Abrams v. Lightolier Inc. , 50 F.3d 1204 ( 1995 )

Opinions of the United
1995 Decisions States Court of Appeals
for the Third Circuit
3-24-1995
Abrams v Lightolier Inc.
Precedential or Non-Precedential:
Docket 94-5083
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UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
N0S. 94-5083 and 94-5110
BERNARD ABRAMS
v.
LIGHTOLIER INC.; COASTAL FAST FREIGHT, INC.;
THE GENLYTE GROUP, INC.; BAIRNCO CORPORATION
The Genlyte Group, Inc.
Appellant in No. 94-5083
Bernard Abrams
Appellant in No. 94-5110
Appeal from the United States District Court
For the District of New Jersey
(D.C. Civil No. 88-cv-02906)
Argued: September 12, 1994
BEFORE: STAPLETON, ALITO and LEWIS, Circuit Judges
(Opinion filed March 24, 1995)
Margaret L. Moses (Argued)
Law Offices of Margaret L. Moses
85 Livingston Avenue
Livingston, NJ 07068
and
Kathleen C. Goger
Susan S. Stinger
Stinger & Goger
111 Mulberry Street
Townhouse D
Newark, NJ 07102
Attorneys for Appellee/
Cross Appellant
Dona S. Kahn (Argued)
Richard G. Tuttle
Anderson, Kill, Olick & Oshinsky
1600 Market Street
Suite 1416
Philadelphia, PA 19103
Attorneys for Appellant/
Cross Appellee
OPINION OF THE COURT
STAPLETON, Circuit Judge:
This matter is an appeal and a cross-appeal from a jury
verdict in favor of the plaintiff on his claim under the New
Jersey Law Against Discrimination ("NJLAD") and in favor of the
defendant employer on plaintiff's federal Age Discrimination in
Employment Act ("ADEA") claim. The appeal and cross-appeal raise
issues concerning the appropriate jury instructions in a pretext
age discrimination case under New Jersey law, the appropriateness
of certain evidentiary rulings, the sufficiency of the evidence,
and the propriety of the awards for back-pay damages, attorneys'
fees, and costs. We conclude that the district court did not err
in instructing the jury as to the burden of proof required for
the NJLAD claim, that any errors with respect to the district
court's evidentiary rulings were harmless, that the evidence was
sufficient to support the judgments, and that the district court
did not abuse its discretion in failing to reduce the back-pay
and attorneys' fees award. However, we conclude that the
district court applied the wrong legal standard in determining
the plaintiff's award of costs. We will therefore remand solely
on that issue and affirm the district court in all other
respects.1
I.
Bernard Abrams was employed by Lightolier, Inc.
("Lightolier" or "the employer") from January 1970 until his
termination on July 3, 1986. Abrams was hired as a Manager of
Physical Distribution. From 1982 through July 3, 1986, he was
the Vice President of Coastal Fast Freight, an in-house trucking
company and subsidiary of Lightolier. In 1981, Abrams organized
a system for combining the purchasing power of a number of
companies to obtain significant price reductions. He headed this
system, known as Team Purchasing, from its inception until late
1985. During 1983 and 1984, Abrams was also given primary
responsibility for negotiating real estate transactions for
Lightolier. Abrams asserted that between 1982 and 1986, he
received ample salary increases and bonuses. After returning to
1
. The district court had jurisdiction over the ADEA claim
pursuant to 29 U.S.C. §§ 623(a), 626(c) and 28 U.S.C. § 1331 and
supplemental jurisdiction over the state law claim pursuant to 28
U.S.C. § 1367. This court has jurisdiction over the appeal
pursuant to 28 U.S.C. § 636(c)(3) (permitting appeal to Court of
Appeals from matters tried by consent before U.S. Magistrate
Judge) and 28 U.S.C. § 1291.
work following coronary by-pass surgery in the fall of 1985,
Abrams claimed that Lightolier began to restrict his job
responsibilities. On July 3, 1986, he was terminated. At that
time he was fifty-nine years old. Abrams was replaced with a man
whom he had hired, trained, and supervised. Abrams estimated
that his replacement was about forty years old.
During his tenure with Lightolier, Abrams was
responsible for dealing with Midland Transportation Company, Inc.
("Midland"),2 a company that provided trucking services to
Lightolier. In June 1980, Abrams orally agreed to modify the
shipping rates in Lightolier's local contract with Midland. The
companies performed under the oral modification until Midland
sued Lightolier in 1982, claiming that it was being underpaid
according to the terms of its written contract. Midland also
claimed that Lightolier owed it detention charges for waiting
periods caused by Lightolier's delay. During the Midland
litigation, Lightolier learned that Abrams and two other
employees, Richard Petit and John Zarkoski, had accepted various
favors from Midland or its principals.3 The Midland litigation
was settled in late June 1986, just before the jury was to return
2
. Midland was a successor to the trucking company EZ
Freight Lines. For ease of reference, we refer to both companies
as Midland.
3
. Abrams was alleged to have taken bribes from Midland's
principals and to have received a number of less significant
favors such as free car repairs. Abrams has consistently denied
the bribery charge and offered explanations to show that he did
not act improperly in accepting the other favors.
its verdict. The Midland litigation cost Lightolier, in
settlement and attorneys' fees, almost one million dollars.
Abrams was not terminated when Lightolier first learned
of his failure to memorialize the oral modification, of his
failure to avoid the detention charges, and of the favors he
accepted from Midland. Instead, he was terminated on July 3,
1986, soon after the Midland litigation had settled. Michael
Whelan, who had become president of Lightolier in 1985, informed
Abrams of the termination. Both Petit and Zarkoski were
terminated at that time as well. Abrams supervisor at the time
of his termination was Richard Kurtz. Believing his termination
was part of a campaign to eliminate older workers, Abrams filed
charges with the New Jersey Civil Rights Division and the Equal
Employment Opportunity Commission. Subsequently, Abrams also
filed a civil action against Lightolier and various parent
companies and subsidiaries,4 alleging he was terminated because
of his age in violation of the New Jersey Law Against
Discrimination and the ADEA.5 The parties consented to trial
4
. In addition to Lightolier, the complaint named the
following companies as defendants: The Genlyte Group, Bairnco
Corporation, and Coastal Fast Freight. Coastal Fast Freight was
dismissed by stipulation and Bairnco Corporation was dismissed by
the court prior to trial. Subsequent to Abrams's termination,
Lightolier became a subsidiary of The Genlyte Group as a result
of a corporate merger in 1991. The district court therefore
entered judgment against Genlyte and it is Genlyte who has filed
this appeal. For ease of reference, we will refer to both
Abrams's employer and the appellant/cross-appellee as Lightolier.
5
. Abrams had also asserted a claim of disability
discrimination which was dismissed by the district court prior to
trial. Abrams has not appealed from that order and that claim is
therefore not before this court.
before a United States magistrate judge. Prior to trial, the
employer moved for summary judgment in its favor. The magistrate
judge granted summary judgment in part, dismissing Abrams's claim
of disability discrimination under the NJLAD and dismissing one
of the defendants, but denied the employer's motion for summary
judgment as to the ADEA and NJLAD age discrimination claims. The
employer also moved for an in limine order excluding certain
evidence, which the district court granted in part and denied in
part.6
Trial was held before a jury. To support his
contention that Lightolier terminated him because of his age,
Abrams introduced evidence of prior age-based remarks made by
Richard Kurtz, his supervisor at the time of his termination, as
well as evidence that he was replaced by a younger employee, and
evidence that other older employees at Lightolier had also been
mistreated by Kurtz. Lightolier submitted evidence that Michael
Whelan, the president of the company, communicated the
termination decision to Abrams, that he, rather than Kurtz, was
responsible for the Abrams's discharge, and that the reason for
the discharge was Abrams's earlier misconduct in connection with
the Midland contract.
The case was submitted to the jury as a pretext case,
i.e. a case that does not qualify for special treatment under
Price Waterhouse v. Hopkins, 490 U.S. 228 (1989). However, the
6
. The magistrate judge also severed from this action a
counterclaim asserted by Lightolier against Abrams.
court submitted the NJLAD and ADEA claims to the jury under two
different standards of proof. To prevail on the ADEA claim,
Abrams had to show that age was the sole motivating factor for
Abrams's discharge, while he could prevail on the NJLAD claim by
showing that age was a determinative factor in the discharge
decision. The jury responded to special interrogatories in the
following manner. The jury found that the employer's reasons for
its actions were pretextual; that age was not the sole motivating
factor for Abrams's termination; that age was a determinative
factor in his termination; that the employer was liable for back
pay, future losses, and damages for pain and suffering, but was
not liable for punitive damages under the NJLAD. The district
court thus entered judgment in Abrams's favor on the NJLAD claim
and in Lightolier's favor on the ADEA claim.
The employer moved for judgment as a matter of law or
for a new trial on the ground that the evidence was insufficient
to support the verdict against it and Abrams moved for an award
of attorneys' fees. The magistrate judge denied the employer's
motion for judgment as a matter of law or for a new trial, but
ordered a remittitur of all but $2500 of the $100,000 award for
pain and suffering, finding Abrams had established mental
distress damages only to that extent. Abrams agreed to the
remitter and an amended order for judgment against the employer
was entered in the amount of $473,953.45. The magistrate judge
awarded Abrams attorneys' fees in the amount of $546,379.59 and
costs of $240.00. Lightolier filed a timely notice of appeal
from the amended order entering judgment in Abrams's favor on the
NJLAD claim and the order denying its motion for summary judgment
on the ADEA and NJLAD claims. Abrams filed a protective cross-
appeal as to the amended order entering judgment in the
employer's favor on the ADEA claim and cross-appealed as to the
order awarding him costs.
II.
Lightolier's arguments on appeal fall into three
general categories: arguments relating to (1) the appropriate
standard of proof in a pretext case of age discrimination under
the NJLAD, (2) evidentiary rulings and the sufficiency of the
evidence, and (3) the amount of back-pay damages and attorneys'
fees awarded. Abrams cross-appealed as to the award of costs and
also filed a protective cross-appeal on the ground that in the
event the case is remanded for a new trial, his ADEA claim should
be submitted to the jury under the mixed-motives standard of
proof. Because we conclude that the instructions as to the NJLAD
claim were proper and that the magistrate judge's evidentiary
rulings do not require reversal, we need not reach the issue
raised by Abrams regarding the standard of proof for his ADEA
claim. Because we conclude that the magistrate judge applied the
correct standard in instructing the jury as to the back-pay award
and in awarding attorneys' fees, but did not apply the correct
standard in determining the award of costs, we will remand solely
as to the issue of costs.
III. Standard of Proof Under the NJLAD
In instructing the jury as to Abrams's burden for
establishing Lightolier's liability for his discharge, the
magistrate judge explained that the standard of proof under the
NJLAD and ADEA claims differed, stating:
As to the federal cause of action . . .
[i]t is the Plaintiff's burden to prove, by a
preponderance of the credible evidence, that
his age was the sole motivating factor for
the Defendant's decision to terminate his
employment. . . .
* * *
Under the terms of the state claim, Mr.
Abrams must prove by a preponderance of the
evidence that age was a determinative factor
in the employment decision. In is not
necessary under New Jersey law against
discrimination that age be the sole
motivating factor. If discrimination on the
basis of age made the difference in the
decision, then discrimination in violation of
the statute has been established.
In other words, Plaintiff must prove
that but for his age he would not have been
discharged.
All right? So under the state law,
Plaintiff, again, must prove by a
preponderance of the credible evidence, it is
his burden of proof, that age was a
determinative factor in the employment
decision.
It is not necessary under the state law
claim that age be the sole motivating factor.
That's the difference.
App. 110-14.
In answering special verdicts, the jury found that
Abrams had proven that the employer's reasons for his discharge
were pretextual and that age was a determinative factor in
Lightolier's decision to discharge him. The jury also found that
Abrams had not proven that age was the sole motivating factor for
his discharge. The magistrate judge therefore entered judgment
in Abrams's favor on the NJLAD claim and in Lightolier's favor on
the ADEA claim.
In instructing the jury that Abrams was required to
prove that age was the sole motivating factor in order to succeed
on the ADEA claim, the magistrate judge believed he was following
the decision of this court in Griffiths v. CIGNA Corp., 988 F.2d
457 (3d Cir.), cert. denied, 114 S. Ct. 186 (1993). The
magistrate judge did not adopt that standard for the NJLAD claim,
however, concluding that the New Jersey Supreme Court would not
necessarily follow the higher standard of proof he understood
Griffiths to require. Instead, the magistrate judge concluded
that the New Jersey Supreme Court would continue to require a
showing that age was a determinative factor in the adverse
employment decision.
This court sitting in banc recently clarified the
proper standard of proof for an ADEA pretext case in Miller v.
CIGNA Corp., No. 93-1773, __ F.3d __ (3d Cir. Jan. 23, 1995).
There we stated that "in ADEA cases that do not qualify for a
burden shifting charge under Price Waterhouse v. Hopkins, 490
U.S. 228 (1989), district courts should instruct the jury that
the plaintiff's burden is to prove that age played a role in the
employer's decisionmaking process and that it had a determinative
effect on the outcome of that process." Miller, slip op. at 3,
__ F.3d at __. We also noted that to the extent that Griffiths
v. CIGNA could be read to require an ADEA plaintiff to prove that
age was the sole motivating factor for the adverse employment
action, it was overruled. Id. at 17 n.8, __ F.3d at __ n.8.
Our review over the issue whether jury instructions
misstate a legal standard is plenary. Savarese v. Agress, 883
F.2d 1194, 1202 (3d Cir. 1989) (citations omitted); United States
v. Adams, 759 F.2d 1099, 1116 (3d Cir.), cert. denied, 474 U.S.
906 (1985), and cert. denied, 474 U.S. 906 (1985), and cert.
denied, 474 U.S. 971 (1985). Our task is to "'determine whether
the charge, taken as a whole and viewed in light of the evidence,
fairly and adequately submits the issue in the case to the
jury.'" Adams, 759 F.2d at 1116 (quoting Ayoub v. Spencer, 550
F.2d 164, 167 (3d Cir.), cert. denied, 432 U.S. 907 (1977)).
Because New Jersey courts in applying the NJLAD generally follow
the standards of proof applicable under the federal
discrimination statutes, see McKenna v. Pacific Rail Service, 32
F.3d 820, 827 (3d Cir. 1994) (predicting that the New Jersey
Supreme Court would adopt the clarification for proving a federal
pretext discrimination case set forth in St. Mary's Honor Ctr. v.
Hicks, 113 S. Ct. 2742 (1993), to claims arising under the
NJLAD); Grigoletti v. Ortho Pharm. Corp., 570 A.2d 903, 907 (N.J.
1990), we agree with Abrams that the New Jersey Supreme Court
would likely adopt our holding in Miller as the proper standard
of proof for an age discrimination pretext claim under the NJLAD.
The magistrate judge's instructions as to that claim were
therefore proper.7 While we note that the instructions as to the
ADEA claim may have required Abrams to demonstrate more than he
was required to under the appropriate standard, Abrams has not
cross-appealed on that ground and we therefore leave the judgment
undisturbed as to the ADEA claim. Because Abrams filed only a
protective cross-appeal as to his ADEA claim, and because we
conclude below that none of the other grounds for reversal urged
by Lightolier have merit, we do not reach Abrams's argument that
his ADEA claim warranted an instruction under the standard of
proof applicable to mixed-motives Price-Waterhouse cases.
IV. Evidentiary Rulings
Lightolier argues that the magistrate judge erred in
admitting certain evidence proffered by Abrams and in excluding
certain evidence that it sought to introduce. We find that the
evidence was properly ruled upon, or if it was admitted or
excluded in error, that it did not affect a substantial right of
Lightolier in this case. The district court's evidentiary
rulings therefore provide no basis for reversing the jury verdict
in this case. See Fed. R. Civ. P. 61.8 We also reject
7
. We also reject Lightolier's argument that the
magistrate judge's NJLAD charge was otherwise improper because it
required only a showing that age was a motivating factor in the
employment decision. The charge clearly required a showing that
age was a determinative factor and explained that this meant a
showing of but-for cause was needed. The charge therefore
incorporates the standard articulated in Miller.
8
. Rule 61 of the Federal Rules of Civil Procedure
provides:
No error in either the admission or the
exclusion of evidence . . . is ground for
Lightolier's contention that the evidence does not support the
verdict against it and we therefore conclude that the district
court properly denied Lightolier's motion for judgment as a
matter of law.
Lightolier takes issue with a number of evidentiary
rulings made by the magistrate judge prior to and during trial.
Two of these rulings concern the admission of age-based comments
by Lightolier executives. A related ruling concerns the
testimony of other Lightolier employees who claimed to have been
the subject of age-based employment decisions by one of those
decisionmakers. Another ruling concerns the admission of charts
prepared by Abrams to represent Lightolier's internal
organizational structure and the final ruling concerns the
exclusion of Lightolier's evidence concerning its intent in
discharging Abrams.
When the district court applies the appropriate legal
standard, evidentiary rulings are subject to the trial judge's
discretion and are therefore reviewed only for abuse of
discretion. In re Merritt Logan, Inc., 901 F.2d 349, 359 (3d
Cir. 1990); Government of V.I. v. Pinney, 967 F.2d 912, 914 (3d
(..continued)
granting a new trial or for setting aside a
verdict or for vacating, modifying, or
otherwise disturbing a judgment or order,
unless refusal to take such action appears to
the court inconsistent with substantial
justice. The court at every stage of the
proceeding must disregard any error or defect
in the proceeding which does not affect the
substantial rights of the parties.
Fed. R. Civ. P. 61.
Cir. 1992). Additionally, application of the balancing test
under Federal Rule of Evidence 403 will not be disturbed unless
it is "arbitrary and irrational." Bhaya v. Westinghouse Elec.
Corp., 922 F.2d 184, 187 (3d Cir. 1990) (internal quotation and
citations omitted), cert. denied, 501 U.S. 1217 (1991).
Furthermore, under Federal Rule of Civil Procedure 61 errors in
the admission or exclusion of evidence can not be grounds for
reversal or a new trial if they constitute harmless error.
Finally, when a party fails to timely object to the trial court's
evidentiary rulings during the proceedings, those rulings are
reviewed under the plain error standard. United States v. Brink,
39 F.3d 419, 425 (3d Cir. 1994).
A. Evidence of Age-Based Comments and
Employment Decisions of Richard Kurtz
Underlying Abrams's claim that he was discharged
because of his age is his belief that during the 1980s there
existed a corporate atmosphere at Lightolier unfavorable to older
workers and that Richard Kurtz led this "youth movement." Kurtz
was employed as a plant manager at Lightolier's Fall River
facility and then as a corporate vice president. He was Abrams's
supervisor during Abrams's last few months with the company.
During the trial, Lightolier objected to two types of
evidence that Abrams introduced with regard to Kurtz: (1)
evidence of discriminatory remarks made by Kurtz, and (2) the
testimony of other older former Lightolier employees who alleged
that they too had been mistreated by Kurtz. On appeal,
Lightolier argues that admission of this evidence was improper
because Kurtz was not a decisionmaker for purposes of Abrams's
termination and because the evidence was highly prejudicial. We
reject both arguments.
There was sufficient evidence from which a jury could
reasonably conclude that Richard Kurtz was a decisionmaker for
purposes of Abrams's discharge. We find it significant that
Steven Klosk, a former Lightolier human resource manager,
testified that in documents submitted to the New Jersey Division
on Civil Rights in response to their investigation of a claim of
age discrimination filed by Abrams, Lightolier indicated that a
number of managers, including Kurtz, participated in the decision
to discharge Abrams. App. 852-53. There was other evidence
tending to show a connection between Kurtz and the decision to
terminate Abrams as well.9 We thus have no trouble concluding
that the jury could have reasonably found that Kurtz played a
role in Lightolier's decision to discharge Abrams. Evidence that
Kurtz harbored age-related animus would thus be relevant to
9
. This additional evidence included the following:
evidence that Kurtz was Abrams's supervisor at the time of his
termination; Kurtz's testimony that he had recommended to another
Lightolier executive that the leadership of Team Purchasing be
"rotated" and that he had suggested Doug Pedder as Abrams's
replacement as chair of Team Purchasing; evidence that when
Abrams's secretary was assigned to a new president, Kurtz and
Steven Klosk refused to let Abrams hire a replacement and told
him to use the typing pool; Abrams's testimony that after he
fired a subordinate, Kurtz refused to let him fill that position;
and Abrams's testimony that Kurtz told him in the spring of 1986
that he would have no more real estate responsibilities.
determining whether the discharge decision resulted from
discriminatory motives. See Torre v. Casio, Inc., 42 F.3d 825,
834 (3d Cir. 1994) (noting that evidence of age-biased comments
by supervisor could lead to inference that termination decision
was made because of plaintiff's age); Armbruster v. Unisys Corp.,
32 F.3d 768, 783 (3d Cir. 1994) (same). Indeed, we have held
that discriminatory comments by nondecisionmakers, or statements
temporally remote from the decision at issue, may properly be
used to build a circumstantial case of discrimination. See
Lockhart v. Westinghouse Credit Corp., 879 F.2d 43, 54 (3d Cir.
1989) (finding age-biased comment relevant even when made
subsequent to plaintiff's termination); Roebuck v. Drexel Univ.,
852 F.2d 715, 733 (3d Cir. 1988) (upholding admissibility of
discriminatory comment by decisionmaker made five years before
denial of tenure).
Abrams's testimony that he had overheard Kurtz say to
another employee "things would begin to hum around here when we
got rid of the old fogies," App. 518,10 and the testimony of
another Lightolier employee that she heard Kurtz refer to two
plant managers as "a dinosaur" and "the old men," App. 712, were
therefore relevant. For these same reasons, evidence as to
Kurtz's attitude toward other older employees and the manner in
which he treated them, was also relevant. See Fuentes v.
Perskie, 32 F.3d 759, 765 (3d Cir. 1994) (circumstantial evidence
10
. Abrams testified that he understood "old fogies" to
refer to senior management above Kurtz, not older employees in
general. App. 611-12.
of discrimination includes evidence "that the employer in the
past had subjected [the plaintiff] to unlawful discriminatory
treatment, that the employer treated other, similarly situated
persons out of his protected class more favorably, or that the
employer has discriminated against other members of his protected
class or other protected categories of persons"); cf. Josey v.
John Hollingsworth Corp., 996 F.2d 632, 641 (3d Cir. 1993)
(noting that atmosphere in which a company makes its employment
decision can be circumstantial evidence of discrimination). Both
the comments and the evidence of how Kurtz treated older
employees were probative of whether Kurtz harbored a
discriminatory attitude against older workers, and if credited,
that evidence made the existence of an improper motive for the
discharge decision more probable. See Fed. R. Evid. 401
(definition of relevant evidence).
Because we have concluded that this evidence was
relevant, the only remaining question regarding admissibility is
whether the magistrate judge should have excluded the evidence
under Federal Rule of Evidence 403 because its probative value
was outweighed by its prejudicial impact.11 The magistrate
judge's determination of admissibility under Rule 403 is reviewed
for abuse of discretion. Bhaya v. Westinghouse Elec. Corp., 922
F.2d at 187. Because discriminatory comments by an executive
connected with the decisionmaking process will often be the
11
. Lightolier does not argue that the evidence was
excludable on any other basis.
plaintiff's strongest circumstantial evidence of discrimination,
they are highly relevant and a trial court's decision to admit
such evidence should ordinarily be upheld. We perceive no basis
for concluding that the magistrate judge's determination to admit
Kurtz's age-related comments was an abuse of discretion in this
case.
Lightolier also objected to the testimony of five
former Lightolier employees who believed they had been mistreated
by Kurtz because of their age. Lightolier objects that the
testimony was highly prejudicial because it concerned treatment
of employees other than Abrams and created the possibility that
the jury would find against the employer on the basis of these
accusations without finding that it had discriminated against
Abrams. Although we find the so-called "testimonials" of former
employees to be less probative of Kurtz's discriminatory attitude
and more inflammatory than Kurtz's two age-based comments, we
cannot conclude that the determination that its probative value
outweighed its prejudicial impact was "irrational and
arbitrary."12 See Bhaya v. Westinghouse Elec. Corp., 922 F.2d at
12
. Lightolier's reliance on Haskell v. Kaman Corp., 743
F.2d 113 (2d Cir. 1984), is misplaced. In that case the Court of
Appeals for the Second Circuit held that the testimony of six
former employees had been admitted in error because their stories
did not produce statistically significant evidence of a pattern
and practice of discrimination and, thus, any probative value was
outweighed by the prejudicial impact of "'a parade of witnesses,
each recounting his contention that defendant has laid him off
because of his age.'" Haskell, 743 F.2d at 122; see also
Moorehouse v. Boeing Co., 501 F. Supp. 390, 393-94 (E.D. Pa.),
aff'd without op., 639 F.2d 774 (3d Cir. 1980). However, because
the Haskell plaintiff had admitted the evidence to show a
"pattern and practice" of discrimination, the court was not
187. We therefore conclude that the admission of the evidence
concerning Kurtz provides no basis for a new trial.
B. Testimony that Lightolier "Frowned On" Older Workers
Lightolier also objected to the testimony of Milton
Hinsch, a former purchasing manager. Hinsch was in his sixties,
worked at the Norwich, Connecticut plant, and reported to Douglas
Pedder, Director of Corporate Purchasing. There was no evidence
that either Hinsch or Pedder had anything to do with the decision
to terminate Abrams. However, Hinsch testified that in
connection with his performance reviews, Pedder gave him the
following explanation about company policy.
He did tell me that the company frowned
on older people, that my raises wouldn't be
as high as he would like them to be, and that
the company looked at people with gray hair
as being in a position where they couldn't do
much about it because they probably couldn't
get another job.
App. 919. Hinsch further testified that there had been several
discussions with Pedder of the same nature, usually at the time
of his performance review, and that Pedder repeatedly expressed
the sentiment that the company frowned on older workers.
Although Pedder's statement was clearly an out-of-court
statement, the magistrate judge admitted it under Federal Rule of
Evidence 801(d)(2)(D), which defines as nonhearsay a statement
(..continued)
addressing whether the evidence was probative of a discriminatory
attitude on the part of the employees' supervisor. See Haskell,
743 F.2d at 120.
made by a party's agent concerning a matter within the scope of
the agent's employment. The magistrate judge concluded that
Pedder was authorized to discuss Hinsch's salary and the
company's employment policies with him. Lightolier argues that
the statement should have been excluded as double hearsay outside
the scope of Rule 801(d)(2)(D).
Where a supervisor is authorized to speak with
subordinates about the employer's employment practices, a
subordinate's account of an explanation of the supervisor's
understanding regarding the criteria utilized by management in
making decisions on hiring, firing, compensation, and the like is
admissible against the employer. We so held in Zipf v. American
Telephone & Telgraph Co., 799 F.2d 889, 894-95 (3d Cir. 1986),
citing Rules 801(d)(2)(D) and 701. The Seventh Circuit Court of
Appeals more recently so held in Hybert v. Hearst Corp., 900 F.2d
1050, 1053 & n.6 (7th Cir. 1990). We perceive no double hearsay
problem because we do not think the supervisor's explanation, if
offered through the testimony of the supervisor, would be subject
to a hearsay objection.
Lightolier relies primarily on Carden v. Westinghouse
Electric Corp., 850 F.2d 996 (3d Cir. 1988). In Carden, this
court reversed a jury verdict in an age discrimination case on
the ground that a statement attributed to the plaintiff's
supervisor had been admitted in error. The plaintiff had been
told by his supervisor, in the context of not being promoted to a
position he sought, that the supervisor "thought they wanted a
younger person." Carden, 850 F.2d at 1001. Over the employer's
in limine objection, the testimony was admitted. We found that
the testimony involved "double hearsay" and that the plaintiff
had not identified a basis for overcoming the hearsay objection
to the supervisor's account of what the unidentified declarant
had told the supervisor about the reason for not promoting the
plaintiff. The statement of the unidentified declarant was being
offered to show the reason for the particular employment decision
affecting the plaintiff and, because the declarant was
unidentified, there was no way of knowing whether he or she was
authorized by the employer to make such a statement on this
subject. Because this statement was the only evidence of
discrimination supporting one of the two theories the jury could
have chosen to support its verdict, we reversed and remanded for
a new trial.
In Carden, the supervisor's statement was understood to
refer to a specific declaration made to him about the reason
underlying a particular employment decision and that declaration
was offered for its truth without the required foundation. That
is not the case here. The magistrate judge understandably viewed
Pedder's statement as his opinion regarding company policy. This
case is governed by Zipf, not by Carden.
C. Abrams's Organizational Charts
Lightolier also argues on appeal that Abrams introduced
"pattern and practice" evidence that was not relevant to his
claim and highly prejudicial, and that the admission of this
evidence requires a new trial. The objectionable evidence
consists of two handwritten organizational charts that Abrams
prepared from memory and which purported to contain the job
titles and ages of the members of Lightolier's management team
located at company headquarters at the level of vice president or
above in 1982 and 1985 respectively, and a blow up of a chart
that appeared in a magazine article written by William Blitzer as
president of Lightolier which contained the names and job titles
of Lightolier's upper level management, including Abrams.
Lightolier attacks this "statistical evidence" on two
grounds: that Abrams's used the testimony of other witnesses to
establish a statistical disparity in the treatment of older
employees by describing what had happened to the employees listed
on these charts, and that because the information on this charts
was, as Abrams admitted, incomplete, the evidence was therefore
misleading.13 Finally, Lightolier argues that the evidence
should have been excluded because Abrams brought his claim as an
individual treatment case and should therefore have been
precluded from attempting to prove a "pattern and practice" of
age discrimination.
We find Lightolier's arguments unpersuasive.
Employment discrimination plaintiffs are not precluded from
introducing statistical evidence as circumstantial evidence of
13
. On cross-examination Abrams admitted that the charts
were incomplete. However, they were not intended to be and were
not introduced as complete organizational charts of company
management. For example, his handwritten charts only purported
to show the managers at or above the level of vice president at
Lightolier headquarters.
discrimination in a disparate treatment case. Furnco Constr.
Corp. v. Waters, 438 U.S. 567, 578 (1978); Bruno v. W.B. Saunders
Co., 882 F.2d 760, 766-67 (3d Cir.) ("By contrast [to a class-
action or pattern and practice case], in individual disparate
treatment cases such as this, statistical evidence, which may be
helpful, though ordinarily not dispositive, need not be so finely
tuned." (internal quotation and citation omitted)), cert. denied,
493 U.S. 1062 (1989). The cases cited by Lightolier are not to
the contrary. Gilty v. Village of Oak Park, which Lightolier
relies on for the proposition that "pattern and practice"
evidence is irrelevant to an individual pretext claim, simply
suggests that statistical evidence is only "'collateral to
evidence of specific discrimination against the actual
individual.'" Gilty, 919 F.2d 1247, 1252 (7th Cir. 1990)
(quoting Williams v. Boorstin, 663 F.2d 109, 115 n.38 (D.C. Cir.
1980), cert. denied, 451 U.S. 985 (1981)). The court in Gilty
did not suggest that such evidence is per se inadmissible. See
Gilty, 919 F.2d at 1253 n.7 (noting that because the court found
plaintiff's statistical evidence of only collateral importance it
did not have to rule on the employer's motion to strike). The
other cases cited by Lightolier are similar; they note the
relative unimportance of statistical evidence in an individual
treatment case, but they do not establish a rule that statistical
evidence is prohibited. See, e.g., King v. General Elec. Co.,
960 F.2d 617 (7th Cir. 1992); Babrocky v. Jewel Food Co. & Retail
Meatcutters, 773 F.2d 857, 865 n.6 (1985).14 More importantly,
the charts were not tendered as statistical evidence; they were
used primarily as testimonial aids to describe the employees'
positions relative to key decisionmakers. Furthermore,
Lightolier had the opportunity to cross-examine Abrams as to the
deficiencies or inaccuracies in his charts and did so vigorously.
Finally, the only objection Lightolier made regarding the charts
was to the inclusion of the ages on the handwritten charts, thus
its objections to the admission of the charts in general is
reviewed under the plain error standard. Fed. R. Evid. 103(d).
The admission of these charts was not reversible error.
14
. The court's exclusion of statistical evidence in
Haskell v. Kaman Corp., 743 F.2d 113, 120-21 (2d Cir. 1984), is
distinguishable because the plaintiff in that case attempted to
prove discrimination in part through the use of statistical
disparity and his statistical evidence, because of sample size,
etc., was faulty.
D. Evidence of Lightolier's Intent
Lightolier's final argument with regard to the
magistrate judge's evidentiary rulings is that the magistrate
judge improperly excluded as inadmissible hearsay much of its
evidence relating to its intent in terminating Abrams. The
excluded evidence concerned statements made by Lightolier
president, Michael Whelan, and others about the Midland
litigation and Abrams's termination. Lightolier claims that this
evidence was significant because it bolstered admitted testimony
concerning how and when Whelan reached the decision to terminate
Abrams, and because it contradicted Abrams's evidence that Kurtz
was the Lightolier manager responsible for his termination. For
example, Lightolier sought to introduce the testimony of a number
of managers who would testify that Whelan had explained to them
at an executive meeting that he was going to fire Abrams because
of the Midland affair. The magistrate judge excluded this
testimony as inadmissible hearsay.
Lightolier makes substantial arguments (1) that the
statements of these witnesses were not hearsay because they were
not offered to prove the truth of their content, but rather to
show how early Whelan had made a decision to terminate Abrams;
and (2) that, if hearsay, they were admissible under Federal Rule
of Evidence 803(3) to show the speaker's state of mind. See,
e.g., Keisling v. SER-Jobs for Progress, Inc., 19 F.3d 755 (1st
Cir. 1994). We are not persuaded, however, that the exclusion of
this evidence resulted in substantial prejudice. To the
contrary, we are convinced that the exclusion was harmless
because the out-of-court speakers, whose statements concerning
Abrams's discharge others would testify to, were permitted to
testify directly to what they had said and the excluded evidence
was therefore only cumulative evidence as to Lightolier's
intent.15 While it is true that the excluded testimony would
have bolstered the speaker's credibility, we can not conclude
that its exclusion was prejudicial to Lightolier's case. We are
particularly hesitant to find prejudicial error when the admitted
testimony was corroborative; Lightolier's witnesses all
maintained that the termination decision was made by Whelan well
prior to the termination of the Midland litigation and was based
on the facts learned in that litigation, rather than on Abrams's
age.16 Despite this evidence, the jury concluded that age was in
fact a determinative cause of the discharge and we will not
disturb that finding on this basis.
15
. For example, Whelan was permitted to testify as to what
he said in the executive meeting referenced above and the
managers in attendance were permitted to testify as to what they
had said prior to and in response to Whelan's explanation.
16
. While we are persuaded that Kurtz's testimony that he
heard of the decision to terminate Abrams from someone else could
have been admitted as nonhearsay as it was not offered for the
truth of the matter asserted (that Abrams was being terminated)
but as evidence that Whelan, and not Kurtz, had made the
termination decision, we find this exclusion too was harmless.
Kurtz was permitted to testify that he did not make the
termination decision and that he learned of the decision in a
conversation with others, App. 1386, and Whelan was permitted to
testify that he was in fact the person who had made the decision.
E. Sufficiency of the Evidence
In addition to Lightolier's objections to specific
evidence, it argues on appeal that the evidence is insufficient
to support the jury verdict. A jury verdict will not be
overturned "unless the record is 'critically deficient of that
minimum quantum of evidence from which a jury might reasonably
afford relief.'" Rotondo v. Keene Corp., 956 F.2d 436, 438 (3d
Cir. 1992) (quoting Dawson v. Chrysler Corp., 630 F.2d 950 (3d
Cir. 1980) (internal quotation omitted), cert. denied, 450 U.S.
959 (1981)). Evidence that should have been admitted, but was
not, may be considered as well. Walter v. Holiday Inns, Inc.,
985 F.2d 1232, 1238 (3d Cir. 1993).
We understand Lightolier to argue that the record,
devoid of the evidence it maintains was improperly admitted and
bolstered by the evidence that it maintains should have been
admitted, would not be sufficient to uphold the jury verdict
against it. While we have already concluded that the magistrate
judge's evidentiary rulings were not reversible error, we also
find that the record would support the jury's conclusion that age
was a determinative factor in the decision to terminate Abrams
even if some of the objectionable evidentiary rulings had been
otherwise. Had the magistrate judge admitted the cumulative
evidence of Lightolier's intent (evidence that we concluded might
have been excluded in error but which was not shown to have been
anything other than harmless error), we would still find that the
record was not "critically deficient of that minimum quantum of
evidence from which a jury might reasonably afford relief".
Rotondo v. Keene Corp., 956 F.2d at 438 (internal quotation and
citation omitted) (internal quotation omitted)). Significantly,
in addition to evidence that Kurtz harbored age animus and that
Abrams was replaced by a younger employee, Abrams offered
testimony to show that Lightolier's proffered reason for his
discharge was pretextual. Abrams introduced evidence that after
Lightolier became aware of Abrams's misjudgment and alleged
wrongdoing in connection with the Midland contract, they did not
terminate him, but rather gave him additional responsibilities
and salary increases throughout his remaining years with the
company. Therefore, the record would still contain evidence from
which the jury could conclude, as it did, that Lightolier's
explanation for the discharge was pretextual and that Abrams was
terminated because of his age. The district court therefore did
not abuse its discretion in refusing to grant Lightolier's motion
for judgment as a matter of law or for a new trial.
V. Damages and Attorneys' Fees
In addition to raising issues as to its liability,
Lightolier also appeals the back-pay and the attorneys' fees
awards. Lightolier maintains that the jury award for back pay
should have been reduced by the amount of taxes that would have
been payable had the same amount been earned by Abrams as income
and that the award of attorneys' fees should have been reduced
both to reflect an amount proportional to the damages award and
for efforts expended on unsuccessful claims.
The question of what standard to apply in calculating
attorneys' fees or costs is a legal question and therefore
subject to plenary review. Sosebee v. Rath, 893 F.2d 54, 55 (3d
Cir. 1990). The reasonableness of the amount of the award is
reviewed only for abuse of discretion if the correct legal
standard is applied and the findings of fact are not clearly
erroneous. Northeast Women's Center v. McMonagle, 889 F.2d 466,
475 (3d Cir. 1989), cert. denied, 494 U.S. 1068 (1990). An abuse
of discretion will have occurred if no reasonable person would
adopt the trial court's view. Rode v. Dellarciprete, 892 F.2d
1177, 1182 (3d Cir. 1990).
A. Back-pay Award
Lightolier sought a reduction in the back-pay award in
its motion for judgment as a matter of law and, in denying that
motion, the district court held that a back-pay award under the
NJLAD likely represented nontaxable income and that as between a
NJLAD plaintiff and a discriminating employer, the plaintiff
should receive the benefit of a damages award that may not be
taxable. Abrams v. Lightolier, 841 F. Supp. 584, 598 (D.N.J.
1994). Because the district court's holding rested on its
determination of the legal standard for NJLAD back-pay awards,
our review is plenary. We will affirm.
During trial, Lightolier's expert calculated Abrams's
lost wages using a twenty-eight percent deduction for taxes that
would have been owing on the award if it had been earned by
Abrams as income. Abrams's expert testified to an amount that
was based on gross income and on cross-examination testified that
to account for tax liability that figure should be reduced by
twenty percent, with a five percent margin of error. The
district court instructed the jury regarding damages for back pay
in the following manner:
Now I am going to explain to you back
pay and front pay.
In calculating the amount of back-pay
damages to award to the Plaintiff, if you
decide he is entitled to such an award
because he was unlawfully discharged, you
should first determine the period for which
you will award such damages.
* * *
. . . Once you have determined the period, if
any, for which you will award back-pay
damages, you should next proceed to determine
the gross amount of wages Plaintiff would
have earned and the value of the fringe
benefits Plaintiff would have received during
that period had he not been discharged.
Finally, once you have determined these
gross amounts, you should deduct the
following amount to arrive at a final figure
for back-pay damages.
Wages or salary or other income actually
earned or received by the Plaintiff during
that period.
App. 121-22 (emphasis added). When the court finished charging
the jury, Lightolier's counsel objected to the instruction that
gross pay should be used to determine the back-pay award. App.
129. The district court refused to alter its charge.
In its post-trial motions, Lightolier requested that
the district court reduce the back-pay award to reflect what
would have been Abrams's tax liability on the award if it had
been earned as income.17 Although the district court concluded
that the back-pay award would not be taxable, it refused to
reduce it, determining that as between the plaintiff and the
employer, the plaintiff should reap the benefit of the exclusion
of the award from income for federal income tax purposes.
Lightolier argues that the magistrate judge erred as a
matter of law in instructing the jury that a back-pay award
should be based on gross income, and in refusing to reduce the
award to reflect the absence of tax liability. Lightolier
maintains that the award is nontaxable and that Abrams will thus
obtain a windfall by receiving back-pay based on gross income
without sustaining any tax liability on that amount. Lightolier
argues that Abrams will therefore be in a better financial
position than if he had not been discriminated against and seeks
an adjustment in the back-pay award to reflect Abrams's net
income or a new trial on damages. Because we find that the
current law regarding the tax liability on a NJLAD back-pay award
is not as clear as Lightolier posits, we predict that a New
Jersey court would uphold an NJLAD back-pay award which was based
17
. When, during deliberations, the jury asked whether an
award to Abrams would be taxable, the magistrate judge again
explained that a back-pay award should be calculated on gross
income and that a front-pay award should be calculated on net
income. App. 1652. As clarified by Lightolier's post-trial
motions and the district court's resolution of them, the issue
preserved for appeal was whether net or gross wages should have
been considered by the jury in awarding back-pay damages, not
whether the jury should have been instructed as to Abrams's tax
liability on the award. See Lightolier's Reply Br. at 45 n.33.
on gross income and we will therefore affirm the back-pay award
in this case.
We find no clear answer in the law of the Supreme
Court, this circuit, or the New Jersey courts as to whether an
age discrimination back-pay award under the NJLAD represents
taxable income. While guidance is provided by the Supreme
Court's decision in United States v. Burke, 112 S. Ct. 1867, 1873
(1992), we believe the particular question posed by this appeal
remains unanswered.
In Burke, the Court held that a Title VII back-pay
award did not fit the exemption for nontaxable personal injury
damages under the Internal Revenue Code because, while common law
tort claims encompass "damages for lost wages, medical expenses,
and diminished future earning capacity on account of the injury,
[and] also [damages] for emotional distress and pain and
suffering," as well as punitive or exemplary damages under
appropriate circumstances, a Title VII back-pay award was
intended to compensate for "'legal injuries of an economic
character.'"18 Id. at 1873 (quoting Albemarle Paper Co. v.
Moody, 422 U.S. 405 (1975)).
18
. Under section 104(a)(2) of the Internal Revenue Code
"the amount of any damages received (whether by suit or agreement
and whether as lump sums or as periodic payments) on account of
personal injuries or sickness" is excludable from taxable income.
26 I.R.C. § 104(a)(2). We note that amendments to Title VII made
by the Civil Rights Act of 1991 allow a plaintiff to recover
compensatory and punitive damages and thus throw doubt on the
continued validity of the Burke holding. See Drase v. United
States, 866 F. Supp. 1077, 1079 n.1 (N.D. Ill. 1994).
The federal statute most analogous to the NJLAD in this
case is the Age Discrimination in Employment Act. However, it is
currently unclear whether the Court's holding in Burke applies as
well to back-pay awards under the ADEA which, unlike pre-1991
Civil Rights Act Title VII claims, provides for an award of
punitive damages. Our own precedent, decided prior to Burke,
holds that such an award is not subject to federal income tax
under the personal injury damages exception. See Rickel v.
Commissioner of Internal Revenue, 900 F.2d 655, 658-63 (3d Cir.
1990) (holding that the ADEA provides a tort-like remedy and that
ADEA damages should therefore be treated like personal injury
awards under the Internal Revenue Code). Subsequent to the
Supreme Court's decision in Burke, other courts have also held
that ADEA awards are not taxable, distinguishing Burke on the
ground that ADEA damages are different in substance from the
damages available under Title VII prior to the 1991 Civil Rights
Act. See, e.g., Schmitz v. Commissioner of Internal Revenue, 34
F.3d 790 (9th Cir. 1994) (back-pay and liquidated damages);
Purcell v. Seguin State Bank & Trust Co., 999 F.2d 950 (5th Cir.
1993) (back-pay award); Burns v. Commissioner of Internal
Revenue, T.C. Memo. 1994-284, 67 T.C.M. 3116 (T.C. 1994)
(back-pay and liquidated damages); Bennett v. United States, 30
Fed. Cl. 396 (Ct. Cl. 1994) (holding that back-pay award is
nontaxable income and liquidated damages award is taxable).
Other courts, however, have extended Burke's holding to ADEA
awards and have found them to be taxable income. See, e.g.,
Commissioner of Internal Revenue v. Schleier, No. 22909-20 (U.S.
T.C. July 7, 1993) (liquidated damages), aff'd, 26 F.3d 1119 (5th
Cir. 1994) (table), cert. granted, 115 S. Ct. 507 (1994); Downey
v. Commissioner of Internal Revenue, 33 F.3d 836 (7th Cir. 1994)
(settlement award of back-pay and liquidated damages), rev'g 100
T.C. 624, No. 40 (1993); Shaw v. United States, 853 F. Supp. 1378
(M.D. Ala. 1994) (liquidated damages); Maleszewiski v. United
States, 827 F. Supp. 1553 (N.D. Fla. 1993) (settlement award).
We note that the Supreme Court has recently granted certiorari in
Commissioner of Internal Revenue v. Schleier, 115 S. Ct. 507
(1994), to answer just this question.
Where there remains some uncertainty as to whether an
employee will ultimately have to pay taxes on a discrimination
claim award, we are confident that the New Jersey courts would
not require that the award be calculated on net income. Cf.
Wachstein v. Slocum, 625 A.2d 527, 536-37 (N.J. Super. Law Div.
1993) (holding that a jury instruction regarding the nontaxable
nature of a damage award is not required in claim for retaliatory
transfer brought under Title VII and NJLAD because law after
Burke was still unsettled as to whether the award was subject to
tax liability), certif. denied, 636 A.2d 521 (N.J. 1993). To
hold otherwise where the law is unclear, places the risk of tax
liability on the prevailing plaintiff rather than on the
discriminating employer. That result would not be in keeping
with the broad remedial policies behind the NJLAD.19 See McKenna
19
. Furthermore, we note that it is not altogether clear
that the nontaxable nature of a back-pay award mandates the use
of gross income. The parties have failed to cite, and our
research has likewise failed to uncover, any New Jersey cases
v. Pacific Rail Service, 32 F.3d 820, 827-28 (3d Cir. 1994)
(discussing legislative policy). We therefore conclude that the
district court did not err in instructing the jury to consider
gross wages in determining Abrams's back-pay award under the
NJLAD.
B. Attorneys' Fees Award
Under the NJLAD, reasonable attorneys' fees are
available to a prevailing plaintiff as part of costs. New Jersey
Stat. Ann. § 10:5-27.1 (West 1993). While the NJLAD does not
provide further guidance in calculating a proper award, New
Jersey courts have followed the rules established under the
federal Civil Rights Attorney's Fees Award Act of 1976, 42 U.S.C.
§ 1988, in awarding fees pursuant to the NJLAD. See, e.g., Robb
v. Ridgewood Bd. of Educ., 635 A.2d 586 (N.J. Super. Ct. Ch. Div.
(..continued)
indicating that either gross or net income should be used under
such circumstances. This issue has engendered some disagreement
in the federal courts as well. Contrast Johnston v. Harris
County Flood Control Dist., 869 F.2d 1565, 1580 (5th Cir. 1989)
(holding that nontaxable back-pay award under Title VII should
"ideally" reflect net income), cert. denied, 493 U.S. 1019
(1990); Purcell v. Seguin State Bank & Trust Co., 999 F.2d 950,
960-61 (5th Cir. 1993) (holding that an ADEA back-pay award more
than twice the amount of net lost wages was excessive because the
award is not taxable and a reduction to reflect net income was
therefore proper) with Redfield v. Insurance Co. of North
America, 940 F.2d 542, 547-48 (9th Cir. 1992) (holding that
although an ADEA back-pay award is not subject to income tax
liability, an employer may not refuse to pay an ADEA judgment in
full on the ground that the amount it withheld reflected the
amount that the plaintiff would have had to pay as income tax if
the award had been earned as income); Klein v. Secretary of
Transp., 807 F. Supp. 1517, 1525 (E.D. Wash. 1992) (following
Redfield and refusing to reduce ADEA back-pay damages to account
for tax withholding).
1993); see also McKenna v. Pacific Rail Serv., 817 F. Supp. 498,
518-19 (D.N.J. 1993) (using federal caselaw under § 1988 as a
guide to attorneys' fee claim under NJLAD), rev'd in part on
other grounds, 32 F.3d 820 (3d Cir. 1994).
Lightolier contends that the attorneys' fees award was
improper in this case because it exceeded the amount of damages
awarded to Abrams and because it did not properly reflect the
time spent on claims on which Abrams did not succeed. We find
both arguments to be without merit.
While the amount of the compensatory damages award may
be taken into account when awarding attorneys' fees to a civil
rights plaintiff, there is no rule that the fees award may be no
larger than the damages award. Hensley v. Eckerhart, 461 U.S.
424 (1983) (rejecting a rule that proportionality of a damages
award and attorneys' fees award is required). On the contrary,
the degree of the plaintiff's success will determine the
appropriate attorneys' fee award. See Farrar v. Hobby, 113 S.
Ct. 566, 574 (1992) (citing Hensley v. Eckerhart, 461 U.S. 424
(1983)). The Supreme Court's recent explanation in Farrar that a
federal civil rights plaintiff who obtains only nominal damages
is not entitled to an attorneys' fees award, does not abrogate
this rule. In Farrar, the Court noted that nominal damages
reflect a vindication of the plaintiff's procedural due process
rights but likewise reflect the fact that the plaintiff was
unable to prove she had suffered any compensable injuries. In
such a case, attorneys' fees are improper because they do not
reflect the plaintiff's success. Farrar, 113 S. Ct. at 575.20
Lightolier's citation to Farrar therefore does not support its
argument that the award of attorneys' fees in this case
($546,379.59) was improper because it was greater than the
damages award ($473,953.00). The New Jersey cases cited by
Lightolier are likewise unavailing, as they simply restate or
expound on the Hensley rule, or do not concern attorneys' fees
for discrimination claims. See, e.g., Singer v. State, 472 A.2d
138 (N.J.), cert. denied, 469 U.S. 832 (1984) (applying Hensley
to a § 1983 claim). We therefore reject Lightolier's
proportionality argument as a misstatement of the law.
Lightolier also argues that the magistrate judge erred
in not reducing the attorneys fees award to reflect time spent by
Abrams's counsel on unsuccessful claims. Lightolier is correct
that a court is to consider the amount of time plaintiff's
counsel has spent on unsuccessful claims in determining the
appropriate attorneys' fees award. See Robb v. Ridgewood Bd. of
Educ., 635 A.2d at 591 (where claims are distinct, time spent on
unsuccessful claims should not be awarded, but where claims
"'involve a common core of facts' or are 'based on related legal
theories'" the trial court does not have to exclude all time
spent on unsuccessful claims) (quoting Hensley, 461 U.S. at 435).
However, when the trial court applies the correct legal standard,
20
. In Farrar, the jury found a conspiracy to deprive the
plaintiffs of their constitutional rights, but found there was no
evidence that any injuries were caused by this civil rights
violation. 113 S. Ct. at 575.
the court has discretion in determining the actual fees award.
Hensley, 461 U.S. at 437; Blum v. Witco Chem. Corp., 829 F.2d
367, 378 (3d Cir. 1987). Based on our review of record, we are
convinced that the magistrate judge carefully considered the
claims on which Abrams did not succeed and made a reasoned
judgment that the time spent on these claims did not justify a
reduction in the fees award.21 Finding no abuse of discretion,
we will affirm the attorneys' fees award.
VI. Abrams's Cross-Appeal Regarding the Award of Costs
In conjunction with his motion for an award of
attorneys's fees under the NJLAD, Abrams sought an award of costs
and out-of-pocket expenses totaling $39,834.92, for items such as
deposition transcripts, trial transcripts, travel, photocopies,
and other litigation expenses. The district court denied the
bulk of these expenses and limited Abrams's recovery to $240.00,
representing those items enumerated as taxable costs under 28
U.S.C. § 1920.22 The district court limited the allowable costs
21
. The magistrate judge concluded that the amount of time
spent on some of the claims was insignificant and that the facts
underlying other claims were closely tied to Abrams's NJLAD
claim. See, e.g., App. 1666-67 ("I don't think there ought to be
a reduction for unsuccessful claims. . . . The claims that were
unsuccessful really don't represent any specific component of
time or effort in this case. In other words, in order to obtain
a verdict that they obtained on the LAD claim, they had to
litigate everything else.").
22
. 28 U.S.C. § 1920 provides:
A judge or clerk of any court of the
United States may tax as costs the following:
on the ground that Federal Rule of Civil Procedure 54(d)(1),
which incorporates 28 U.S.C. § 1920, limits the award of out-of-
pocket expenses in a federal diversity action. The district
court also concluded that Abrams had received sufficient
remuneration for the litigation through the generous attorneys'
fees award and that Lightolier should therefore not be
responsible for any additional expenses.23 We conclude that the
(..continued)
(1) Fees of the clerk and marshal;
(2) Fees of the court reporter for
all or any part of the stenographic
transcript necessarily obtained for use
in the case;
(3) Fees and disbursements for
printing and witnesses;
(4) Fees for exemplification and
copies of papers necessarily obtained
for use in the case;
(5) Docket fees under section 1923
of this title;
(6) Compensation of court appointed
experts, compensation of interpreters,
and salaries, fees, expenses, and costs
of special interpretation services under
section 1828 of this title.
A bill of costs shall filed in the case
and, upon allowance, included in the judgment
or decree.
23
. The magistrate judge gave the following explanation in
denying the majority of out-of-pocket expenses for which Abrams
sought reimbursement.
[E]ven if I were to consider them as
legitimate items of costs, it is not
reasonable to expect the defendant to
reimburse Mr. Abrams for all of this stuff,
transportation and parking, secretarial
district court applied the incorrect legal standard and will
therefore vacate the award of costs and remand for application of
the correct legal standard.
Abrams's request for costs presents an intriguing
choice of law problem. Where there is a statutory provision
shifting attorneys' fees and costs in a state statute creating
the plaintiff's cause of action, a federal court exercising
diversity or supplemental jurisdiction over that claim should,
under Erie R.R. Co. v. Tompkins, 304 U.S. 64 (1938), apply the
state provision shifting fees and costs in the absence of a
controlling federal statute, rule, or policy. E.g., Security
Mut. Life Ins. Co. of New York v. Contemporary Real Estate
Assoc., 979 F.2d 329 (3d Cir. 1992); McAdam v. Dean Witter
(..continued)
assistance, binders, dividers, messenger
service, paralegal costs--which I believe I
have already awarded [as part of the
attorneys' fee award]--meals, telephone
calls. The only thing that I believe to be
debatable here is photocopying and
depositions. But the depositions under the
federal rules are not reimbursable because
they['re] about discovery depositions. . . .
* * *
That's the way you tried cases and
you're getting paid for trying the case, Ms.
Moses. I am awarding -- I am permitting
costs to be added to this in the aggregate of
clerk's fees and the attendance fees of
witnesses embraced by 28 U.S.C. § 1821. . . .
The other request for reimbursement of
costs is denied.
App. 1675-76.
Reynolds, 896 F.2d 750, 774-75 (3d Cir. 1990). On the other
hand, under Hanna v. Plummer, 380 U.S. 460 (1965), where there is
a valid applicable Federal Rule of Civil Procedure, it is to be
applied by a federal court even where the plaintiff's claim is
based on state law.
Rule 54(d)(1) of the Federal Rules of Civil Procedure
requires the clerk of the court to award certain litigation
expenses to the prevailing party as a matter of course. These
routine court "costs" are listed in 28 U.S.C. § 1920, and this
assessment as a matter of course is made whether the plaintiff's
underlying claim is federal or state. Under the rules of Erie
and Hanna v. Plummer, Rule 54(d)(1) will thus trump a state cost
shifting provision with which it conflicts. Cf. Exxon Corp. v.
Burglin, 42 F.3d 948, 950-52 (5th Cir. 1995) (finding that
Alaska procedural rule that allows at least minimal recovery of
attorneys' fees in every civil appeal conflicts with Federal Rule
of Appellate Procedure 38 which permits recovery of fees only
when appellee successfully defends a frivolous appeal and holding
that federal rule must therefore apply in diversity action).
There is, however, no federal statute or rule providing
the rule of decision when a federal court is asked to award
litigation expenses other than those enumerated as section 1920
costs. Rule 54(d)(2) recognizes the possibility of awards of
"attorney's fees and related non-taxable expenses" and
establishes a procedure for asserting a right to such an award.
This rule does not provide a rule of decision, however. Rather,
it and the accompanying advisory committee comment recognize that
there must be another source of authority for such an award.24
The reference in Rule 54(d)(2) to another source of
authority is consistent with the general federal caselaw rule
that there is no fee or cost shifting except as authorized by
statute or rule. Alyeska Pipeline Serv. Co. v. Wilderness
Society, 421 U.S. 240 (1975). That source of authority need not
be federal law, however. Neither Alyeska nor Rule 54(d)(2),
precludes a federal court from looking to state law to determine
the rule of decision as to attorneys' fees in a state law case,
and Erie requires it to do so. Accordingly, the district court
should have looked to New Jersey law to determine what nontaxable
expenses related to attorneys' fees were authorized in this case.
Section 10:5-27.1 of the New Jersey Statutes Annotated
(West 1993), a provision of the NJLAD, provides:
24
. Rule 54(d)(2) provides:
Claims for attorneys' fees and related
non-taxable expenses shall be made by motion
unless the substantive law governing the
action provides for the recovery of such fees
as an element of damages to be proved at
trial.
Commentary to the 1993 amendment which added paragraph (d)(2),
clarifies that this new subsection
establishes a procedure for presenting claims
for attorneys' fees, whether or not
denominated as "costs." It applies also to
requests for reimbursement of expenses, not
taxable as costs, when recoverable under
governing law incident to the award of fees.
Rule 54(d) advisory committee's note (1993).
In any action or proceeding brought
under this act, the prevailing party may be
awarded a reasonable attorney's fee as part
of the cost, provided however, that no
attorney's fee shall be awarded to the
respondent unless there is a determination
that the charge was brought in bad faith.
New Jersey thus authorizes an award of an "attorney's fee as part
of the cost," using the exact same wording as the federal civil
rights fee shifting statute, 42 U.S.C. § 1988, and the Title VII
fee shifting provision, 42 U.S.C. § 2000e-5(k).
We have found no helpful New Jersey Supreme Court or
Appellate Division cases construing N.J. Stat. Ann § 10:5-27.1.
However, these courts, as the District Court for the District of
New Jersey has recently noted in a similar context, "generally
look to cases interpreting the federal civil rights laws in
construing the [NJ]LAD." McKenna v. Pacific Rail Serv., 817
F. Supp. 498, 518-19 (D. N.J. 1993), rev'd in part on other
grounds, 32 F.3d 820 (3d Cir. 1994). We predict that the Supreme
Court of New Jersey would do so here, particularly in light of
the virtual identity of the relevant texts.
In West Virginia University Hospitals, Inc. v. Casey,
499 U.S. 83 (1991), the Supreme Court of the United States held
that the word "costs" in section 1988 referred to the taxable
costs referenced in Rule 54(d)(1) and enumerated in 28 U.S.C. §
1920. We predict that the Supreme Court of New Jersey would read
"cost" in N.J. Stat. Ann. § 10.5-27.1 to refer to the costs
recoverable by the prevailing party as a matter of course
(assuming no judicial directive to the contrary), i.e. those
costs enumerated in N.J. Stat. Ann. § 22A:2-8 (West 1969).25
That statute provides no authority for an award of out-of-pocket
litigation expense other than a specified list of items similar
to those listed in 28 U.S.C. § 1920.26 Florczak v. United Jersey
Bank, 591 A.2d 1023, 1024 (N.J. Super. Ct. App. Div. 1991).
25
. Rule 4:42-8(a) of the New Jersey Court Rules provides:
"Unless otherwise provided by law, these rules or court order,
costs shall be allowed as of course to the prevailing party."
26
. N.J. Stat. Ann § 22A:2-8 provides:
A party to whom costs are awarded or
allowed by law or otherwise in any action,
motion or other proceeding, in the Law
Division or Chancery Division of the Superior
Court is entitled to include in his bill of
costs his necessary disbursements, as
follows:
The legal fees of witnesses, including
mileage for each attendance, masters,
commissioners and other officers;
The costs of taking depositions when
taxable, by order of the court;
The legal fees for publication where
publication is required;
The legal fees paid for a certified copy
of a deposition or other paper or document,
or map, recorded or filed in any public
office, necessarily used or obtained for use
in the trial of an issue of fact or the
argument of an issue of law, or upon appeal,
or otherwise;
Sheriff's fees for service of process or
other mandate or proceeding;
This leaves us with the issue of whether the New Jersey
Supreme Court would interpret the phrase "a reasonable attorney's
fee" broadly enough to include the expenses which Abrams claimed
but was denied by the district court. Some, like his claim for
his own personal expenses in traveling to attend the deposition
of another witness, clearly cannot be squeezed into that rubric.
See A. J. Tenwood Assoc. v. Orange Senior Citizens Housing Co.,
491 A.2d 1280, 1288 (N.J. Super. Ct. App. Div.), certif. denied,
501 A.2d 976 (N.J. 1985). In considering Abrams's other claims,
however, we believe that the New Jersey Supreme Court would look
to the United States Supreme Court's construction of "attorney's
fees" in section 1988.
In Missouri v. Jenkins, 491 U.S. 274 (1989), the Court
was presented with the issue of whether a fee for the work of law
clerks and paralegals could be part of "a reasonable attorney's
fee" within the meaning of section 1988 and, if so, whether the
"fee" should be at the market rate charged to private clients or
limited to the out-of-pocket cost to the attorney. The Court
held in part:
Clearly, a "reasonable attorney's fee" cannot
have been meant to compensate only work
performed personally by members of the bar.
Rather, the term must refer to a reasonable
fee for the work product of an attorney.
(..continued)
All filing and docketing charges paid to
the clerk of court;
Such other reasonable and necessary
expenses as are taxable according to the
course and practice of the court or by
express provision of law, or rule of court.
Thus, the fee must take into account the work
not only of attorneys, but also of
secretaries, messengers, librarians,
janitors, and others whose labor contributes
to the work product for which an attorney
bills her client; and it must also take
account of other expenses and profit. The
parties have suggested no reason why the work
of paralegals should not be similarly
compensated, nor can we think of any.
Missouri v. Jenkins, 491 U.S. at 285. The Court further held
that recovery should be at the market rate billed to private fee-
paying clients so long as the rate used to compensate the
attorney was the community rate charged by an attorney who billed
separately for the work of paralegals and law clerks. Id. at
288-89. The Court thereby avoided the possibility of double
payment that would occur if these other costs were subsumed, for
example as part of ordinary overhead, in the attorney's hourly
rate.
The types of expenses available as part of a reasonable
attorney's fee is not, however, limitless. We know from West
Virginia University Hospital that the reading given "attorney's
fee" in Jenkins, does not include fees paid for expert witnesses
and other expenses that have traditionally been considered a
category of litigation expenses distinct from fees payable for
the legal services of the litigating attorney. Thus, it includes
only those litigation expenses that are incurred in order for the
attorney to be able to render his or her legal services. Under
these rules, the following are generally recoverable under
section 1988 when it is the custom of attorneys in the local
community to bill their clients separately for them:
(a) reproduction expenses;
(b) telephone expenses of the attorney;
(c) travel time and expenses of the attorney;
(d) postage.
Harris v. Marhoefer, 24 F.3d 16, 19 (9th Cir. 1994); Associated
Builders & Contractors of La., Inc. v. Orleans Parish School Bd.,
919 F.2d 374, 380 (5th Cir. 1990); Ramos v. Lamm, 713 F.2d 546,
559 (10th Cir. 1983); Northcross v. Board of Educ., 611 F.2d 624,
639 (6th Cir. 1979), cert. denied, 447 U.S. 911 (1980), and cert.
denied, 477 U.S. 911 (1980); Dickinson v. Indiana State Election
Bd., 817 F. Supp. 737, 752 (S.D. Ind. 1992).
We predict the Supreme Court of New Jersey would adopt
this same approach. Some of the out-of-pocket expenses for which
Abrams sought reimbursement consisted of these types of
recoverable expenses. The district court therefore erred in
denying recovery because these items were not listed in 28 U.S.C.
§ 1920.27 We therefore vacate the award of costs and remand to
the district court for reconsideration.
VII.
The district court properly instructed the jury as to
the standard of proof for a pretext claim of age discrimination
under the NJLAD by requiring that Abrams prove that his age was a
27
. To the extent the district court's attorneys' fees
award included some of the claimed expenses as overhead,
compensating Abrams for these expenses directly will result in a
double recovery. Because the district court is in the best
position to know which billable expenses it has already included
in the attorneys' fees award, we leave it to the district court's
discretion to determine for which out-of-pocket expenses, if any,
Abrams has already been compensated.
determinative factor and a but-for cause of the decision to
terminate him. Likewise, none of the court's evidentiary rulings
warrant reversal of the jury verdict. We affirm the judgment in
Abrams's favor on the NJLAD claim and the damages and attorneys'
fees award in his favor. We remand only as to the award for
costs and out-of-pocket expenses and instruct the district court
to recalculate the proper cost award consistent with this
opinion.