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When the defendant in an employment discrimination case makes a formal pre-trial settlement offer and the plaintiff rejects it and goes on to win less from the jury, the plaintiff is not entitled to attorneys’ fees for any work done after the offer was made — even if the jury’s award and court-ordered fees would have been greater than the offer — a federal judge has ruled. Instead, such a plaintiff must fork over part of his winnings to reimburse the defendant for any costs incurred after a formal offer is made under Rule 68 of the Federal Rules of Civil Procedure, U.S. Magistrate Judge Jacob P. Hart of the U.S. District Court for the Eastern District of Pennsylvania ruled in Tai Van Le v. University of Pennsylvania. But Hart also ruled that the defendant in such a case is entitled to nothing more than “costs” and cannot recover attorneys’ fees for work on taking the case to trial. The ruling means that Tai Van Le must forfeit more than $4,000 of his $35,000 jury verdict because he rejected a $50,000 settlement offer, but his lawyers are still entitled to nearly $34,000 in fees for their work up to the date the offer was made. In the suit, Le claimed that while he was working as an electronics engineer, he was targeted for harassment because he is Vietnamese. He said he was ultimately fired in retaliation for complaining about the harassment. After a four-day trial in April, a jury rejected Le’s claim of national origin harassment but found that he was the victim of retaliation and awarded him $25,000 in compensatory damages and $10,000 in punitive damages on that claim. In post-trial motions, the university’s lawyers — Neil J. Hamburg, Alpa V. Patel, Jeffrey B. First and JuHwon Lee of Hamburg & Golden — moved for an award of all costs the defense had incurred after Feb. 29, 2000, when it made a $50,000 settlement offer under Rule 68. Le’s lawyers — Robert O’Brien and Nancy S. Sokol of Tomar Simonoff Kaplan Jacoby & Graziano in Cherry Hill, N.J. — filed their own motion asking for an award of attorneys’ fees up to the date of the offer. But both sides also asked for even more. The plaintiff’s team argued that since the $35,000 verdict combined with the fees they had incurred up to the date of the offer was more than $50,000, the defense was entitled to nothing under Rule 68. The defense team argued that it was entitled not only to post-offer costs, but also to the attorneys’ fees the university had incurred in taking the case to trial. Hart found that since Le succeeded on one of his two claims, he was a “prevailing party” under Title VII. In a “plain vanilla” Title VII case, Hart said, the court would simply calculate the plaintiff’s legal fees and add that to his award. “However, the post-verdict stage of this case can hardly be termed ‘plain vanilla.’ ‘Rocky Road’ is a more apt description,” Hart wrote. “Not only is the calculation [of the plaintiff's attorneys' fees] complicated by the existence of the Rule 68 offer and the plaintiff’s partial success at trial, but the university has accused plaintiff’s counsel of front-loading his fee due to the Rule 68 offer,” Hart wrote. As a result, Hart said, the court’s first task was to decide whether the Rule 68 offer was a valid one. Le’s lawyers argued that the Rule 68 offer was deficient because it lacked the clarity and precision necessary for such an offer. Since the defendants failed to apportion the offer between the two defendants — the university and Dr. Stanley Opella — and between Le’s two claims, they argued that Le is entitled to all his costs and attorneys’ fees and the university is entitled to nothing. But the defense argued that “the university’s pocketbook and Opella’s pocketbook were one and the same” due to the university’s indemnification policy. Hart sided with the defense, saying, “the policy considerations of Rule 68 favor application of the cost-shifting provision.” Applying the rule, Hart found that Le was not entitled to any costs or fees he incurred after the offer and that he must reimburse the defense for its post-offer costs. But Hart rejected the defense argument that the university is entitled to recover its post-offer attorney fees. Although the 3rd U.S. Circuit Court of Appeals has never addressed the issue, Hart found that several district courts within the circuit have held that Rule 68 does not entitle the defense to any attorney’s fees. The university conceded that courts around the country have been inconsistent in deciding the issue, but it said the 11th Circuit and several trial courts had held that fees are recoverable under the rule. But Hart said he agreed with the decisions of the 1st, 4th, 5th, 7th and 8th Circuits cited by Le’s lawyers. In calculating the plaintiff’s attorneys’ fees, Hart found that attorney O’Brien was entitled to $300 per hour due to his “extensive experience, all of it specializing in the areas of labor and employment law,” and that his associate, Sokol, was entitled to $125 per hour. The defense team argued that the $33,900 bill should be slashed because the plaintiff’s team had “front-loaded” their fees in anticipation of being denied any fees after the settlement offer. But Hart found that, on inspection, the bill was reasonable. “At first glance, the court was struck by the disproportionate number of hours billed in the early stages of this litigation. By Feb. 29, 2000, plaintiff’s counsel had billed just over 113 hours, when the complaint in the retaliation suit had not even been filed until Jan. 27, 2000,” Hart wrote. But in its brief, Hart said, the plaintiff’s team “adequately explains the hours billed and we find that the time spent was reasonable.” Hart rejected the university’s complaint that the plaintiff’s lawyers said they met with Le for 34.5 hours and spoke with him on the phone for 7.1 hours before the settlement offer. “Considering the complexity of the plaintiff’s job, it is understandable that plaintiff’s counsel may have needed to consult with his client concerning the technical aspects of the position that were referenced in the evaluations, policies, etc.,” Hart wrote. Hart also rejected the university’s argument that Le’s lawyers were not entitled to bill for the hours spent on the discrimination claim since he was unsuccessful on that count. “The problem with the university’s contention is that we don’t believe the two claims can be easily separated, if at all,” Hart wrote.

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