Wilson v. Nomura Securities International, Inc. - dissent

Wilson v. Nomura Securities
Docket No. 02-9001(L), 02-9069(XAP), 02-9449(CON)
Decided: March 2, 2004

JON O. NEWMAN, Circuit Judge, dissenting:

When opposing lawyers execute a document to settle litigation,

they should expect courts to apply that document according to its

precise terms, leaving room for "interpretation" only to remedy the

most obvious inadvertencies. In this case involving claims under both

federal and municipal law, the lawyers settled their litigation for an

amount that was stated to be "inclusive of costs." It did not say,

"inclusive of costs and attorney's fees," as most careful lawyers would

have said if they wanted the settlement to preclude a claim for

attorney's fees. The Court acknowledges that the term "costs" includes

attorney's fees under applicable federal law, but not under applicable

municipal law. Nevertheless, the Court deems the parties to have

settled the Plaintiff's claim for attorney's fees under municipal law

by agreeing to a payment "inclusive of costs." Because that ruling

imports into the word "costs" a meaning that it does not have under

applicable municipal law and unjustifiably rewards the Defendants for

their counsel's inattention to careful drafting, I respectfully

dissent.

Darnel Wilson's suit, alleging racial discrimination in

employment, was settled by his acceptance of the Defendants' offer,

pursuant to Fed. R. Civ. P. 68, "to allow judgment to be taken against

them in the amount of $15,000.00 inclusive of all costs available under
all local, state or federal statutes accrued to date" (emphasis added).

We all agree that, under applicable federal law, a reasonable

attorney's fee may be allowed to the prevailing party "as part of the

costs," see 42 U.S.C. § 2000e-5(k) (2001), and that, under applicable

municipal law, the prevailing party may be awarded "costs and

reasonable attorney's fees," Administrative Code of the City of New

York ("New York City Human Rights Law" or "NYCHRL") § 8-502(f)

(emphasis added). We also agree, as the Court states, that "when a

plaintiff prevails on two . . . overlapping claims, he or she is

entitled to only one award of fees for the indivisible legal work

performed," slip op. at [10] (emphasis added), and that Wilson's Title

VII and NYCHRL claims "were factually and legally identical," id.

Where we disagree is when the Court goes on to state that "Wilson's

acceptance of the Offer settled all rights to fees." Id.

The settlement settled only what it said it settled, which

included "all costs available under all local, state or federal

statutes accrued to date." Because the word "costs" under federal law

includes attorney's fees, the parties settled the Plaintiff's claim for

an award of attorney's fees under federal law. However, because the

word "costs" under municipal law does not include attorney's fees, the

parties did not settle the Plaintiff's claim for an award of attorney's

fees under municipal law. That latter claim remains viable, as the

District Court ruled.

Of course, as this Court states, a plaintiff who prevails on two

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overlapping claims is entitled to only one "award" of attorney's fees,

but Wilson has yet to receive any "award" of such fees. Rather, he has

received a lump sum settlement, which includes an amount for which he

was willing to settle the merits of his discrimination claims and an

amount for which he was willing to settle his claim for attorney's fees

under federal law. Had he received an "award" of attorney's fees, he

would have received a reasonable fee (calculated under the lodestar

approach, see Quarantino v. Tiffany & Co., 166 F.3d 422, 425 (2d Cir.

1998), rather than the small portion of the $15,000 settlement amount

that can be attributed to the settlement of his claim for attorney's

fees under federal law.

As far as the record discloses, there is no firm basis on which

to determine whether either side knew the precise meaning of "costs"

under federal or municipal law when the Rule 68 offer was made and

accepted. For all I can tell, both lawyers might have been unaware

that "costs" includes an attorney's fee under 42 U.S.C. § 2000e-5(k).

Thus, it may well be that both lawyers thought the settlement preserved

the Plaintiff's claim for attorney's fees under federal law. If so,

the Defendants' lawyer must have been pleasantly surprised to learn

that the settlement extinguished the claim for an attorney's fee under

federal law. It is also possible that both lawyers were unaware that

"costs" does not include an attorney's fee under NYCHRL § 8-502(f).

If so, the Plaintiff's lawyer must have been pleasantly surprised to

learn that the settlement did not extinguish the claim for an

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attorney's fee under municipal law. It is also possible that both

lawyers fully understood the meaning of "costs" under both provisions

and understood that they were settling the claim for attorney's fees

under federal law while maintaining entitlement to an award of

attorney's fees under local law. If so, the Defendant's lawyer, under

this Court's ruling, is reaping a reward that is unexpected as well as

undeserved.1

In the final analysis, none of these possibilities matters. In

the absence of mutual mistake, which is not even alleged, or an obvious

unilateral mistake of the sort entitled to correction, see Prudential

Insurance Co. of America v. S.S. American Lancer, 870 F.2d 867, 871-74

(2d Cir. 1989), which is also not alleged, the parties are bound by the

terms of their settlement. In this case, regardless of the parties'

understanding of the law, those terms happen to preclude an award of

attorney's fees under federal law (because that claim has been

settled), but permit recovery of a reasonable attorney's fee under

municipal law (because that claim has not been settled).

Of course, the Plaintiff is not entitled to more than a reasonable

attorney's fee under municipal law. Had this Court upheld Judge

Sweet's ruling, the Defendants would have been entitled to offset an

1
The affidavit of the Plaintiff's counsel, cited by the Court, __
F.3d at __, n.1, indicates that counsel promptly made a demand for an
attorney's fee upon the Defendants' counsel, but does not reveal
whether he thought his entitlement to an attorney's fee derived from
federal law or municipal law.

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award of reasonable attorney's fees under municipal law by whatever

part of the settlement amount they can show should be attributed to

settlement of the claim for attorney's fees under federal law.

Because the Court has unjustifiably denied the Plaintiff an award

of a reasonable attorney's fee under municipal law, a claim that is

indisputably outside the terms of the Rule 68 settlement, I

respectfully dissent.

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