Saffos v. Avaya, Inc., 419 N.J. Super. 244 (App. Div. 2011). A jury found that defendant Avaya’s termination of plaintiff’s employment had violated the New Jersey Law Against Discrimination (“NJLAD”), in that the termination was part of a pattern of firing older workers and replacing them with younger ones. The jury awarded plaintiff $250,000 in emotional distress damages, $493,000 in back pay and front pay, and $10 million in punitive damages. The trial judge reduced the punitive damages to $3,715,000, representing five times the compensatory damages. The judge also awarded plaintiff $843,638 in attorneys’ fees, plus a 25% enhancement of $210,909. Avaya appealed the verdict, the punitive damages, the fees, and the enhancement, while plaintiff cross-appealed the reduction in the punitive damages. The Appellate Division, in a lengthy opinion by Judge Miniman, upheld the verdict and the compensatory damages, but reduced the punitive damages and the attorneys’ fees. Still, it is a resounding win for plaintiff.
On the punitive damages issue, the Appellate Division rejected Avaya’s contention that its actions were not “reprehensible” or “especially egregious.” Nor did the award violate substantive due process, as Avaya had asserted. But the court reduced the award for a different reason. The emotional distress damages awarded were likely to have had “a punitive aspect,” since there was no physical harm or need for treatment. Given that, Judge Miniman ruled that the emotional distress damages should not have been included in the amount that the trial judge multiplied by five (a multiplier that the panel found reasonable) to get the total punitive damage amount. That resulted in a reduction of the punitive damages to $2,465,000.
Avaya attacked the attorneys’ fees on several bases. First, Avaya cited the presence in the retainer agreement between plaintiff and his counsel of a provision under which plaintiff agreed that the case could not be settled unless both he and his counsel agreed to settle. That provision purportedly violated Rule of Professional Conduct 1.2(a), which states that “[a] lawyer shall abide by a client’s decision whether to settle a matter.” Avaya claimed that since the retainer agreement violated the public policy embodied in RPC 1.2(a), plaintiff’s counsel could not get a fee based on that agreement.
Judge Miniman disagreed. “[A]n unenforceable provision in the retainer agreement does not prevent the award of counsel fees” under a fee-shifting statute such as the NJLAD. Avaya would not be permitted to assert public policy “to avoid [its] own statutory obligation to pay attorneys’ fees to plaintiff.”
Next, Avaya demanded a reduction in counsel’s lodestar based on time expended on (a) an unsuccessful motion to disqualify defense counsel, and (2) a gender discrimination claim, which had been dismissed. The Appellate Division agreed that the time spent on the disqualification motion should be excluded from the lodestar. But the gender discrimination claim was sufficiently related to the claim on which plaintiff prevailed that no reduction for time expended on the gender claim was warranted. Judge Miniman cited Singer v. State, 95 N.J. 487, 489-90 (1984), and Kluczyk v. Tropicana Prods., Inc., 368 N.J. Super. 479, 498-500 (App. Div. 2004), for that principle.
Finally, the Appellate Division overturned the 25% fee enhancement. The panel declined to apply Perdue v. Kenny A., 130 S. Ct. 1662 (2010), which restricted fee enhancements under federal fee-shifting statutes, rightly concluding that Rendine v. Pantzer, 141 N.J. 292 (1995), not Perdue, governed. But because the trial judge had erroneously stated that Rendine created a presumption that counsel in contingency cases are entitled to an enhancement, and because the retainer agreement in Saffos provided for an ample fee, counsel had mitigated the contingency risk, and an enhancement on top of the fee was therefore unwarranted.