McGrath v. Toys "R" Us, Inc.

409 F.3d 513, 2005 WL 1308431
CourtCourt of Appeals for the Second Circuit
DecidedJune 2, 2005
DocketDocket No. 02-9308
StatusPublished
Cited by7 cases

This text of 409 F.3d 513 (McGrath v. Toys "R" Us, Inc.) is published on Counsel Stack Legal Research, covering Court of Appeals for the Second Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
McGrath v. Toys "R" Us, Inc., 409 F.3d 513, 2005 WL 1308431 (2d Cir. 2005).

Opinion

RAGGI, Circuit Judge.

Defendanb-Appellant Toys “R” Us, Inc., appeals from a judgment entered on October 22, 2002, in the United States District Court for the Eastern District of New York (Charles P. Sifton, Judge), awarding Plaintiffs-Appellees Donna McGrath, Robert Jinks (also known as “Tanya Jinks” and “Tanya Medina”), and Norbert Lopez (also known as “Tara Lopez”) $193,551 in attorney’s fees pursuant to New York City Administrative Code § 8-502(f). As we explained in an earlier opinion in this case, McGrath v. Toys “R” Us, Inc., 356 F.3d 246, 247 (2d Cir.2004), plaintiffs are eligible for attorney’s fees because they prevailed at trial on a claim that Toys “R” Us had discriminated against them in a public accommodation based on gender and sexual orientation in violation of local law. The parties’ appellate dispute concerns the reasonableness of the district court’s fee award given that the jury had voted each plaintiff only $1 in nominal damages. Because of ambiguities in New York law regarding the standards applicable to determining a reasonable fee award under Administrative Code § 8-502(f) in a case of nominal damages, we certified certain questions pertaining to that issue to the New York Court of Appeals. See id. at 254. In response, the New York Court of Appeals has unequivocally adopted both the general rule of Farrar v. Hobby, 506 U.S. 103, 115, 113 S.Ct. 566, 121 L.Ed.2d 494 (1992), that no attorney’s fees should be awarded to plaintiffs who recover only nominal damages, and this court’s recognition of a public purpose exception to that rule. See McGrath v. Toys “R” Us, Inc., 3 N.Y.3d 421, 788 N.Y.S.2d 281, 821 N.E.2d 519 (2004). The Court of Appeals has, however, approved a broader inquiry with respect to public purpose than has previously been applied by this court in cases arising under federal law. Because we cannot conclude on the record before us that such a broader inquiry would necessarily support an award of fees in the amount originally ordered by the district court, we remand the case for further proceedings consistent with this opinion and that of the New York Court of Appeals.

I. Background

A. Proceedings Before the District Court

Although we assume familiarity with our prior opinion in this case, we briefly reiterate the facts relevant to the district court’s challenged award of fees. See McGrath v. Toys “R” Us, Inc., 356 F.3d at 248-49.

On December 13, 2000, plaintiffs, three pre-operative transsexuals, visited a Toys “R” Us store in Brooklyn, where several employees made derogatory remarks about plaintiffs’ sexuality. Similar events occurred on December 20, 2000. On May 15, 2001, plaintiffs invoked federal diversity jurisdiction to sue Toys “R” Us in the United States District Court for the Eastern District of New York for discrimination pursuant to New York City Administrative Code § 8-502, part of the City’s Human Rights Law.2 Specifically, plaintiffs [515]*515alleged that Toys “R” Us, through its employees, had denied them the advantages, privileges, and facilities of one of its stores because of plaintiffs’ transsexuality, in violation of Administrative Code § 8-107.4.3 Following failed settlement negotiations, a ten-day trial ensued at which plaintiffs urged the jury to consider a compensatory award of several hundred thousand dollars, and a multi-million dollar punitive award. On June 27, 2002, the jury returned a verdict in favor of plaintiffs but awarded each only $1 in nominal damages and no punitive damages.

Thereafter, on July 17, 2002, plaintiffs petitioned the district court for attorney’s fees pursuant to Administrative Code § 8-502(f).4 Plaintiffs, to support their petition, and defendant, to oppose it, relied upon case law applying fee provisions in federal civil rights statutes, such as 42 U.S.C. §§ 1988 and 2000e-5(k). These laws, like New York City Administrative Code § 8-502(f), permit fee awards only if the petitioner is a “prevailing party,” and the requested fee is “reasonable.”5 Given the parties’ reliance upon federal law and noting that other courts had evaluated § 8-502(f) fee petitions by reference to parallel federal law, the district court ruled that it would rely upon federal standards in determining what, if'any, attorney’s fees to award the plaintiffs. See McGrath v. Toys “R” Us, Inc., No. 01 Civ. 3071, 2002 U.S. Dist. LEXIS 22610, at *3 (E.D.N.Y. Oct. 16, 2002).

In its argument to the district court, Toys “R” Us conceded that plaintiffs were “prevailing parties”; however, it maintained that no fees should be awarded because the Supreme Court, applying federal law in Farrar v. Hobby, had ruled that “when a plaintiff recovers only nominal damages ... the only reasonable fee is usually no fee at all.” 506 U.S. at 115, 113 S.Ct. 566. The district court acknowledged Farrar’s holding, but concluded that plaintiffs were nevertheless entitled to attorney’s fees because their lawsuit had served a significant public purpose by being the first to succeed at trial on a § 8-107.4(a) claim of unlawful discrimination against transsexuals in a public aceommo-[516]*516dation. Indeed, the district court noted that, when plaintiffs filed their lawsuit, it was unresolved whether the public accommodation protections of § 8-107.4(a) even extended to transsexuals. See McGrath v. Toys “R” Us, Inc., 2002 U.S. Dist. LEXIS 22610, at *6-*7. Accordingly, the court awarded plaintiffs $193,551 in attorney’s fees, id. at *17, prompting Toys “R” Us to file this timely appeal.

B. Certification to the New York Court of Appeals

1.This Court’s Inquiry

Recognizing a dearth of New York cases interpreting or applying the fee provision of the New York City Human Rights Law, as well as the uncertainty of New York law concerning the applicability, of Farrar v. Hobby to an award of attorney’s fees for prevailing civil rights litigants who recovered nominal damages, this court certified the following questions to the New York Court of Appeals:

1. In determining whether an award of attorney’s fees is reasonable under New York City Administrative Code § 8-502(f), does New York apply the standards set forth in Farrar v. Hobby, 506 U.S. at 114-15, 113 S.Ct. 566, 121 L.Ed.2d 494, i.e., (a) that “the most critical factor ... is the degree of success,” and (b) that when a party is awarded nominal damages, “the only reasonable fee is usually no fee at all”?
2. If the Farrar standard does not apply, what standard should a court'use to determine what constitutes a reasonable fee award for a prevailing party who has received only nominal damages?
3. If the Farrar standard applies, does Administrative Code § 8-502(f) authorize a fee award to a prevailing plaintiff who receives only nominal damages but whose lawsuit served a significant public purpose?

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