The Ninth Circuit Court of Appeals held that a lower court did not abuse its discretion in awarding $697,971.80 in attorneys' fees to a Plaintiff who was awarded only $27,280 in damages.

Kim Muniz sued her employer, United Parcel Service (UPS), in state court for employment discrimination. She did not bring any federal claims, but UPS removed the case to federal court on the basis of diversity of citizenship.

The case ultimately proceeded to trial and a jury found that UPS subjected Muniz to gender discrimination and awarded her damages totaling $27,280, including $9,990 for lost earnings, $7,300 for past medical expenses, and $9,990 for past non-economic damages. Muniz sought $1,945,726.50 in attorneys' fees, but the district court awarded only $697,971.80.

The Ninth Circuit rejected Defendant's argument on appeal that the district court abused its discretion in awarding Muniz $697,971.80 since the jury awarded damages of only $27,280.

Given that neither party could segregate hours spent exclusively on the unsuccessful claims, the Court was "not convinced . . . that the district court was clearly wrong in failing to deduct further." Although there was a clear disparity between the damages and the fees awarded, the Court was "not convinced that California law requires the trial court to reduce that disparity."

The court held, however, that a fee award to a paralegal was based upon inadmissible hearsay evidence. Muniz was represented by attorney Stephen Jaffe and two other attorneys.

Susan Jaffe served as a paralegal but she did not submit a declaration swearing to the hours she spent on the case. Mr. Jaffe submitted a declaration, however, purporting to verify Ms. Jaffe's hours based upon his personal knowledge. "The only reasonable interpretation of Mr. Jaffe's declaration is that Ms. Jaffe provided this information to him. It was therefore hearsay," the court held. "In the absence of a more complete explanation from the district court regarding paralegal hours," the Court could not "conclude that allowing hearsay as the sole justification for an award to Ms. Jaffe was harmless." As such, the court remanded the case with instructions to reconsider Ms. Jaffe's fees and to determine the amount of attorneys' fees Muniz should be awarded for defending the appeal. See: Muniz v. United Parcel Service, Inc., 738 F.3d 214 (9th Cir. 2013).

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