Moriarty, Thomas J. v. Svec, James F.

In the
United States Court of Appeals
For the Seventh Circuit
Nos. 99-4266 & 99-4285
Thomas J. Moriarty, Trustee on behalf of the
Trustees of the Local Union No. 727, I.B.T.
Pension Trust, and the Trustees of the
Teamsters Local Union No. 727 Health
and Welfare Trust,
Plaintiff-Appellee/Cross-Appellant,
v.
James F. Svec, individually and d/b/a Svec & Sons
Funeral Home and West Suburban Livery,
Defendant-Appellant/Cross-Appellee.
Appeals from the United States District Court
for the Northern District of Illinois, Eastern Division.
No. 96 C 7392--George W. Lindberg, Judge.
Argued October 24, 2000--Decided November 27, 2000
Before Flaum, Chief Judge, and Manion and Evans,
Circuit Judges.
Flaum, Chief Judge. In this successive appeal,
James F. Svec, now a half-owner of Svec & Sons
Funeral Home ("Home") and majority owner of West
Suburban Livery ("WSL"), two sole
proprietorships, challenges the district court’s
determination that Home owes contributions on his
behalf to a pension fund and a health and welfare
fund, both of which have plaintiff Thomas J.
Moriarty on their respective boards of trustees.
In addition, both James and Moriarty appeal the
amount of attorney’s fees awarded to Moriarty.
For the reasons stated herein, we vacate and
remand for further consideration.
I. Background
The facts of this dispute that occurred prior
to 1999 are recounted in the first decision
regarding this case, Moriarty v. Svec, 164 F.3d
323 (7th Cir. 1998), and will be restated here
only to the extent necessary. James’s father
Elmer was the sole owner of Home and half-owner
of WSL until his death on June 29, 1987. James
owned the other half of WSL and worked as a
funeral director for Home. Home, as part of the
Funeral Directors Services Association of Greater
Chicago ("FDSA"), was bound by a collective
bargaining agreement ("CBA"). The CBA required
Home to make contributions on behalf of its
employees, including funeral directors, to a
pension fund and a health and welfare fund until
the end of 1995, when James caused Home to
withdraw from the FDSA. In 1997, after an audit
of Home and WSL, Moriarty sued on behalf of these
funds to recover contributions that WSL allegedly
owed on behalf of its employees ("Claim I") and
Home supposedly owed on behalf of James ("Claim
II"). Moriarty employed (and continues to employ)
the law firm of Jacob, Burns, Orlove, Stanton &
Hernandez ("Jacob, Burns") to litigate against
James. Moriarty acknowledges that under the CBA
contributions are not required for principal
owners. After some preliminary investigation,
Moriarty believed that James became the principal
owner of Home on April 15, 1993. Moriarty then
sought contributions in the amounts of $17,802.50
for Claim I for the period from October 1993 to
December 1995 and $32,727.00 for Claim II for the
period from January 1987 to April 1993, for a
total of $50,529.50.
James argued that Home did not owe
contributions on his behalf because he was a
principal owner of Home. James also claimed that
WSL was not a signatory to the CBA and so no
contributions were owed for its employees. The
district court decided in favor of Moriarty on
February 23, 1998. In its first decision in this
case, the district court held that the CBA is
unambiguous and that James was an employee of
Home for purposes of the CBA, regardless of his
ownership status, because he is a funeral
director. Thus, Home owed contributions on his
behalf. The lower court also used the "single
employer" doctrine to find that WSL and Home were
a single organization for purposes of the CBA.
Because Home was bound by the CBA, WSL was as
well and so contributions were owed for WSL’s
employees.
The district court also awarded attorney’s fees,
as required by the Employee Retirement Income
Security Act ("ERISA"), 29 U.S.C. sec.
1132(g)(2)(D), in cases where a plan fiduciary
successfully recovers delinquent contributions.
Moriarty requested hourly rates of $225 and $200
for Jacob, Burns, which claimed its rates were
depressed due to the firm’s dedication to the
labor movement. Moriarty apparently did not
inform the district court of the rate Jacob,
Burns actually charged. James challenged these
rates, but likewise did not submit evidence of
Jacob, Burns’s actual billing rates to the court.
The district court used the rates requested by
Moriarty in entering a judgment that included
$120,928.48 in attorney’s fees.
James appealed. This court rejected James’s
claim that the National Labor Relations Board
("NLRB") has exclusive jurisdiction to determine
whether Home and WSL should be treated as a
single employer and affirmed the district court’s
holding that WSL and Home should be considered a
single organization for purposes of the CBA. 164
F.3d at 332-35. However, the lower court’s
holding that the CBA is unambiguous was reversed,
and we remanded to the district court to receive
extrinsic evidence on how the term "employee" in
the CBA should be interpreted. Id. at 329-32.
Regarding attorney’s fees, the opinion notes
James’s objections and states "While we realize
that this award may have to be adjusted on remand
to reflect any additional proceedings, we see no
error in any of the cost and fee calculations the
court has already ordered." Id. at 327 n.3.
On remand, the district court found that the
term "employee" in the CBA excludes principal
owners from its definition. The court further
found that James became a principal owner of Home
on June 29, 1987, and so Moriarty could not
recover for Claim II after that date. However,
the court ruled in Moriarty’s favor on Claim II
for the period from January 1, 1987 to June 29,
1987. James argued that he was not an employee
during this truncated time period, claiming that
the single employer doctrine and the Labor
Management Relations Act ("LMRA"), which excludes
the children of employers from its definition of
"employee," 29 U.S.C. sec. 152(3), should be used
to interpret the CBA. However, the district court
rejected these contentions. Because Moriarty’s
success on Claim II covered a much shorter period
of time than it did after the district court’s
first decision, the court reduced Moriarty’s
recovery on this claim from $32,727.00 to
$2,389.00.
Moriarty requested attorney’s fees for the
period following the district court’s first
decision, while James asked that the court reduce
the fees Moriarty had already been awarded and
challenged Moriarty’s request for additional
fees. The district court used the date of its
first decision to divide the case into two
phases: the first from August 1995 until February
23, 1998 ("Phase I"), and the second from
February 24, 1998 until the present ("Phase II").
James argued that the district court’s prior
Phase I award, which was based on Moriarty
recovering over $32,000 for Claim II, should be
reduced to reflect Moriarty’s lack of success.
The district court agreed and divided the Phase
I award in half, with one half representing the
time spent on Claim I and the other half
representing the time spent on Claim II. The
court then reduced the amount of the Phase I
recovery on Claim II to ten percent, in order to
reflect Moriarty’s "extremely limited success" on
this claim. Thus, the district court awarded
Moriarty attorney’s fees of $66,511.32 for Phase
I, or fifty-five percent of the original award.
Moriarty requested 418.7 hours of attorney time
at rates of $315 and $345 for Phase II. James,
now armed with the knowledge that Jacob, Burns
actually charged Moriarty $165, challenged
Moriarty’s request on a variety of grounds. James
also produced evidence that two other firms that
prosecute ERISA collection cases for unions
charge $160. The district court decided that $165
was the market rate for prosecuting ERISA
collection actions, and based its award on that
amount. The court also stated that Moriarty was
not entitled to time spent during Phase II
litigating the issue of when James became the
Funeral Home’s owner because James "prevailed" on
these "claims" rather than Moriarty. The court
then awarded $60,000 for Phase II, indicating
that the court credited Jacob, Burns with 363.6
hours. Both parties appeal the attorney’s fee
awards, and James also appeals the finding that
Home is liable on Claim II.
II. Discussion
A. Home’s Contributions on Behalf of James
James has two arguments as to why he was not an
employee of Home during the first half of
1987./1 The first is that the definition of
employee used in LMRA, which excludes the
children of employers, should be used to
interpret the CBA. The second is that judicial
estoppel requires that the single employer
doctrine be used to determine whether he was a
principal owner of the Home/WSL combination.
1. LMRA definition.
The LMRA provides that, for purposes of
determining an appropriate bargaining unit "any
individual employed by his parent or spouse" is
not included within the definition of "employee."
29 U.S.C. sec. 152(3). ERISA’s definition of
employee is "any individual employed by an
employer." 29 U.S.C. sec. 1002(6). James claims
that LMRA’s definition of "employee" should be
used to interpret the CBA rather than ERISA’s
because ERISA was not passed until well after the
trust agreements creating the funds were formed,
which was in 1961 and 1963. The district court
relied on the ERISA definition and the CBA’s
explicit exclusion of trainees but not children
of employers in determining that such children
were employees on whose behalf contributions are
owed. We review the district court’s
interpretation of pension plan terms de novo.
Moriarty, 164 F.3d at 330.
We agree with the district court that the
definition contained in 29 U.S.C. sec. 152(3)
should not be used to interpret the CBA. Even
assuming without deciding that LMRA rather than
ERISA should be used to interpret the CBA,
James’s argument that he is not an employee
because he was Elmer’s son would not succeed.
Within LMRA itself, the definition of "employee"
is broader than that contained in sec. 152(3)
when determining whether an employer may make
payments to workers by means of a trust fund
under sec. 186(c)(5). See Reiherzer v. Shannon,
581 F.2d 1266, 1276 (7th Cir. 1978), abrogated in
other part by Black v. TIC Inv. Corp., 900 F.2d
112 (7th Cir. 1990). For example, retired workers
are not "employees" for purposes of sec. 152(3)
but are "employees" under sec. 186(c)(5). See
Allied Chem. & Alkali Workers of Am. v.
Pittsburgh Plate Glass Co., 404 U.S. 157, 170
(1971). The portion of the CBA about which James
is arguing concerns a trust fund, and so the
broader definition of sec. 186(c)(5) should be
used to interpret the CBA rather than sec.
152(3). Whether children of employers would be
considered "employees" for purposes of sec.
186(c)(5) is unclear. Thus, LMRA does not support
James’s construction of "employee" in the CBA.
2. Judicial estoppel.
The doctrine of judicial estoppel provides that
when a party prevails on one legal or factual
ground in a lawsuit, that party cannot later
repudiate that ground in further litigation based
on the same underlying facts. See Menominee
Indian Tribe of Wisc. v. Thompson, 161 F.3d 449,
454 (7th Cir. 1998); McNamara v. City of Chicago,
138 F.3d 1219, 1225 (7th Cir. 1998). Moriarty
prevailed on Claim I by using the "single
employer" doctrine, which provides that when two
entities/2 are sufficiently integrated these
will be treated as a single entity for certain
purposes. See Moriarty, 164 F.3d at 332. Moriarty
successfully argued that Home and WSL are a
single organization such that the employees of
WSL would be considered the employees of Home for
purposes of contributions to the funds under the
CBA. Thus, James is correct that Moriarty is now
estopped from arguing that the single employer
doctrine cannot be applied in determining whether
James is an employee of Home.
Both James and Moriarty agree that a "principal
owner" rule applies to interpret the CBA, under
which those who work at one of the firms within
the FDSA are not considered employees for
purposes of the CBA if they own a certain
percentage of the firm. Because of his half-
ownership in WSL, James could not have been
considered an employee of WSL under the principal
owner rule. In the current litigation, employees
of WSL and Home are considered to be the
employees of a combined Home/WSL organization for
purposes of the contributions required under the
CBA. A nominal employee of Home/WSL is entitled
to show that his or her ownership of WSL or Home
translates to sufficient ownership of the
Home/WSL organization such that the principal
owner rule applies and he or she is not
considered an employee for purposes of the CBA.
Thus, the lower court erred in not taking account
of James’s partial ownership of this combined
Home/WSL organization through his ownership of
WSL in determining whether he is an employee of
the Home part of this combined entity such that
Home owes contributions on his behalf.
However, two factual questions prevent this
court from determining whether James should
prevail on Claim II. The first involves the
percentage of the Home/WSL combination that James
owned. James claims that because he owned half of
WSL and there are two entities in this
combination, James owned one quarter of Home/WSL
during the relevant time period. However, this is
not necessarily correct; WSL may have been much
smaller than Home, such that James’s half-
ownership of WSL amounted to owning only a tiny
fraction of Home/WSL. We remand to the district
court to determine the relative sizes of Home and
WSL during the first half of 1987 and thus what
percentage of Home/WSL James owned by his half-
ownership of WSL. In calculating these sizes, the
district court should be guided by the annual
revenues of Home and WSL, which is what the NLRB
uses in its applications of the single employer
doctrine. See Goodman Investment Co., 292
N.L.R.B. 340, 347-48 (1989). The second factual
question concerns what percentage of ownership is
necessary before James is considered a principal
owner under the CBA. James claims that ten
percent ownership is sufficient, but Moriarty has
an opportunity on remand to show that this figure
is incorrect.
B. Attorney’s Fees
Both parties challenge the amount of attorney’s
fees awarded to Moriarty in this case. ERISA
provides for a mandatory award of reasonable
attorney’s fees when a plan fiduciary prevails in
an action to collect delinquent contributions. 29
U.S.C. sec. 1132(g)(2)(D). A district court
generally has wide discretion in determining a
reasonable attorney’s fee award, and we review
only for abuse. See Hensley v. Eckerhart, 461
U.S. 424, 437 (1983). However, when fees are
adjusted because of a principle of law our review
is de novo. See Jaffee v. Redmond, 142 F.3d 409,
412-13 (7th Cir. 1998).
1. Phase I.
James claims that the approximately $66,000
awarded to Moriarty for Phase I is unreasonable.
Moriarty claims that the lower court made legal
errors in reducing the Phase I award from
approximately $120,000 to $66,000 on remand
because of Moriarty’s reduced success on Claim
II. We conclude that the district court did not
err in determining the amount of the Phase I
award, though an adjustment may have to be made
depending on the resolution of Claim II on
remand.
James’s argument can be disposed of quickly.
James raised certain objections to the Phase I
award when this case first appeared before this
court./3 164 F.3d at 327 n.3. We rejected his
contentions, and since James has not provided any
good reason for reconsidering our determination,
these objections are barred by the law of the
case doctrine. See Blue Cross and Blue Shield
United of Wis. v. Marshfield Clinic, 152 F.3d
588, 591 (7th Cir. 1998). Any of James’s
remaining claims against the Phase I award should
have been brought during the prior appeal, and
James has forfeited these by failing to do so.
See Gibson v. West, 201 F.3d 990, 992 (7th Cir.
2000).
Some of Moriarty’s objections require more
sustained analysis. Moriarty’s first claim is
that any reduction in the Phase I fees is
prohibited by language in the first opinion of
this court, which states that "we see no error in
any of the cost and fee calculations the
[district] court has already ordered." 164 F.3d
at 327 n.3. However, immediately preceding this
phrase the opinion states that "we realize that
this award may have to be adjusted on remand to
reflect any additional proceedings." Id. This
language plainly demonstrates that we did not
freeze the amount of the Phase I award but rather
explicitly invited the district court to adjust
it in accord with subsequent proceedings. After
conducting further proceedings, the lower court
determined that Moriarty’s success on Claim II
was much less than when it had made the award,
and so adjusted the award accordingly. The
district court did not violate the law of the
case in making such an adjustment.
Moriarty next argues that Claim I and Claim II
are intertwined, such that the attorney’s fees
awarded for the whole action should not have been
reduced because of a lack of success regarding
Claim II. Moriarty claims that Jaffee, 142 F.3d
at 414, supports his argument and that we should
review the district court’s decision de novo, but
he is incorrect on both counts and his argument
fails for two independent reasons.
First, Claim I and Claim II are not related for
purposes of Jaffee or Hensley, 461 U.S. at 435.
Jaffee holds that where a party presents multiple
claims for relief based on a common core of facts
or related legal theories, no legal bar exists
against awarding attorney’s fees for time spent
on rejected claims. 142 F.3d at 413. As presented
by Moriarty, Claim I relies on the facts that
Home is covered by the CBA, WSL and Home are
integrated enterprises, and the legal theory that
WSL and Home are a single employer. Claim II
relies on the facts that James worked at Home as
a funeral director, the CBA requires
contributions on behalf of Home employees, and
the mixed question of law and fact as to whether
James was a principal owner of Home through his
ownership of WSL. The mere circumstance that both
of these claims depend on Home being covered by
the CBA is not sufficient to make these
interrelated. No dispute existed regarding Claim
I as to whether Home was covered by the CBA. For
Claim II, the main questions were whether the
principal owner rule, which was not an issue in
Claim I, should be applied to the CBA and when
James became such an owner. Thus, none of the
time spent litigating Claim II would have aided
Moriarty in prevailing on Claim I. Therefore,
these two claims are distinct, such that if
Moriarty loses on Claim II, no attorney’s fees
could be rewarded for that claim as a matter of
law. See Hensley, 461 U.S. at 434-35; Jaffee, 142
F.3d at 413. Because these two claims are
discrete, Moriarty cannot leverage his success on
Claim I into success on Claim II. Thus, since
Moriarty achieved significantly worse results
regarding Claim II on remand, the district court
did not abuse its discretion in reducing the
Phase I award for that claim.
Second, even if these two claims were related,
the district court did not rule as a matter of
law that attorney’s fees could not be awarded for
Claim II, as the lower court in Jaffee did, 142
F.3d at 413, but rather exercised its discretion
in reducing the attorney’s fees for Claim II.
Unlike in Jaffee, the district court here did in
fact award attorney’s fees to Moriarty for Claim
II. However, the district court exercised its
discretion in reducing the Phase I award because
of Moriarty’s limited success on that claim.
Where the prevailing party has achieved only
limited success, the standard lodestar method may
yield an excessive award and the district court
may reduce the lodestar result. See Hensley, 461
U.S. at 436.
Moriarty’s final argument is that James withheld
evidence of when he became the owner of Home,
causing the litigation to be prolonged
unnecessarily. Moriarty claims that the Phase I
award should not have been reduced because of
James’s tactics. However, the parties fiercely
dispute whether Moriarty knew or should have
known that James became the owner of Home on June
29, 1987. James claims that he gave Moriarty
copies of Illinois state court probate documents,
which conclusively establish when James became
the owner of Home, and that Moriarty incurred
fees attempting an impermissible collateral
attack on the probate court’s judgment. Such
contested issues of facts are left to the
district court. The district court’s reduction in
the Phase I award indicates that it found that
James did not improperly prolong the litigation,
and this finding is not clearly erroneous. In
sum, the district court did not abuse its
discretion in reducing the Phase I award to
reflect Moriarty’s lack of success on Claim II.
All of the challenges of both parties to the
Phase I award have been considered and rejected.
Any objections to this award that we have not
considered are forfeited. On remand, absent a
reason that justifies changing the law of the
case, the Phase I award should not be disturbed
if Moriarty prevails on Claim II. If James
prevails on Claim II, then, as noted above,
Moriarty cannot recover attorney’s fees for Claim
II as a matter of law, and the district court
must reduce the Phase I award accordingly.
2. Phase II.
Both parties bring myriad challenges to the
Phase II attorney’s fee order. The district
court’s order awarding Phase II fees is terse,
but provides sufficient explanation for most of
the lower court’s determinations. We find no
error in the explanations that are provided in
this order. However, because we cannot be certain
that the district court considered specific
significant objections made by James, we vacate
the award and remand to the district court. See
Hensley, 461 U.S. at 437.
a) Phase II attorney’s fee order.
The district court entered an order regarding
attorney’s fees on October 29, 1999 that dealt
with the Phase II award. In this order, the court
stated that the evidence the parties provided to
it shows that $165 is the market rate for
"attorneys prosecuting ERISA collection actions."
The court also stated that Moriarty could not
recover the time he spent during Phase II
litigating over when James became Home’s owner,
because James "prevailed" on that "claim."
Moriarty argues that $165 (the rate Jacob, Burns
actually charged him) is too low because the
district court awarded Moriarty a higher rate for
Phase I and Jacob, Burns artificially deflates
its rate to favor the labor movement. He also
claims that the lower court erred by focusing on
only the plaintiff’s side of ERISA litigation
rather than defense and plaintiff’s attorneys as
a whole. Finally, he contends that the hours he
requested should not have been reduced because of
whatever success James may have had on Claim II.
Given the evidence before it, the district
court did not abuse its discretion in deciding
that $165 is the hourly rate for Jacob, Burns’s
work. James produced evidence that two other
firms charge multiemployer union pension plans
$160 per hour. More importantly, Jacob, Burns
charges between $150 and $200 for all of its
clients, and charged Moriarty a rate of $165. The
lawyer’s regular rate is strongly presumed to be
the market rate for his or her services. See
Central States Pension Fund v. Central Cartage
Co., 76 F.3d 114, 116-17 (7th Cir. 1996); Gusman
v. Unisys Corp., 986 F.2d 1146, 1150 (7th Cir.
1993).
Jacob, Burns’s claim that it and the two other
union firms charge less than their market rate is
unavailing. If an attorney charges most clients
a high fee, and then represents a client pro bono
or for a reduced fee, that attorney’s presumable
market rate in the pro bono or reduced-fee case
is still the attorney’s normal high rate. See
Central Cartage, 76 F.3d at 117, Gusman, 986 F.2d
at 1150-51. Jacob, Burns’s case differs because
it does not have a high, regular rate from which
it deviates to make gifts to unions. James
produced evidence that Jacob, Burns’s rate to all
clients in the various litigation that it
undertakes is between $150 and $200 per hour;
this is the firm’s presumptive market rate. See
Central Cartage, 76 F.3d at 117 ("[T]he union’s
lawyer had a low rate for everything; that normal
rate, we held, is the market rate."). James also
produced the similar rates of two other firms
that engage in the same kinds of litigation as
Jacob, Burns, further supporting his claim that
Jacob, Burns’s market rate is $165. Moriarty
cites the claims of Jacob, Burns and the two
other union firms that all of their market rates
are depressed because of their dedication to the
labor movement. However, the district court was
not required to credit these assertions in the
face of their actual market rates for all of
their clients.
The district court’s award of lower rates for
Phase II than Phase I was likewise not an abuse
of discretion. James produced more evidence for
the Phase II attorney’s fee hearing, including
Jacob, Burns’s actual billing rates and the rates
of the other two union ERISA firms, than he had
done at the Phase I hearing. The district court
could rely on such new evidence in determining
that Jacob, Burns’s rate was actually lower than
what the court had awarded for Phase I.
Moriarty’s claim that the district court erred
by focusing only on firms that prosecute ERISA
collection actions is similarly unsuccessful. The
district court’s discretion in determining what
is a reasonable attorney’s fee applies to its
determination of what constitutes a market.
Attorneys who specialize in a specific area of
litigation may be paid more or less than lawyers
who work in related areas of the law. Similarly,
certain kinds of litigation defense attorneys may
make more than plaintiff’s lawyers or vice versa.
Basing fee awards on such distinctions, as long
as these are reasonable and supported by the
record, are left to the sound discretion of the
district court. Given the evidence presented to
the district court, we do not find an abuse of
discretion in determining that Jacob, Burns was
in a market composed of firms prosecuting ERISA
collection actions.
We also reject Moriarty’s final objection, that
the district court erred by reducing the
attorney’s fees because James "prevailed" on the
"claims" of when James became Home’s owner. While
the fee order’s language is imprecise, the
district court did not abuse its discretion. At
the time of this order, Moriarty had been awarded
judgment on Claim II for approximately $2,400.
This award means that Moriarty was still the
prevailing party/4 on Claim II, see Farrar v.
Hobby, 506 U.S. 103, 112 (1992) (holding that a
plaintiff who wins any measure of damages is a
prevailing party for the purposes of fee-shifting
statutes) and was entitled to reasonable fees
under 29 U.S.C. sec. 1132(g)(2)(D). We do not
read the district court’s order to state that
Moriarty was not a prevailing party on Claim II
at the time of the order. The district court
reduced the hours claimed by Moriarty from 418.7
to 363.6, a decrease of approximately only
thirteen percent. Given that the district court
apportioned Jacob, Burns’s time evenly between
Claims I and II in reducing the Phase I award,
and that the district court could not have
awarded any hours on Claim II if James was the
prevailing party (as explained above), the
district court was only reducing the hours
claimed by Moriarty because of a lack of success
rather than stating that Moriarty had not
prevailed on Claim II. The district court did not
abuse its discretion in making such a reduction
given Moriarty’s limited success on Claim II at
the time of the fee order.
b) Settlement offer.
James claims that he made a settlement offer of
$43,000 on December 30, 1997./5 Moriarty
contends that James did not comply with the
technical requirements of Fed.R.Civ. P. 68, but
appears to acknowledge that James did in fact
make a settlement offer for $43,000 that was
rejected by Moriarty. The district court’s Phase
II fee order does not mention this attempted
settlement.
Substantial settlement offers should be
considered by the district court as a factor in
determining an award of reasonable attorney’s
fees, even where Rule 68 does not apply. See
Sheppard v. Riverview Nursing Center, Inc., 88
F.3d 1332, 1337 (4th Cir. 1996). Attorney’s fees
accumulated after a party rejects a substantial
offer provide minimal benefit to the prevailing
party, and thus a reasonable attorney’s fee may
be less than the lodestar calculation. See Marek
v. Chesny, 473 U.S. 1, 11 (1985). Determining
whether an offer is substantial is left in the
first instance to the discretion of the district
court. Nevertheless, an offer is substantial if,
as in this case, the offered amount appears to be
roughly equal to or more than the total damages
recovered by the prevailing party. In such
circumstances, a district court should reflect on
whether to award only a percentage (including
zero percent) of the attorney’s fees that were
incurred after the date of the settlement offer.
The district court must only consider the
substantial settlement offer; it need not reduce
the lodestar calculation because of the offer. We
stress that a substantial offer is only one of
the factors that a district court should evaluate
in making an attorney’s fee award, and (absent an
offer complying with Rule 68 where that Rule
applies) is not necessarily determinative. The
district court may evaluate the settlement offer
and decide that under the circumstances of a
particular case an unadjusted lodestar method
still provides a reasonable attorney’s fee.
However, because the Phase II fee order does not
mention James’s offer and so we cannot determine
whether it was a factor in the award, we remand
to the district court to consider the settlement
offer in determining a reasonable Phase II
attorney’s fee. See Fleming v. County of Kane,
898 F.2d 553, 563-64 (7th Cir. 1990).
c) Proportionality.
James claims that the Phase II fees awarded are
unreasonable because these are disproportionately
large compared to the amount of damages claimed
and the amount of damages actually recovered by
Moriarty. We have not formulated any mechanical
rules requiring that a reasonable attorney’s fee
be no greater than some multiple of the damages
claimed or recovered. See Connolly v. National
Sch. Bus Serv., Inc., 177 F.3d 593, 597 (7th Cir.
1998). However, proportionality concerns are a
factor in determining what a reasonable
attorney’s fee is. See City of Riverside v.
Rivera, 477 U.S. 561, 585-86 & n.3 (1986)
(opinion of Powell, J.); Perez v. Z Frank
Oldsmobile, Inc., 223 F.3d 617, 625-26 (7th Cir.
2000); Cole v. Wodziak, 169 F.3d 486, 488 (7th
Cir. 1999).
The Phase II fee order does not provide any
indication that proportionality concerns were
considered in determining the attorney’s fees
awarded in this case, despite the size of the
total amount of attorney’s fees compared to the
amount of damages claimed and the amount of
damages recovered by Moriarty. While such
disproportionality is not determinative and this
court has approved attorney’s fees many times the
amount of damages recovered, see Connolly, 177
F.3d at 597, the district court’s fee order
should evidence increased reflection before
awarding attorney’s fees that are large multiples
of the damages recovered or multiples of the
damages claimed./6 Because the Phase II fee
order does not provide any indication that these
concerns were factored into the attorney’s fee
award, we remand for such evaluation. See
Fleming, 898 F.2d at 563-64. On remand, the
district court should consider the amount of
attorney’s fees already awarded in Phase I in
determining a reasonable amount for Phase II,
though the Phase I award should not be adjusted
except as aforementioned. We emphasize that any
disproportionality that may be present in this
case does not mean that the amount of attorney’s
fees awarded for Phase II was an abuse of
discretion, but only that the district court
should consider such proportionality factors in
exercising its discretion in fashioning a
reasonable attorney’s fee.
d) James’s other objections.
James raises a number of less significant
objections to the district court’s fee order,
such as that Jacob, Burns’s time entries are
vague or that Jacob, Burns billed too much time
working on the appeal in light of the firm’s
experience. These issues are left to the sound
discretion of the trial court and, unlike in the
case of substantial settlement offers or
disproportionality, the district court need not
demonstrate in a fee order that it has considered
each individual objection. See EEOC v. AIC Sec.
Investigations, Ltd., 55 F.3d 1276, 1288 (7th
Cir. 1995). After a review of the record, we find
that the district court acted within its
discretion in rejecting James’s claims on these
issues.
As with Phase I, we have adjudicated all of the
parties’ objections to the Phase II fee award.
The Phase II fee award may be adjusted downward
after the district court considers James’s
settlement offer and the possible
disproportionality of the award. In addition, if
James prevails on Claim II, the district court
must ensure that the Phase II award compensates
Moriarty only for the time spent on Claim I. Any
reason for changing the Phase II award besides
these three is either forfeited or barred by the
law of the case.
III. Conclusion
Because of judicial estoppel, the single
employer doctrine must be used to determine
whether James was a principal owner of the
Home/WSL organization during the first half of
1987 for purposes of Claim II. The district court
did not abuse its discretion in awarding the
Phase I attorney’s fees, and on remand the Phase
I fees should be adjusted only if James prevails
on Claim II. The fee order for Phase II does not
establish that certain important factors, namely,
a substantial settlement offer and the possible
disproportionality of the attorney’s fee award to
both the damages claimed and the damages
recovered, were considered, and we remand to the
district court to consider James’s contentions
and Moriarty’s replies on these issues in
determining a reasonable Phase II attorney’s fee.
In addition, as with the Phase I award, the Phase
II award must be adjusted if James prevails on
Claim II. For the reasons stated herein, we Vacate
the decision of the district court and Remand for
further proceedings consistent with this opinion.
/1 In addition, James continues to argue that
exclusive jurisdiction to decide Claim I is
vested in the NLRB. James does not bring any new
theories, but continues to argue the same ones
that we considered in the first case. We rejected
James’s argument in our initial decision, 164
F.3d at 334, and James’s attempt to resurrect it
without good reason is barred by the law of the
case. See Blue Cross and Blue Shield United of
Wis. v. Marshfield Clinic, 152 F.3d 588, 591 (7th
Cir. 1998).
/2 We note, as we did in our first decision, 164
F.3d at 331 n.7, that Home and WSL are sole
proprietorships, and are not legal entities
distinct from their owner, James, in the way that
properly formed corporations are. We use the word
"entity" when explaining the single employer
doctrine only because this is the language in
which the doctrine is normally formulated.
/3 These objections were that the district court
incorrectly awarded Moriarty attorney’s fees for:
time spent preparing for a trial that did not
occur; pursuing claims against James’s sister
Sharon who was eventually dropped from the
lawsuit; awarding a Jacob, Burns associate the
same amount as more experienced attorneys.
/4 Unlike many other fee-shifting statutes, 29
U.S.C. sec. 1132(g)(2) does not use the term
"prevailing party," but rather speaks of when
"judgment in favor of the plan is awarded."
Because Congress used the latter language only to
specify that a pension plan, and not a
participant or beneficiary, can take advantage of
29 U.S.C. sec. 1132(g)(2), case law regarding
prevailing parties is applicable to this section
of ERISA.
/5 While James refers to this offer in his brief as
a Fed.R.Civ.P. 68 offer of judgment, whether he
intends to claim that his settlement offer
complied with that Rule is unclear. Further, he
does not develop an argument based on Rule 68,
and thus we consider his objection to the
district court’s fee order as involving only the
lower court’s apparent failure to consider a
substantial offer of settlement.
/6 Where a statute provides for certain enhancements
(or reductions) to damages, as 29 U.S.C. sec.
1132(g)(2) does, the district court should apply
these adjustments to the damages claimed and the
damages recovered in deciding whether to reduce
attorney’s fees because of disproportionality.