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Nov 26

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Award of expert fees to prevailing party upheld without common limitations

00011891In Equal Employment Opportunity Commission vs. Peoplemark, Inc., Case. No. 11-2582 (6th Cir. October 7, 2013), the Sixth Circuit reviewed the award of legal and expert fees. The matter is particularly interesting regarding the expert fees awarded, and the explanation for doing so.

The Sixth Circuit’s Opinion included the following case facts:

“Defendant-appellee Peoplemark is a temporary-employment agency with offices in Michigan, Tennessee, Kentucky, and Florida. Peoplemark uses an application form that asks applicants whether they have a felony record. Peoplemark also conducts an independent investigation into the criminal records of all applicants.

In 2005, Sherri Scott, an African American with a felony conviction, submitted an application to Peoplemark’s Grand Rapids office. Peoplemark did not refer Scott for employment. Because of this refusal, Scott filed a charge of discrimination with the Commission. She alleged that Peoplemark denied her application because of her race and felony record. …

The Commission argued that the case hinged on the possibility that Peoplemark’s consideration of felony convictions when assessing applications had a disparate impact on African Americans. To determine if the case was viable, the Commission, through its expert, would need to analyze flow data and current work force data and conduct an adverse-impact analysis. This, the Commission contended, could establish that Peoplemark’s actual policy had a disparate impact on African Americans.

Though Peoplemark brought a motion for summary judgment on February 25, 2010, the parties agreed to voluntarily dismiss the case with prejudice on March 24, 2010. The dismissal provided that Peoplemark would be the prevailing party for purposes of determining who was entitled to fees under § 706(k) of Title VII, as amended at 42 U.S.C. § 2000e-5(k). The court granted the joint motion and dismissed the action on March 29, 2010.

Peoplemark thereafter moved for attorney’s fees, expert fees, sanctions, and costs. …On March 31, 2011, the magistrate judge recommended that Peoplemark be awarded fees in the amount of $751,942.48, which included $219,350.70 in attorney’s fees, $526,172.00 in expert witness fees, and $6,419.78 in other expenses.

The magistrate judge found that ‘the complaint turned out to be without foundation from the beginning.’”

This article provides background to these statistical tests, and provides an online calculator for one of these common statistical tests.

The issue of interest (at least for purposes of this post) involves the time that the expert fees were reimbursable. The amount of expert fees found to be reimbursable (i) was for a period that exceeded when legal fees were determined to be reimbursable, and (ii) was prior to the time when the EEOC knew that its expert could not statistically show the EEOC’s case, yet the EEOC continued to litigate the case.

The Sixth Circuit explained:

“Section 2000e-5(k) permits a court to award the prevailing party in a Title VII action “a reasonable attorney’s fee (including expert fees).” A plain reading of the statute confirms that expert fees are included within, or a subset of, attorney’s fees. …

This question raises the issue of whether an award of expert fees must cover only the same time as attorney’s fees. It would be tempting to hold that a court may only award expert fees temporally concurrent with awarded attorney’s fees. While it may well be reasonable in some cases for a district judge to award expert fees—as a subset of attorney’s fees—for the same time period that attorney’s fees are awarded, this does not mean that awarding expert fees incurred during a different period is always unreasonable.

The benchmark for awarding expert fees under the statute is reasonableness. …Our holding that temporal concurrence is not required is confirmed by the fact that experts may proceed on a schedule distinct from that if the attorneys on the case. … Preparing an expert report will often require a considerable amount of time. Once an expert report deadline is set, an expert must promptly begin her work in order to complete the required report by the deadline, particularly in a complex case with stringent deadlines. An expert often works independently of the attorney to gather, convert into a reviewable format, and review the documents and other materials considered in forming the opinion that will underlie her opinion.

Because a failure to timely complete the report will prevent the expert from testifying at trial, which may be fatal to a party’s claim, experts cannot wait and see if a disposition motion is granted or if a case becomes frivolous before beginning their work.”

In many cases, expert fees are not awarded because of the connection that the parties and bench make between the lawyer and expert fees, and/or a time limitation that cuts off reimbursement of all expert fees incurred. The Sixth Circuit indicates that these restrictions are artificial and unnecessary if the expert fees are otherwise reasonable and incurred for reasonable purposes.

 

About the author

David Nolte

I am a founding principal of Fulcrum Inquiry, an accounting and economic consulting firm that performs damage analysis for commercial litigation, forensic accountings, financial investigations, and business valuations. I am a Certified Public Accountant (CPA) and an Accredited Senior Appraiser (ASA), as well as having other professional credentials. I regularly serve as an expert witness involving damages measurement. My litigation-oriented resume is on Fulcrum's website.

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