Flaa v. Manor Country Club

BARBERA, Judge. We are asked in this case to review the award of attorney’s fees in a discrimination case filed more than ten years ago, with the Montgomery County Office of Human Rights (“MCOHR”), 1 by appellant, Betty Flaa, against appellee, Man- or Country Club. The award of attorney’s fees has been the subject of two petitions for judicial review by the Circuit Court for Montgomery County, the latter of which is now before us. In her first petition for judicial review, appellant contested the decision of the Montgomery County Public Accommodation Panel of the MCOHR (“Panel”) to award her $3,000.00 in attorney’s fees.

The circuit court reversed that decision and remanded with instructions for the Panel to apply the appropriate factors set forth in the county code for calculating a reasonable fee award. The Panel issued its second award of attorney’s fees for $22,440.00, and appellant, still aggrieved, filed a second petition for judicial review. The court subsequently affirmed the Panel’s award of attorney’s fees. Appellant has appealed from the court’s order affirming that award of attorney’s fees.

She raises the following issue for our review: Whether the Montgomery County Circuit Court committed an error of law by affirming the Public Accommodations Panel’s Order and Opinion Awarding Attorney’s Fees, in which the Panel failed to apply the lodestar method in its calculation of attorney’s fees and costs. ⁴⁸⁷ Because we conclude that the Panel did not properly analyze the fee issue, we vacate the judgment of the circuit court affirming the Panel’s decision and remand the case for further proceedings consistent with this opinion. FACTS AND LEGAL PROCEEDINGS Inasmuch as the underlying facts giving rise to appellant’s discrimination claims against appellee are not the focus of this appeal, we shall not chronicle all of the details of those claims. We shall present only those facts necessary for context, and concentrate our attention upon the facts pertaining to appellant’s request for attorney’s fees. On December 23, 1993, appellant filed a marital status discrimination claim with the MCOHR.

She averred that appellee’s policies, which restricted access to and use of appel-lee’s golf course, were discriminatory on the basis of marital status and resulted in disparate treatment of her because of sex. 2 Appellant thereafter amended her claim to add a sex discrimination claim, asserting theories of disparate impact in the membership structure and hostile environment in appel-lee’s indoor restaurant, known as the Grill Room. At about the same time, appellant, with others, filed a complaint with the Office of the Attorney General of Maryland, identifying the same claims and setting forth the same legal theories as those alleged in the MCOHR complaint. After the Attorney’s General Office launched an investigation into appellant’s claims, appellee modified numerous club policies to avoid potential prosecution for unlawful discriminatory ⁴⁸⁸ practices. No formal charges were ever brought against appellee by the State.

On January 6, 1997, following an investigation, MCOHR found reasonable grounds to believe that appellee was a place of public accommodation and had violated Montgomery County Code, § 27-8 (1987) by engaging in unlawful discriminatory practices on the basis of marital status and gender. MCOHR referred the matter to the Office of Zoning and Administrative Hearings for a public hearing. After five postponements, the parties appeared before a hearing examiner on May 17, 1999, for the first day of what became a ten-day public hearing in which 33 witnesses testified and 158 exhibits were submitted as evidence. On September 30, 1999, the hearing examiner issued a 141-page Report and Recommendation to the Public Accommodation Panel of the MCOHR.

The report stated the hearing examiner’s findings that appellee was a place of public accommodation; that appellee had engaged in sex discrimination (disparate treatment) against appellant during the golf course incident; and that appellee had engaged in gender-based discriminatory practices, creating a hostile environment. The hearing examiner did not find that appellee’s practices had resulted in a disparate impact on women. The hearing examiner recommended the award to appellant of $1,000.00 in damages (the statutory limit), $120,481.00 in attorney’s fees, and $4,282.31 in expenses. Appellant filed a brief seeking modification by the Panel of the hearing examiner’s recommendation on the disparate impact claim.

Appellee filed a response to appellant’s request for modification, and separately requested that the Panel modify the hearing examiner’s recommendations with respect to jurisdiction and the hostile environment claim. On March 1, 2000, the Panel held a public hearing on the matter and allowed both parties to make oral arguments. Two months later, the Panel issued a Memorandum Opinion and Order adopting the hearing examiner’s finding that appel-lee was a place of public accommodation. The Panel also ⁴⁸⁹ adopted the hearing examiner’s finding that there had been an act of sex discrimination against appellant, namely the incident on the golf course in the spring of 1993.

See supra, note 1. The Panel, however, rejected the hearing examiner’s finding that appellee had engaged in sex discrimination by creating a hostile environment, concluding that such theories are reserved for employment cases. The Panel observed that, even assuming appellant could maintain a hostile environment claim in a public accommodation case, her claim still would have failed, because the facts she alleged fell short of creating a hostile environment. In its order dated May 8, 2000, the Panel declared that appellee was a place of public accommodation and had treated appellant differently based on her sex.

The Panel then granted the following equitable relief: “[Appellee] is ordered to cease and desist from all activities and conduct that discriminate against women”; “[appellee] is ordered to establish a formal and written policy against discrimination against women in the use of any facilities, services and activities of the club”; “[appellee] is ordered to provide for a confidential and unbiased procedure for filing complaints of discrimination”; and “[appellee] is ordered to provide reasonable access for [MCOHR] staff to monitor compliance with this order.” The Panel awarded appellant $750.00 in damages and $3,000.00 in attorney’s fees, which was a significant reduction of the hearing examiner’s recommended attorney’s fee award of $120,481.00. Both parties filed petitions for judicial review in the circuit court, and the parties presented oral argument on January 19, 2001. By order entered on August 10, 2001, the court affirmed the Panel’s decision on all points except its award of attorney’s fees. The court concluded that the Panel erred when it calculated attorney’s fees by simply multiplying $750.00, the damages awarded, by four, to equal an award of $3,000.00.

The court stated: “There exists no authority for the [Panel] to determine the amount of the attorney’s fees award to be a multiple of the amount of the damage award ⁴⁹⁰ given to [appellant].” The court stated that the Panel failed to apply the factors set forth in Montgomery County Code, § 27-7(k)(l) (1987) 3 and failed to refute the hearing examiner’s findings that supported his fee recommendation of $120,481.00. The court cited a bankruptcy case, Allright Mort. Co. v. Hill, 213 B.R. 943 (D.Md.1997). In that case, the United States District Court for the District of Maryland reversed an award of attorney’s fees because the bankruptcy court had calculated fees based on a cost-benefit analysis, which was tantamount to determining attorney’s fees based upon damages awarded to a plaintiff.

Pointing to the rationale of that decision, the court in the instant case noted in a footnote to its remand opinion that the Panel’s Chair had contemplated a cost-benefit analysis during oral argument. The court reversed the Panel’s decision and remanded the case with instructions for the Panel to consider the factors listed in § 27-7(k)(l) of the Montgomery County Code, as well as the degree of success in appellant’s pursuit of her claims in calculating attorney’s fees. The court added that appellant had prevailed on her claim that appellee was a place of public accommodation, which was a case of first impression in Maryland, and on her claim of sex discrimination, but appellant did not prevail on her claims of hostile environment and disparate ⁴⁹¹ impact. The court also noted that, because a prevailing plaintiff may recover fees for trial and appeal, the Panel should consider appellant’s claim for fees up to the present.

Pursuant to the court’s order, the Panel issued an order directing appellant to submit to the Panel an application for award of attorney’s fees that applied to the instant case the factors in § 27-7(k)(l) of the Montgomery County Code. Appellant duly filed an application for attorney’s fees that had accrued from May 3, 1993 to September 27, 2001. Appellee filed an opposition, arguing, inter alia, that appellant’s application was deficient because the time entries lacked specificity and bundled more than one activity per entry. 4 These deficiencies, appellee argued, precluded the Panel from identifying how much time counsel spent on her unsuccessful claims of disparate impact and hostile environment, and the complaint before the Office of the Attorney General. The Panel thereafter issued an undated memorandum order, listing its preliminary findings with respect to the factors in § 27 — 7(k)(l) of the Montgomery County Code, and stating that appellant was entitled to reasonable attorney’s fees for time spent litigating the jurisdictional question of whether appellee was a place of public accommodation.

The Panel instructed appellant to submit “a revised billing report indicating the estimated time spent only on the issue of determining [appellee] to be a place of public accommodation.” Appellant subsequently filed a revised billing report, which included time entries for 757.17 hours of work spent litigating the public accommodation issue, amounting to $131,476.10. In the same petition, appellant identified an additional 436.17 hours ($71,-044.04) in fees accrued while litigating the attorney’s fee award. Appellee filed an opposition, arguing that $131,476.10 was not a reasonable fee for litigating the jurisdictional issue, ⁴⁹² because that figure amounted to 70 percent of the total time counsel spent litigating the entire case. Appellee further argued that appellant’s time entries were still unbundled and unduly vague.

On October 10, 2002, the Panel issued an Order and Opinion Awarding Attorney’s Fees, in which the Panel addressed, preliminarily, issues of specificity and bundling of time entries. As for the specificity issue, the Panel stated: The Panel has scrutinized the time records involved and read the briefs of both parties, but cannot, with any degree of reliability, determine what tasks were accomplished related to which of the causes of action in this matter. We do not believe that [appellant] and her counsel have met their burden of proof to demonstrate to this Panel what time was spent on the issue of jurisdiction of the Commission. The Panel went on to state, with respect to bundling, that appellee demonstrated in its opposition how appellant’s application was “replete with examples of such bundled billings.” The Panel added: [I]t is not our responsibility to make subjective estimates as to how such entries should be allocated.

Moreover, the Panel is comprised of volunteers and does not have access to staff who could spend large amounts of time to attempt to make such estimates, even if the Panel thought it wise to attempt to do so, which it does not. For those reasons, we will make the rate percentage cuts in the final award. The Panel then addressed each of the factors in § 27-7(k)(l) of the Montgomery County Code. With respect to time and labor required, the Panel stated that clerical work and inefficient and redundant work had to be excluded from billable time.- The Panel determined that “the same task and research were performed by counsel multiple times.” The Panel also considered what a reasonable client would pay, stating that it could not fathom how any person, dealing with the facts alleged, could have decided that it was worth $250,000 or so to litigate these issues.

We believe that an attorney has a responsibil ⁴⁹³ ity to dissuade clients or potential clients from launching costly litigation, knowing that the other party will incur enormous defense costs, where the cost/benefit ratio of that litigation is low. In this case particularly, damages were capped under the statute. Rather, it is our decision on this issue that any reasonable client would not have been willing to spend more than $25,000 to pursue claims of the type made in this proceeding. Addressing the novelty and complexity of the case, the Panel credited appellant for successfully litigating the jurisdictional issue, which was a case of first impression in Maryland.

The Panel also pointed out that appellant had presented no evidence that counsel was precluded from other employment while litigating the instant case or that there were strict time limitations. Neither the Panel nor appellee contested the hourly rates used in calculating attorney’s fees; the Panel therefore deemed the rates reasonable. The Panel decided to make no adjustment relating to the skill required to litigate the case, the customary fee for similar cases, or whether the fee was fixed or contingent. Despite finding that lead counsel was experienced in this area of the law, the Panel declined to make an upward adjustment on that basis.

With respect to awards in similar cases, the Panel found little evidence on that point, but nonetheless described appellant’s request for fees as “excessive.” In addressing the factor of relative success of appellant’s case, the Panel stated: We found some of [appellant’s] major theories and alleged causes of action brought in this case to be without merit and therefore declined to follow the recommendations of the Hearing Examiner on those issues of law. Moreover, in awarding the monetary damages that we did, this Panel was well aware of the fact that there was one (and only one) proven instance of “discrimination.” We felt compelled by the statute to award injunctive relief, regardless of whether ⁴⁹⁴ we believed that there were systemic wrongs to be righted. As discussed above, only the argument and decision in favor of finding for the jurisdiction of the Commission was a major victory for [appellant]. The Panel declined to make an upward adjustment on the relative success factor.

The Panel concluded by stating that, based on its consideration of the factors set forth in § 27-7(k)(l) of the Montgomery County Code, appellant was entitled to an award of attorney’s fees in the amount of $22,440.00, reflecting 132 hours of work at a rate of $170.00 per hour. Appellant filed a petition for judicial review; appellee filed a response; and, seven months later, the parties appeared for a hearing on the matter. Ruling from the bench, the court affirmed the Panel’s award of attorney’s fees. Then, by order entered on June 30, 2003, the court specifically found that the Panel did not abuse its discretion or commit legal error in reaching its decision concerning appellant’s award of attorney’s fees.

The court determined that the Panel properly applied the § 27 — 7(k)(l) factors and that there was substantial evidence in the record to support the Panel’s decision. From that order, appellant filed the instant appeal. DISCUSSION Appellate review of the Panel’s decisions is governed by Montgomery County Code, § 2A-11 (1994, April 2002 Supp.), which provides: “Any party to the [administrative] proceeding in the circuit court may appeal from such decision to the appellate courts of Maryland pursuant to the applicable provisions of the Maryland Rules of Procedure.” Upon review of an administrative decision, we make our determination independent of the circuit court’s ruling. Mayer v. Montgomery County, 143 Md.App. 261, 270 , 794 A.2d 704 (2002).

We “proceedf ] directly to the review of the administrative decision itself.” Department of Health & Mental Hygiene v. Shrieves, 100 Md.App. 283, 303 , 641 A.2d 899 (1994). We are ⁴⁹⁵ “ ‘ “under no constraints in reversing an administrative decision which is premised solely upon an erroneous conclusion of law.”’” Mayer, 143 Md.App. at 271 , 794 A.2d 704 (citations omitted). Furthermore, a “ ‘reviewing court “must substitute its judgment for that of the agency if ... [its] interpretation of the applicable legal principles is different from that of the agency.” ’ ” Id. (citation omitted).

Appellant argues that the Panel committed legal error by failing to apply the so called lodestar analysis in calculating its award of attorney’s fees, and applying, instead,