Opposition Brief — Lohman v. Borough

No. 09-1147

“Supreme Court, U.S.

FILED

LP @) APR 2 1 2010

gn The

Supreme Court of the Anited States

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NICHOLAS LOHMAN,

Petitioner,

v.

DURYEA BOROUGH, DURYEA BOROUGH COUNCIL,

ANN DOMMES, LOIS MORREALE, FRANK

GROBLEWSKI, EDWARD ORKWIS, ROBERT WEBB,

AUDREY YAGER and JOAN ORLOSKI,

Respondents.

¢

On Petition For A Writ Of Certiorari

To The United States Court Of Appeals

For The Third Circuit

4

BRIEF IN OPPOSITION

¢

KAROLINE MEHALCHICK

Counsel of Record

OLIVER, PRICE & RHODES

P.O. Box 240

1212 South Abington Road

Clarks Summit, Pennsylvania 18411

(570) 585-1200

km@oprlaw.com

Attorney for Respondents

COCKL£ LAW BRIEF PRINTING CO (800) 225-6964

OR CALL COLLECT (402) 342-2831

Il.

QUESTIONS PRESENTED

Whether Petitioner has presented compelling

reasons to grant the Petition, where the Third

Circuit’s Opinion affirming the District Court’s

consideration of settlement negotiations in deter-

mining an award of attorney fees does not con-

flict with a decision of this Court or a Court of

Appeals, and where Petitioner does not claim

that the Third Circuit’s ruling implicates an im-

portant federal question that has not been settled

by this Court.

Whether Petitioner has presented compelling

reasons to grant the Petition, where the Third

Circuit’s Opinion affirming the District Court’s

consideration of the hourly rates of defense coun-

sel in this case does not conflict with a decision of

this Court or a Court of Appeals, and where

Petitioner does not claim that the Third Circuit’s

ruling implicates an important federal question

that has not been settled by this Court.

li

PARTIES TO THE PROCEEDINGS

The caption to the case contains the names of all

parties remaining in the case.

CORPORATE DISCLOSURE STATEMENT

Respondents, Duryea Borough, Duryea Borough

Council, Ann Dommes, Lois Morreale, Frank

Groblewski, Edward Orkwis, Robert Webb, Audrey

Yager and Joan Orloski, are a municipality and its

governing body, Borough Council, the individual

members of council and the Borough’s Borough Sec-

retary. As such, Respondents are government entities

and are not corporations, do not have any parent

corporation or any corporate stock.

itl

TABLE OF CONTENTS

Page

I cradinotunenonsesseconse i

Parties to the Proceedings. ..................2:cesceeeeeeeeerece

Corporate Disclosure Statement.....................00000:-

Table of Contents.......... M7 hoy het AE eR iil

i ol crcnmepenmperedesencconsonees iv

I scsteevensensncsonsessseneveveece 1

Reasons for Denying the Petition ...................2...... 6

I.

If.

Contrary to Lohman’s assertion, there is

no compelling reason for review of the de-

cisions of the Third Circuit Court of Ap-

peals and the United States District Court

for the Middle District of Pennsylvania on

the issue of consideration of settlement ne-

gotiations in determining a _ reasonable

Bg

Contrary to Lohman’s assertion, there is

no compelling reason for review of the deci-

sions of the Third Circuit Court of Appeals

and the United States District Court for

the Middle District of Pennsylvania on the

issue of Lohman’s counsel’s hourly rate......

a suowsbatinacensucsauevenes

iV

TABLE OF AUTHORITIES

Page

CASES

Black Grievance Committee v. Philadelphia

Electric Co., 802 F.2d 648 (3d Cir. 1986).......... 10, 11

Clark v. Sims, 28 F.3d 420 (4th Cir. 1994)............... 8,9

Cooper v. Utah, 894 F.2d 1169 (10th Cir. 1990)....... 8,9

EMI Catalogue Partnership v. CBS/Fox Co.,

No. 86 Civ. 1149 (PKL), 1996 WL 280813

es es I ins cncnicnrisnusawaveneverévscesocconsons 3

Hensley v. Eckerhart, 461 U.S. 424 (1983) .......... 3,4,5

Johnson v. Georgia Highway Express, Inc., 488

Re oe EG Be ceeiiitcdoevennn senetccsnch ta ceasatevsccns 3

Lohman v. Duryea Borough, 574 F.3d 163 (3d

Cai SIND cc cunticccsassedcascuahecsestisucsenieeteaneienes 7, 8,10, 11

Moriarty v. Svec, et al., 233 F.3d 955 (7th Cir.

SII cnisisS senchosnjndumaceuanmuhessaienabanioentaniuanmienigueuniormeeneite 9

Ortiz v. Regan, 980 F.2d 138 (2d Cir. 1992)............. 7,9

Student Public Interest Research Group ov.

AT & T Bell Laboratories, 842 F.2d 1436 (3d

I ae 10

Washington v. Philadelphia County Court of

Common Pleas, 89 F.3d 1031 (3d Cir. 1996) .......... 10

RULES

Federal Rule of Evidence 408.........................22205- 3,4, 5

TS COmre TG 10.05 cecsccsvccvesevevsocssesensvessvvevenes 6, 11

1

STATEMENT OF THE CASE

Petitioner, Nicholas Lohman (“Lohman”),

brought the underlying action against Respondents,

Duryea Borough, Duryea Borough Council, Ann

Dommes, Lois Morreale, Frank Groblewski, Edward

Orkwis, Robert Webb, Audrey Yager and Joan Orloski

(“Duryea Borough”), alleging violations of the pro-

cedural component of the Fourteenth Amendment,

First Amendment retaliation claims, publicity given

to a private life and wrongful discharge. Pet. App. 16.

At the close of discovery, Duryea Borough moved for

summary judgment on all counts. The District Court

granted summary judgment on all claims except

Lohman’s claims of First Amendment retaliation,

which proceeded to trial. Jd. At the close of Lohman’s

case, the District Court dismissed Respondents

Orkwis and Morreale from the case on a motion for

judgment as a matter of law. Jd. The jury reached its

verdict on April 23, 2008. The jury found in favor of

Lohman on his First Amendment retaliation claim

with respect to his assistance in filing a grievance

against all Respondents except Robert Webb. They

found in favor of all Respondents on Lohman’s claim

of First Amendment retaliation with respect to his

union contract negotiations. Pet. App. 16-17. For

his successful claims, the jury awarded Lohman dam-

ages for lost wages in the amount of $7,320.00

against Duryea Borough and $1,220.00 each against

Dommes, Groblewksi, Yager and Orloski. The jury

also awarded one dollar in nominal damages against

all Respondents except Robert Webb. Pet. App. 17.

2

Lohman’s initial demand to settle this matter

was five-hundred thousand dollars ($500,000.00) in

compensatory and punitive damages. Pet. App. 46.

Duryea Borough offered thirty-thousand dollars

($30,000.00). Jd. After trial commenced, Duryea

Borough made three additional offers — twenty-five

thousand dollars ($25,000) plus the job of chief of

police, fifty-thousand dollars ($50,000.00) plus the job

of chief of police, and seventy-five thousand dollars

($75,000.00) without the job of chief of police. Pet.

App. 46-47. These offers were rejected by Lohman.

Pet. App. 47.

Following the verdict at trial, Lohman requested

attorney's fees and costs in the amount of $112,883.73.

Pet. App. 18. The request sought an hourly rate deter-

mination of $300.00 for a total of 356 hours. Pet. App.

20. Duryea Borough opposed Lohman’s request and

made very specific objections to each and every prob-

lematic time entry. The District Court reduced the

total number of hours by 46.8 hours for duplicative-

ness, 4.80 hours for inapplicability, and 35.70 hours

due to excessiveness. Pet. App. 21-30. Those reduc-

tions have not been appealed by Lohman.

The District Court next determined that the ap-

propriate hourly rate for Plaintiff’s counsel was $215.

The District Court, who is very familiar with Plain-

tiff’s counsel’s work and skill, reached this rate by

analyzing the affidavits submitted by both Lohman’s

counsel and those submitted by counsel for Duryea

Borough. Pet. App. 30-39.

3

The above calculations resulted in a total lode-

star calculation of $59,060.50. Pet. App. 40. The Dis-

trict Court then made additional considerations as to

whether to adjust the fee upward or downward,

specifically looking at the Johnson’ factors, appor-

tionment, settlement negotiations, and the degree

of success obtained. Based on these additional con-

siderations, the District Court adjusted its fee award

to $30,900.00. Pet. App. 54.

The District Court, in reducing the lodestar,

noted that this Court, in Hensley v. Eckerhart, 461

U.S. 424 (1983), held that “the most critical factor” in

determining a reasonable fee “is the degree of success

obtained.” Pet. App. 47; citing Hensley at 436. In con-

struing Federal Rule of Evidence 408, which governs

the use of settlement negotiations, the District Court

found a decision by the District Court for the

Southern District of New York to be persuasive. That

decision held that “evidence of the alleged settlement

negotiations is not being offered to prove ‘either

liability for or invalidity of the claim or its amount.’

Rather it is being offered to show that the Court’s

rejection of the claim should not merit an award of

attorney’s fees under the Court’s power of equitable

discretion.” Pet. App. 50; citing EMI Catalogue Part-

nership v. CBS/Fox Co., No. 86 Civ. 1149 (PKL), 1996

WL 280813, at *2 (S.D.N.Y. May 24, 1996) (finding

' Johnson v. Georgia Highway Express, Inc., 488 F.2d 714

(5th Cir. 1974).

4

that Rule 408 does not bar consideration of settle-

ment discussions in determining whether to award

attorney's fees under the Copyright Act). The District

Court in this case agreed with the reasoning of the

District Court for the Southern District of New York

that evidence of settlement negotiations is not barred

in an application for attorney’s fees, since the same is

not used to show liability or validity of a claim or

amount. Pet. App. 51. Relying on this Court’s decision

in Hensley, the District Court concluded that the

settlement negotiations are to be used as an indicator

of the “degree of success wbtained” by Plaintiff’s coun-

sel, and that it would therefore consider the settle-

ment negotiations in its determination of Plaintiff’s

attorney’s fee award. Pet. App. 51; citing Hensley, 461

U.S. at 436.

Lohman then appealed the District Court’s

award of attorney’s fees to the Third Circuit, which

affirmed the award. The Third Circuit addressed

Lohman’s appeal of the District Court’s determination

of his counsel’s hourly rate in a footnote, in which it

acknowledged that a district court’s determination of

an attorney’s reasonable hourly rate will not be upset

unless found to be clearly erroneous, and further that

there was ample evidence to support the Court’s

lower rate. Pet. App. 4.

In reviewing the District Court’s consideration of

settlement negotiations, the Third Circuit agreed that

. Rule 408 does not bar a court’s con-

sideration of settlement negotiations in its

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analysis of what constitutes a reasonable fee

award in a particular case. By its terms,

Rule 408 requires exclusion of evidence of

such negotiations “when offered to prove

liability for, invalidity of, or amount of a

claim that was disputed as to validity or

amount, or to impeach through a prior incon-

sistent statement or contradiction.”

Pet. App. 10.

The Third Circuit further held that evidence of

settlement negotiations as bearing on the issue of

what relief was sought by a plaintiff does not offend

the clear terms of Rule 408, and that such evidence

can be relevant when determining the degree of suc-

cess. Pet. App. 11; citing Hensley, 461 U.S. at 436

(“[t]here is no precise rule or formula” for determining

how a fee should be adjusted to reflect limited suc-

cess). The Third Circuit affirmed the District Court’s

consideration of settlement negotiations, concluding

that “[w]Jhile evidence of settlement negotiations is

only one indicator of the measure of success, it is a

permissible indicator that is not precluded by Rule

408.” Pet. App. 11. In reaching this conclusion, the

Third Circuit rejected Lohman’s public policy argu-

ment and argument that Federal Rule of Civil Pro-

cedure 68, Offer of Judgment, precludes the consider-

ation of settlement negotiations by the District Court.

Pet. App. 12-13. Finally, the Third Circuit noted that

settlement negotiations may be relevant in measur-

ing success, and, if so, are clearly only one factor to be

considered in the award of fees, and remarked that in

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this case, the District Court considered many fac-

tors before awarding Lohman’s counsel a fee of

$30,000.00. Pet. App. 13-14.

Following the denial of a Petition for Rehearing

En Banc (Pet. App. 61), Lohman filed the instant

Petition for Writ of Certiorari with this Court.

a

REASONS FOR DENYING THE PETITION

Lohman submits that this Court should grant its

Petition for Writ of Certiorari in order to rule on the

issues of whether settlement negotiations may be

used to reduce a fee petition, and whether the lower

courts improperly considered defense counsel’s hourly

rates in determining the market rate for civil rights

plaintiffs’ attorneys. Duryea Borough submits that

Lohman has not carried his burden of demonstrating

“compelling reasons” for this Court to grant his

Petition. See Supreme Court Rule 10. The decisions of

the Third Circuit Court of Appeals and the District

Court for the Middle District of Pennsylvania do not

conflict with a decision of this Court or any Court of

Appeals, nor do they implicate a federal question that

has not been decided by this Court. Id.

7

I. Contrary to Lohman’s assertion, there is no

compelling reason for review of the deci-

sions of the Third Circuit Court of Appeals

and the United States District Court for the

Middle District of Pennsylvania on the issue

of consideration of settlement negotiations

in determining a reasonable attorney’s fee

award.

Lohman incorrectly avers that there is a split in

the circuits as to whether settlement negotiations can

be used to reduce a fee petition. Pet. at 2. In support

of his argument that such a circuit split exists,

Lohman cites to cases out of the Second, Fourth and

Tenth Circuits. However, these cases are all dis-

tinguishable from the case at bar and do not, as

Lohman would lead this Court to believe, stand for

the proposition that settlement negotiations cannot

be considered in reducing a fee petition. As the Third

Circuit noted, “ ... the cases relied on by Lohman

regarding Rule 68 are factually distinguishable and

do not set forth a categorical rule that applies here.”

Pet. App. 14; Lohman v. Duryea Borough, 574 F.3d

163, 169 n.4 (3d Cir. 2009). Specifically, the Third

Circuit panel distinguished these cases as follows:

In Ortiz v. Regan, 980 F.2d 138 (2d Cir.

1992), the Court of Appeals for the Second

Circuit rejected a district court’s denial of

fees for work performed by plaintiff’s coun-

sel after the defendants offered the plaintiff

a post-deprivation hearing. Instead of re-

questing a hearing, plaintiff proceeded with

her due process claim based on defendants’

8

conduct prior to the suspension of her retire-

ment benefits. The court of appeals stated

that the “availability of Rule 68” provided

“additional weight” for its conclusion that the

district court abused its discretion by cutting

off all fees incurred after the rejected offer.

Id. at 141. The District Court here did not

cut off all fees incurred after Lohman re-

jected Appellees’ settlement offer.

In Clark v. Sims, 28 F.3d 420 (4th Cir. 1994),

the Court of Appeals for the Fourth Circuit

concluded that a district court erred in

applying Rule 68, because the offer in ques-

tion did not meet the formality requirements

of the Rule. Jd. at 423. The case at bar does

not involve any application of Rule 68.

In Cooper v. Utah, 894 F.2d 1169 (10th Cir.

1990), the Court of Appeals for the Tenth

Circuit determined that a district court erred

by reducing a fee award to one half of the

lodestar based on simplicity of issues, be-

cause simplicity of issues should have been

factored into the determination of the lode-

star. Jd. at 1171. In a terse statement, the

court “[a]ldditionally” noted that the district

court’s reduction of fees in light of settlement

negotiations was “not well-founded” where

defendants failed to make an offer of judg-

ment under Rule 68. Id. at 1172. There is no

indication that the district court’s use of

settlement negotiations in Cooper was anal-

ogous to the application in this case, nor is it

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clear that the settlement issue was necessary

to the holding on appeal.

Id.

The cases relied upon by Lohman, Ortiz, Clark,

and Cooper, do not stand for the proposition that a

court may not consider settlement negotiations when

determining an award of attorney fees. While the

Third Circuit, in this case, and the Seventh Circuit,

in Moriarty v. Svec, et al., 233 F.3d 955 (7th Cir.

2000),” have held that a court should consider settle-

ment offers as a factor in determining an award of

reasonable attorney fees, no other Circuit Court of

Appeals has specifically addressed this issue. As such,

there is no split in the Circuits on this issue, and

therefore no compelling reason for this Court to grant

Lohman’s Petition for Writ of Certiorari.

* In Moriarty, a case which involved claims pursuant to the

Employee Retirement Income Security Act (“ERISA”) and the

Labor Management Relations Act (“LMRA”), the Seventh Circuit

held that “substantial settlement offers should be considered by

the district court as a factor in determining an award of rea-

sonable attorney's fees, even where Rule 68 does not apply.” 233

F.3d 955 at 967. The Seventh Circuit further stated that the

“district court must only consider the substantial settlement

offer; it need not reduce the lodestar calculation because of the

offer.” Jd.

10

II. Contrary to Lohman’s assertion, there is no

compelling reason for review of the deci-

sions of the Third Circuit Court of Appeals

and the United States District Court for the

Middle District of Pennsylvania on the

issue of Lohman’s counsel’s hourly rate.

Lohman asserts that it was improper for the

District Court (and the Third Circuit, in affirming the

District Court) to consider defense counsel’s rates in

determining Lohman’s counsel’s rates. Lohman does

not present any compelling reason for this Court to

grant his Petition for Writ of Certiorari on this issue.

There is no split in the Circuits or otherwise com-

pelling federal question which would require review

by this Court.

Moreover, the matter of an attorney's marketplace

billing rate is a factual question which is subject to a

clearly erroneous standard of review. Washington v.

Philadelphia County Court of Common Pleas, 89 F.3d

1031, 1035 (3d Cir. 1996); citing Student Public In-

terest Research Groun v. AT & T Bell Laboratories,

842 F.2d 1426. . 1+. \3d Cir. 1988) (citing Black Grie-

vance Committee v. Philadelphia Electric Co., 802

F.2d 648, 652 (3d Cir. 1986) (citation omitted), va-

cated on other grounds, 483 U.S. 1015, 107 S. Ct.

3255, 97 L. Ed. 2d 754 (1987)). More generally, the

appellate court may not upset a trial court’s exercise

of discretion on the basis of a visceral disagreement

with the lower court’s decision. Similarly, the appel-

late court may not reverse where the trial court em-

ploys correct standards and procedures, and makes

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findings of fact not clearly erroneous. Jd. In this case,

the Third Circuit concluded, in a footnote, that

... there was ample evidence to support the

[District] Court’s lower rate and we conclude

that the [District] Court did not clearly err in

choosing the rate that it did. See Interfaith

Comty. Org. v. Honeywell Intern., Inc., 426

F.3d 694, 703 n.5 (3d Cir. 2005) (“[Wle will

not upset a district court’s factual determina-

tions, including its determination of an attor-

ney’s reasonable hourly rate and the number

of hours he or she reasonably worked on the

case, unless we find them to be clearly erron-

eous.”).

Pet. App. 4; Lohman v. Duryea Borough, 574 F.3d

163, 164 n.1 (3d Cir. 2009).

The opinions of the Third Circuit Court of Ap-

peals and the United States District Court for the

Middle District of Pennsylvania on the issue of

Lohman’s counsel’s hourly rate are not clearly erron-

eous. Moreover, the opinions comport with the law of

the Third Circuit, and are in harmony with every

other Circuit. For the foregoing reasons, Lohman has

not met his burden in establishing that there is a

compelling reason for this Court to grant his Petition.

See Sup. Ct. R. 10 (“a petition for a writ of certiorari

is rarely granted when the asserted error consists of

erroneous factual findings or the misapplication of a

properly stated rule of law”). As such, this Court

should deny Lohman’s Petition.

¢

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CONCLUSION

For the foregoing reasons, Respondents, Duryea

Borough, Duryea Borough Council, Ann Dommes,

Lois Morreale, Frank Groblewski, Edward Orkwis,

Robert Webb, Audrey Yager and Joan Orloski, re-

spectfully submit that this Court should deny

Lohman’s Petition for a Writ of Certiorari.

Respectfully submitted,

KAROLINE MEHALCHICK

Counsel of Record

OLIVER, PRICE & RHODES

P.O. Box 240

1212 South Abington Road

Clarks Summit, Pennsylvania 18411

(570) 585-1200

km@oprlaw.com

Attorney for Respondents

April 21, 2010