3 N.Y.3d 421 (2004)

The standard articulated in Farrar v. Hobby regarding attorney’s fees in federal civil rights cases where only nominal damages are awarded also applies to attorney’s fee claims under the New York City Human Rights Law.

Summary

Plaintiffs, preoperative transsexuals, sued Toys “R” Us for harassment under the New York City Human Rights Law, seeking substantial damages and injunctive relief. The jury found in their favor but awarded only $1 in damages to each plaintiff. Plaintiffs then sought attorney’s fees of approximately $206,000. The District Court, applying the Farrar v. Hobby standard, awarded $193,551 in fees, finding the case served a significant public purpose. The Second Circuit certified questions to the New York Court of Appeals regarding the applicability of the Farrar standard. The Court of Appeals held that the Farrar standard does apply but that the case could potentially fall within the “significant public purpose” exception, leaving the final determination to the Second Circuit.

Facts

Three plaintiffs, identifying as preoperative transsexuals, alleged harassment by Toys “R” Us employees while shopping in December 2000. They filed suit, claiming violations of the New York City Human Rights Law, which prohibits discrimination in public accommodation. They sought significant compensatory and punitive damages, as well as attorney’s fees and injunctive relief. At trial, plaintiffs’ attorney requested substantial monetary damages but did not pursue injunctive relief.

Procedural History

The case proceeded to a nine-day jury trial in the District Court. The jury found in favor of the plaintiffs, determining that defendant’s employees violated their rights under the New York City Human Rights Law, but awarded only $1 in damages to each plaintiff. Plaintiffs applied for attorney’s fees, which the District Court granted in large part, applying the Farrar v. Hobby standard. Toys “R” Us appealed the attorney’s fee determination to the Second Circuit, which certified four questions to the New York Court of Appeals.

Issue(s)

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, 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?
4. If New York recognizes `service of a significant public purpose’ as a factor warranting an attorney’s fee award to a plaintiff recovering only nominal damages, would a plaintiff who is the first to secure a favorable jury verdict on a claim of unlawful discrimination against transsexuals in public accommodation be entitled to a fee award even though the law’s prohibition of discrimination against transsexuals in employment has previously been recognized?

Holding

1. Yes, because the attorney’s fee provision in the New York City Human Rights Law is textually indistinguishable from the federal statutes interpreted in Farrar, and there’s no indication in the legislative history that a different standard should apply.
2. N/A, as the first question was answered in the affirmative.
3. Yes, because the Farrar standard allows for fee awards in nominal damages cases where the lawsuit served a significant public purpose.
4. Yes, because it cannot be said as a matter of law that a court would have abused its discretion in determining that the case served a significant public purpose, given the uncertain state of the law at the time the action was commenced.

Court’s Reasoning

The Court reasoned that because the attorney’s fee provision in the New York City Human Rights Law is nearly identical to comparable federal civil rights statutes, it should be interpreted consistently with federal precedent. The Court cited the general practice of interpreting state and local civil rights statutes in line with federal counterparts when they are substantively and textually similar. It acknowledged the Farrar standard, which holds that while a plaintiff who recovers only nominal damages is still a prevailing party, an attorney’s fee award is usually inappropriate unless the litigation served a significant public purpose. The Court rejected the plaintiffs’ argument that the legislative history of the local law mandated a different, broader interpretation, finding no specific intent to deviate from the federal standard. The Court further stated that even though some lower courts had previously held that transsexuals were protected under the law, this case could still have served a significant public purpose by clarifying the scope of the law and educating the public. The dissent argued that the legal principle was not novel, and therefore did not serve a significant public purpose.