McGrath v. Toys "R" US, Inc.

*437 Read, J. (dissenting).

I dissent with respect to certified question 4 only, which I would answer in the negative.

In Cabrera v Jakabovitz ( 24 F3d 372 [2d Cir 1994])—the Second Circuit’s seminal case applying the “significant public purpose” exception of Farrar v Hobby ( 506 US 103 [1992])—the court approved attorney’s fees based on its conclusion that the plaintiffs had “prevailed on a significant legal issue—namely, that landlords can be held liable for employing real estate brokers who are engaged in racial steering” ( 24 F3d at 393 ). In Cabrera , the plaintiffs, by creating a new rule making landlords vicariously liable for the discriminatory actions of the real estate brokers that they employ, prevailed on a novel issue of law that served a significant public purpose. As the Second Circuit later stressed in Pino v Locascio ( 101 F3d 235, 239 [2d Cir 1996]), however, the holding in Cabrera was “limited.” “The vast majority of civil rights litigation does not result in ground-breaking conclusions of law, and therefore, will only be appropriate candidates for fee awards if a plaintiff recovers some significant measure of damages or other meaningful relief” (id.).

The plaintiffs here recovered only nominal damages and sought no injunctive relief. Under Farrar and the relevant Second Circuit precedent, Cabrera and Pino , adopted by us today, the question then becomes whether these plaintiffs achieved a “ground-breaking conclusion[ ] of law.”

“[W]hen courts speak of issues of first impression, they speak only of these relatively few cases, which require consideration of adjustments of substantive rules of law” (Tancredi v Metropolitan Life Ins. Co., 256 F Supp 2d 196, 201 [SD NY 2003], revd on other grounds 378 F3d 220 [2d Cir 2004]). This is primarily because,

“[a]t too high a level of generality, there are no cases of first impression, while at too low a level, every case is one of first impression. . . . [Although every motor vehicle accident case is one of ‘first impression,’ there are very few indeed in which the factual context from which they are born requires courts to give serious consideration to altering or adjusting legal rules in order to resolve them. So too in all areas of the law” (id.).

While in some instances the first jury verdict pursuant to a particular statutory provision may qualify as a case of first impression, this cannot be so where, as here, the purportedly groundbreaking legal principle—the recognition of transsexuals *438 as members of a protected class safeguarded against discrimination by the New York City Human Rights Law—had already been supported by the only courts to have considered the question (see Maffei v Kolaeton Indus., 164 Misc 2d 547 [Sup Ct, NY County 1995]; Rentos v Oce-Office Sys., 1996 WL 737215 , 1996 US Dist LEXIS 19060 [SD NY, Dec. 24, 1996]). As the majority points out, the New York City Commission on Human Rights, the administrative agency responsible for interpreting and enforcing the New York City Human Rights Law, had endorsed the same reading of the Human Rights Law in its administrative decisions.

In Maffei , which preceded plaintiffs’ action by over six years, Supreme Court expressly rejected the argument of a transsexual plaintiffs employer that the New York City Human Rights Law did not recognize transsexuals as a protected class. In refusing to adopt the employer’s narrow interpretation of the statutory phrase “discrimination based on sex,” the court explained that the “New York City law is intended to bar all forms of discrimination in the workplace and to be broadly applied” (164 Misce 2d at 555 [emphasis added]). In Rentos , the United States District Court for the Southern District of New York embraced Maffei’& interpretation, holding that the transsexual plaintiff’s complaint, alleging employment discrimination based on “sex,” “clearly allege[d] membership in what at least one court has found to be a protected class under city and state law” ( 1996 WL 737215 , *9, 1996 US Dist LEXIS 19060 , *26). The present litigation cannot be viewed as groundbreaking when the pioneering legal precedent had already been this firmly established.

Although believing that the New York City Human Rights Law already protected transsexuals against discrimination, the New York City Council adopted an amendment in 2002 to guard against any misinterpretation. The majority views the Council’s action in this regard as further evidence of the uncertain state of the law when plaintiffs commenced this litigation. Once the amendment was enacted on April 30, 2002, however, plaintiffs’ trial, which did not begin until about two months later, was rendered even more obviously irrelevant to establishing the protection of transsexuals under the New York City Human Rights Law.

In fact, the law was so certain that defendant Toys “R” Us never challenged plaintiffs’ assertion that, as pre-operative transsexuals, they were members of a protected class under *439 Administrative Code § 8-107 (4). To the contrary, defendant acknowledged from the outset of this litigation that section 8-107 (4) of the Code, proscribing discrimination in places of public accommodation, applied to transsexuals and to plaintiffs as pre-operative transsexuals. Settlement talks collapsed on the eve of trial when plaintiffs demanded $600,000 (just reduced from $3.2 million plus attorney’s fees), and defendant signaled a willingness to enter into productive negotiations only if plaintiffs lowered their demand to $60,000 (increased from a longstanding offer of $10,000). At trial, the parties litigated only factual issues related to whether and to what extent defendant’s actions discriminated against plaintiffs. In short, defendant never contested the supposedly novel issue of law on which plaintiffs prevailed and premise their request for attorney’s fees.

An attorney’s fee provision in an anti-discrimination statute “is not a relief Act for lawyers” (Farrar, supra, 506 US at 122 [O’Connor, J., concurring] [citation and internal quotation marks omitted]). Rather, there is a strong “public interest in preventing dubious or trivial claims from flooding the . . . courts” (Adams v Rivera, 13 F Supp 2d 550, 553 [SD NY 1998]). If the fee provision in Administrative Code § 8-502 (f) encourages a gold rush of attorneys promoting doubtful or inconsequential claims, it will be of little value to either legitimate civil rights plaintiffs or the general public. Nor does the judicial system as a whole benefit from “a second [round of] litigation of significant dimension” over the propriety of attorney’s fees (Texas State Teachers Assn. v Garland Ind. School Dist., 489 US 782, 791 [1989]).

An attorney’s fee provision in a civil rights statute is a tool that, used sparingly, “ensures the vindication of important rights, even when large sums of money are not at stake, by making attorney’s fees available under a private attorney general theory” (Farrar, 506 US at 122 [O’Connor, J., concurring]). Here, plaintiffs failed to accomplish any important public goal as private attorneys general by litigating a civil rights issue that had already been resolved in favor of transsexuals by the courts.

Chief Judge Kaye and Judges G.B. Smith, Ciparick and Rosenblatt concur with Judge Graffeo; Judge Read dissents in part and votes to answer certified question 4 in the negative in a separate opinion in which Judge R.S. Smith concurs.

Following certification of questions by the United States Court of Appeals for the Second Circuit and acceptance of the ques *440 tions by this Court pursuant to section 500.17 of the Rules of Practice of the Court of Appeals (22 NYCRR 500.17), and after hearing argument by counsel for the parties and consideration of the briefs and the record submitted, certified questions 1, 3 and 4 answered in the affirmative and certified question 2 not answered upon the ground that it has been rendered academic.