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New Jersey Supreme Court to Review Enhanced Fee Rule

October 27, 2011 | Posted in : Contingency Fees / POF, Fee Award, Fee Award Factors, Fee Issues on Appeal, Fee Jurisprudence, Fee Shifting, Lodestar

A recent New Jersey Law Journal post, “N.J. High Court Mulls Federal Fee-Shifting Rule That Could Spell Doom for Rendinereports that the New Jersey Supreme Court on Tuesday took up whether to adopt a U.S. Supreme Court ruling that sharply curtails trial judges’ power to enhance attorney fees in cases that might have never been filed but for fee-shifting rules.  In two cases, Walker v. Giuffre and Humphries v. Powder Mill Shopping Center, the Appellate Division slashed enhanced fees under Perdue v. Kenny A. (pdf),which held that a trial judge may award such fees only in rare and extraordinary circumstances and not “on an impressionistic basis.”  If those ruling stand, they would eviscerate the doctrine of Rendine v. Pantzer, which allows judges to enhance fees if it is demonstrated that the attorney worked on a contingency-fee basis, there was a financial risk absorbed by the attorney, and there was some question about the relative likelihood of success.

In Walker, a consumer fraud case, the plaintiff’s lawyer asked the Court to reinstate a $99,000 legal fee on the plaintiff’s $650 recovery.  The appellate panel said Middlesex County Superior Court Judge Alexander Waugh failed to provide a sufficient analysis for his decision to enhance the plaintiffs counsel’s lodestar by 45 percent.  In that case, plaintiff Mary Walker purchased a new car at Route 22 Nissan in 2001.  The sales contract included a $140 vehicle registration fee that was $51.50 more than the Motor Vehicle Commission charges.  Waugh ruled for the plaintiff, awarding damages of $654.50.  Waugh rejected Nissan’s argument that no fees should be awarded to Walker’s attorneys since the case was over the same alleged practices in Cerbo v. Ford of Englewood and covered the same work.

In Humphries, a disability discrimination case, wheel-chair bound Bobbie Humphries alleged the parking lot did not have enough handicap parking spaces.  In a partial settlement, Power Mill agreed to fix the ramps and improve striping and signage for handicap spots and pay Humphries $2,500.  The parties left it up to the judge to decide the attorney fees for her lawyer, Edward Kopelson.  Judge Deanne Wilson held Humphries was a prevailing party and awarded $62,235 in fees plus an additional $12,448, a 20 percent enhancement of the lodestar. 

Walker’s lawyer on the Supreme Court appeal, Bruce Greenberg of Newark’s Lite DePalma Greenberg said the fee enhancement should be reinstated.  Greenberg told the justices they were faced with a stark decision.  “If Rendine is still good law, then Perdue is incompatible,” he said.  Greenberg said it would be wrong to dismiss Rendine because it is an incentive for attorneys to take on matters that are risky at the outset.  “Humphries is a good example of why enhancement is necessary.  Architectural relief is equitable.  Damages are rarely more than minimal, and plaintiffs are rarely able to afford counsel.”