Nicholas Lohman v. Duryea Borough

PRECEDENTIAL
UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
________
No. 08-3524
_________
NICHOLAS LOHMAN,
Appellant
v.
DURYEA BOROUGH; DURYEA BOROUGH COUNCIL;
ANN DOMMES, Individually and
in her official capacity as Council President;
LOIS MORREALE, Individually and
in her official capacity as Borough Secretary;
FRANK GROBLEWSKI, Individually and
in his official capacity as Councilman;
EDWARD ORKWIS, Individually and
in his official capacity as Councilman;
ROBERT WEBB, Individually and
in his official capacity as Councilman;
AUDREY YAGER, Individually and
in her official capacity as Councilwoman;
JOAN ORLOSKI, Individually and
in her official capacity as Councilwoman.
_________

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__________
On Appeal from the United States District Court
for the Middle District of Pennsylvania
(D.C. Civil No. 05-cv-01423)
District Judge: Honorable A. Richard Caputo
__________
Argued May 20, 2009
Before: RENDELL and GARTH, Circuit Judges,
and PADOVA,* District Judge.
(Filed : July 23, 2009)
__________________
* Honorable John R. Padova, Senior Judge of the
United States District Court for the Eastern District
of Pennsylvania, sitting by designation.

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Cynthia L. Pollick, Esq.
The Employment Law Firm
363 Laurel Street
Pittston, PA 18640
Counsel for Plaintiff-Appellant
Nicholas Lohman
Karoline Mehalchick, Esq.
Oliver, Price & Rhodes
1212 South Abington Road
Clarks Summit, PA 18411
Counsel for Defendants-Appellees
Duryea Borough; Duryea Borough Council;
Ann Dommes; Lois Morreale; Frank Groblewski;
Edward Orkwis; Robert Webb; Audrey Yager
Joan Orloski.
__________
OPINION OF THE COURT
__________
RENDELL, Circuit Judge.
Nicholas Lohman appeals from the District Court’s
award of $30,000.00 in attorney’s fees following a jury verdict
in his favor in his wrongful discharge action. The jury awarded
Lohman $12,205.00 in lost wages and nominal damages, after

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Lohman also challenges the hourly rate used by the District1
Court in determining the lodestar, which was below the rate he
urged. However, there was ample evidence to support the
Court’s lower rate and we conclude that the Court did not
clearly err in choosing the rate that it did. See Interfaith Comty.
Org. v. Honeywell Intern., Inc., 426 F.3d 694, 703 n.5 (3d Cir.
2005) (“[W]e will not upset a district court's factual
determinations, including its determination of an attorney’s
reasonable hourly rate and the number of hours he or she
reasonably worked on the case, unless we find them to be clearly
erroneous.”).
4
finding Appellees liable on one of Lohman’s three First
Amendment retaliation claims. Lohman contends that the
District Court improperly considered settlement negotiations
between the parties, including evidence that Lohman rejected a
settlement offer of $75,000.00, to reduce the fee award. The
issue before us – namely whether and to what extent the trial
court may consider settlement negotiations when awarding fees
– appears to be one of first impression in our Court.1
I. Background
Nicholas Lohman brought an action asserting numerous
claims relating to his discharge from employment with Duryea
Borough. Only three First Amendment retaliation claims
survived summary judgment and proceeded to trial. Defendants
made three settlement offers after trial commenced, including

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one for $75,000.00. Lohman rejected each of these offers. The
jury found for Lohman on one of the three claims, and awarded
him $12,205.00 in lost wages and nominal damages. Lohman
moved for attorney’s fees and costs of $112,883.73.
The District Court granted the motion in part, awarding
$30,000.00 in attorney’s fees and $4,251.77 in costs. The
District Court engaged in an extensive consideration of the
lodestar, and a review of the twelve factors set forth in Johnson
v. Georgia Highway Express, Inc., 488 F.2d 714 (5th Cir. 1974),
and referenced by the Supreme Court in Hensley v. Eckert, 461
U.S. 424, 434 n.9 (1983). The District Court noted that in
Hensley, the Supreme Court stated that “the most critical factor”
in determining a reasonable fee “is the degree of success
obtained.” Lohman v. Borough of Duryea, No. 05-1423, 2008
W.L. 2951070 (M.D. Pa. July 30, 2008) at *11 (quoting
Hensley, 461 U.S. at 436).
The District Court then proceeded to refer to case law
that had been cited by the parties regarding the propriety of
considering settlement negotiations in awarding fees, including
Alphonso v. Pitney Bowes, Inc., 356 F. Supp. 2d. 442 (D.N.J.
2005), which was relied upon by Lohman. In Alphonso,
defendants brought a post-trial motion for sanctions against a
plaintiff, arguing that the plaintiff’s unsuccessful employment
retaliation claims were frivolous. Id. at 445. The plaintiff
sought to undermine the defendants’ position by offering
evidence that the defendants made a settlement offer on the eve

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of trial. Id. at 447 n.4. The court disregarded the plaintiff’s
argument, intimating that the use of settlement discussions to
show the validity or invalidity of a claim would violate Federal
Rule of Evidence 408. Id.
However, the District Court here found another case,
EMI Catalogue Partnership v. CBS/FOX Co., No. 86-1149,
1996 W.L. 280813 (S.D.N.Y. May 24, 1996), to be more
relevant, and its logic more persuasive. In EMI, the court
referred to the language of Rule 408 and considered the precise
issue before us in a copyright case. The court noted that a
distinction should be drawn where
evidence of the alleged settlement negotiations is
not being offered to prove “either liability for or
invalidity of the claim or its amount.” Rather, it
is being offered to show that the Court’s rejection
of the claim should not merit an award of
attorney’s fees under the Court’s power of
equitable discretion . . . .
Id. at *2 (quoting Fed. R. Evid. 408). Furthermore, the court
noted,
Because nothing in the language of Rule 408
requires exclusion of evidence of settlement
negotiations on issues “other than liability for or
invalidity of a claim or its amount,” the Court can

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consider evidence of settlement negotiations
where, as here, that evidence is probative of the
objective unreasonableness of the claim for
purposes of determining whether to award
attorney’s fees under the Copyright Act.
Id. The District Court here agreed, and concluded that evidence
of settlement negotiations could be used as an indicator of the
degree of success obtained by Lohman’s counsel under § 1988.
It stated, in so concluding: “The fact that Plaintiff prevailed at
trial may not be entirely indicative of counsel’s success.
Therefore, the Court will consider the settlement negotiations in
its determination of Plaintiff’s attorney’s fee award.” Lohman,
2008 W.L. 2951070 at *12 (internal citation omitted).
The Court calculated a lodestar of $62,986.75, but
concluded that the award should be reduced for limited success.
In reasoning through this reduction, evidence of settlement
negotiations between the parties was but one consideration:
In this case, the Court finds that the lodestar, or
the product of the reasonable rate times the
reasonable hours, results in an excessive fee
award. As per Hensley, a court may consider other
facts in determining an award. Hensley, 461 U.S
at 434. The degree of success obtained for
Ms. Pollick was not as great as she claims. Of the
six (6) claims in the Complaint, only the First

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Amendment claims went to trial. Of the claims
that were presented to the jury, only one (1) claim
returned a verdict in favor of the Plaintiff.
Furthermore, the Court notes that the
Plaintiff’s counsel may have achieved a much
greater level of success if Plaintiff had settled the
case. A seventy-five thousand dollar ($75,000.00)
result in settlement is significantly greater than
the twelve-thousand, two-hundred and five dollar
($12,205.00) result obtained at trial. Plaintiff
noted that she worked on a contingent fee basis.
Had Plaintiff settled for the seventy-five thousand
dollars ($75,000.00), counsel would only have
been entitled to about twenty-five thousand
dollars ($25,000.00), as contingent fee
agreements often call for approximately
thirty-three percent (33%). If she had a contingent
fee agreement of forty-percent (40%), she would
h av e re ce ived thirty-th o u san d d o lla rs
($30,000.00). Likewise, a contingent fee of the
jury’s verdict would have yielded four-thousand
and sixty dollars and thirty-three cents ($4068.33)
and four-thousand, eight-hundred and eighty-two
dollars ($4882.00) respectively.
Plaintiff’s counsel argues that she achieved
“excellent” results for her client, especially

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because this trial followed on the heels of another
trial. The fact that this trial followed another is
not relevant. While she focuses on the fact that
she received a jury verdict in her favor, her client
received a lesser result from trial than from
settlement, and only prevailed on one claim. In
this case, the results obtained at trial do not justify
an award of over sixty-thousand dollars
($60,000.00) as calculated by the lodestar, and
surely does not justify the requested fees of over
one-hundred thousand dollars ($100,000.00).
The Johnson factors, other than the results
obtained factor, also justify a reduced award. The
skill requisite to perform the services was not
particularly rigorous-Plaintiff’s counsel often
brings First Amendment retaliation claims, and
such a claim is not a new or novel issue of law.
The claims were not particularly difficult . . . .
Counsel did not demonstrate any special ability in
the prosecution of the case. The case cannot be
considered “undesirable”-there is no evidence that
Mr. Lohman was unable to attract other attorneys
to this case. These factors weigh in favor of a
downward departure from the lodestar.
Based upon the Johnson factors, including
the results obtained factor, the Court finds that a

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downward departure of the lodestar is warranted,
and Plaintiff will be awarded a total of thirty
thousand dollars ($30,000.00) in attorney’s fees.
Such an award is comparable to the award
Plaintiff’s counsel would have received had the
Plaintiff settled for the maximum settlement offer,
and substantially greater than one she would have
received under a normal contingent fee of the
verdict.
Lohman argues on appeal that the District Court erred by using
evidence from settlement negotiations to reduce the fee award.
II. Discussion
In a civil rights action, a district court, “in its
discretion, may allow the prevailing party . . . a reasonable
attorney’s fee.” 42 U.S.C. § 1988. It is undisputed that
Lohman prevailed in his action, but the parties disagree as
to whether the fee awarded was reasonable. We have
jurisdiction to review a fee award under 28 U.S.C. § 1291,
once the award has been reduced to a definite amount.
Interfaith Cmty. Org. v. Honeywell Int., Inc., 426 F.3d 694,
701 (3d Cir. 2005). While we generally review fee awards for
abuse of discretion, the issue as to what standards are to be
applied in determining the fee involves a question of law, and
our review of the issue before us is plenary. Washington v.

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Federal Rule of Evidence 408 provides in full:2
(a) Prohibited uses.--Evidence of the following is not admissible
on behalf of any party, when offered to prove liability for,
invalidity of, or amount of a claim that was disputed as to
validity or amount, or to impeach through a prior inconsistent
statement or contradiction:
(1) furnishing or offering or promising to furnish--or
accepting or offering or promising to accept--a valuable
consideration in compromising or attempting to
compromise the claim; and
(2) conduct or statements made in compromise
negotiations regarding the claim, except when offered in
a criminal case and the negotiations related to a claim by
a public office or agency in the exercise of regulatory,
investigative, or enforcement authority.
(b) Permitted uses.--This rule does not require exclusion if the
evidence is offered for purposes not prohibited by subdivision
11
Phila. County Court of Common Pleas, 89 F.3d 1031, 1034-35
(3d Cir. 1996).
We agree with the District Court that Rule 408 does not
bar a court’s consideration of settlement negotiations in its
analysis of what constitutes a reasonable fee award in a
particular case. By its terms, Rule 408 requires exclusion of
evidence of such negotiations “when offered to prove liability
for, invalidity of, or amount of a claim that was disputed as to
validity or amount, or to impeach through a prior inconsistent
statement or contradiction.” This was the case in Alphonso,2

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(a). Examples of permissible purposes include proving a
witness’s bias or prejudice; negating a contention of undue
delay; and proving an effort to obstruct a criminal investigation
or prosecution.
Appellees refer to several cases where settlement offers were3
used by courts as evidence of the amount in controversy, and
urge that these cases are persuasive on the issue before us. We
view these cases as not sufficiently similar to warrant
discussion.
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relied on by Lohman in the District Court, where evidence of
negotiations was offered to demonstrate that the defendants
believed that the plaintiff’s claim had merit. We do not disagree
that settlement negotiations cannot be used in this way, for the
Rule clearly places settlement negotiations off limits where the
validity of the claim is at issue.3
While evidence of settlement negotiations is inadmissible
to prove the merit or lack of merit of a claim, the use of such
evidence as bearing on the issue of what relief was sought by a
plaintiff does not offend the clear terms of Rule 408. Such
evidence can be relevant when comparing what a plaintiff
“requested” to what the plaintiff was ultimately “awarded.” We
noted in Washington the “settled principle . . . that counsel fees
should only be awarded to the extent that the litigant was
successful.” Washington, 89 F.3d at 1042. Hensley instructs us
that “[t]here is no precise rule or formula” for determining how
a fee should be adjusted to reflect limited success. Hensley, 461

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U.S. at 436. These determinations are appropriately committed
to the discretion of the district court “in view of the district
court’s superior understanding of the litigation and the
desirability of avoiding frequent appellate review of what
essentially are factual matters.” Id. at 437. While evidence of
settlement negotiations is only one indicator of the measure of
success, it is a permissible indicator that is not precluded by
Rule 408.
Lohman urges that permitting the use of evidence from
settlement negotiations to reduce attorney’s fees is against
public policy, because it will penalize civil rights attorneys who
achieve only partial success, and will discourage settlement
discussions. He also argues that Appellees’ failure to make an
offer of judgment under Rule 68 of the Federal Rules of Civil
Procedure should preclude the Court from considering
settlement discussions under these circumstances.
While the asserted policy implications have superficial
appeal, upon reflection they are not convincing. The concept of
having reduced fees awarded based on partial success is not a
new one – indeed, it is well settled in our jurisprudence. See
Hensley, 461 U.S. at 436 (“Congress has not authorized an
award of fees whenever it was reasonable for a plaintiff to bring
a lawsuit or whenever conscientious counsel tried the case with
devotion and skill. Again, the most critical factor is the degree
of success obtained.”). No exception has been made in the case
law for fee awards in civil rights cases.

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Moreover, the thought that settlement discussions will
not now occur because an attorney could be penalized if he or
she achieves less than was demanded makes little sense. In fact,
permitting settlement negotiations to be considered would
encourage reasonable and realistic settlement negotiations. In
addition, there has been no argument made that a plaintiff’s
naming or rejection of a number is anything other than an
indication of what the plaintiff is seeking. It comports with
established law to consider what was sought as compared to
what was awarded. Accordingly, the policy considerations
asserted by Lohman lack a solid footing in any real policy.
We also reject Lohman’s argument that the failure of
Appellees to make an offer of judgment under Rule 68 should
preclude the District Court from considering settlement
negotiations in determining the degree of Lohman’s success.
Rule 68 encourages settlement by providing a formal process by
which a defendant may limit its exposure to trial costs by
making a written offer of judgment more than ten days prior to
trial. Fed. R. Civ. P. 68(a). If a plaintiff rejects such an offer,
and obtains a less favorable judgment thereafter, the plaintiff is
responsible for costs incurred after the offer was made. Fed. R.
Civ. P. 68(d).
We do not disagree that Rule 68 was available to
Appellees more than ten days prior to trial as a means to
potentially limit subsequent costs. However, we fail to see how
the existence of this Rule and availability of this strategic

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Moreover, the cases relied on by Lohman regarding Rule 684
are factually distinguishable and do not set forth a categorical
rule that applies here. In Ortiz v. Regan, 980 F.2d 138 (2d Cir.
1992), the Court of Appeals for the Second Circuit rejected a
district court’s denial of fees for work performed by plaintiff’s
counsel after the defendants offered the plaintiff a post-
deprivation hearing. Instead of requesting a hearing, plaintiff
proceeded with her due process claim based on defendants’
conduct prior to the suspension of her retirement benefits. The
court of appeals stated that the “availability of Rule 68”
provided “additional weight” for its conclusion that the district
court abused its discretion by cutting off all fees incurred after
the rejected offer. Id. at 141. The District Court here did not
cut off all fees incurred after Lohman rejected Appellees’
settlement offer.
In Clark v. Sims, 28 F.3d 420 (4th Cir. 1994), the Court
of Appeals for the Fourth Circuit concluded that a district court
erred in applying Rule 68, because the offer in question did not
meet the formality requirements of the Rule. Id. at 423. The
case at bar does not involve any application of Rule 68.
In Cooper v. Utah, 894 F.2d 1169 (10th Cir. 1990), the
Court of Appeals for the Tenth Circuit determined that a district
court erred by reducing a fee award to one half of the lodestar
based on simplicity of issues, because simplicity of issues
should have been factored into the determination of the lodestar.
Id. at 1171. In a terse statement, the court “[a]dditionally” noted
15
mechanism for limiting one’s costs should preclude a district
court from considering informal negotiations for the unrelated
purpose of determining the extent of relief sought by a plaintiff.4

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that the district court’s reduction of fees in light of settlement
negotiations was “not well-founded” where defendants failed to
make an offer of judgment under Rule 68. Id. at 1172. There is
no indication that the district court’s use of settlement
negotiations in Cooper was analogous to the application in this
case, nor is it clear that the settlement issue was necessary to the
holding on appeal.
Here, as the District Court’s analysis quoted above makes5
clear, the Court considered many factors, including the degree
of Lohman’s success, before awarding a fee of $30,000, roughly
one-half of the lodestar.
16
The District Court here did not deny Lohman fees and costs
incurred after the rejected offer, but merely reduced the fee
award in part because Lohman was ultimately awarded
substantially less than he sought.
We think it important to note that we hold only that
settlement negotiations may be relevant in measuring success,
and, if so, are clearly only one factor to be considered in the
award of fees. A court is also free to reject such evidence as5
not bearing on success when, for instance, negotiations occur at
an early stage before discovery, or are otherwise not a fair
measure of what a party is truly seeking in damages. Here,
however, the District Court considered evidence that, during
trial, Lohman rejected a settlement offer of $75,000.00, an offer
more than six times the amount awarded by the jury. Lohman
offers no explanation as to why his rejection of this amount is

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not probative of the amount he sought in damages. Nor does he
offer a reason as to why a comparison between the rejected
$75,000.00 offer and the ultimate $12,205.00 jury award would
not be an indication of his success in the litigation as a whole.
Accordingly, we will AFFIRM the Order of the District
Court.

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