Muniz v. United Parcel Service, Inc.

FOR PUBLICATION

UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT

KIM MUNIZ, No. 11-17282
Plaintiff-Appellee,
D.C. No.
v. 4:09-cv-01987-
CW
UNITED PARCEL SERVICE, INC.,
Defendant-Appellant. OPINION

Appeal from the United States District Court
for the Northern District of California
Claudia Wilken, Chief District Judge, Presiding

Submitted June 14, 2013*
San Francisco, California

Filed December 5, 2013

*
The panel unanimously finds this case suitable for decision without
oral argument. FED. R. APP. P. 34(a)(2).
2 MUNIZ V. UPS

Before: Diarmuid F. O’Scannlain and Milan D. Smith, Jr.,
Circuit Judges, and James K. Singleton, Senior District
Judge.**

Opinion by Judge Singleton;
Partial Concurrence and Partial Dissent by Judge Milan D.
Smith, Jr.

SUMMARY***

Attorneys’ Fees

The panel affirmed in part and vacated in part the district
court’s order awarding attorneys’ fees to a prevailing plaintiff
under California’s Fair Employment and Housing Act.

The panel held that the district court did not abuse its
discretion in awarding the prevailing plaintiff $697,971.80 in
attorneys’ fees where the jury awarded her only $27,280 in
damages. The panel held that although there was a clear
disparity between the damages recovered and the fees
awarded, California law did not require the district court to
reduce the disparity. The panel also held that the fee award
to a paralegal was based upon inadmissible hearsay. The
panel remanded to the district court to reconsider the award
of fees to the paralegal, and to determine an award to the

**
The Honorable James K. Singleton, Senior United States District
Judge for the District of Alaska, sitting by designation.
***
This summary constitutes no part of the opinion of the court. It has
been prepared by court staff for the convenience of the reader.
 MUNIZ V. UPS 3

plaintiff for attorneys’ fees and costs incurred in defending
this appeal.

Concurring in part and dissenting in part, Judge M. Smith
agreed with the majority that the district court abused its
discretion in granting paralegal fees based solely on hearsay
evidence, and dissented from the remainder of the majority
opinion.

COUNSEL

Katherine C. Huibonhoa, Paul Hastings LLP, San Francisco,
California, filed the briefs for the defendant-appellant. With
her on the briefs was Ryan C. Hess, Paul Hastings LLP, San
Francisco, California.

Michael von Loewenfeldt, Kerr & Wagstaffe LLP, San
Francisco, California, filed the brief for the plaintiff-appellee.
With him on the brief were Daniel A. Zaheer, Kerr &
Wagstaffe LLP, San Francisco California, and Stephen R.
Jaffe, The Jaffe Law Firm, San Francisco, California.
4 MUNIZ V. UPS

OPINION

SINGLETON, Senior District Judge:

Kim Muniz sued her employer United Parcel Service,
Inc., (“UPS”) in California State Superior Court for
employment-related discrimination in violation of
California’s Fair Employment and Housing Act (“FEHA”),
California Government Code § 12900. Muniz made no
federal claim. UPS removed the case to federal court on the
basis of diversity of citizenship. The case was tried to a jury
which returned a verdict in Muniz’s favor finding that UPS
had discriminated against her on the basis of her gender and
awarded her $27,280 in damages. Muniz, as a prevailing
plaintiff under FEHA, sought an award of attorney fees. CAL.
GOV’T CODE § 12965(b). Muniz requested $1,945,726.50 in
fees. After extensive argument, the district court awarded
Muniz $697,971.80.

UPS appeals. The sole issue on appeal is whether the
district court abused its discretion in awarding Muniz
$697,971.80 where the jury awarded her only $27,280.

JURISDICTION

The district court had subject matter jurisdiction over
Muniz’s gender discrimination claims based upon diversity
of citizenship. 28 U.S.C. § 1332. This court has jurisdiction
over the final judgment under 28 U.S.C. § 1291.

STANDARDS OF REVIEW

We review the district court’s interpretation of state law
in a diversity case de novo. Stanford Ranch, Inc. v. Md. Cas.
 MUNIZ V. UPS 5

Co., 89 F.3d 618, 624 (9th Cir. 1996). If state substantive law
governs a case, then an award of attorney fees is also
governed by state law. Champion Produce, Inc. v. Ruby
Robinson Co., 342 F.3d 1016, 1024 (9th Cir. 2003).
California state law determines the standards and factors to be
considered in determining an award of attorney fees in this
diversity action. See Winterrowd v. Am. Gen. Annuity Ins.
Co., 556 F.3d 815, 827 (9th Cir. 2009). We review attorney
fees awarded under state law for abuse of discretion. 389
Orange St. Partners v. Arnold, 179 F.3d 656, 661 (9th Cir.
1999). Decisions of the California Supreme Court, including
reasoned dicta, are binding on us as to California law. Aceves
v. Allstate Ins. Co., 68 F.3d 1160, 1164 (9th Cir. 1995).
Decisions of the six district appellate courts are persuasive
but do not bind each other or us. See In re Student-Athlete
Name & Likeness Licensing Litig., 724 F.3d 1268, 1278 (9th
Cir. 2013). We should nevertheless follow a published
intermediate state court decision regarding California law
unless we are convinced that the California Supreme Court
would reject it. In re Watts, 298 F.3d 1077, 1082–83 (9th
Cir. 2002); Owen ex rel. Owen v. United States, 713 F.2d
1461, 1464–65 (9th Cir. 1983).

“We review evidentiary rulings for abuse of discretion,
though we review de novo the district court’s interpretation
of the Federal Rules of Evidence.” United States v. Urena,
659 F.3d 903, 908 (9th Cir. 2011), cert. denied, __U.S.__,
132 S. Ct. 1608 (2012).

We may affirm on any basis supported by the record,
whether or not relied upon by the district court. Hall v. N.
Am. Van Lines, Inc., 476 F.3d 683, 686 (9th Cir. 2007).
Accordingly, the decision of the district court may be
affirmed “even if the district court relied on the wrong
6 MUNIZ V. UPS

grounds or wrong reasoning.” Cigna Prop. & Cas. Ins. Co.
v. Polaris Pictures Corp., 159 F.3d 412, 418 (9th Cir. 1998).

PRIOR PROCEEDINGS AND FACTUAL
BACKGROUND1

In her complaint, Muniz identified a single adverse
employment action—her two-level demotion from Division
Manager to Supervisor—and alleged alternative
“discriminatory motives” for UPS’s action in separate claims
for retaliation, gender discrimination and age discrimination.
Muniz contended that the wrongful discrimination was
traceable in part to UPS’s negligence in hiring and training its
employees.

It appears that Muniz only identified one adversary in
UPS management—Ron Meyer—to whom she traced all of
her problems. Meyer is the only one specifically accused by
Muniz of retaliation and age and gender discrimination. She
does not contend that Mary Gill, the District Manager who
demoted her, or UPS’s other managers were gender biased or
had any reason to retaliate against her. She maintains that
Gill and the other managers were influenced by Meyer into
taking all of the actions upon which this case is brought.

1
UPS did not include a transcript of the trial in its excerpts of record.
This failure makes a determination regarding attorney fees difficult. See
Maria P. v. Riles, 43 Cal. 3d 1281, 1295–96 (Cal. 1987) (failure of
appellant challenging attorney fee awards to include trial transcript in
record warrants summary affirmance); Vo v. Las Virgenes Mun. Water
Dist., 94 Cal. Rptr. 2d 143, 79 Cal. App. 4th 440, 447–48 (Cal. Ct. App.
2000) (same). We have prepared our statement of facts based upon the
parties’ submissions which we do not believe to be disputed. See Chavez
v. City of Los Angeles, 224 P.3d 41, 45 (Cal. 2010) (suggesting this
approach).
 MUNIZ V. UPS 7

From the record provided, it appears that UPS essentially
argued that Muniz was an example of what has elsewhere
been called the “Peter Principle”—that she had been
promoted to her level of incompetence. See LAURENCE J.
PETER & RAYMOND HULL, THE PETER PRINCIPLE: WHY
THINGS ALWAYS GO WRONG 7 (William Morrow ed. 1969).
In line with this theory, UPS apparently argued that Meyer
was simply the first to recognize Muniz’s failings, and that
his efforts were a reasonable attempt to persuade senior
management to demote her to a position consistent with her
limitations. The jury disagreed and awarded damages. UPS
does not challenge the jury verdict on appeal.

On March 30, 2009, Muniz filed a complaint with the
California Department of Fair Employment and Housing
(“DFEH”) alleging that she was demoted based on gender,
age and retaliation for engaging in protected activity. The
only adverse action Muniz mentioned in her state court
complaint and in her administrative complaint was the two-
step demotion. Her complaint about the Manager
Performance Improvement Plan (“MPIP”) and the stock
bonus came later. Muniz filed the instant action on April 6,
2009.

Muniz’s claims for age discrimination, retaliation and
punitive damages were resolved against her through summary
judgment. After UPS moved for summary judgment but prior
to oral argument, Muniz abandoned her age discrimination
claim and no longer argued that her retaliation claim fell
under FEHA as pled. Muniz sought to amend her complaint
to properly allege retaliation under state labor law, but the
district court held that she had waited too long and, in any
event, she could not show that her reports of Fair Labor
Standards Act violations in 2007 were close enough in time
8 MUNIZ V. UPS

to permit an inference of causation regarding the adverse
employment actions in 2008. Muniz’s claim for negligent
supervision and training survived summary judgment but was
abandoned at trial. UPS concedes that the negligent
supervision claim was interrelated with the gender
discrimination claim.

The case went to trial on claims of gender/sex-based
employment discrimination. See Muniz v. United Parcel
Serv., Inc., No. 4:09-cv-019887-CW, 2011 WL 3740808, at
*1 (N.D. Cal. Aug. 23, 2011). The district court described
the claims tried and the result as follows:

A jury trial was held on Plaintiff’s FEHA
gender discrimination claim. This claim rested
on three alleged adverse actions: (1) the denial
of a stock bonus; (2) her placement on the
MPIP; and (3) her demotion from division
manager to supervisor. The jury found that
UPS’s decision to deny Plaintiff a stock bonus
was not motivated by her gender. It
concluded that UPS’s decision to place her on
an MPIP, although motivated by her gender
and a substantial factor in causing her harm,
was made for both discriminatory and non-
discriminatory reasons and that UPS would
have made the same decision for a non-
discriminatory reason.2 However, the jury

2
At the time this case was tried, the Ninth Circuit had held, in reliance
on 1991 amendments to Title VII, that a plaintiff who proved
discrimination but lost a mixed-motive case because the jury believed the
employer would have made the same adverse decision in the absence of
a discriminatory motive may nevertheless recover reasonable attorney
 MUNIZ V. UPS 9

found that Plaintiff’s gender motivated UPS to
demote her, it was a substantial factor in
causing her harm and UPS would not have
demoted her for a non-discriminatory reason.
The jury awarded Plaintiff $27,280.00, which
was the sum of $9,990 for her lost earnings,
$7,300 for her past medical expenses and
$9,990 for her past non-economic loss.3

fees. See Costa v. Desert Palace, Inc., 299 F.3d 838, 857 (9th Cir. 2002),
aff’d, 539 U.S. 90 (2003); Norris v. Sysco Corp., 191 F.3d 1043, 1050 (9th
Cir. 1999). The jury in this case was apparently instructed in conformity
with federal law. At the time of the trial of Muniz’s claims, the California
Supreme Court was considering, but had not decided, whether California
recognized a mixed-motive defense to FEHA. Early this year the
California Supreme Court determined that California law was essentially
the same as federal law. Harris v. City of Santa Monica, 294 P.3d 49,
51–52 (Cal. 2013).

It does not appear that Harris should affect the outcome here. While
UPS terms the mixed-motive result a win for it and suggests that Muniz
should not recover any fees for time spent on it, the district court
apparently treated all of the gender discrimination claims as related and
apparently included time spent on them in the lodestar; Harris supports
including any time spent on challenging the MPIP decision in the award
of attorney fees and on this record all of the alleged gender discrimination
adverse employment claims are sufficiently related to permit a full award
of attorney fees.
3
At the close of trial, Muniz asked the jury during argument to award
damages totaling over $700,000.
10 MUNIZ V. UPS

Muniz, 2011 WL 3740808, at *2. UPS and Muniz, each
claiming to be prevailing parties, sought attorney fees under
FEHA, California Government Code section 12965(b).4

UPS brought a number of post-trial motions which were
decided by the trial court. In that decision, the district court
also addressed both parties’ request for attorney fees. The
court found Muniz to be a prevailing party and rejected
UPS’s motion for attorney fees. The court summarized
Muniz’s fee request in the following table:

Attorney Hourly Hours Total Fees
Rate Billed
Stephen Jaffe $650.00 1,610.8 $1,047,020.00
Daniel Zaheer $350.00 395.2 $138,320.00
Kathryn Landman $290.00 28.1 $8,149.00
Susan Jaffe $195.00 531.6 $103,662.00
Subtotal $1,297,151.00
Subtotal x Proposed 1.5 Lodestar $1,945,726.50
Multiplier

4
We will consider federal cases arising under Title VII and 42 U.S.C.
§ 1988 to the extent California would consider them persuasive. As we
shall see, however, in some respects California law differs from federal
law regarding the calculation of reasonable fees based upon differences in
the language of the governing statutes, and we will be sensitive to those
differences. See Chavez, 224 P.3d at 50. “An upward or downward
adjustment from the lodestar figure will be far more common under
California law than under federal law.” Id. at 51 n.6 (citation omitted).
 MUNIZ V. UPS 11

The district court considered Muniz’s requested fees in
determining the lodestar. Based upon the district court’s
review of the record, the submissions of the parties, fees
awarded in other cases in the same district, and the district
court’s observation of Mr. Jaffe during trial and earlier
proceedings, the district court reduced his requested hourly
fee from $650 per hour to $445 per hour. The district court
reduced Ms. Landman’s requested fee from $290 to $230 and
Ms. Jaffe’s rate from $195 to $130 per hour. The district
court left Mr. Zaheer’s quoted fee intact.

Initially UPS vigorously objected to the hours claimed by
the Jaffes. The district court largely agreed with UPS. It
found Mr. Jaffe’s record keeping inadequate and sent him
back three times to improve it. The court ultimately found
that Jaffe had not sufficiently proved his hours or Ms. Jaffe’s
hours and therefore reduced each by 20 percent. The court
then multiplied the adjusted hourly rate by the adjusted hours
and arrived at a lodestar award of $773,514.20. The district
court reduced this amount by a further 10 percent to reflect
Muniz’s limited success (having recovered $27,280) and her
disproportionate fee request ($2 million in fees requested
versus $696,162.78 awarded),5 resulting in an adjusted fee
award of $696,162.78. The district court summarized
Muniz’s award for attorney fees and costs as follows:

5
The initial fee request (approximately $2 million) was approximately
73 times the damage award ($27,280). The reduced fee award of
$696,162.78 is approximately 26 times the damage award.
12 MUNIZ V. UPS

Attorney Hourly Hours Total Fees
Rate Billed
Stephen Jaffe $445.00 1,288.64 $573,444.80

Daniel Zaheer $350.00 395.2 $138,320.00

Kathryn Landman $230.00 28.1 $6,463.00
Susan Jaffe $130.00 425.28 $55,286.40
Subtotal $773,514.20
Subtotal x Lodestar Reduction of 0.1 $696,162.78
Non-statutory costs $1,809.02
Total award $697,971.80

DISCUSSION

In general, California courts, like their federal
counterparts, utilize the lodestar (or “touchstone”) approach
to determine a proper fee award to a prevailing plaintiff in a
civil rights law suit. Chavez, 224 P.3d at 51. Each attorney’s
reasonable hourly rate is determined, and then that rate is
multiplied by the hours reasonably spent in achieving
plaintiff’s victory. Id. The result is the lodestar, which may
be adjusted up or down to determine an appropriate award in
the individual case. Id. In the absence of special
circumstances which would make the adjusted lodestar
amount unjust, it should be awarded to a prevailing plaintiff’s
attorneys. Id. at 45.

UPS has narrowly focused its appeal. It does not
challenge the jury verdict. It concedes that the district court’s
 MUNIZ V. UPS 13

lodestar calculation, after the reductions noted, was within its
discretion except in one particular instance. UPS argues that
the award of fees to paralegal Susan Jaffe was based upon
inadmissible hearsay. UPS directs its primary argument to
the court’s treatment of Muniz’s limited success and its
inflated fee request, which UPS contends required a
substantially greater downward adjustment.

WAS THE FEE AWARD TO PARALEGAL SUSAN
JAFFE BASED UPON INADMISSIBLE HEARSAY?

Declarations in support of attorney fee awards should be
based upon personal knowledge. Mardirossian & Assocs.,
Inc. v. Ersoff, 62 Cal. Rptr. 3d 665, 6774–75 (Cal. Ct. App.
2007). Ms. Jaffe did not file a declaration swearing to the
hours she spent on this case. Mr. Jaffe filed a declaration (his
third) which he alleged was based upon his personal
knowledge and in which he stated that he had watched Ms.
Jaffe reconstruct her hours using the same information he
used, and that the attached spreadsheet showed her hours.

UPS objected that this statement and the accompanying
spreadsheet were inadmissible hearsay. Muniz argued that
Mr. Jaffe’s declaration verified Ms. Jaffe’s hours based upon
his personal knowledge. No evidentiary hearing was held.
The district court interpreted Mr. Jaffe’s declaration as stating
that he had personal knowledge of Ms. Jaffe’s hours and
tasks, that he watched her reconstruct her hours and the
spreadsheet he attached to his declaration showed her hours,
and that he could state from personal knowledge that the
hours she put down were an approximation of those she
actually expended under his supervision on the identified
tasks. See Strong v. Valdez Fine Foods, 724 F.3d 1042,
1045–47 (9th Cir. 2013) (rejecting similar hearsay objection
14 MUNIZ V. UPS

and finding that the declaration was an expression of “lay
opinion”). Here the declaration would arguably be an expert
opinion by Mr. Jaffe.

Our decision on this issue is controlled by the Federal
Rules of Evidence. Hearsay is a statement by someone who
does not testify at a hearing and which is offered to prove the
truth of the matter asserted in the statement. FED. R. EVID.
801(c). Here the matter asserted in the statement is the hours
expended by Ms. Jaffe in this case and contained in the
spreadsheet. We are satisfied that the only reasonable
interpretation of Mr. Jaffe’s declaration is that Ms. Jaffe
provided this information to him. It was therefore hearsay
and the district court’s conclusion to the contrary clearly
mistaken.

Muniz argues that if the spreadsheet is hearsay, any error
was harmless because the trial court had sufficient
information to estimate hours reasonably spent by the Jaffes,
and her adjusted hours reflects the district court’s conclusion
regarding the proper hours. Mardirossian analogizes the
foundation for an attorney fee award in California to the rule
that an injured party must show that he was injured—i.e.,
damaged—by persuasive evidence, but is not required to
show with certainty the amount of his damage. 62 Cal. Rptr.
3d at 674–75 (precise calculations of hours spent not
required; estimates based upon personal knowledge which are
a fair approximation will suffice). Here, there is no question
the Jaffes invested some hours in this case, and that the
district court knew what tasks they performed. Mr. Jaffe
certainly knew if he assigned work to Ms. Jaffe and if she
completed it. Nevertheless, Mardirossian requires an
evidentiary basis for each aspect of an award. Id. In the
absence of a more complete explanation from the district
 MUNIZ V. UPS 15

court regarding paralegal hours, we cannot conclude that
allowing hearsay as the sole justification for an award to Ms.
Jaffe was harmless.

DID THE DISTRICT COURT ABUSE ITS DISCRETION
IN FAILING TO REDUCE THE FEE AWARD TO A
GREATER EXTENT DUE TO LIMITED SUCCESS AND
INFLATED FEES?

No reported decision of the California Supreme Court has
held that a trial court abused its discretion by awarding a
prevailing plaintiff in a FEHA case fees based upon the
lodestar. The cases like Chavez, upon which UPS relies, all
involve decisions upholding the trial court’s discretion in
adjusting the lodestar calculation and determining fees. See
224 P.3d at 54–55. These cases provide little support to UPS
because trial court decisions are not precedential. An
appellate decision upholding a particular exercise of trial
court discretion does not mean that the appellate court would
not have also upheld a substantially different decision.

I. Limited success

UPS argues that the district court did not adequately
account for Muniz’s limited success in this case. Under both
California and federal law, a fee award must be adjusted to
reflect limited success. Hensley v. Eckerhart, 461 U.S. 424,
440 (1983); Chavez, 224 P.3d at 53–54. California considers
this aspect of federal law persuasive. Chavez, 224 P.3d at
53–54. The limited success determination has two
components: first, the court must deduct from the lodestar
hours spent exclusively on unrelated unsuccessful claims; and
second, the court must evaluate the remaining hours to
determine if they were reasonably necessary to achieve the
16 MUNIZ V. UPS

result obtained. Hensley, 461 U.S. at 434; Odima v. Westin
Tucson Hotel, 53 F.3d 1484, 1499–1500 (9th Cir. 1995).

(a) The district court did not abuse its discretion in
failing to deduct more time for unsuccessful claims

California law requires a trial court to adjust a lodestar
award to account for time spent exclusively on an
unsuccessful claim. Chavez, 224 P.3d at 53–54. It appears
that California law follows federal law in evaluating such
claims. See Envtl. Prot. Info. Ctr. v. Cal. Dep’t of Forestry
& Fire Prot., 118 Cal. Rptr. 3d 352, 368–78 (Cal. Ct. App.
2010) (applying limited success analysis set forth in Hensley
v. Eckerhart and remanding for reevaluation of award of
attorney fees under California’s private attorney general fee-
shifting statute); Harman v. City & Cnty. of San Francisco,
69 Cal. Rptr. 3d 750, 760–70 (Cal. Ct. App. 2007) (holding
that, on remand, trial court did not abuse its discretion in
evaluating attorney fees awarded in civil rights fee-shifting
case for limited success under Hensley v. Eckerhart).

Hensley cautions that, before hours may be deducted
specifically for unsuccessful claims, the claims must be
suitable for entirely separate lawsuits. 461 U.S. at 434–35;
Schwarz v. Sec’y of Health & Human Servs., 73 F.3d 895,
901 (9th Cir. 1995). They must be distinct in both fact and
law. Hensley, 461 U.S. at 434–35; Harman, 69 Cal. Rptr. 3d
at 760 (in evaluating a claim for limited success under
Hensley, “the court [must] inquire whether the different
claims for relief . . . are based on different facts and legal
theories. If so, they qualify as unrelated claims.”) (citations
and internal quotation marks omitted). To deduct time, the
court must find that the time deducted did not aid in proving
the successful claims. Schwarz, 73 F.3d at 903–04
 MUNIZ V. UPS 17

(discussing Herrington v. Cnty. of Sonoma, 883 F.2d 739, 747
(9th Cir. 1989)). UPS points to Muniz’s claims for retaliation
and age discrimination, which it claims are “unrelated.” The
district court agreed, reasoning that the age discrimination
and retaliation claims involved different legal theories than
the gender discrimination claim, and that Muniz had not
shown that they were related factually. The district court
therefore deducted a further 10 percent from the total lodestar
award on this account. UPS argues that this was not a
sufficient deduction.

UPS does not attempt to estimate the actual number of
hours the Jaffes could reasonably have spent on the claims for
age discrimination, retaliation, negligent hire and punitive
damages. UPS apparently assumes that it and the Jaffes spent
an equal amount of time on each claim, whether successful or
unsuccessful. UPS points to no evidence supporting this
assumption. UPS argued that the district court should assume
that Muniz spent as much time developing its age
discrimination claim which it abandoned at summary
judgment as it spent on its gender discrimination claim upon
which it prevailed after a seven day jury trial. The district
court properly rejected this contention, and under both federal
and California law, that the jury sustained a mixed-motive
defense does not preclude an award of attorney fees for that
claim.

In Corder v. Gates, this Court criticized percentage
adjustments to the lodestar amount for limited success,
concluding that limited success should be addressed in the
lodestar calculation by deducting specific hours. 947 F.2d
374, 378 (9th Cir. 1991). California law is much more open
to percentage adjustments of the lodestar up and down. See
Chavez, 224 P.3d at 51 n.6. In any event, Corder finds such
18 MUNIZ V. UPS

a deduction harmless error unless the district court double
counts, which was not done here. 947 F.2d at 378.

We are not convinced, however, that the district court was
clearly wrong in failing to deduct further for them,
particularly where it does not appear that either party could
segregate hours spent exclusively on the unsuccessful claims.
The district court was not clearly mistaken in declining to
deduct a greater amount for unsuccessful claims.

(b) The district court’s implicit conclusion that the hours
claimed by Muniz after deductions were reasonably
incurred in order to obtain a $27,280 verdict and a
determination of a gender-biased employment
decision was not clearly mistaken

The second component of the limited success inquiry asks
whether the hours allowed were reasonably necessary to
achieve the result reached. Hensley, 461 U.S. at 434;
Harman, 69 Cal. Rptr. 3d at 761. Initially we must evaluate
the level of Muniz’s success. Her success was not
insignificant. In her initial complaint, she alleged that UPS
had made one adverse employment decision by demoting her
two levels from division manager to supervisor. She
attributed this adverse decision to discrimination prohibited
by FEHA. She offered age discrimination, gender-based
discrimination and retaliation as alternate motives for the
FEHA violation. The jury found that the two-step demotion
was motivated by gender bias prohibited by FEHA. Muniz
asked for damages “in excess of $25,000” in her complaint.
The jury awarded her $27,280. No equitable relief was
sought or obtained.
 MUNIZ V. UPS 19

UPS argues that the district court abused its discretion by
failing to discuss the relationship that the damages awarded
to Muniz had to the damages Muniz sought. The district
court’s opinion, however, makes clear that it was well aware
of this relationship. The district court expressly relied on the
fact that Muniz “was awarded a minimal amount for her past
losses and received nothing for future economic and non-
economic losses.” This was not an abuse of discretion.

II. The district court did not abuse its discretion in
declining to reduce the fee request further because the
initial fee request was inflated

Muniz sought attorney fees of $1,297,151.00, enhanced
by a 1.5 multiplier to $1,945,726.50. The district court
denied the multiplier and ultimately awarded $696,162.78, or
approximately 36 percent of the amount requested.
California law clearly allows the trial court to reduce or deny
attorney fees if it is satisfied that the fee request is
unreasonably inflated. Chavez, 224 P.3d at 54–55. It has
long been the law in California that an unreasonably inflated
fee request is a special circumstance authorizing the trial
court to substantially reduce or deny fees altogether. Serrano
v. Unruh, 32 Cal. 3d 621, 635 (Cal. 1982). Like all special
circumstances, a reduction is permitted but not required. The
district court has broad discretion to determine whether an
inflated fee request warrants reduction and, if so, to what
extent. In this case, the district court concluded that the fee
request was inflated and recognized that it had discretion to
deny all fees, but concluded that a total denial of fees or
limiting the award to a nominal amount would be too severe
a sanction. Instead, the district court considered the inflated
fee request in reducing the lodestar by 10 percent.
20 MUNIZ V. UPS

UPS argues that Chavez, 224 P.3d 41, requires a deeper
cut. Chavez is distinguishable. Like Muniz, Chavez declined
to proceed as a limited civil action in state court but, unlike
Muniz, recovered less than $25,000, which under an
applicable California statute permitted a reduction in
awardable fees. Id. at 45. Here, Muniz recovered more than
$25,000 and was not vulnerable to the statute permitting
reduction in fees. This case would not have been appropriate
for a limited civil action, and the trial court exercised its
discretion to grant fees, while in Chavez the court exercised
its discretion to deny fees. Id. at 55.

UPS’s reliance on Farrar v. Hobby, 506 U.S. 103 (1992),
is also inapposite. Farrar permits but does not require a
reduction in fees where only nominal or minimal damages are
awarded. Id. at 114–15. In Morales v. City of San Rafael,
96 F.3d 359, 362–63 (9th Cir. 1996), this Court concluded
that a jury award of $17,500 was neither nominal or minimal.
Here Muniz recovered more than $17,500.

To the extent that presenting an unreasonably inflated
request for fees presents a separate issue from limited
success, it is determined as of the time the request for fees is
made. Here, the district court found that Muniz made an
unreasonably inflated fee request. Its decision to deduct 10
percent of the lodestar was based in part on this finding. The
district court believed that it had discretion under Chavez to
deduct further or eliminate attorney fees entirely, but
concluded a lesser sanction was appropriate. See Beaty v.
BET Holdings, Inc., 222 F.3d 607, 613–14 (9th Cir. 2000)
(remanding to ensure that district court understood that it had
discretion to reduce fees based upon results obtained). UPS
has not shown that this decision was an abuse of discretion.
 MUNIZ V. UPS 21

In conclusion, UPS has not demonstrated that the initial
fee request in this case was made in bad faith and was so
inflated that a 10 percent negative multiplier was not
adequate to account both for limited success and possible
inflation of the fee request.

It is not clear that the dissent disputes anything we have
said so far. The dissent argues that the district court failed to
“show her work,” which we understand to mean that the
district court did not disclose the basis for her decision to
deduct only 10 percent from the lodestar calculation rather
than some other percentage, e.g., 5 percent, 50 percent or 90
percent, based upon its conclusion that limited success and an
inflated fee request warranted a deduction from the lodestar.
A trial court owes the parties and a reviewing court a
reasoned resolution of the factual and legal disputes presented
by a case. Typically this involves finding facts and providing
legal conclusions, which may be included in a written
decision as was done here. UPS does not dispute any of the
trial court’s findings of fact. UPS does not argue that the
lodestar was improperly calculated. It presents legal
arguments chiefly based upon what we have concluded was
an untenable reading of Chavez and Farrar. In light of the
arguments made by UPS and the record it provided, the
district court’s decision was more than adequate to enable us
to resolve this appeal.

Notably, UPS did not press on appeal the approach
favored by the dissent. Even assuming that we should
consider the matter, the district court sufficiently explained its
reasoning to permit meaningful appellate review. See
Padgett v. Loventhal, 706 F.3d 1205, 1208 (9th Cir. 2013).
In its opinion, the district court provided a helpful table to
explain its calculation of the lodestar and the effect of its
22 MUNIZ V. UPS

adjustment on that calculation. The district court also
expressly discussed factors relevant to the lodestar adjustment
and made clear why it believed that Muniz had obtained only
limited success and submitted an inflated fee request.

CONCLUSION

The district court recognized that it had discretion to
reduce Muniz’s fee award further than it did. The district
court gave a clear and concise explanation of its reasoning
addressing every issue that UPS asks us to consider on
appeal. There is a disparity between the damages recovered
and the fees awarded. We are not convinced that California
law requires the trial court to reduce that disparity. See
Beaty, 222 F.3d at 612–13 (“[A] trial court does not under
California law abuse its discretion by simply awarding fees
in an amount higher, even very much higher, than the damage
awarded, where successful litigation causes conduct which
FEHA was enacted to deter to be exposed and corrected.”)
(internal quotation marks omitted).

UPS has failed to demonstrate that the fee award, except
to the extent it addressed paralegal fees, was clearly mistaken.

The judgment of the district court is AFFIRMED in part
and Vacated in part, and this case is REMANDED to the
district court 1) to reconsider an award of fees to Susan Jaffe
for paralegal work on behalf of Muniz and to determine, in
the first instance, whether any hearsay exception applies to
Mr. Jaffe’s declaration regarding fees for paralegal work in
this case and 2) to determine an award to Muniz for
 MUNIZ V. UPS 23

reasonable attorney fees and costs incurred in defending this
appeal.6

M. SMITH, Circuit Judge, concurring in part and dissenting
in part:

I agree with the majority that the district court abused its
discretion in granting paralegal fees based solely on hearsay
evidence. I respectfully dissent from the remainder of the
majority opinion.

Although we review attorney fee awards for abuse of
discretion, “[w]e have long held that district courts must show
their work when calculating [such awards].” Padgett v.
Loventhal, 706 F.3d 1205, 1208 (9th Cir. 2013); McCown v.
City of Fontana, 565 F.3d 1097, 1102 (9th Cir. 2009) (“A
district court acts within its discretion in awarding fees when
the amount is reasonable and the court fully explains its
reasoning in making the award.”). This requirement makes
good sense. “Without an adequate explanation by the district
court,” we are unable to conduct a meaningful review of the
fees awarded, and we have no way of knowing whether the
district court abused its discretion. Padgett, 706 F.3d at 1208
(citing Ass’n of Mexican-Am. Educators v. California,
231 F.3d 572, 592–93 (9th Cir. 2000) (en banc)). As we
recently explained, “[t]he mandate that district courts show
their work is all the more important in cases where, as here,

6
California law allows a plaintiff to recover not only the fees incurred
with respect to the underlying claim but also any fees incurred in
enforcing the right to fees. Maria P., 43 Cal. 3d at 1296; Ketchum,
17 P.3d at 747–48. Muniz should recover her fees on appeal.
24 MUNIZ V. UPS

there are many overlapping claims and [] mixed result[s].”
Padgett, 706 F.3d at 1209.

Fee awards that employ across-the-board percentage
reductions “are subject to heightened scrutiny. . . .” Gates v.
Deukmejian, 987 F.2d 1392, 1400 (9th Cir. 1992). Where the
court applies an across-the-board percentage reduction in lieu
of engaging in a line-by-line analysis, “[a] cursory statement”
that neglects to explain why a particular reduction is “the
correct reduction . . . does not allow for us meaningfully to
assess the determination.” Id. Accordingly, absent “a
concise but clear explanation of [the court’s] reasons for
choosing a given percentage reduction,” we have no choice
but to conclude that the chosen reduction was arbitrary. Id.
at 1400–01 (internal quotation marks omitted); see also
Gonzalez v. City of Maywood, 729 F.3d 1196, 1204–05 (9th
Cir. 2013).

Here, the district court applied a ten-percent across-the-
board lodestar reduction. In so doing, the court merely
explained that a reduction was necessary to account for
“Plaintiff’s limited success.” The court did not explain how
it arrived at a ten-percent reduction, nor how the $697,971.80
fee award it approved after applying this reduction could have
been reasonable in light of the mere $27,280.00 that plaintiff
recovered in damages. See Hensley v. Eckerhart, 461 U.S.
424, 436–37 (1983). Without such an explanation, we cannot
meaningfully assess the reasonableness of the fee award.

Under these circumstances, I believe we must remand for
the district court to complete its work. To the degree the
majority holds otherwise, it departs from and adds confusion
to our well-settled jurisprudence governing the review of fee
awards.
 MUNIZ V. UPS 25

I respectfully dissent.