search the entire site.
or go to the recent opinions, or the chronological or subject indices.
Singh v. Dillon and State Farm Auto Insurance (10/8/93), 860 P 2d 1193
NOTICE: This opinion is subject to
formal correction before publication in the
Pacific Reporter. Readers are requested to
bring typographical or other formal errors to
the attention of the Clerk of the Appellate
Courts, 303 K Street, Anchorage, Alaska
99501, in order that corrections may be made
prior to permanent publication.
THE SUPREME COURT OF THE STATE OF ALASKA
MATHRA SINGH, )
Appellant and Cross-Appellee, )
) Supreme Court
v. ) Nos. S-4549, S-4550
STATE FARM MUTUAL AUTOMOBILE ) Superior Court
INSURANCE COMPANY and ) No. 3AN-89-7572 CIVIL
WAYNE DILLON, )
) C O R R E C T E D
Appellees and Cross- ) O P I N I O N
[No. 4011, October 8, 1993]
Appeal from the Superior Court of the
State of Alaska, Third Judicial District,
Dana Fabe, Judge.
Appearances: William Grant Callow,
Anchorage, for Appellant/Cross-Appellee.
David S. Carter, Hughes, Thorsness, Gantz,
Powell & Brundin, Anchorage, for
Appellees/Cross-Appellants. William E.
Caldwell, Alaska Legal Services Corp.,
Fairbanks, and Carol H. Daniel, Alaska Legal
Services Corp., Anchorage, for Amicus Curiae
Alaska Legal Services Corporation.
Before: Rabinowitz, Chief Justice,
Burke, Matthews, Compton and Moore, Justices.
RABINOWITZ, Chief Justice.
MATTHEWS, Justice, dissenting in part.
This appeal involves the grant of attorney's fees to a
civil rights litigant pursuant to 42 U.S.C. 1988. The
underlying civil rights and defamation causes of action arose out
of the handling of Mathra Singh's third-party insurance claim by
State Farm Insurance Co. and Wayne Dillon, a State Farm senior
FACTS & PROCEEDINGS
Mathra Singh is a 67-year-old man who was born and
raised in Delhi, India and is a member of the Sikh religion.
Singh moved to Anchorage in 1986. In 1988, he and his son began
driving a taxi for Yellow Cab.
On September 30, 1988, Singh suffered soft-tissue
injuries to his back and neck, as well as injuries requiring
surgery on his hand, when his taxi was struck by a vehicle driven
by Patrick Stone. Stone was insured by State Farm Mutual
Automobile Insurance (State Farm). Singh subsequently submitted
a claim to State Farm for damages related to the accident. The
investigation and handling of Singh's claim was assigned to Wayne
Dillon, a State Farm claims representative.
Singh alleges that when Dillon went to Singh's
residence to investigate the claims, Dillon was extremely
hostile. During his visit, Dillon allegedly began "yelling [and]
screaming"at Singh and his family. When Singh told him that he
really had suffered an injury, "Mr. Dillon yelled and he said,
'anybody can put that collar on his neck.'"
Two deponents testified that Dillon used racial and
ethnic slurs when referring to Singh and his insurance claim. Jo
Ann Dobbert, the office manager of the Anchorage Neuro-Spinal
Clinic where Singh received some of his medical treatment,
testified that she telephoned State Farm and asked Dillon for a
claim number for her records. Dillon told her that Singh had "no
claim" and that "those ragheads will do anything to get someone
else to pay their bills for them." Dobbert registered complaints
by telephone to both the head of State Farm for Alaska and the
office of the director of the Alaska Division of Insurance.
A second deponent, Lynnie Ben-Ezra, a licensed
independent insurance agent who provided insurance to Singh, also
testified that she spoke to Dillon regarding Singh's claim.
During the conversation, Dillon referred to Singh with an "ethnic
slur" and indicated that Singh was exaggerating his injuries,
"malingering," "overextending" his claim, and "abusing the
Singh also asserts that Dillon treated him in a
discriminatory fashion by failing to follow State Farm's policy
of offering what was determined to be the "fair value"of every
claim.1 Singh further asserts that while Dillon was assigned to
his case, instead of offering a settlement for fair value, Dillon
persisted in employing stall tactics to avoid payment. State
Farm claims that it was actively pursuing a settlement, and that
the reason that a settlement could not be executed immediately
was that up until the time that he filed suit, Singh was still
undergoing medical treatment related to injuries sustained in the
accident, including surgery on his finger.
Singh filed a complaint against State Farm and Dillon
requesting relief under 42 U.S.C. 1981, a state anti-
discrimination statute, and state tort law pertaining to
defamation. Singh sought judgment against Dillon and State Farm
for "compensatory and punitive damages in excess of the
jurisdictional limit of the Alaska State District Court." On
motion for summary judgment by State Farm, the superior court
dismissed Singh's claims for relief under Alaska's anti-
discrimination statute (AS 18.80.210, .250, and .260) but denied
State Farm's motion to dismiss the 1981 and defamation claims.
The superior court held that racial discrimination in the
formation of an insurance settlement contract fell within the
scope of 42 U.S.C. 1981; that discrimination on the basis of
ethnicity or ancestry was racial discrimination for purposes of
1981; and that Singh had raised a genuine issue of material fact
as to whether such discrimination had occurred. The superior
court further concluded that Singh had raised a genuine issue of
material fact regarding his defamation claim.
In March 1990, State Farm extended an offer to settle
all of Singh's claims and actions against State Farm's insureds
Patrick and Allen Stone for the sum of $23,000. Singh accepted
On July 26, 1990, State Farm and Dillon made an offer
of judgment to Singh. The offer of judgment did not specifically
identify the individual claims of the lawsuit; it stated that the
defendants "hereby offers [sic] to allow judgment in favor of
Mathra Singh in this action for [$17,501] plus applicable costs,
interest and attorney's fees as set by this court." Singh
accepted the offer, and subsequently filed a motion for
attorney's fees and costs pursuant to 42 U.S.C. 1988. In
support of this motion, Singh's attorney provided an affidavit
and a detailed billing statement, which indicated that he had
expended 228 hours in attorney time, at a fee rate of $140 per
hour for a total of $31,920 in attorney's fees. Singh's attorney
additionally argued before the superior court that his fee should
be enhanced by at least 100% of $31,920, and that he should be
reimbursed for $20,000 in attorney's fees expended in litigating
the 1988 attorney's fee issue before the superior court.
The superior court found that "plaintiff achieved
significant relief in that he settled his defamation and 1981
claims for the principal amount of $17,501." The superior court
further concluded that Singh's success on his civil rights claims
was limited, since much of his litigation effort had addressed
state claims for relief that had been found to be without merit.
The court also observed that "the level of preparation of this
case is disproportionate to the complexity of the case as well as
the relief achieved." Thus the superior court reduced Singh's
fee award to fifty-five percent of the "lodestar" amount,
awarding $17,556 for legal services performed prior to judgment.
The superior court refused to enhance the lodestar amount to
compensate for the risk of nonpayment of attorney's fees.
Finally, the court awarded $2,000 of the requested $20,000 in
attorney's fees arising out of the litigation regarding Singh's
attempt to obtain 42 U.S.C. 1988 attorney's fees.
Singh appeals from the superior court's reduction of
his requested attorney's fee award, the court's denial of his
request for fee enhancement, the court's limited award of $2,000
in attorney's fees for his efforts to obtain an award under 42
U.S.C. 1988, and the court's dismissal of his three claims
under Alaska's anti-discrimination statute.
State Farm cross-appeals, arguing that the superior
court erred in applying 42 U.S.C. 1981 to insurance claims, in
denying State Farm's motion for summary judgment on Singh's
1981 discrimination claim, and in ruling that Singh was entitled
to an award of attorney's fees under 42 U.S.C. 1988.
I. DID THE SUPERIOR COURT ERR IN ITS RULINGS ON STATE
FARM'S MOTION FOR SUMMARY JUDGMENT?
Both Singh and State Farm challenge aspects of the
superior court's ruling on State Farm's motion for summary
judgment. State Farm argues in its cross-appeal that the
superior court erred in denying it summary judgment on Singh's
1981 discrimination claim. Singh argues on appeal that the
superior court erred in granting State Farm summary judgment on
his three separate claims for relief under the Alaska anti-
discrimination statute. We have held that a right to appeal is
waived by stipulating to judgment. Harold's Trucking v. Kelsey,
584 P.2d 1128, 1129-30 & n.3 (Alaska 1978) (right to appeal is
waived by stipulating to entry of judgment on an arbitration
award). Since these claims are within the scope of the consent
judgment, both parties waived their rights to appeal the merits
of the superior court's ruling on State Farm's motion for summary
II. DID THE SUPERIOR COURT ABUSE ITS DISCRETION IN ITS AWARD OF
The award of attorney's fees by the superior court in
the instant case is governed by the 1976 Civil Rights Attorney's
Fees Awards Act:
In any action or proceeding to enforce a
provision of sections 1981, 1981a, 1982,
1983, 1985, and 1986 of this title, title IX
of Public Law 92-318, or title VI of the
Civil Rights Act of 1964, the court, in its
discretion, may allow the prevailing party,
other than the United States, a reasonable
attorney's fee as part of the costs.
42 U.S.C. 1988 (Supp. 1992) (emphasis added). A 1988
attorney's fee award, then, has two requirements: (1) the
recipient must be a "prevailing party;"and (2) the fee awarded
must be "reasonable." We address these requirements in turn.
A. Prevailing Party
State Farm and Dillon argue that the superior court
abused its discretion by disregarding this court's holding in
Tobeluk v. Lind, 589 P.2d 873 (Alaska 1979), in its determination
of "prevailing party." Since our consideration of and decision
in Tobeluk, however, federal case law has developed considerably
regarding the "prevailing party"determination in the settlement
context. As we did in Tobeluk, we now look to the prevailing
federal view on this issue.
State Farm does not seem to dispute that settlement of
a valid, existing 1981 claim would make Singh a prevailing
party under 1988.3 Rather, State Farm argues that "[h]ad the
trial court properly analyzed and applied the law to the
circumstances presented in this case, it would have dismissed
Singh's alleged 1981 claim long before the offer of judgment
was accepted." Implicit in this argument is the sentiment that a
settling litigant should not become eligible for 1988
attorney's fees by merely reciting an otherwise frivolous 1981
or other federal civil rights claim in his complaint. In
response to this sentiment, the majority of federal circuits have
developed a two-part test for determining prevailing party status
in the settlement context. 2 Martin A. Schwartz & John E.
Kirklin, Section 1983 Litigation: Claims, Defenses, and Fees
18.11, at 48-49 (1991).
The Fifth Circuit's test for determining a prevailing
party in the settlement context is typical of the approach taken
by a majority of the federal circuits.4 That court has set forth
two requirements for determining prevailing party status: (1) the
plaintiff's suit must have caused the plaintiff's achievement of
his desired goal in the litigation; and (2) the claim forming the
basis of 1988 fees must not "lack colorable merit." Hennigan
v. Ouachita Parish Sch. Bd., 749 F.2d 1148, 1152-53 (5th Cir.
1985). The first requirement, causation, is easily fulfilled in
the present case. It seems quite clear, and none of the parties
argue otherwise, that the settlement for money damages -- one of
Singh's goals in filing the suit -- was caused by this
litigation. The second requirement, a meritorious claim,
requires further analysis.
The Fifth Circuit places the burden on the party
opposing attorney's fees to show lack of merit: "A defendant who
contends that his conduct was a wholly gratuitous response to a
lawsuit that lacked colorable merit, must demonstrate the
worthlessness of the plaintiff's claims and explain why he
nonetheless voluntarily gave the plaintiffs the requested
relief." Id. at 1153. In its briefs to this court, State Farm
argues that Singh's 1981 claim is without merit. We now
address whether Singh asserted a claim of "colorable merit"under
All persons within the jurisdiction
of the United States shall have the same
right in every State and Territory to make
and enforce contracts, to sue, be parties,
give evidence, and to the full and equal
benefit of all laws and proceedings for the
security of persons and property as is
enjoyed by white citizens, and shall be
subject to like punishment, pains, penalties,
taxes, licenses, and exactions of every kind,
and to no other.
42 U.S.C. 1981 (1988). Singh alleged that State Farm's refusal
to pursue a fair settlement "contract"for his injuries was
partly the result of racial animus. State Farm responds that
handling of insurance claims does not fall within the meaning of
"contract"as used in 42 U.S.C. 1981. See Patterson v. McLean
Credit Union, 491 U.S. 164 (1989) (holding that 1981 is
restricted to the making and enforcement of contracts). In
denying State Farm's motion for summary judgment, the superior
court adopted Singh's reading of 1981, stating that "an
insurance company's refusal to enter into a settlement agreement
with an injured party who was not its own insured fell within the
purview of 42 U.S.C. 1981 if the basis for refusal was racial
discrimination."5 We agree.
It is well established that a settlement is a contract,
provided that it meets minimal contractual requirements. See
Dillon v. City of Davenport, 366 N.W.2d 918, 925 (Iowa 1985);
Eide v. State Farm Mut. Auto. Ins. Co., 492 N.W.2d 549, 555
(Minn. App. 1992); Randall v. Harmon, 761 S.W.2d 278, 279 (Mo.
App. 1988). Specifically, we have held that a consent judgment
is a contract. Continental Ins. Co. v. Bayless & Roberts, Inc.,
608 P.2d 281, 295 (Alaska 1980); Tobeluk v. Lind, 589 P.2d. 873,
881 (Alaska 1979). The agreements settling Singh's damages from
the automobile accident meet the basic requirements for a valid
contract. State Farm and Dillon made an offer of compromise to
Singh, which Singh accepted. For total consideration of $26,735,
Singh agreed to forego litigation against State Farm's insureds.6
On this analysis, we conclude that Singh pled a colorable 1981
claim when he argued that State Farm racially discriminated
against him in forming the initial settlement contracts.
B. Reasonableness of Attorney's Fees
Singh argues that the superior court abused its
discretion in reducing the 1988 attorney's fee award to fifty-
five percent of the lodestar amount. Under Hensley v. Eckerhart,
461 U.S. 424 (1983), a court awarding 1988 attorney's fees to a
prevailing party initially should compute "the number of hours
reasonably expended on the litigation multiplied by a reasonable
hourly rate." Id. at 434. There is a strong presumption that
this amount, which is known as the "lodestar"value, represents a
"reasonable fee."7 Adjustments are made only as required by
special circumstances. See Cunningham v. County of Los Angeles,
879 F.2d 481, 484 (9th Cir. 1988), cert. denied, 493 U.S. 1035
The court may adjust the lodestar value upward or
downward based on other considerations such as the "results
obtained."8 Hensley, 461 U.S. at 434. In a case where a
prevailing party plaintiff is successful on some, but not all, of
his claims, the court should address two other questions: "First,
did the plaintiff fail to prevail on claims that were unrelated
to the claims on which he succeeded? Second, did the plaintiff
achieve a level of success that makes the hours reasonably
expended a satisfactory basis for making a fee award?" Id.
Additionally, if an unsuccessful claim is frivolous, not only is
the plaintiff barred from recovery of attorney's fees related to
the claim, but the defendant may recover fees for defending
against such a claim as well. Id. at 435.
1. Relationship between successful and
Describing the situation in which successful and
unsuccessful claims are factually or legally intertwined, the
Supreme Court noted,
In [some] cases the plaintiff's claims
for relief will involve a common core of
facts or will be based on related legal
theories. Much of counsel's time will be
devoted generally to the litigation as a
whole, making it difficult to divide the
hours expended on a claim-by-claim basis.
Such a lawsuit cannot be viewed as a series
of discrete claims. Instead the district
court should focus on the significance of the
overall relief obtained by the plaintiff in
relation to the hours reasonably expended on
Hensley, 461 U.S. at 435, quoted approvingly in City of Riverside
v. Rivera, 477 U.S. 561, 569 (1986).
The superior court's decision implicitly accepts
Singh's argument that his successful and unsuccessful claims fell
under the second scenario described in Hensley, namely that the
claims were legally and/or factually intertwined. Neither party
has contested the superior court's determination that the claims
were intertwined. Based on our review of the relationship
between the state and federal civil rights claims, we conclude
that the superior court did not err in determining that the
claims were intertwined.9
2. Degree of success
Since Singh's claims were intertwined, we assess the
reasonableness of attorney's fees by "focus[ing] on the
significance of the overall relief obtained by the plaintiff in
relation to the hours reasonably expended on the litigation."
Id. at 435. In establishing Singh's attorney's fee award, the
superior court focused on the following portion of Hensley:
[T]he product of hours reasonably
expended on the litigation as a whole times a
reasonable hourly rate may be an excessive
amount. This will be true even where the
plaintiff's claims were interrelated, non-
frivolous, and raised in good faith. . . .
Again, the most critical factor is the degree
of success obtained.
Id. at 436 (emphasis added). The superior court noted that under
Hensley, "[a] reduced fee award is appropriate if the relief,
however significant, is limited in comparison to the scope of the
litigation as a whole." Id. The superior court then concluded
that Singh's success was limited because of the dismissal of his
three state civil rights claims for relief:
In this case, plaintiff achieved
significant relief in that he settled his
defamation and 1981 claims for the
principal amount of $17,501. On the other
hand, a substantial portion of the motion for
summary judgment and the work that went into
litigation of that motion addressed a state
civil rights cause of action which was
without merit and would have required a court
to employ a tortured construction of the
clear language of the statute. Thus,
plaintiff's success on his civil rights claim
was limited in this regard.
Upon review of the record and the relevant case law we
conclude that the superior court erred in its reduction of
Singh's attorney's fees from the lodestar amount for two reasons.
First, as we have previously recognized, "[f]ull attorney's fees
are the norm under 42 U.S.C. 1988,"but "such fees must be
reasonable." Moseley v. Beirne, 626 P.2d 580, 581 (Alaska 1981).
Second, we believe that the superior court erred in its
determination that Singh's level of success did not merit a full
award of attorney's fees.
The degree of success is difficult to measure,
particularly in a civil rights case such as this one, where a
settlement has precluded a trial on the merits. We note that
Singh's financial recovery represented a significant proportion
of the damages that he requested. In his initial complaint,
Singh requested compensatory and punitive damages in excess of
the jurisdictional limits of our district court, or $35,000. See
AS 22.15.030. The total of the two settlements Singh obtained
exceeded this amount. While it is not possible to quantify
Singh's 1981 damages specifically, since the second settlement
aggregated damages for both the defamation and civil rights
claims, Singh's total recovery of $17,501 is significant.
Additionally, we find that Singh's litigation served a public
purpose within the scope of the "private attorney general theory"
of civil rights litigation, as first expressed in City of
Riverside v. Rivera, 477 U.S. 561, 575 (1986).
3. Proportionality of fees to the
complexity of the case
The superior court found that the level of effort
expended by Singh's counsel was "disproportionate" to the
complexity of the case, and that this factor also warranted an
adjustment downward from the lodestar amount of attorney's fees.10
Singh challenges the superior court's conclusion that his
attorney's work effort was disproportionate to the complexity of
the case and the relief obtained.11
Upon consideration of the complexity of the case and
the relief obtained, we hold that the superior court erred in
finding Singh's attorney's work effort disproportionate to those
other variables. Singh's briefing on this point, and the
affidavits of Alaskan attorneys attesting to the reasonableness
of his legal efforts, are persuasive. Our review of the record
convinces us that Singh's attorney's fees were justified in light
of the complexity of this litigation and the result achieved.12
4. Proportionality of fees to damages
The attorney's fees that Singh requested exceeded the
damages he recovered in the settlement. The United States
Supreme Court has rejected the proposition that fees awarded
under 1988 for civil rights litigation must be less than the
damages recovered. Id. The Rivera plaintiffs received a $33,350
damages award. Their attorneys requested $245,456.25 in fees.
The Court upheld the award in a 5-4 decision.
Justice Brennan, writing for a 4-Justice plurality,
categorically rejected the need for proportionality in civil
rights cases, holding that such cases have inherent public
benefits. Id. at 575 (plurality opinion).
Justice Powell concurred, but stated that "[i]t
probably will be the rare case in which an award of private
damages can be said to benefit the public to an extent that would
justify the disproportionality between damages and fees reflected
in this case." Rivera, 477 U.S. at 586 n.3. (Powell, J.,
concurring). He indicated that the "public interest" served by
civil rights litigation, as well as the damages awarded, might
support such a disproportionate award, though he did not specify
what degree of disproportionality requires such an analysis.
While Justice Powell limited his discussion to the vindication of
constitutional rights, the reasoning of his concurrence may be
extended to civil rights litigation involving the vindication of
statutory rights as well.
The ambiguity created by the divisions in Rivera has
led the federal circuit courts in different directions. Schwartz
& Kirklin, supra, at 304-07. Some courts have treated Justice
Powell's concurrence as the controlling law. See Foley v. City
of Lowell, 948 F.2d 10, 19-20 (1st Cir. 1991); Nephew v. City of
Aurora, 830 F.2d 1547, 1550 (10th Cir. 1987). Others have
declined to do so. See Cowan v. Prudential Ins. Co. of America,
935 F.2d 522, 525-26 (2d Cir. 1991); Bell v. United Princeton
Properties, Inc., 884 F.2d 713, 724 (3d Cir. 1989).
There is no need in this case for a remand to the
superior court for consideration of the public interest served by
the litigation. As noted above, a majority of the United States
Supreme Court has not endorsed the notion that such an analysis
is ever necessary. Moreover, the gross disproportionality of the
fees requested in Rivera is not present here. Singh settled for
$17,501, and requested $31,920 in fees. This is in sharp
contrast with Rivera, where requested fees were almost seven
times the damages award.
5. Enhancement of lodestar amount
Singh argues that the "United States Supreme Court has
held that in appropriate circumstances it is permissible and
proper for a court to `enhance' an attorney fee award based on
contingent fee risk in order to fulfill the statutory goal of
awarding reasonable attorney's fees to prevailing parties in
discrimination cases under 42 U.S.C. 1988." See Pennsylvania
v. Delaware Valley Citizens' Council, 483 U.S. 711 (1987).
Briefing in this appeal, however, was concluded prior to the
Supreme Court's decision in City of Burlington v. Dague, 112 S.
Ct. 2638 (1992). In Dague, the Supreme Court held that a federal
fee-shifting statute did not allow upward adjustment of a
lodestar fee for the risk of nonpayment incurred by the
prevailing party's attorney. While Dague involved environmental
litigation, its reasoning applies to all federal fee-shifting
statutes. Id. at 2641; see also Gates v. Deukmejian, 987 F.2d
1392, 1403 (9th Cir. 1992) ("Given the Court's holding in Dague,
it is clear that contingency multipliers are no longer permitted
under 1988."); Barrow v. Falck, 977 F.2d 1100, 1105 (7th Cir.
1992) ("Dague . . . prohibits enhancements under 1988.").
Thus, we affirm the superior court's denial of Singh's request
for enhancement of his lodestar fee.
III. DID THE SUPERIOR COURT ABUSE ITS DISCRETION IN AWARDING 10%
OF SINGH'S CLAIMED ATTORNEY'S FEES FOR LEGAL SERVICES
PERFORMED IN CONNECTION WITH SINGH'S 1988 ATTORNEY'S FEE
The superior court awarded Singh $2,000 for attorney's
fees for legal services rendered in connection with his
application for an award of attorney's fees pursuant to 1988.
In rejecting Singh's $20,000 fee request, the superior court
reasoned: "As the court in Hensley v. Eckerhart noted, `a
request for attorney's fees should not result in a second major
litigation,' 461 U.S. at 437, and the requested $20,000 for
litigation of these fees is approximately two-thirds of the total
amount claimed by plaintiff for full fees for the underlying
Singh argues that the superior court erred in reducing
attorney's fees for work performed in connection with his 1988
attorney's fees application for three reasons: (1) State Farm
did not contest the time claimed for such work; (2) the superior
court did not find that any specific task, or amount of attorney
time spent on any task, in connection with the fee litigation,
was unreasonable; and (3) the superior court's decision imposes a
penalty solely upon Singh's counsel for what the superior court
assumed to be a "second major litigation." Singh argues that the
superior court's $2,000 award is unfair because State Farm's
attorneys were paid for all time spent contesting Singh's 1988
fee application, and thus Singh's counsel alone has been
penalized by the superior court's decision.
As the prevailing party in a 1981 case, Singh is
entitled to an award of attorney's fees pursuant to 1988 for
the time expended in establishing his entitlement to attorney's
fees. Clark v. City of Los Angeles, 803 F.2d 987, 992 (9th Cir.
1986) ("We, like every other court that has considered the
question, have held that the time spent in establishing
entitlement to an amount of fees awardable under 1988 is
compensable."); accord Rose Pass Mines, Inc. v. Howard, 615 F.2d
1088, 1093 (5th Cir. 1980) (per curiam) ("We have long required
an attorney to file a detailed account of the legal services he
provided the bankrupt in order to recover any compensation at all
for his services. It would be unduly penurious to require such
an accounting without granting reasonable compensation.")
We hold that the rationale employed by the superior
court in awarding Singh only $2,000 of his request for an award
of $20,000 in attorney's fees is mistaken. While we are mindful
of the Supreme Court's cautionary directive in Hensley that
litigation for attorney's fees should not constitute a second
major litigation, we believe that logic and subsequent federal
case law cast that directive in a light of moderation. Scrutiny
of legal costs incurred as a consequence of an application for
attorney's fees under 1988 should focus on whether the time
expended was reasonable in light of all the surrounding
circumstances. See, e.g., Grano v. Barry, 783 F.2d 1104, 1114-15
(D.C. Cir. 1986) (upholding an award of fees incurred in
litigation for 1988 attorney's fees where no showing had been
made that "the time spent on attorneys' fees . . . was
unreasonable, could have been avoided, or was unrelated to the
If in fact Singh's attorney failed to exercise
reasonable billing judgment, the award should be reduced
accordingly.13 Alone, the fact that the total time spent in
litigating Singh's 1988 application for attorney's fees
represents a significant percentage of Singh's attorney's fees
incurred in connection with the underlying merits action is not a
sufficient justification for the superior court's reduced $2,000
award of attorney's fees. We therefore vacate the $2,000 award
and remand the matter to the superior court for redetermination
of an appropriate attorney's fee award for work done on the fee
The superior court's rejection of Singh's request for
an enhanced award of attorney's fees under 1988 is AFFIRMED.
The superior court's award of $17,556 in attorney's fees
(representing 55% of the attorney's fees requested by Singh) is
REVERSED and REMANDED with directions to enter an award in the
amount of $31,920 for Singh's reasonable attorney's fees in the
underlying litigation.14 The superior court's award of $2,000 in
attorney's fees to Singh for services incurred in connection with
his efforts to obtain an award of attorney's fees pursuant to
1988 is VACATED and REMANDED with directions to redetermine its
award of attorney's fees for work done on Singh's 1988
attorney's fees application.
MATTHEWS, Justice, dissenting in part.
Singh settled his civil rights/defamation case for
$17,501. The trial court awarded him an additional $17,556 in
attorney's fees under 42 U.S.C. 1988. Today's opinion holds in
part that the trial court abused its discretion as a matter of
law and should have awarded attorney's fees of $31,920 for work
leading up to the settlement. I do not join in this conclusion
for the reasons that follow.
Because it is not economically reasonable to spend
$2.00 to make $1.00, the degree of success in litigation where
only money is at issue is easy to measure. Litigation is not
successful, even where the recovery may be called "significant,"
if the amount spent to obtain a recovery exceeds the amount of
the recovery. By this measure this case was not successful. I
would suggest that if a claimant's lawyer were to recommend that
a case be settled for $17,000 and then, upon settlement, were to
send his client a bill for $31,000, the lawyer would have a very
difficult task in explaining to the client -- and perhaps the fee
arbitration panel of the bar association -- why the requested fee
was a reasonable one.15 Yet, on essentially these facts, the
court today holds that such a fee is reasonable as a matter of
Because this is a civil rights case it is possible that
the fee mandated by today's opinion should be awarded. Civil
rights cases, including those where only money damages are
sought, may have a public value which cannot be measured
economically. If this is such a case, attorney's fees at a
higher level than would be regarded as reasonable in commercial
litigation may be warranted. Such a determination, however,
should be made by the trial court.
Justice Powell addressed the issue of proportionality
between the actual recovery and fees in civil rights cases in
casting the deciding vote in City of Riverside v. Rivera, 477
U.S. 561 (1986). In Riverside, the plaintiff sought $245,456.25
for attorney's fees incurred in recovering $33,350 in damages.
Justice Powell wrote that "[i]t probably will be the rare case in
which an award of private damages can be said to benefit the
public interest to an extent that would justify the
disproportionality between damages and fees reflected in this
case." Id. at 586 n.3 (Powell, J., concurring in the judgment)
(emphasis in original). He voted to uphold the fee award,
however, deferring to the trial court's finding that the
plaintiff's suit "served the public interest by vindicating
important constitutional rights." Id. at 583.
This establishes a framework for assessing the
reasonableness of a fee award in light of the proportionality
between the amount recovered and the fees sought. Under this
framework, no fee adjustment is necessary if the amount recovered
substantially exceeds the fees sought. If, however, the fees
sought equal or exceed the amount recovered, the court must
consider whether plaintiff's suit "served the public interest"
sufficiently to justify a disproportionate fee. If so, the
"lodestar" fee may be awarded. If not, the court should adjust
the fee accordingly.16
In the present case, the trial court never specifically
addressed the possible public interest value of this litigation.
For this reason, I believe that this case should be remanded for
further consideration of attorney's fees under Justice Powell's
If the trial court were to determine that this
litigation did not have a public interest value which required a
fee in excess of the settlement amount, I would not hold that the
fee awarded was an abuse of discretion. The trial court found
that this case was overlitigated by Singh's attorney, suggested
that he lacked "billing judgment,"and gave credible examples in
support of these conclusions.
1. Singh bases his claim of discriminatory treatment by
Dillon in part on an affidavit by attorney John R. Lohff, who
stated that during the time that Dillon was handling Singh's
claim, Dillon offered to pay one of Lohff's clients $97,000 for a
soft-tissue back injury that "aggravated a previous back injury
the man had suffered in a previous collision that had occurred
two months earlier." Lohff's client was a white male in his mid-
2. Previously Singh had accepted State Farm's offer of
$3,735 as total payment for the loss of his taxi in the accident.
3. Section 1988 attorney's fees are appropriate if a
settlement disposes of a federal civil rights issue that
"remained in the case until the entire case is settled,"Maher v.
Gagne, 448 U.S. 122, 134 (1980) (Powell, J., concurring), and the
issue disposed of is a "significant issue in litigation." Texas
State Teachers Ass'n v. Garland Indep. Sch. Dist., 489 U.S. 782,
788 (1989). In the present case, Singh's 1981 claim survived
summary judgment and, thus, remained in the suit until
settlement. Additionally, it cannot be disputed that the 1981
claim was a "significant"matter in the litigation. The only
remaining issue, discussed above, is whether Singh must also make
some showing that his 1981 claim was meritorious in order to
receive 1988 attorney's fees.
4. Singh cites to the First Circuit's formulation of this
approach. See Nadeau v. Helgemoe, 581 F.2d 275 (1st Cir. 1978);
see also Schwartz & Kirklin, supra, 18.11, at 49-62 (listing
federal cases applying a similar two-part test).
5. The superior court further held that the term "racial
discrimination" included discrimination based on religious
affiliation or ethnic origin. See Saint Francis College v. Al-
Khazraji, 481 U.S. 604, 613 (1987). We note that the superior
court correctly interpreted Al-Khazraji as barring discrimination
based on ancestry and ethnicity. Id. at 613.
6. At the time the offer was made and accepted Singh's
remaining claims for relief consisted of his defamation claim and
his 1981 discrimination claim.
7. The United States Supreme Court recently held that where
a plaintiff's recovery is merely technical, or de minimis, a
court may award low fees or no fees without calculating or
adjusting the lodestar. Farrar v. Hobby, 113 S. Ct. 566 (1992).
In Farrar, the plaintiff had recovered one dollar on a $17
million civil rights claim. Id. at 574-75. The Supreme Court
held that while the plaintiff was a prevailing party, his success
was de minimis, and therefore he was not entitled to a 1988 fee
award. We find that Farrar is inapplicable to the case at bar,
since Singh's success was not merely technical.
8. The Supreme Court noted that in adjusting an
attorney's fee award, a court may consider the so-called "Johnson
factors" as identified in Johnson v. Georgia Highway Express,
Inc., 488 F.2d 714, 717-19 (5th Cir. 1974), although many of
these factors will be subsumed within the original lodestar
determination. Hensley, 461 U.S. at 434 n.9.
9. In his summary of attorney work effort, Singh's attorney
described his work by category, but did not delineate his efforts
by individual claim. We note that in the future, civil rights
plaintiffs would be well advised to document their work effort by
claim to avoid reduction of a fee award by percentage where
unsuccessful claims are found to be unrelated to successful
10. The superior court cited two examples of work that it
considered "disproportionate": "[T]hree hours billed for
`[r]esearch voir dire inquiry re: tort reform; policy holder
status; religion; prior contacts' . . . three and one-half hours
billed for `[r]esearch admiss. of Bests's/Moody's/Standard/Poor
11. Amicus Curiae Alaska Legal Services submitted a brief in
support of Singh's position. Alaska Legal Services argues that
it appears from the record that without providing any acceptable
rationale, the superior court reduced the fee award to $17,556 to
make it commensurate with the settlement judgment of $17,501.
Alaska Legal Services notes that in Rivera the Supreme Court
expressly "reject[ed] the proposition that fee awards under
1988 should necessarily be proportionate to the amount of damages
a civil rights plaintiff actually recovers." 477 U.S. at 574.
In Rivera, the Supreme Court noted that "unlike private tort
litigants, a civil rights plaintiff seeks to vindicate important
civil and constitutional rights that cannot be valued solely in
monetary terms." Id.
Singh further argues that State Farm's contentious
litigation tactics were the cause of a large amount of his
attorney's fees. Singh asserts that these tactics included a
number of incidents. First, State Farm produced nominally
responsive answers to discovery requests concerning questions
such as its net worth, which caused Singh both to file motions to
compel responses, which ultimately were successful, and to
conduct independent research on State Farm such as his research
of insurance reports published by Best's, Moody's and Standard
and Poor. Second, State Farm filed protective orders concerning
discovery requests on the ground that the information sought by
Singh was personal, subject to constitutional rights of privacy,
and irrelevant. When the superior court ordered State Farm to
produce the information for an in camera inspection, however,
State Farm declined the opportunity and gave the information to
Singh, suggesting that State Farm knew that the privacy claims
were unfounded. Third, State Farm made detailed, time-consuming
requests for itemization from Singh, including, for example, a
request for specific dollar amount itemization of medical bills,
instead of reference to billings generally.
12. Significant portions of Singh's attorney's work efforts
were expended in reaction to a pattern of non-responsiveness by
State Farm. This pattern continued after the settlement was
accepted. Singh notes that "State Farm not only failed to offer
evidence of its own attorney's fees in this case, but disobeyed a
lawful subpoena to produce such information. . . ."
13. For example, recovery of attorney's fees for assembling
the affidavits of twenty-five experts may be contrary to the
spirit of Alaska Administrative Rule 7(c), which provides in
A party may not recover costs for more
than three expert witnesses as to the same
issue in any given case, unless the judge
permits recovery for an additional number of
expert witnesses. See Gates v. Deukmejian,
977 F.2d 1300, 1314 (9th Cir. 1992); Norman
v. Housing Authority of Montgomery, 836 F.2d
1292, 1300 (11th Cir. 1988); King v. Palmer,
906 F.2d 762, 766 (D.C. Cir. 1990), rev'd on
other grounds, 950 F.2d 771, 785 (D.C. Cir.
1991) (en banc).
14. State Farm does not contest the reasonableness of the
claimed 228 hours in attorney time at a fee rate of $140 per
hour. Our holdings have made it unnecessary to address any other
contentions of the parties or amici.
15. See Alaska Bar Rules 34 and 35.
16. Several federal circuits follow the Powell
proportionality approach. See, e.g., Ustrak v. Fairman, 851 F.2d
983, 989 (7th Cir. 1988); Nephew v. City of Aurora, 830 F.2d
1547, 1550-51 (10th Cir. 1987), cert. denied, 485 U.S. 976
(1988); Gonzales v. Jillson, 642 F. Supp. 908, 909 (D. Mass.
1986) (awarding full fees because "significance of [low] monetary
award is outweighed by the important public interests vindicated
by the general jury verdict").