health or safety of others; [3] the target of theconduct had financial vulnerability; [4] the conduct involved repeated actions or was an isolated incident;and [5] the harm was the result of intentional malice, trickery, or deceit, or mere accident." CGBOccupational Therapy, Inc., 499 F.3d at 190 (quoting Campbell, 38 U.S. at 419).

Here, it is clear that the evidence supports a finding of three of the five subfactors. Testimony supports afinding that Wade suffered physical as well as emotional harm, Defendant's conduct evinced anindifference to the health and safety of others; and the harm was the result of malice. Plaintiff contendsthat this latter guidepost alone supports the size of the award. The Court, however, is not convinced.Although the evidence supports a finding of intentional malice, the tortious conduct is limited to a singleisolated incident. Based on this Court's consideration of this reprehensibility guidepost, it would appearthat Defendant's conduct although reprehensible is not sufficiently egregious to warrant a punitivedamages award of $4.5 million. Accordingly, the Court turns to the remaining guideposts.

2. RATIO OF PUNITIVE DAMAGES TO HARM

"The second and perhaps most commonly cited indicium of an unreasonable or excessive punitivedamages award is its ratio to the actual harm inflicted on the plaintiff." CGB Occupational Therapy, Inc.,499 F.3d at 192 (quoting Gore, 517 U.S. at 580). "The Supreme Court has been `reluctant to identifyconcrete constitutional limits on the ratio,' instead emphasizing that `the precise award in any case . . .must be based upon the facts and circumstances of the defendant's conduct and the harm to theplaintiff.'" Id. (quoting Campbell, 538 U.S. at 424-25). "It has cautioned, however, that ìn practice feeawards exceeding a single-digit ratio between punitive and compensatory damages, to a significantdegree, will satisfy due process." Id.

Defendant argues that "[b]y any rational measure, the jury's award of compensatory damages was`substantial' here, and the jury's 9:1 punitive-to-compensatory ratio excessive." (Pl.'s Br. at 39). Plaintiffcounters that the 9:1 ratio is constitutionally permissible as it falls within the single-digit ratio. Citing CGBOccupational Therapy, Inc., 499 F.3d at 193, Plaintiff contends that the Third Circuit has imposed aremitted punitive damages award with approximate 7:1 punitive to compensatory damages ratio. Plaintiff





argues that given Defendant's conduct and the resulting harm to Plaintiff, the single-digit ratio of 9:1 doesnot offend due process. In support of that assertion, Plaintiff cites to out-of-circuit caselaw in whichcourts have upheld larger ratios in cases involving the vindication of constitutional rights. (Pl.'s Br. at 40(citing Romanski v. Detroie Entm't, LLC, 428 F.3d 629, 646 (6th Cir. 2005), cert. denied, 549 U.S. 946(2006) (in § 1983 case, ordering remittitur to a ratio of 2,150:1) Williams v. Kaufman County, 352 F.3d994, 1016 (5th Cir. 2003) (affirming 10:1 ratio); Lincoln v. Case, 340 F.3d 283, 293 (5th Cir. 2003)(remitting to ratio of 110:1)).

As Defendant points out, however, the few out-of-circuit cases cited by Plaintiff involving analogous tortsdid not award punitive damages even approaching the magnitude of the $4.5 million award here. SeeRomanski v. Detroie Entm't, LLC, 428 F.3d 629 (remitting the punitive award of $875,000 to $600,000,noting that the high ratio was sustainable given that the $279.05 compensatory damage award was"unusually low"); Williams v. Kaufman County, 352 F.3d 994 (affirming $15,000 punitive award wherecompensatory award for unlawful detention and invasion of privacy based on strip search was $100);Lincoln v. Case, 340 F.3d 283 (remitting punitive award from $100,000 to $55,000 where compensatoryaward in Fair Housing Act case was only $500). The $4.5 million punitive damage award here does notbear a reasonable relationship to the reprehensibility of Defendant's use of excessive force and results inan unsustainable damages-to-harm ratio of 9:1. The Court is cognizant of the fact that the ratio fallswithin the single-digit range, nevertheless, the Court finds that "it crosses the line into constitutionalimpropriety." CGB Occupational Therapy, Inc., 499 F.3d at 193. While the Supreme Court has held thatratios in excess of the single-digit range "may comport with due process in cases where à particularlyegregious act has resulted in only a small amount of economic damages,' or where `the injury is hard todetect or monetary value of noneconomic harm might have been difficult to determine'", Id. (quotingCampbell, 538 U.S. at 425), the Court finds the 9:1 ratio here unsustainable given the $500,000compensatory award that, while not excessive, is at the upper limit of what the evidence will bear.

The Third Circuit has held that it is uncertain "as to how to properly apply" the third guidepost set forth inCampbell. In CGB Occupational Therapy, Inc., 499 F.3d at 190, the Third Circuit confined its analysis tothe first two guideposts, noting that the third guidepost was not instructive in the tortious interferencecase. Plaintiff argues that Defendant has improperly applied this third guidepost, analyzing comparablepunitive awards in similar cases, rather than civil penalties authorized in comparable cases.

Regardless of the proper application of the third guidepost, the Court is convinced that under the first twoguideposts, the punitive damage award cannot stand. In determining the constitutional limit of a punitivedamages award, the Third Circuit has held that the court "must accord à measure of deference' to thejury's award" and "is obliged to `decrease the award to an amount the evidence will bear, which amountmust necessarily be as high — and may well be higher — than the level the court would have deemedappropriate if working on a clean slate.'" CGB Occupational Therapy, Inc., 499 F.3d at 193 (quotingWillow Inn, Inc. v. Pub. Serv. Mut. Ins. Co., 399 F.3d 224, 231 (3d Cir. 2005)). The evidence here willsimply not support a $4.5 million punitive award. In arriving at the appropriate punitive damage award,the Court may take into consideration the financial strength of Defendant. As the Third Circuit noted inCGB Occupational Therapy, Inc., 499 F.3d at 193, "what `may be awesome punishment for animpecunious individual defendant . . . [may be] wholly insufficient to influence the behavior of aprosperous corporation.' Continental Trend, 101 F.3d at 641; see Campbell, 538 U.S. at 427-28, 123S.Ct. 113 (observing that consideration of defendant's wealth is not ùnlawful or inappropriate' so long asit is not used to `make up for the failure of other factors, such as 'reprehensibility,' to constrainsignificantly an award that purports to punish a defendant's conduct.') (citation omitted)." WhileDefendant's use of excessive force, as found by the jury, was indeed reprehensible, a punitive award of$4.5 million is not supportable here where Defendant testified to a net worth of approximately $100,000.Given a compensatory award which reaches the upper bounds and Defendant's limited net worth, theCourt finds that a punitive award in the amount of $2 million represents the constitutional upper limit inthis case.

FOOTNOTES

1. At the close of trial, and before submitting the case to the jury, the Court dismissed defendant MichaclRyan ("Ryan"), a New Jersey State Trooper, who was present at the time of the incident betweenPlaintiff and Defendant, from the case and granted him judgment as a matter of law pursuant to FED. R.CIV. P. 50(a). (4/22/10 Tr. at 136-138). The claim against Ryan was that he aided and abetted Colaner.

2. A copy of the video was introduced into evidence as J-1. See 4/19/10 Tr. at 47.

3. The lengthy background and procedural history of this case is more fully set forth in previous Opinionsand orders of this Court issued on March 20, 2009 (Doc. No. 40), June 17, 2009 (Doc. No. 50), and April13, 2010 (Doc. No. 88), which are hereby incorporated by reference.

4. Prior to trial, this Court took the following actions: (1) two defendants were dismissed from the case,leaving Colaner and Ryan as the remaining defendants; and (2) dismissed Plaintiff's deliberateindifference claim against Colaner and Ryan but permitted Plaintiff to proceed with his claims ofexcessive force against the pair. In that context, the Court limited the excessive force claim to Colaner'suse of pepper spray and his physical strike against Wade. Based on qualified immunity, the Courtdismissed Plaintiff's claim that Colaner used excessive force by brandishing his gun during the arrest.











Name*

5. The Policy specifically provides that a law enforcement officer may use physical or mechanical forceonly when the officer reasonably believes that it is immediately necessary at the time: (a) to overcomeresistance directed at the officer or others; (b) to protect the officer, or a third party, from unlawful force;(c) to protect property; or (d) to effect other lawful objectives, such as to make an arrest. (Id. at 42-43).Physical force is defined to include actions such as "wrestling a resisting subject to the ground," or"striking with the hands or feet." (Id. at 41). Likewise, mechanical force is defined to include spraying witha chemical agent. (See Id.).

6. John J. Ryan, the defense's expert witness, testified regarding the Error! Main DocumentOnly.police's procedures with respect to the use of force during an arrest. (See 4/22/10 Tr. at 63-67).Essentially, on direct, Ryan opined that Colaner's use of force was consistent with standard policeprocedures. (Id. at 69). Notably, on cross, contrary to the depictions of the video, Ryan testified thatWade was non-complaint throughout the incident; that instead of moving his right arm behind his back,Wade moved his arm away from Colaner (See Id. at 78); that instead of striking Wade with his fist,Colaner struck Wade with his forearm (See Id. at 82-83); and that although Wade only offered minimalresistance, Colaner was justified in using force because Wade had a gun strapped to his ankle (See Id.at 81).

7. Defendant cites many out-of-Circuit cases that are factually dissimilar to the case at hand; some areeven helpful to Plaintiff because, in those cases, the plaintiffs were actively or passively resisting arrestover a prolonged period of time, and force was used after the issuance of warnings. See Meecham v.Frazier, 500 F.3d 1200, 1204-1205 (10th Cir. 2007) (no excessive force when, during a traffic stop thatturned into a "fifty-minute ordeal requiring arrest" because the plaintiff refused to answer questions, stoptalking on her cell phone, or get out of her car, and after repeated warnings, officers used pepper sprayto bring the woman out of the car and onto the ground); Forrester v. City of San Diego, 25 F.3d 804,807-08 (9th Cir. 1994) (ample evidence supported the jury's conclusion that officers who used paincompliance arrest techniques on trespassing protestors, but did not deliver any physical blows or cuts,had not used excessive force); Draper v. Reynolds, 369 F.3d 1270, 1278 (11th Cir. 2004) (not excessiveforce for police officer to use taser during a traffic stop where plaintiff's hostility, belligerence, refusal tocomply with several requests from the officer created a "tense and uncertain situation," and officer's usecaused no injury); Crowell v. Kirkpatrick, 667 F. Supp. 2d. 391, 410 (D. Vt. 2009) (no excessive forcewhere officers, forty minutes after arriving to a property and spending time trying to use less intrusivemeans of arrest, tased protestors). Further, Defendant cites Phillips v. James, 422 F.3d 1075, 1083-1084(10th Cir. 2005) for the proposition that an "officer's use of deadly force was found objectively reasonablewhere plaintiff resisted and was armed . . . ." (Def.'s Br. at 17). As Plaintiff correctly points out, this is an"egregious characterization" of Phillips, where "the drunk and medicated [plaintiff] had locked himself inthe bedroom with numerous firearms and refused to come out, repeatedly threatened to shoot theofficers, and stated that he had pulled a weapon on officers in the past. After the officers heard soundsof a shotgun being chambered, and tried to negotiate with the suspect for an hour, the suspect cameoutside holding a gun, took note of the officers stationed around the house, went back inside the house,propped up a window in apparent preparation of shooting at the SWAT team, and advised the officersthat he had a clean shot at them." (Pl.'s Br. at 17-18) (citing Phillips, 422 F.3d at 1078-79).

8. Indeed, this Court, in Hendrix v. City of Trenton, No. 06-3942, 2009 U.S. Dist. LEXIS 120718, at *24-30 (D.N.J. Dec. 29, 2009), construing Third Circuit precedent, explained that there are circumstanceswhere despite a plaintiff having physically provoked an officer first, because the plaintiff was no longer athreat to that officer's safety, the officer's assaultive behavior would be deemed excessive or gratuitous.In other words, at the time the officer had applied unreasonable or excessive force, the plaintiff wasalready subdued by the officer. Id. at *24; see Nelson v. Jashurek, 109 F.3d 142, 145-46 (3d Cir. 1997);Green v. New Jersey State Police, 246 Fed. Appx. 158, 162 n. 8 (3d Cir. 2007); Lora-Pena v. FBI, 529F.3d 503, 505-06 (3d Cir. 2008).Error! Main Document Only.Error! Main Document Only.

9. Defendant contends that the instruction "[i]f you find it more likely than not that [Colaner] actedmaliciously or wantonly in violating Gary Wade's federal rights, then you may award punitive damagesagainst [Colaner]" (4/23/10 Tr. at 29) implored the jury to calculate punitive damages and "may evenhave implied, unintentionally, that Trooper Colaner had, in fact, violated plaintiff's rights." (Def.'s Br. at27). Because Defendant did not object to the language, those instructions are subject to review only forplain error. See FED. R. CIV P. 51. There is no error, let alone plain error, in those instructions.(Compare 4/23/10 Tr. at 28-31 with Third Circuit Model Civil Jury Instructions, § 4.8.3 (Section 1983 —Damages — Punitive Damages)). Additionally, Defendant cannot successfully argue that the jury wasprejudiced on the basis that, when it deliberated on the jury verdict form for the first time, it was unawareof Defendant's financial status. See Keenan, 983 F.2d at 472 n.12 (citing Bennis v. Gable, 823 F.2d 723,734 n. 14 (3d Cir. 1987)) ("We reject the defendants' contention that evidence of their financial statuswas a prerequisite to the imposition of punitive damages."). Even if this decision was in error, the Courtsubsequently rectified it by permitting Defendant to testify regarding his net worth, and instructing the jurythat it was permitted to consider that testimony in calculating damages. (See 4/23/10 Tr. at 88-90).

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Honorable Madeline Cox Arleo is a judge of the United States District Court for the District of New Jersey. Judge Arleo was previously a United States Magistrate Judge. A Fellow of the American Bar Association, Judge Arleo has been an Advisor to the Historical Society of the United States District Court for the District of New Jersey and to the Association of the Federal Bar for the District of New Jersey, and has served on the Paralegal Studies Advisory Board at Montclair State University. Prior to her appointment, Judge Arleo was a Partner at Tompkins, McGuire, Wachenfeld & Barry, and was associated with the law firm of Clapp & Eisenberg. She has been Secretary to the District V-A Ethics Committee and an Adjunct Professor of Law at Seton Hall University Law School. Judge Arleo received her undergraduate degree from Rutgers College and her Master’s degree from the Eagleton Institute of Politics, Rutgers University. She is a summa cum laude graduate of Seton Hall University School of Law, where she served as Editor-in-Chief of the Law Review. She was a law clerk to the Honorable Marie L. Garibaldi, New Jersey Supreme Court.

FRANK M. CIUFFANI, PJ, CH Professional Experience

September 2008 to Present - Presiding Judge Chancery-Middlesex

2003 – 2008 Superior Court Judge-Middlesex County

1974 – 2003 Wilentz, Goldman & Spitzer Specialized in Commercial Litigation and Employment Law 1994 Re-Certified Civil Trial Attorney 1987 Certified Civil Trial Attorney 1984 Chairman, District XIII Ethics Committee 1973-1974 Assistant Prosecutor-Middlesex County Education 1972 Juris Doctorate, Villanova University 1969 Bachelor of Arts, Cum Laude University of Notre Dame 1965 Perth Amboy High School

• Admitted to Practice before the United States Supreme Court and Second Circuit Court of Appeals

• Member, Supreme Court CDR Committee • Member, Middlesex County Bar Association (1973 – Present) • Member, State Bar Association • Elected to the American Bar Fellowship (restricted to 1/3 of 1% of

all attorneys in the United States)

Page 1 of 7

The Honorable Harriet Derman

DiFrancesco Bateman T: (908) 757-7800 – Ext. 134 Coley Yospin Kunzman Davis Lehrer & Flaum, P.C. F: (908) 757-8039 Attorneys at Law [email protected] 15 Mountain Boulevard, New Jersey 07059 www.newjerseylaw.com

CURRENT POSITION Of Counsel with DiFrancesco, Bateman, Coley, July 2009 to Present Yospin, Kunzman, Davis, Lehrer & Flaum, P.C.

Provides alternative dispute resolution, case management and special master services

Successfully mediated and/or arbitrated coverage disputes; personal injury; shareholder oppression; employment litigation, including sexual harassment and conscientious employee protection, and discrimination cases; medical and dental practice disputes; municipal services and prerogative writ actions; will contests; breach of fiduciary duty; undue influence; land disputes; contract actions; and professional malpractice matters

Lectured on mediation practice to attorneys for Continuing Legal Education (CLE) credits

PROFESSIONAL ACCOMPLISHMENTS

Highest ranking of Martindale-Hubbell, Peer Review Rating (AV Preeminent) Fellow of The American College of Trust and Estate Counsel Member of the Editorial Board of the New Jersey Law Journal

APPOINTMENTS

Appointed by Governor Chris Christie to Judicial Advisory Panel to review candidates for appointment to the Superior Court

Appointed by Chief Justice Stuart Rabner to Supreme Court Committee on Dispute Resolution

MEDIATION CREDENTIALS

Approved Federal Mediator Approved International Institute for Prevention & Resolution (CPR) Mediator

mailto:[email protected]

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JUDICIAL EXPERIENCE Chancellor and Presiding Judge of General Equity & Probate September 2006 to June 30, 2009

Served as arbiter of corporate and securities law disputes Supervised and adjudicated many significant business and corporate

Issues including Shareholder derivative suits, claims of breach of the business judgment rule

and breach of fiduciary duty by members of the Board of Directors Allegations of misrepresentations in securities filings, including proxy documents Trade secrets and confidential information Restrictive covenants, including insurance businesses, medical and dental

practices, brokers and engineers Shareholder, partnership, and limited liability company matters and dissolutions

Managed real estate matters, such as quiet title actions and reformation of

recorded instruments

Dealt with issues impacting intervivos trusts

Served as foreclosure judge for three (3) counties

Served as Probate Judge, trying and settling hundreds of will contests and matters dealing with estates of decedents and incompetents and testamentary trusts

Member of Supreme Court Committee on Judicial Performance

Presiding Judge of Civil Division September 2003 to September 2006

Supervised civil trial judges of Somerset, Hunterdon and Warren Counties

Managed and/or settled multimillion dollar EIFS/stucco construction defect cases; multi-party wrongful death actions; multi-party assault & battery and Dram Shop liability cases; multi-party insurance coverage matters; complex commercial litigation; wrongful death malpractice actions; and automobile, fall down and other personal injury matters

Conducted trials, settlements hearings, and motions in such areas as contract

disputes, breach of fiduciary duty, employment discrimination, personal injury, products liability, malpractice, construction defect and injury and insurance coverage

Settled thousands of cases of every variety on the Civil Docket

Member of Supreme Court Committee on Civil Practice (Chairperson of

Subcommittee on Employment Discrimination)

Member of Supreme Court Committee on Voir Dire in the Courts Judge of the Superior Court of New Jersey February 1998 to September 2003

Conducted civil trials, settlements, hearings, and motions as a civil judge

Page 3 of 7

Served as Replevin Judge

Adjudicated family disputes (dissolution, equitable distribution, custody, visitation and relocation) as trial level judge

Authored hundreds of opinions

Member of Supreme Court Committee on Family Practice

Member of Supreme Court Committee on Civil Practice

EXECUTIVE EXPERIENCE Chief of Staff to Governor Christine Todd Whitman July 1996 to January 1998

Primary gatekeeper and adviser to Governor Christine Todd Whitman of New Jersey

Oversaw implementation of Governor’s policy initiatives and agenda

Chief Counsel to Governor Christine Todd Whitman May 1996 to July 1996

Served as chief lawyer to Governor Christine Todd Whitman on all legal and legislative issues

Advised the Governor on such issues as securing passage of state budget

and Governor's legislative initiatives

Interacted with Legislature to reach consensus on legislation

Recommended gubernatorial approval or vetoing of bills of Legislature

Served as solicitor to Governor with respect to formulation and implementation of highest ethical standards for the Governor and her staff

Facilitated all gubernatorial appointments, including members of the judiciary

Commissioner of Department of Community Affairs February 1994 to May 1996

Oversaw, as Cabinet level officer, multiple divisions, including Local Government Services (responsible for all municipal and local authority budgets and dispensing millions of dollars in municipal aid), Codes and Standards, Fire Safety, Housing, Hispanic Center, and Aging and Senior Services

Managed more than 1,000 employees and greater than one billion dollar annual

budget

Served as Chairperson of New Jersey Housing and Mortgage Finance Agency, annual issuer of approximately $300 million dollars in bonds, whose portfolio exceeded $3 billion in mortgage loan assets

Page 4 of 7

Served as Chairperson of Hackensack Meadowlands Development Commission, which oversees reclamation, planning, and development of 21,000 acres in the Hackensack River Meadowlands

Served as Chairperson of Council on Affordable Housing

Served as Board Member of the New Jersey Sports and Exhibition Authority

LEGISLATIVE EXPERIENCE Member, New Jersey General Assembly, 18th District January 1992 to January 1994

Elected in 1992 and 1994 to represent New Jersey’s 18

th District as Assemblywoman

Served as Majority Whip in 1994 and Assistant Majority Whip from 1992 to 1994

Member of Judiciary Law and Public Safety Committee

Vice-Chairwoman of Joint Legislative Committee on Economic Recovery

Sponsor of tax and business legislation recognizing S Corporation status for New Jersey businesses, authorizing Limited Liability Companies and authorizing tax credits for the creation of jobs

Sponsor of additional legislation, including rape shield law, mandatory seat belts on

school buses, reformation of construction lien law, and campaign finance reform

Reached consensus on legislation with different constituencies

LEGAL EXPERIENCE Partner, Weiner, Hendler & Derman, P.A. 1982 to 1994

Practiced as name partner in boutique law firm specializing in tax, securities, corporate operations and governance, contract drafting and negotiation, real estate, estate planning and administration, and commercial litigation

Oversaw financial reporting for clients, including security filings with Securities

and Exchange Commission and New Jersey Division of Securities

Counseled clients with respect to disclosures and corporate governance and process

Counseled clients on legally minimizing and deferring payment of federal and state taxes, including the use of off-shore tax entities

Advised privately and publicly held corporations on transactions, meetings, process,

and planning

Significant legal experience in:

Deferred compensation, pension and profit sharing plans and stock option plans and recommending and implementing appropriate employee benefit plans for clients

Page 5 of 7

Real estate law including preparation and implementation of Planned Real Estate Development projects

Tax and securities law, oil and gas partnerships and medical equipment partnerships

Estate planning and succession planning for family businesses and estate administration

Operation and termination of medical and dental practices

CORPORATE BOARD EXPERIENCE 1989-1994

Member of Board of Directors of publicly traded New Brunswick Scientific, Edison, New Jersey

NON-PROFIT BOARD 2009 to Present

Member of Board of Directors of Opportunity Project, Inc., 80 East Willow Street, Millburn, New Jersey 07041

A clubhouse program empowering people with brain injury FACULTY PRESENTATIONS

Contested Guardianships – 2011 - New Jersey Institute for Continuing Legal Education

Mediation and Settlement Techniques of a Business Dispute – 2011 – New Jersey Institute for Continuing Legal Education

Summary Judgment Practice - 2011 - The Sidney Reitman Labor & Employment Inn of Court

Chancery Practice - 2008 - New Jersey State Bar Association, Equity Section

Medicine for Judges - 2006 - Judicial College

Hot Topics in Civil Trials - 2000 - New Jersey Institute for Continuing Legal Education

ACTIVITIES

President, Middlesex County Bar Association First Vice President, Tax Section of the New Jersey State Bar Association

Page 6 of 7

Member, Board of Directors, New Jersey Lawyer, weekly newspaper

sponsored by State Bar Association Member, Supreme Court of New Jersey Ethics Committee for Middlesex County Secretary, Fee Arbitration, Middlesex County

MEMBERSHIPS

New Jersey State Bar Association Dispute Resolution, Labor and Employment Law, Real Property, Trust and

Estate Law, and Taxation Sections Equity Jurisprudence, Construction Law, Business & Commercial Litigation (including

subcommittees studying creation of a separate business court or track and amendment of limited liability company law) Committees

The Marie Garibaldi Alternative Dispute Resolution Inn of Court The Joseph Halpern-David Furman Inn of Court The New Jersey Association of Professional Mediators Somerset County Bar Association Middlesex County Bar Association

Retired Judges Association

HONORS AND AWARDS

Retail Merchants Association Legislator of the Year Association for Retarded Citizens Legislator of the Year New Jersey Women of Achievement Award, Douglass College Delaware Raritan Girl Scouts Women of Distinction Award Honoree of the Year American Heart Association Hands of Humanity Award by Jewish Family and Vocational Services La Tribuna Distinguished Woman First Recipient of New Jersey League of Municipalities Cabinet Member Award Woman Lawyer of Achievement Award by Women Lawyers of Monmouth County Outstanding Woman Award, Executive Women of New Jersey

EDUCATION

New York University School of Law, Graduate Division, L.L. M. in Taxation Seton Hall Law Center, J.D., cum laude New York University, B.A.

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ADDITIONAL INFORMATION

Married Three children Completed triathlons in 2005 and 2006 Newspaper “junkie” Interests include current events, running, skiing, traveling, dancing, tennis and reading

Honorable Walter Koprowski, Jr., P.J.Ch. was appointed to the bench in 2005 and sits in Newark, New Jersey, where he serves as Presiding Judge of the Chancery Division in Essex County. In 2009 Judge Koprowski was assigned to the Chancery Division, Probate Part, in Essex County. He is Chair of the Chancery Division Probate Part Judges Committee and a member of the Judiciary Surrogates Liaison Committee and the National College of Probate Judges. He served as the Supervising Judge of the Special Civil Part and as a Trial Judge in the Civil Division, and also served on the Special Civil Part Supervising Judges Committee and the Supreme Court Special Civil Part Practice Committee. Judge Koprowski has been a speaker and panelist for programs presented by ICLE, the Essex County Bar Association, Rutgers School of Law, the Guardianship Association of New Jersey and the Judicial College. He is also a member of the Brennan-Vanderbilt American Inn of Court. Judge Koprowski is an honors graduate of Rutgers University and Seton Hall University School of Law.

Allison L. Segal, is an associate at DiFrancesco, Bateman, Coley, Yospin, Kunzman, Davis, Lehrer & Flaum, P.C. in Warren, New Jersey. Ms. Segal’s practice is dedicated to commercial litigation with a particular focus on business entities and individuals in commercial disputes, shareholder litigation, consumer fraud actions, and home improvement contractor litigation as well as municipal tax appeals. She is admitted to practice in the State of New Jersey, the State of New York, and the United States District Court for the District of New Jersey. Prior to joining DiFrancesco, Bateman, Ms. Segal clerked for the Honorable Margaret Mary McVeigh, P.J. Ch., in the General Equity Division in the Passaic Vicinage. She also recently co-authored the article “Avoiding Problems in Calculating Hours for a Lodestar.”

Ms. Segal received her B.A., with honors, from Drew University and her J.D. from Widener University School of Law.

BIOGRAPHICAL INFORMATION

THE HONORABLE SUSAN D. WIGENTON, U.S.D.J.

Susan D. Wigenton serves as a United States District Judge, for the District of New Jersey, where she sits in Newark, New Jersey, hearing civil and criminal matters. She previously served as a United States Magistrate Judge from 1997 until her appointment in 2006. Judge Wigenton was a trial attorney engaged in private practice in her own firm, until she was appointed to the Bench. Prior to that time, she practiced with the law firm of Giordano, Halleran & Ciesla, P.C., Middletown, New Jersey, where she was a Partner/Shareholder. She also served as the Public Defender for the City of Asbury Park, from 1989 until 1993, and graded bar exams for the State of New Jersey Board of Bar Examiners for more than eight (8) years. From 1987 through 1988, Judge Wigenton served as the Judicial Law Clerk to the Honorable Lawrence M. Lawson, who currently serves as the Assignment Judge for the Monmouth County Superior Court. Judge Wigenton holds a Bachelor’s Degree in Political Science from Norfolk State University, Norfolk, Virginia and a Doctorate of Jurisprudence Degree from the College of William & Mary, Marshall-Wythe School of Law, Williamsburg, Virginia.

FREDA L. WOLFSON, U.S.D.J.

Judge Freda L. Wolfson is a United States District Judge of the District of New Jersey and hasserved in that position since December 4, 2002. From 2002 to 2005, Judge Wolfson sat in the Camdenvicinage and since 2005, has been sitting in Trenton. Prior to her appointment to the District Court, sheserved as a United States Magistrate Judge, also in Trenton, New Jersey, for 16 years. She has authorednumerous opinions on a vast array of subjects. The Judge is currently the Chair for the Rules ofPractices and Procedure Committee and the Co-Chair for the Committee on Pro Se Litigation, as wellas a member of the Committee on Budget and Functioning of the Clerk’s Office. Notably, JudgeWolfson had been designated by the Multi-District Litigation Panel to preside over five separatemulti-district cases.

In the past, Judge Wolfson has served as Chair of the United States District Court, District ofNew Jersey Pro Se Committee, as Supervisor of the District’s Pro Se Law Clerks, and as a member ofboth the Third Circuit Court of Appeals Task Force for Indigent Litigants in Civil Cases and the Judges’Advisory Committee for the Rutgers University School of Law – Newark. She frequently participatesin professional seminars as a speaker or panelist before such organizations as the Association of theFederal Bar of the State of New Jersey, the New Jersey State Bar, the ATLA-New Jersey EducationalFoundation, the New Jersey Institute of Continuing Legal Education, and numerous county barassociations. Recently, Judge Wolfson was a guest panelist at the Annual Jewish Law Symposium,where she discussed the intersection of law and religion.

Committed to the education of young lawyers, Judge Wolfson often acts as a judge in mootcourt and mock trial competitions at local law schools. In 2009, Judge Wolfson delivered theconvocation address to Rutgers University School of Law – Newark graduates at their commencementceremony. Judge Wolfson, a first generation American, was born on May 20, 1954, and grew up inVineland, New Jersey. She was an Eagleton Institute of Politics Undergraduate Fellow and Phi BetaKappa at Rutgers University, Douglass College, where she graduated magna cum laude in 1976. In 1979,she graduated cum laude from Rutgers University School of Law – Newark, where she served both asa teaching assistant and as a research assistant, in addition to serving as an editor of the Rutgers LawReview. Judge Wolfson has also been honored as an American Bar Foundation Fellow, and as arecipient of the New Jersey State Bar Association Young Lawyer Division’s Professional AchievementAward. She received the 2002 Outstanding Alumnus Award from the Alumni Association of theRutgers – Newark School of Law. More recently, Judge Wolfson received the 2008 Women's Initiative& Leaders in Law Platinum Award from the New Jersey Women Lawyers Association.

Prior to her 1986 appointment to the United States District Court at the age of 32, Judge Wolfsonworked as a litigation attorney at the Roseland firm of Lowenstein, Sandler, Kohl, Fisher & Boylan, andat the former Newark firm of Clapp & Eisenberg, where she handled commercial litigation, employmentlitigation, and casino licensing applications.

Judge Wolfson is married to the Honorable Douglas K. Wolfson, J.S.C., who is a formerAssistant New Jersey Attorney General, Director of the Division of Law in the Department of Law andPublic Safety. The Wolfsons have two sons, Brian and Matthew.

Documents

2015 NJSBA Annual Meeting Civil Litigation Track ...€¦ · DiFrancesco Bateman Coley Yospin Kunzman Davis & Lehrer, PC, Warren Speakers: Hon. Madeline Cox Arleo United States District