By Gerald L. Maatman Jr. and Howard M. Wexler

On August 30, 2013, Judge Nicholas G. Garaufis of the U.S. District Court of the Eastern District of New York awarded interim attorneys’ fees and costs totaling $3,707,313.29 to Plaintiffs who intervened in the matter of United States v. The City of New York, No. 07-CV-2067 (E.D.N.Y. Aug. 30, 2013). Although the total amount of interim fees and costs awarded by Judge Garaufis is substantially less than the $7,710.542.00 requested, it nonetheless represents a substantial payday for the attorneys litigating this case that New York City will have to pay in connection with this six-plus year hard fought and highly controversial case that is still ongoing.

As such, the ruling illustrates the heightened exposure employers face in high-stakes workplace class actions.

Background Of The Case

As we previously blogged here and here, the United States originally filed this lawsuit against the City in 2007, alleging that the City’s entry-level firefighter exams and applicant ranking had an unlawful disparate impact on African-American and Hispanic applicants. Id. at 2. The Vulcan Society and several individuals intervened in the lawsuit (“Plaintiff-Intervenors”), alleging similar claims of disparate impact and also alleging disparate treatment on behalf of a putative class of African-American, entry firefighter candidates. Id. The Court agreed with Plaintiffs, finding that the City’s procedures for screening and selecting entry-level firefighters violated Title VII, the Equal Protection Clause, and the Civil Rights Act of 1866, along with New York state and local law. Id. at 2-3. Consequently, the Court issued an order requiring the City to develop a non-discriminatory test for entry-level firefighter applicants. Id. Earlier this year, the Second Circuit vacated the grant of summary judgment for disparate treatment liability, but upheld the injunctive relief order. Id. at 4. After the Second Circuit’s decision, the Plaintiff-Intervenors filed requesting Judge Garaufis award them interim attorneys’ fees and costs given that the relief they sought was largely upheld. Id. at 5.

The Basis Of The Fee Ruling

Judge Garaufis agreed with Plaintiff-Intervenors, finding that they were entitled to recover interim attorneys’ fees and costs given that they were “undoubtedly the prevailing party” given the Second Circuit’s decision, as well as those aspects of his decision that the City did not appeal, including summary judgment on disparate impact. Id. at 18. However, Judge Garaufis discounted the attorneys’ fees and costs requested by Plaintiff-Intervenors based on several factors, including the fact that Plaintiff-Intervenors requested attorney fee rates consistent with those provided for in the Southern District of New York rather than the Eastern District of New York (where the lawsuit was brought) as the Plaintiff-Intervenors failed to establish, as they must to recover out-of-district rates that, “in district counsel [within the EDNY] were unable or unwilling to take this case.” Id. at 10.

Upon deciding on the rate(s) that he would award for each attorney who worked on the case, Judge Garaufis made a 40% across-the-board reduction of Plaintiff-Intervenors’ requested hours broken down as follows: a 25% reduction for claims upon which Plaintiff-Intervenors are not the prevailing party (e.g., individual claims brought against Mayor Bloomberg);  a 10% reduction for duplicative efforts with the United States; and a 5% reduction for overstaffing totaling an attorneys’ fee award of $3,556,609.20. Id. at 21. According to Judge Garaufis, “this award accounts for the appropriate reductions in the explained areas but ultimately reflects the extraordinary effort that was necessary to effect change of the magnitude and importance involved in this litigation.” Id. Judge Garaufis further granted the Plaintiff-Intervenors $150,704.09 in interim costs for items such as electronic research costs, meals and travel with leave to additional documentation as to their request to recoup certain expert and consultant fees. Id. at 28-29.

Implications For Employers

Given that a bench trial on the disparate treatment aspect of the case is yet to come (which Judge Garaufis will not preside over based on the Second Circuit’s decision) the meter is still running on how much the employer will have to pay in attorneys’ fees and costs in this case, which will be on top of both the monetary and non-monetary relief Plaintiffs recover. Cases such as this serve as a reminder that multi-million dollar attorneys’ fee awards in class action cases such as this are not unusual. Those who litigate them – including the attorneys in this case – can easily spend thousands of hours engaged in discovery, motion practice, pre-trial preparation, and more.