MANZO v. SOVEREIGN MOTOR CARS, LTD. No. 08-CV-1229 (JG)(SMG).
ISABEL MANZO, Plaintiff, v. SOVEREIGN MOTOR CARS, LTD., EDWARD FELDMAN, and JACK MATALON, Defendants.
United States District Court, E.D. New York.
May 11, 2010.
WILSON, ELSER, MOSKOWITZ, EDELMAN & DICKER, LLP, New York, NY, By: Ricki E. Roer, Nancy V. Wright, Attorneys for Defendants.
MEMORANDUM AND ORDER
JOHN GLEESON, District Judge.
Plaintiff Isabel Manzo brought this action pursuant to Title VII of the Civil Rights Act of 1964, as amended, 42 U.S.C. §§ 2000e et seq., and the New York City Human Rights Law, New York City Administrative Code ("NYCHRL") §§ 8-107 et seq., alleging that defendants sexually harassed Manzo through the creation of a hostile work environment and fired her in retaliation for her complaining about it.
The defendants' motion is denied in its entirety; the plaintiff's motion is granted to the extent set forth below.
Familiarity with the facts and procedural history of the case is assumed. For a more complete description of the underlying facts, see Manzo v. Sovereign Motor Cars, Ltd., No. 08-CV-1229 (CPS), 2009 WL 3151094 (E.D.N.Y. Sept. 29, 2009). A brief summary of the essential facts follows.
Isabel Manzo was an employee of Sovereign Motor Cars ("SMC"), a Mercedes-Benz retailer, from February 26, 2007 until June 7, 2007. During that relatively brief period of employment, she was subjected to a continuous and concerted campaign of sexually harassing remarks and behavior by her direct supervisor, Jack Matalon, and she was fired in direct retaliation for filing of a complaint of sexual harassment with SMC's vice president, Edward Feldman. At trial, defendants disputed that any sexual harassment had occurred and argued that the company had promptly investigated and addressed Manzo's complaint. The defendants asserted that Manzo was terminated for performance-based reasons. The jury credited Manzo's testimony and awarded her $25,000 for her hostile work environment claim against SMC and Matalon, $25,000 for her retaliation claim against SMC and Feldman, and at total of $200,000 in punitive damages, of which it attributed $50,000 to SMC, $50,000 to Feldman, and $100,000 to Matalon.
Defendants' Challenge to Punitive Damages
Defendants seek to set aside the punitive damage award as a matter of law pursuant to Fed. R. Civ. P. 50(b), or, in the alternative, for a remittitur or a new trial pursuant to Fed. R. Civ. P. 59(a) and (e). Defendants do not challenge the jury's finding of liability or its award of compensatory damages.
Standard of Review
Federal Rule of Civil Procedure 50 provides that where there is no "legally sufficient evidentiary basis" for a reasonable jury to find for a party on a particular issue, the court may resolve the issue against that party and may grant a motion for judgment as a matter of law. "A movant seeking to set aside a jury verdict faces a `high bar.'" See Tse v. UBS Fin. Servs., Inc.,
The standard for granting a new trial pursuant to Fed. R. Civ. P. 59 "is less stringent than that for judgment as a matter of law." Zakre, 541 F. Supp. 2d at 560. A motion for a new trial should be granted when, in the opinion of the district court, "the jury has reached a seriously erroneous result or . . . the verdict is a miscarriage of justice." Song v. Ives Labs., Inc.,
If a district court finds that a verdict is excessive, it may reduce the jury's award through the process of a remittitur, whereby a plaintiff is given the option of either accepting damages in a (specified) reduced amount or consenting to a new trial. See Cross v. N.Y. City Transit Auth.,
Motion to Vacate the Punitive Damages Award as a Matter of Law
Punitive damages may be awarded for a civil rights claim against a defendant employer under either Title VII or the NYCHRL if "the defendant's conduct is shown to be motivated by evil motive or intent, or when it involves reckless or callous indifference to the federally protected rights of others." Tolbert, 242 F.3d at 77 (citing Smith v. Wade,
Direct evidence that an employer acted with knowledge that the discrimination and retaliation violated federal law is not required; rather, the requisite state of mind may be inferred from the circumstances. See, e.g., Zimmermann, 251 F.3d at 385 (general training in equal opportunity protocol and hiring practices is sufficient to infer awareness of Title VII requirements); see also Hill v. Airborne Frgt. Corp.,
There is no dispute that the evidence at trial was sufficient to allow a reasonable jury to award compensatory damages. However, defendants contend that the award of punitive damages was precluded as a matter of law on three grounds: (1) their actions were taken on the advice of counsel; (2) they believed their conduct was lawful; and (3) they made good faith efforts to promptly take corrective action following Manzo's complaint. As explained below, each of these arguments is unavailing.
Consultation with counsel might show that a defendant lacked the requisite subjective intent to violate federal law, but it does not operate as a per se bar to an award of punitive damages. See Quinby v. WestLB AG, No. 04-CV-7406 (WHP), 2008 WL 3826695, at *2 (S.D.N.Y. Aug. 15, 2008) ("[S]eeking advice of counsel does not as a matter of law preclude a punitive damage award; indeed, such consultation may instead establish that a defendant knew about the legal consequences of its action."); see also Greenbaum v. Handelsbanken,
The contention that defendants actually believed their conduct to be lawful fails because the evidence at trial amply supported the jury's contrary conclusion. There was considerable evidence that Matalon and Feldman were aware that their conduct violated federal and city law. Matalon acknowledged that he was aware of the inappropriateness of sexual harassment in the workplace. See Tr. 633 ("At that time, harassment in the workplace was a big issue, and it was a very sensitive issue, and I wasn't — I wasn't — I should have been much more careful at that time."); see also Tr. 634 ("[O]f course we know  all along [that] it's an issue. It's in the news all the time."). Multiple witnesses testified at trial as to the existence of Sovereign's anti-discrimination and harassment policies, which are set forth in SMC's employee manual. Matalon also conceded at trial that he was aware of the inappropriateness of certain of his comments to Manzo. See Tr. 628-29, 634. These facts are more than sufficient to permit a jury to infer that Matalon was aware his actions may have been in violation of the law. See Tse, 568 F. Supp. 2d at 309-10 (evidence that the employer was generally familiar with anti-discrimination law and knew its actions may be in violation of the law is sufficient to support jury award of punitive damages). A jury could also infer the requisite malice or intent from the nature of Matalon's conduct. See Kolstad, 527 U.S. at 538 ("To be sure, egregious or outrageous acts may serve as evidence supporting an inference of the requisite `evil motive.'"). Manzo testified to an pattern of inappropriate remarks, culminating in one particularly egregious incident occurring during a business trip, in which defendant Matalon entered her hotel room on the pretense of having lost his room key, laid down on plaintiff's bed, unbuttoned his shirt, and demanded a "bedtime story." The egregiousness of such conduct can hardly be disputed. See Tr. 720 (reflecting Feldman's acknowledgment that the alleged behavior by Matalon, if true, was "outrageous" and "very concerning.").
As for Feldman, who attended law school but does not practice law, he was identified in SMC's employee manual as a contact person for reports of alleged harassment. His testimony at trial suggested that he was aware of the illegality of terminating an employee for retaliatory reasons. See, e.g., Tr. 740-42. Although there was testimony that Feldman promptly directed an investigation into plaintiff's allegations, and he claimed that he fired Manzo due to performance errors, the jury might have reasonably concluded that his asserted non-retaliatory reasons were pretextual,
Finally, defendants contest the punitive damages award by arguing that, as a matter of law, they are entitled to the affirmative defense recognized in Kolstad, which "insulates an employer from punitive damages liability if it has made `good faith efforts to enforce an antidiscrimination policy.'" Zimmermann, 251 F.3d at 385 (citing Kolstad, 527 U.S. at 546). This argument fails because, as discussed above, a reasonable juror could have concluded that SMC's antidiscrimination policies were intentionally ignored by both Manzo's direct supervisor, Matalon, and by SMC's co-owner and vice-president, Feldman.
Motion For a New Trial or a Remittitur
Defendants argue that even if there existed sufficient evidence for an award of punitive damages, a new trial or a remittitur should be granted because the damages awarded were excessive.
Under federal law, punitive damage awards must be "reasonable in their amount and rational in light of their purpose to punish what has occurred and to deter its repetition," Vasbinder v. Scott,
Whether they are awarded under New York or federal law, punitive damages must also comport with due process, which prohibits any punishment that is "grossly out of proportion to the severity of the offense." BMW of N. Am., Inc. v. Gore,
The Supreme Court has stated that "reprehensibility" is "perhaps the most important" factor, and it has identified certain aggravating factors that are associated with particularly reprehensible conduct, including whether " the harm caused was physical as opposed to economic;  the tortious conduct evinced an indifference to or a reckless disregard of the health or safety of others;  the target of the conduct had financial vulnerability;  the conduct involved repeated actions or was an isolated incident; and  the harm was the result of intentional malice, trickery, or deceit, or mere accident." State Farm Mutual Auto. Ins. Co. v. Campbell,
Although there was no evidence at trial of any physical contact or threat of violence, there was evidence that Manzo suffered significant psychological and emotional distress as a direct result of Matalon's sexually harassing behavior. During the period of her employment, Manzo was constantly anxious, "on edge," and fearful. She lost sleep, lost weight, felt vulnerable, manipulated and humiliated, and was mentally and physically drained by Matalon's repeated harassing conduct. See Tr. 218-21. There was also ample evidence that Manzo was in a precarious financial situation during the period of the harassment, that Matalon knew about that situation, and that he used it to his advantage in exerting his power over her. See, e.g., Tr. 44, 462-63. Matalon's harassment of Manzo was not an isolated incident, but rather it began shortly after the start of her employment and continued largely unabated until her termination. Finally, as the jury concluded in awarding punitive damages, Matalon's harassment of Manzo, and Feldman's retaliatory termination, were not mere accidents. Matalon intentionally manipulated the terms and conditions of Manzo's employment both to pursue his goal of a romantic relationship with her and to penalize her when she spurned his advances. The evidence also strongly suggested that Feldman's firing of Manzo was an intentional decision to protect his own financial interests at the expense of Manzo's rights, and that it was done with full knowledge of the severity of Matalon's conduct. In these circumstances, a punitive award of $200,000 is not out of proportion with the reprehensibility of the conduct at issue.
b. Ratio of Punitive to Compensatory Damages
With regard to the ratio of punitive to compensatory damages, the Supreme Court has instructed that there must be a reasonable relationship between the two, but that reasonableness cannot be determined by reference to any "simple mathematical formula." Gore, 517 U.S. at 582. While a punitive award of more than four times the amount of compensatory damages has been described as a ratio that "might be close to the line of constitutional impropriety," State Farm, 538 U.S. at 425, the extreme outer limit of an acceptable ratio of punitive to compensatory damages "may be as high as ten to one." Hill, 212 F. Supp. 2d at 75 (citing TXO Production Corp. v. Alliance Res. Corp.,
c. Comparable Civil Penalties and Cases
The final Gore factor requires consideration of the "the punitive damages award and the civil or criminal penalties that could be imposed for comparable misconduct." Gore, 517 U.S. at 583. The maximum damages award available under Title VII varies with the number of individuals employed by a defendant company. In the case of a company such as SMC with more than 14 and fewer than 101 employees, 42 U.S.C. § 1981a(b)(3)(a) provides for a maximum award of $50,000.
The Second Circuit has stated that consideration of awards in comparable cases is also proper. See Ismail v. Cohen,
The bulk of the cases cited by defendants involved less reprehensible conduct than the defendants' conduct here.
In sum, I conclude that the magnitude of the punitive damages awards did not violate due process, and was not excessive as a matter of either federal or state law.
Plaintiff's Motion For Attorneys' Fees and Costs
The plaintiff's attorneys, Moskowitz, Book & Walsh, LLP, request the following relief: (1) prevailing party attorneys' fees in the total sum of $393,842.50; and (2) costs in the sum of $11,821.39, plus interest.
Standard of Review
In civil rights cases, the court has discretion to award reasonable attorneys' fees and costs to the "prevailing party." 42 U.S.C. § 2000e-5(k); see also 42 U.S.C. § 1988(b). "The function of an award of attorneys' fees is to encourage the bringing of meritorious civil rights claims which might otherwise be abandoned because of the financial imperatives surrounding the hiring of competent counsel." Woodford v. Cmty. Action Agency,
In determining the amount of attorneys' fees to award, the court must first calculate the "presumptively reasonable fee" — what has historically been referred to as the "lodestar" figure — by multiplying the reasonable number of hours worked by a reasonable hourly rate. See Arbor Hill Concerned Citizens Neighborhood Ass'n v. County of Albany,
The Second Circuit has recently reaffirmed the "forum rule," whereby a district court will award fees at the going rate in the district in which the court sits unless a reasonable paying client would pay more to hire an attorney from outside the district. See Simmons, 575 F.3d at 174; see also Lochren v. County of Suffolk, 344 Fed. Appx. 706, 708 (2d Cir. 2009). "In order to overcome that presumption, a litigant must persuasively establish that a reasonable client would have selected out-of-district counsel because doing so would likely (not just possibly) produce a substantially better net result." Simmons, 575 F.3d at 175.
Application for Attorneys' Fees
a. Hourly Rates
Plaintiff's counsel asks for an award of fees based on the following hourly rates:
Moskowitz has 30 years of experience and has tried more than 40 cases to verdict. Book has 19 years of experience and has considerable expertise in labor and employment law. Konovich has more than 11 years of experience and has tried over 15 cases to verdict.
The rates sought by plaintiff's counsel are somewhat higher than the rates typically granted in fee awards in similar cases in this district.
After review of rates awarded in prior cases, the evidence submitted by the parties, and based on my own familiarity with the prevailing rates in the district and my observations of the performance of counsel, I find that the hourly rates requested by plaintiff's counsel should be reduced by 20%. While the resulting $480 per hour rate awarded for Moskowitz is at the upper end of the range typically awarded in this district, he was brought in to try the case, his trial skills may well be the reason for the favorable jury award, and I conclude that reasonable paying clients would be willing to pay $480 per hour for an attorney of his caliber.
Accordingly, the following reduced rates will be applied: Moskowitz: $480; Book: $360; Konovitch: $300; Parker: $200; Mooney: $200; Frosen: $100
b. Number of Hours Expended
Plaintiff's counsel requests a fee award reflecting roughly 987 hours, the majority of which were billed by Moskowitz, Book, and Konovich. The request includes time spent on the present fee application, which is not challenged. See Quaratino, 166 F.3d at 428 (time spent preparing fee application is generally compensable).
"Applications for fee awards should generally be documented by contemporaneously created time records that specify, for each attorney, the date, the hours expended, and the nature of the work done." Kirsch v. Fleet St., Ltd.,
Defendants contend that an across-the-board reduction of "at least 33%" is warranted because of plaintiff's counsel's use of "block billing, duplicative billing, vague entries, and travel time billed at a full rate rather than the 50% compensable rate." Def. Fees Br. at 12. For instance, defendants point to the following billing entries by Moskowitz as improperly block-billed:
Defendants also contend that plaintiff's counsel spent excessive time (and utilized an excessive number of attorneys) in tasks such as: opposing defendants' pre-answer motion to dismiss (83.7 hours); opposing defendants' motion for summary judgment (144 hours); preparing for Matalon's deposition (31 hours); preparing for Feldman's deposition (33.5 hours), and preparing for or attending trial (342.9 hours).
Having reviewed plaintiff's counsel's billing records in some detail, I do not consider them to be vague, redundant, or excessive. Though block billing practices can justify a reduction in a fee award if the court is unable to determine the reasonableness of the hours expended, see Gutman, 2009 WL 3296072 at *8; see also Hensley, 461 U.S. at 437 n.12 ("Plaintiff's counsel, of course, is not required to record in great detail how each minute of his time was expended. But at least counsel should identify the general subject matter of his time expenditures."), plaintiff's counsel's time entries are not so vague as to frustrate such review.
Finally, I am not persuaded by the defendants' claim that a reduction is warranted to account for the time spent litigating unsuccessful claims. It is true that Manzo's complaint included a claim that defendants had failed to pay her overtime compensation and certain earned commissions and bonuses, in violation of federal and state law. See Complaint ¶¶ 29-47. And Manzo conceded an inability to prove those claims during the briefing of the defendants' motion for summary judgment. But Manzo's wage and hour claims were intimately related to the sexual harassment and retaliation claims she proved at trial. Specifically, she proved that Matalon manipulated her employment at SMC in order to ensure that he had personal control over her bonus and commissions, and that he threatened to — and on one occasion did — withhold a promised bonus because she had rebuffed his advances. These facts served as direct evidence of Manzo's successful claim of discrimination. Also, evidence of Manzo's hours, salary arrangement and bonuses (or lack thereof) was relevant to the calculation of her compensatory damages and her rebuttal of defendants' claims that she was fired for poor performance. While the defendants correctly note that "no fees should be awarded for time spent pursuing a failed claim if it was unrelated to the plaintiff's successful claims," Leblanc v. Fletcher, 143, F3d. 748, 762 (2d Cir. 1998), Manzo's wage and hour claims and her claims of discrimination and retaliation all "involve[d] a common core of facts," and accordingly a reduction in the fee award is not appropriate based on the (comparatively little) time spent on the wage and hour claims.
In sum, I find the number of hours for which plaintiff's counsel request an award to be reasonable. Using the reduced hourly rates discussed above, plaintiff's fee request is granted in the sum of $314,534.00.
Application for Costs
In addition to attorneys' fees, Manzo seeks to recover costs in the sum of $11,94139, plus interest. Her entitlement to costs derives from two sources. Pursuant to Fed. R. Civ. P. 54(d)(1), "costs other than attorneys' fees shall be allowed as of course to the prevailing party unless the court otherwise directs." Dattner v. Conagra Foods, Inc.,
Defendants have separately moved for costs under both of the above statutory provisions. Although a request to tax costs under 28 U.S.C. § 1920 is properly addressed in the first instance to the Clerk of Court rather than to the district court pursuant to Local Rule 54.1, I will overlook the plaintiff's procedural error. See Gala Jewelry, Inc. v. Harring, No. 05-CV-7713, 2007 WL 684002, *1 (S.D.N.Y. Mar. 1, 2007) ("[T]he procedure [of filing a request for costs with the Clerk of Court] is permissive, and the failure to follow it does not deprive the Court of power to tax costs.").
Defendants object to the following costs as not recoverable under 28 U.S.C. § 1920: the premium paid for daily copies of the trial transcript, the costs of the deposition transcripts of Angela Zirpoli, Carol Battaglia and Doreen Van Etten, and certain incidental costs associated with those deposition transcripts including attendance fees, delivery charges, and fees for the creation of compact discs. The objection misapprehends the legal provisions explained above governing costs, for the fee shifting provisions of 42 U.S.C. § 2000e-5(k) allow plaintiffs to recover most of the costs ordinarily incurred involved in litigating a case, irrespective of whether they are recoverable under 28 U.S.C. § 1920. See Anderson v. City of New York,
Defendants object to a lack of supporting documentation for the remaining costs, totaling $1,331.70, which are comprised primarily of expenses for duplicating, courier services, electronic research, postage, faxing, and subway travel. Def. Fees Br. at 19-22. While more documentation would have been preferable, the claimed expenses are plainly not excessive in the context of this case. See Tatum v. City of New York, No. 06-CV-4290 (PGG), 2010 WL 334975 (S.D.N.Y. Jan 28, 2010) (awarding duplicating costs which "appear[ed] reasonable" despite absence of full documentation). However, plaintiff's itemized list of costs includes a charge for "trial binders, exhibits, and tabs," ($30.00), an expense that is considered non-compensable general office overhead. See id. With the exception of that $30.00 charge, which has been deducted, plaintiff's request for costs is granted in the amount of $11,911.39.
Under 28 U.S.C. § 1961(a), a plaintiff is entitled to post-judgment interest on "any money judgment in a civil case recovered in a district court." The rate of post-judgment interest is governed by 28 U.S.C. § 1961(a) & (b), which direct that interest be calculated from the date judgment is entered, at a rate equal to the weekly average 1-year constant maturity Treasury yield, compounded annually.
In addition, as the Second Circuit has made clear, where "damages awarded to the plaintiff [in a Title VII action] represent compensation for lost wages, `it is ordinarily an abuse of discretion not to include pre-judgment interest." Gierlinger v. Gleason,
From July 7, 2007 (the date of Manzo's termination) through the present, the rate embodied in 26 U.S.C. § 6621(a)(2) fluctuated from a low of 4 percent per annum to a high of 8 percent, averaging approximately 5.55 percent per annum. See Rev. Rul. 2009-37, Nov. 23, 2009, available at 2009 WL 4023061 (listing quarterly non-corporate tax underpayment interest rates). Applying that rate beginning on December 1, 2008, which is roughly the midpoint between plaintiff's termination and the date of this opinion,
Plaintiff also seeks interest on the costs award. An award of interest on costs is appropriate "since counsel have been out-of-pocket for those costs for a substantial period of time." Rozell v. Ross-Holst,
For the reasons set forth above, defendants' motion to vacate the award of punitive damages or grant a new trial or a remittitur is denied. Plaintiff's motion for attorneys' fees is granted in the amount of $314,534.00, and plaintiff's motion for costs is granted in the amount of $11,911.39. Pre-judgment interest on the compensatory portion of plaintiff's award is granted in the amount of $4,219.73. Post-judgment interest, to be calculated by the Clerk of Court, is granted on the compensatory damages portion of plaintiff's award at a rate equal to the weekly average 1-year constant maturity Treasury yield in accordance with 28 U.S.C. § 1961(a). Interest on the costs of litigation, to be calculated by the Clerk of Court, is granted at that same rate for the period beginning December 1, 2008.
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