5th Circuit Age Ruling - Guidance on Liability, Wilfullness, Mitigation and Even Attorneys Fees

Today's opinion in West v. Nabors Drilling USA, Inc., (5th Cir. 5/20/03) [pdf] discusses a number of issues that arise in discrimination cases in general, and the age cases in particular. Judge Fitzwater, a district judge in the Northern District of Texas, clearly explains the standard of reviewing the evidence after a jury finding of liability. The Reeves decision means that proving pretext alone may be enough. Judge Fitzwater's analysis of the evidence is a good example of the conclusions that can be made to get to that point. (And it certainly didn't help that one of the employer's witnesses had served 21 months in prison for a drug offense between the termination and the time of trial and that another witness gave a false affidavit only 4 months before trial.)


The Court not only upheld liability, but it rejected a heightened standard of egregious facts to support liquidated damages. Instead it harmonized prior 5th Circuit law to be squarely within the confines of the U.S. Supreme Court decision in Trans World Airlines, Inc. v. Thurston, which holds willfulness is present "if the employer knew or showed reckless disregard for whether its conduct violated the ADEA." Judge Fitzwater noted that the jury found that Nash, who made the termination decision, did it because of West's age. With that finding, there is no way to conclude that he did it in the mistaken belief that his action was legal under the ADEA.


Although upholding the verdicts on both liability and exemplary damages, the employer's pain was lessened significantly by the the Court's holding on mitigation. Finding that after two months trying to get Nabers to rehire him, West elected to apply and work as a truck driver at a much lower wage than he was earning as a toolpusher for Nabers. That was not sufficient mitigation. The Court cut off his damages as of the date he applied for and accepted the lower paying job, finding he had an obligation to continue to seek work of a similar nature to that he was doing. Finally, although it upheld an award of attorneys fees, it sent the amount back for further review since it was likely that the damage award following its ruling on mitigation would be substantially lower. Although noting that proportionality of the fee to the damage award is not required in the 5th Circuit, it is certainly one of the factors to be considered. An admonition that I am sure that Judge Fitzwaters' fellow district court judge will consider on remand.


Although lengthy, this case provides a good example of the legal complexities of even a "simple" case, and a good summary of some of the basic principles of discrimination law.

Helmsley Gets to Pay More In Attorneys Fees, Than Award

I have previously noted the results of the lawsuit brought by a former employee of a Helmsley hotel, who convinced a jury that he had been discriminated against because he was gay. Now the court has awarded his counsel over $600,000 in attorneys fees. See the Daily news story. Its less than a 1/3 of what the lawyers requested, but more than the actual amount of the reduced verdict to the plaintiff. The second time this week we have reported on cases where the biggest winner was the plaintiff's counsel, not the plaintiff.

Talk About A Contingency Fee!

A successful plaintiff, who had second thoughts about her attorney, learns a hard lesson about the power of a contingency agreement. She won her Title VII discrimination case at trial, receiving an award of $34,637.84. The defendant was also required to pay $35,775.00 in attorneys fees. In addition, the plaintiff employee received a promotion as a result of the action. After a post-hearing contempt proceeding, both the judgment and the attorneys fees award were increased, the judgment to $49, 769.11, and an additional $915 in fees.


During the course of the contempt proceedings, plaintiff discharged her counsel who promptly intervened for his attorneys fees. He sought not only the court awarded fees of over $36,000, but 35% of the $49,769.11 ($17,419.19) based on his contingency agreement. It provided he would be entitled to "thirty-five (35%) percent of any amount recovered or saved after suit if [sic] filed, excluding court awarded attorneys fees". Another part of the retainer agreement provided "[i]t is specifically understood that all court awarded attorneys fees are and shall remain the property of attorney."


Both the district court and the Fifth Circuit enforced the contingency agreement. Gobert v. Williams (5th Cir. 3/26/03). The plaintiff employee tried to argue that her counsel was limited to a 'reasonable attorneys fees' under Title VII and that was the court determined amount. Noting that the Supreme Court had already decided this issue, the court replied that the question was not the reasonableness of what the defendant employer had been required to pay, but what she had agreed to pay her attorney. And as the Supreme Court had said, "there is nothing in [' 2000e-5(k)] to regulate what plaintiffs may or may not promise to pay their attorneys if they lose or if they win." Net result, one happy attorney; one unhappy, albeit promoted employee. To save you from doing the math, final totals:

Plaintiff's lawyer -- $54,109

Plaintiff -- 32,349.92

And of course the employer was not all that happy either.

Intersection of Rule 68 and Title VII on Costs and Attorneys Fees

Law.com has the story of the 3rd Circuit's determination of the effect of a plaintiff turning down a Rule 68 offer, and then winning less at trial. Tai Van Le v. University of Pennsylvania (3rd Cir. This follows their earlier story on the district court's decision. The facts that led to the ruling were that the defendant made an offer of $50,000 and the jury awarded $35,000. Claiming that it should be entitled to attorneys fees for amounts expended after the Rule 68 offer, the defendant lost. The money quote from the court:

We hold that a defendant in a Title VII civil rights suit can never recover its attorneys' fees under Rule 68, because the triggering event of that rule alters the potential costs that are 'properly awardable' to a defendant under [Section] 1988.

The triggering event of Rule 68, an award for the plaintiff, means that defendant's can never meet the standard of showing the cause of action was frivolous. Among the cases cited in support of its is one from the Fifth Circuit. EEOC. v. Bailey Ford, Inc., 26 F.3d 570, 571 (5th Cir. 1994). And to make matters worse, the defendant was still required to pay $34,000 for the plaintiff's attorney fees incurred before the offer.

No Damages for Covenant Not To Compete, No Attorneys' Fees

After being told by the Supreme Court to review whether an employer who prevailed in enforcing a covenant not to compete, but did not recover damages, was entitled to attorneys fees under the Civil Practice and Remedies Code, the San Antonio Court of Appeals, hold no. Perez v. Texas Disposal System, Inc. (Ct. App. - San Antonio, 2/5/03). The Court also reaffirmed its earlier ruling that the employer doesn't recover them under 15.51 of the Texas Business & Commerce Code either.

Dangers of Attorney Fees

The Odessa American has the sad story of an employer who went to trial and lost only $500 in actual damages, but then found itself faced with a $90,000 attorneys fee bill that it owed the plaintiff's attorney. The suit arose over the right to wear a union button and a 3 day suspension. The ultimate outcome may be different, but it serves as a good reminder that a decision to take a case all the way to trial brings into play two elements of damage, attorneys fees and pre-judgment interest, which are sometimes overlooked.

No Attorneys Fees for Sabine Pilot Cause of Action

The 5th Circuit makes clear that attorneys fees are not recoverable in a successful Sabine Pilot action. Garcia v. Sunbelt Rentals, Inc. [pdf] (11/2/02).