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Fair Housing Council of San Diego v. Penasquitos Casablanca Owner's Association

November 26, 2007

FAIR HOUSING COUNCIL OF SAN DIEGO; JOANN REED; AND MILTON RODGERS, JAMEL RODGERS AND ANTWAN RAMSEY, MINORS, BY THEIR GUARDIAN AD LITEM, JOANN REED, PLAINTIFFS,
v.
PEÑASQUITOS CASABLANCA OWNER'S ASSOCIATION, DEFENDANT.



The opinion of the court was delivered by: Honorable Larry Alan Burns United States District Judge

ORDER (1) OVERRULING OBJECTIONS TO REPORT AND RECOMMENDATION RE FEES AND COSTS AWARD TO PLAINTIFF REED; (2) ADOPTING RECOMMENDATION RE FEES AND COSTS AWARD TO PLAINTIFF REED; (3) OVERRULING IN PART AND SUSTAINING IN PART OBJECTIONS TO RECOMMENDATION RE DENIAL OF FEES AND COSTS AWARD TO PLAINTIFF FAIR HOUSING COUNCIL; AND (3) AWARDING PORTION OF CLAIMED COSTS TO PLAINTIFF FAIR HOUSING COUNSEL [Dkt Nos. 114, 115, 124, 125, 126]

Following jury verdicts for plaintiffs in this fair housing civil rights action, the undersigned district judge referred the Applications for attorneys' fees and costs of plaintiff Joann Reed ("Reed") and of plaintiff Fair Housing Council of San Diego ("FHCSD") to Magistrate Judge Cathy Ann Bencivengo for a Report and Recommendation ("R&R"). Dkt Nos. 114, 115. Judge Bencivengo received briefing from the parties on both Applications and filed R&Rs on August 31, 2007 and September 4, 2007. Reed had requested an award of $347,198.75 in attorneys' fees -- a figure including a 25% contingent fee risk multiplier applied to a lodestar figure of $277,759.00 in claimed fees -- and $16,001.51 in litigation costs and expenses. Judge Bencivengo recommends Reed's Application be granted, but without any contingent fee multiplier and with additional downward adjustments, in an award amount of $161,000 in attorneys' fees and $7,673.83 in costs and expenses, for a total award of $168,673.83. Dkt No. 122. She recommends the FHCSD's Application requesting an award of $64,809.69 in combined fees and costs be denied in its entirety. Dkt No. 123.

Defendant Penasquitos Casablanca Owner's Association ("PCOA") filed Objections to the recommended fee award to Reed. Dkt No. 124. Reed filed a Reply to the PCOA Objections (Dkt No. 131) and also filed her own objections to the R&R. Dkt No. 125. The PCOA filed a Reply to Reed's Objections. Dkt No. 127. The FHCSD filed Objections to the R&R regarding its fee Application. Dkt No. 126. The PCOA filed a Reply to the FHCSD's Objections. Dkt Nos. 128, 130 (duplicate filing). For the reasons discussed below, all objections to the Reed Application R&R are OVERRULED, and that R&R is ADOPTED. The Objections to the FHCSD's Application R&R are OVERRULED IN PART and SUSTAINED IN PART, and that R&R is ADOPTED IN PART and REJECTED IN PART.

I. BACKGROUND

In July 2004, while she was a resident of the Casablanca condominiums, Reed complained of housing discrimination to the FHCSD, a non-profit organization with the mission to promote fair housing in San Diego County. She reported Kent MacDonald, a security guard PCOA employed, had sexually harassed her between February 2004 and July 2004, and her complaints to the PCOA had not resulted in corrective action.*fn1 Compl. ¶¶ 17, 13. The FHCSD investigated and concluded the sexual harassment allegations had merit. It also purportedly discovered the PCOA had rules and regulations that discriminated against families with children because of their familial status.*fn2 Compl. ¶ 18.

Reed, three of her minor children or grandchildren who lived with her in 2004, and the FHCSD initiated this litigation in January 2005, naming only the PCOA as a defendant. They alleged nine causes of action First, discriminatory housing practices in violation of the federal Fair Housing Act, 42 U.S.C. § 3601, et seq.; Second, unlawful business practices in violation of the California Fair Employment and Housing Act, CAL. GOV. CODE §§ 12927, 12955, et seq.; Third, unlawful business practices in violation of the Unruh Civil Rights Act, CAL. CIV. CODE0 § 51,et seq.; Fourth, violation of the Bane Civil Rights Act, CAL. CIV. CODE § 52.1, et seq.; Fifth, unfair business practices under CAL. BUS. & PROF. CODE §§ 17200, et seq. in the form of a pattern or practice of unlawful housing practices in connection with the operation of the PCOA; Sixth, assault and battery through its agent MacDonald, in violation of CAL. PENAL CODE §§ 227, 242, 245; Seventh, wrongful entry through its agent MacDonald, in violation of CAL. CIV. CODE § 1954; Eighth, breach of the covenant of quiet enjoyment, in violation of CAL. CIV. CODE § 1927; and Ninth, negligence causing injury through its agent MacDonald in breach of its duty to operate the Casablanca condominiums in a safe and lawful manner in that it negligently hired, trained, supervised, and retained MacDonald as its security guard employee. The FHCSD joined in three of the nine causes of action alleged in the Complaint: the First, Second, and Ninth claims.

Plaintiffs sought monetary (compensatory and statutory) damages, declaratory relief, injunctive relief, and punitive damages Compl. pp. 9-10. More than half the claims initially pled were abandoned or eliminated voluntarily or by court order before trial or jury deliberations, notably all the familial status discrimination claims. The case was tried solely on plaintiffs' civil rights and housing discrimination theories for the PCOA's conduct or omissions contributing to the sexual harassment of Reed. The three minors and their claims were dismissed from the case after receipt of trial evidence.

The jury deliberated only on the federal fair housing and the state civil rights and fair housing claims. The January 11, 2007 verdict found the PCOA liable under the fair housing claims, both state and federal, the Unruh Act (CAL. CIV. CODE § 51.9. Sexual Harassment), and the Bane Act (CAL. CIV. CODE § 52.1, interference by threats, intimidation, or coercion with the exercise or enjoyment of individual rights secured by federal or state Constitutions or laws). The pleading was conformed to the findings after trial on plaintiffs' motion to substitute the Ralph Act (Cal. Civ. Code § 51.7(a)) for the Bane Act mistakenly relied on in the Complaint, to preserve the statutory award component of the verdict. See Post-Trial Motions Order, Dkt No. 110. Although a "pattern and practice" was alleged and noted in the Pre-Trial Order as an issue to be tried, this court found no basis upon which to enter an injunction. As the court noted in the Order denying any equitable relief:

[T]he court has expressed reservations throughout this litigation that the unique circumstances of the conduct giving rise to this lawsuit make it a close call whether the case even falls within fair housing policies and statues, including the federal fair housing law upon which federal jurisdiction was predicated. The circumstances certainly fall outside the arena of the usual fair housing cases. The facts of this case reveal no endemic or even isolated discriminatory practice rectifiable by a mandatory injunction of the kind plaintiffs seek. The PCOA does not engage in offering housing, conditioning tenancies on any criteria, or perpetuating particular tenancies. The court is unable to articulate any purpose related to the substance of this case to be served by granting any of the aspects of the injunctions requested. Finally, "[i]n each case, a court must balance the competing claims of injury and must consider the effect on each party of the granting or withholding of the requested relief." Amoco Production Co. v. Village of Gambell, Alaska, 480 U.S. 531, 542 (1987). The PCOA board is a voluntary group whose service should not be unnecessarily burdened with requirements remote from their responsibilities predicated on an isolated instance of sexual harassment by a now-former employee unrelated to any condition of housing targeted by traditional fair housing concerns.

Dkt No. 110, 3:5-18.

As prevailing plaintiffs, both Reed and the FHCSD now move to recover their claimed attorneys' fees and costs to prosecute this civil rights action.

II. DISCUSSION

A. Legal Standards

1. Reports And Recommendations

A district judge "may accept, reject, or modify the recommended decision, receive further evidence, or recommit the matter to the magistrate judge with instructions" on a dispositive matter prepared by a magistrate judge proceeding without the consent of the parties for all purposes. Rule 72(b); see 28 U.S.C. §636(b)(1). A party objecting to the recommended disposition of the matter may "serve and file specific objections to the proposed findings and recommendations," and "a party may respond to another party's objections." Rule 72(b). "[T]he court shall make a de novo determination of those portions of the report or specified proposed findings or recommendations to which objection is made." 28 U.S.C. §636(b)(1); United States v. Raddatz, 447 U.S. 667, 676 (1980) (when objections are made, the court must make a de novo determination of the factual findings to which there are objections). The court also reviews de novo the magistrate judge's conclusions of law. Gates v. Gomez, 60 F.3d 525, 530 (9th Cir. 1995). The statutory provision does not require that the district court conduct some lesser review when no objections are filed. Thomas v. Arn, 474 U.S. 140, 149-50 (1985); but see Robbins v. Carey, 481 F.3d 1143, 1146-47 (9th Cir. 2007) (the magistrate's conclusions of law are reviewed de novo, regardless of whether any party has filed objections thereto). "If neither party contests the magistrate's proposed findings of fact, the court may assume their correctness and decide the motion on the applicable law." Orand v. United States, 602 F.2d 207, 208 (9th Cir. 1979).

2. Attorneys' Fees And Costs Awards To Prevailing Parties

Under the Fair Housing Act ("FHA"), "the court, in its discretion, may allow the prevailing party, other than the United States, a reasonable attorney's fees and costs." 42 U.S.C. § 3613(c)(2). The Fair Employment and Housing Act ("FEHA") similarly provides: "the court may, in its discretion, award the prevailing party, other than the state, reasonable attorney's fees and costs." CAL. GOV. CODE § 12989.2. The only material difference between the state and federal fee-shifting statutes pertinent here concerns the availability under the state statutes of a multiplier to enhance an attorneys' fees award for exceptional representation or other public purpose incentive or to compensate for contingent fee risk. Under the state fee-shifting statute, "a trial court should award a multiplier for exceptional representation only when the quality of representation far exceeds the quality of representation that would have been provided by an attorney of comparable skill and experience billing at the hourly rate used in the lodestar calculation. Otherwise, the fee award will result in unfair double counting and be unreasonable. Nor should a fee enhancement be imposed for the purpose of punishing the losing party." Ketchum v. Moses, 24 Cal.4th 1122, 1139, 1136 (2001) ("every fee shifting statute must be construed on its own merits"). The same factors already encompassed in the lodestar should not be considered when determining an appropriate enhancement. Id. at 1138. Reed's counsel seek a multiplier to enhance their claimed lodestar award by 25%.

"[A] trial court . . . has broad discretion to adjust the fee downward or deny an unreasonable fee altogether." Ketchum, 24 Cal.4th at 1138. "[T]he definition of what is a reasonable fee applies uniformly to all federal fee-shifting statutes." Anderson v. Director, Office Workers Compensation Programs, 91 F.3d 1322, 1325 (9th Cir. 1996). When a party prevails under both federal and state law, the district court may apply the more generous provisions of state law in calculating a fee award, such as including a multiplier for contingent fee risk. See Mangold v. PUC, 67 F.3d 1470, 1479 (9th Cir. 1995). Although the district court has discretion in determining attorneys' fees awards, it must provide "some indication or explanation as to how it arrived at the amount of fees awarded." Fair Housing of Marin v. Combs, 285 F.3d 899, 907 (9th Cir. 2002).

The lodestar approach to calculating attorneys' fee, pursuant to guidelines articulated in Hensley v. Eckerhart, 461 U.S. 424 (1983), is presumed to result in a reasonable fee award. See Rivera, 477 U.S. 561.

The "lodestar" is calculated by multiplying the number of hours the prevailing party reasonably expended on the litigation by a reasonable hourly rate. . . . After making that computation, the district court then assesses whether it is necessary to adjust the presumptively reasonable lodestar figure on the basis of the Kerr factors that are not already subsumed in the initial lodestar calculation.[*fn3 ]

Morales v. City of San Rafael, 96 F.3d 359, 363-64 (9th Cir. 1996) (citation and footnote omitted) (identifying twelve factors bearing on the reasonableness of an attorneys' fee award articulated in Kerr v. Screen Guild Extras, Inc., 526 F.2d 67, 70 (9th Cir. 1975); but see Yahoo Inc. v. Net Games, Inc., 329 F.Supp.2d 1179, 1182 (N.D.Cal. 2004) (discussing the Kerr factors subsequently deemed "subsumed in the initial lodestar calculation," numbering at least five of the twelve), citing Morales, 96 F.3d at 363-64.

In civil rights cases, "Congress intended that statutory fee awards be 'adequate to attract competent counsel, but . . . not produce windfalls to attorneys.' " City of Riverside v. Rivera, 477 U.S. 561, 580 (1986) (citation omitted). The amount of an attorneys' fees award need not be proportionate to the amount of damages the plaintiffs actually recovered. See Id. at 580-85. Congress elected not to impose a rule restricting attorneys' fees to a sum "proportionate to the amount of damages a civil plaintiff might recover" to avoid windfalls. Id. at 580; see also Combs, 285 F.3d at 908. However, the amount of damages recovered is a one of several relevant factors the court should consider in calculating the award.

"[T]he number of hours reasonably expended on the litigation multiplied by a reasonable hourly rate," supported by evidence submitted by the party seeking the fee award, is the "starting point" for the analysis. Hensley, 461 U.S. at 433. From that "objective basis" establishing "an initial estimate of the value of a lawyer's services," the court may reduce the award in consideration of inadequate documentation of hours and should "exclude from this initial fee calculation hours that were not 'reasonably expended.'" Id. at 433-34. The court properly considers such factors as whether the case was overstaffed and the skill and experience of the lawyers. Id. at 434. The prevailing party's counsel has a duty to exclude from a fee request "hours that are excessive, redundant, or otherwise unnecessary." Id. at 434.

The Hensley Court addressed the issue "whether a partially prevailing plaintiff may recover an attorney's fees for legal services on unsuccessful claims" and sought "to clarify the proper relationship of the results obtained to an award of attorney's fees." Hensley, 461 U.S. at 426, 432. "The product of reasonable hours times a reasonable rate does not end the inquiry." Id., at 434. Other considerations that may lead the court to adjust the fee up or down "includ[e] the important factor of the 'results obtained.'" Id. "This factor is particularly crucial where a plaintiff is deemed 'prevailing' even though he succeeded on only some of his claims for relief," in which case the court must address two questions: "First, did the plaintiff fail to prevail on claims that were unrelated to the claims on which he succeeded? Second, did the plaintiff achieve a level of success that makes the hours reasonably expended a satisfactory basis for making a fee award?" Id.

"The extent of a plaintiff's success is a crucial factor in determining the proper amount of an award of attorneys' fees." Hensley, 461 U.S. at 440. "A reduced fee award is appropriate if the relief, however significant, is limited in comparison to the scope of the litigation as a whole." Id. at 439-40 (emphasis added) (declining to affirm a fee award, despite acknowledging the awarding court's "commendable effort in explaining the fee award," because a finding the significant extent of the relief plaintiffs obtained "clearly justifies the award of a reasonable attorney's fee" does not "answer the question of what is 'reasonable' in light of that level of success"). "[T]he inquiry does not end with a finding that the plaintiff obtained significant relief." Id.

In Farrar v. Hobby, 506 U.S. 103, 115 (1992), the Supreme Court identified an exception, applicable in "nominal damages" or "de minimis relief" cases, to the general requirements that govern attorneys' fees award calculations, including the requirement that a lodestar first be calculated. Farrar, 506 U.S. at 116-18; see Morales, 96 F.3d at 362-63 ("The Farrar exception, which would allow the court to dispense with the calculation of a lodestar and simply establish a low fee or no fee at all, is limited to cases in which the civil rights plaintiff 'prevailed' but received only nominal damages and achieved only 'technical' success"). "'Nominal damages' is not limited to an award in the amount of $1, but includes an award that may properly be classified as 'de minimis.'" Morales, 96 F.3d at 363.

Whether the plaintiff's "success is purely technical or de minimis" . . . is determined by examining other factors in addition to the amount of money damages awarded. Primary among such other considerations is "the significance of the legal issues on which the plaintiff claims to have prevailed" and the "public purpose" the plaintiff's litigation served.

Morales, 96 F.3d at 363, quoting Farrar, 506 U.S. at 117, 121 (O'Connor, J., concurring) ("The difference between the amount recovered and the damages sought is not the only consideration").

A prevailing party may also recover as part of a fee award out-of-pocket expenses counsel normally charge fee-paying clients. Dang v. Cross, 422 F.3d 800, 814 (9th Cir. 2005). However, like an attorneys' fees award, the expenses requested must be substantiated and ...


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