1-1700-11597-2

STATE OF MINNESOTA

OFFICE OF ADMINISTRATIVE HEARINGS

FOR THE DEPARTMENT OF HUMAN RIGHTS

State of Minnesota by Janeen Rosas, Commissioner, Department of Human Rights, Complainant, v. Distinctive Dental Services, P.A., Respondent.

ORDER ON MOTION FOR RECONSIDERATION

The above-entitled matter first came on for hearing before Administrative Law Judge (ALJ) George A. Beck on September 12-13, 2000 at the McLeod County Sheriff’s Office, 810 East 10^th Street, Glencoe, Minnesota.  The record closed on December 21, 2000 with the filing of post-hearing memoranda.  On January 22, 2001, the Administrative Law Judge issued a decision finding that the Respondent had discriminated against the Complainant on the basis of marital status in violation of the Minnesota Human Rights Act.  And on April 6, 2001 the ALJ issued an award of litigation costs and civil penalty.  The matter is now before the Administrative Law Judge on Complainant’s motion for reconsideration.  Respondent filed a response to the motion on May 4, 2001 and the record closed on that date. 

Richard L. Varco, Jr., Assistant Attorney General, 525 Park Street, Suite 200, St. Paul, Minnesota, 55103-2106, represented the Commissioner of the Minnesota Human Rights Department (Complainant).  Duane G. Johnson, Attorney at Law, 4318 Xerxes Avenue North, Minneapolis, Minnesota 55412, represented Distinctive Dental Services, P.A. (Respondent).

Based upon all of the files, records, and arguments of counsel and for the reasons set forth in the accompanying Memorandum, the Administrative Law Judge makes the following:

ORDER

IT IS HEREBY ORDERED that:

The Complainant’s motion for reconsideration is DENIED.

 

Dated this 17^th  day of May 2001.

GEORGE A. BECK

Administrative Law Judge

 

NOTICE

Pursuant to Minn. Stat. § 363.071, subd. 2, this Order is the final decision in this case and, under Minn. Stat. § 363.072, any person aggrieved by this decision may seek judicial review pursuant to Minn. Stat. §§ 14.63 through 14.69.

 

MEMORANDUM

Procedural History

On January 22, 2001, the Administrative Law Judge issued a decision in this matter finding that the Respondent had discriminated against Dr. Bryan Correll on the basis of marital status in violation of the Minnesota Human Rights Act.  The ALJ awarded Dr. Correll $34,103.04 in compensatory damages, but denied his request for $32,463.60 in attorney’s fees incurred while challenging Respondent’s arbitration demand in Minnesota district and appellate courts.[1]  On April 6, 2001, the Administrative Law Judge further ordered Respondent to pay Complainant’s contested case litigation and hearing costs, as well as a civil penalty for the State’s general fund.  Complainant now seeks reconsideration of the ALJ’s order denying Dr. Correll’s claim for attorney’s fees incurred while challenging the Respondent’s arbitration demand.

Motion for Reconsideration

Complainant moves the Administrative Law Judge for an order reconsidering and reversing those portions of the findings of fact, conclusions and order of January 22, 2001, denying Dr. Bryan Correll $32,463.60 in attorney’s fees he incurred while challenging the Respondent’s arbitration demand in Minnesota district and appellate courts.  Minn. Stat. § 363.071, subd. 2 authorizes the Administrative Law Judge to award “reasonable attorney’s fees” to an aggrieved party in a discrimination case. Complainant argues that the ALJ should follow analogous Title VII case law[2] and grant attorneys’ fees for work done outside the contested case proceeding where the work was necessary to the successful pursuit of the discrimination claim.  According to Complainant, Dr. Correll’s litigation of Distinctive Dental Services’ (“DDS”) arbitration demand in district court was necessary to his ultimate recovery under the Human Rights Act in this administrative forum.  Complainant has cited to several Title VII cases to support its claim that Dr. Correll should recover the attorneys fees if the fees were for work necessary to allow him to successfully pursue his discrimination claim. 

In Williams v. Secretary of the Navy,[3] for example, the plaintiff initiated both an internal grievance proceeding and a discrimination charge with the Equal Employment Opportunity (“EEO”) office after being terminated from her position with the Navy Exchange Service Command.  While both matters were pending, the parties settled their dispute.  The issue of attorneys’ fees, however, was left unresolved.  The Navy argued that fees incurred for the internal grievance proceeding could not be recovered through Title VII.  The court disagreed, but explained that when considering attorneys’ fees:

It remains for this court to determine what part, if any, of the services rendered in the [grievance proceeding] was so related to plaintiff’s Title VII proceedings as to be properly considered for the purposes of attorneys’ fees.[4]

The court concluded that some portions of plaintiff’s counsel’s services in the grievance proceeding constituted work that was both useful and necessary to advance the civil rights litigation.  But the court held that “to the extent that the services in the [grievance proceeding] were about procedural problems alone and arguably unrelated to discrimination, the court will not award fees.”[5]  In the end, the court found that only 10 percent of the time devoted solely to the grievance proceeding was both useful and necessary to achieve the settlement of plaintiff’s Title VII claims.[6] 

The holding in Williams actuallysupports the ALJ’s decision to deny recovery of the attorney’s fees Dr. Correll incurred while challenging DDS’s arbitration demand.  The litigation over DDS’s arbitration demand involved a procedural question that was unrelated to the merits or success of Dr. Correll’s discrimination claim.  Specifically, the district court matter concerned the conflict between the Minnesota Uniform Arbitration Act, which gives binding effect to arbitration provisions in employment agreements, and the Minnesota Human Right Act, which provides an exclusive procedure for the resolution of discrimination claims.  Ultimately, the Minnesota Supreme Court held that the exclusive procedure provision of the Human Rights Act precluded arbitration of an employee’s discrimination claim, even though the employment contract contained an arbitration provision.  Given that the litigation in district court concerned a procedural issue unrelated to the merits of Dr. Correll’s underlying discrimination claim, the attorney’s fees Dr. Correll incurred in the district and appellate courts are not recoverable under the Human Rights Act.

The other cases cited by Complainant are equally unpersuasive and distinguishable from the facts at hand.  In both Stover v. Riley[7] and Spradley v. Notami Hospitals of Florida, Inc.[8], for example, the prevailing plaintiffs in the Title VII actions were awarded attorneys’ fees for work done in mandatory administrative proceedings. That is, unlike the instant matter, the initiation of the administrative proceedings in those cases was a jurisdictional prerequisite to commencing the Title VII actions.  And both courts emphasized the mandatory nature of the administrative proceedings in awarding the attorneys’ fees to the prevailing plaintiffs.[9]  In this case Dr. Cornell could have arbitrated his Chapter 363 claims and asked for the damages allowed by statute.  He chose to contest arbitration in order to have a different forum to resolve his claims.  But his court action was not a mandatory prerequisite.

In Petite v. Reno[10] and Stathos v. Bowden[11], the prevailing Title VII plaintiffs were awarded attorneys fees for time spent on collateral actions (an administrative proceeding and a state declaratory judgment action) in which the underlying issues were “closely tied together” or “virtually identical” to the discrimination claims.  The issues involved in Dr. Correll’s district court action and the contested case proceeding were not “closely tied together” or “virtually identical”.  Instead, the Minnesota district and appellate courts were asked to construe two competing statutes in order to determine whether the Human Rights Act precludes arbitration of an employee’s discrimination claim.  While resolution of this issue ultimately determined the forum for Complainant’s discrimination claim, it did not address the merits of the claim.  Therefore, the Administrative Law Judge does not find the attorney’s fees incurred for legal services provided in Minnesota district and appellate courts to be recoverable. 

Moreover, an Administrative Law Judge’s jurisdiction to award attorney’s fees may be limited to only those services performed in the contested case proceeding.  The ALJ notes that, with the exception of Stathos[12], the cases cited by Complainant involved federal district courts awarding attorneys’ fees for work done in collateral administrative proceedings.  While in this case, Complainant is requesting that the ALJ award attorney’s fees for work done in a district court action.  Unlike the relatively broad language of Title VII, which allows an award of attorney’s fees “in any action or proceeding under this subchapter”,[13] the language of Minn. Stat. § 363.071, subd. 2 specifically limits the ALJ’s discretion in awarding attorney’s fees to cases “where the administrative law judge finds that the respondent has engaged in an unfair discriminatory practice”.  It appears that the authority to award attorney’s fees may be limited to only the contested case proceeding.[14] 

Additionally, in First Federal Sav. & Loan v. Clark Inv. Co.,[15] the South Dakota supreme court held that where a statute authorizes a court to award attorney’s fees, the court could only consider those services performed in its court and not services performed in a separate declaratory judgment action.  Although there is no Minnesota case specifically addressing this issue, the Administrative Law Judge finds the reasoning in First Federal Sav. & Loan to be applicable here.  The ALJ is not in a position to evaluate Dr. Correll’s counsel’s performance or the reasonableness of his fees for the services rendered in the district court matter.  When collateral district court actions are involved, the prevailing party’s entitlement to attorney’s fees should be decided by the presiding district or appellate court and not by the Administrative Law Judge in the contested case proceeding.[16] 

Based on the reasoning and the case law discussed above, Complainant’s motion for reconsideration and for an order reversing those portions of the ALJ’s decision denying Dr. Bryan Correll $32,463.60 in attorney’s fees incurred while challenging the Respondent’s arbitration demand in Minnesota district and appellate courts is denied.

G.A.B.