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Cheryl E. Farb, Harold Newman v. Baldwin Union Free

September 26, 2011


The opinion of the court was delivered by: E. Thomas Boyle United States Magistrate Judge


Before the Court is attorney Thomas F. Liotti's Motion for Attorneys' Fees. On February 2, 2005, Plaintiffs Cheryl E. Farb and Harold R. Newman, through their then-counsel Liotti, filed this suit asserting causes of action under Title VII of the Civil Rights Act of 1964 ("Title VII"), 42 U.S.C. §§ 2000-e et seq.; causes of action under 42 U.S.C. §§ 1981 and 1983; and various state law tort claims. Liotti was to be paid pursuant to a contingency fee agreement. On April 5, 2005, Liotti was terminated as counsel of record for plaintiffs and filed a Notice of Lien of Outgoing Attorney. The trial on the underlying action resulted in a jury verdict in plaintiffs' favor. The District Judge reduced the jury's award of damages and the parties subsequently settled the case. Thereafter, Liotti filed the instant Motion asserting that he is entitled to attorneys' fees for his earlier representation in the matter. Plaintiffs oppose the Motion, arguing that Liotti was discharged for cause and is therefore not entitled to attorneys' fees. An evidentiary hearing was held on May 26, 2011, at which the following witnesses testified: (1) Jamel Oeser-Sweat, Esq., an attorney formerly employed by the Law Offices of Thomas F. Liotti; (2) Lucia Maria Ciaravino, Esq., an attorney currently employed by the Law Offices of Thomas F. Liotti; and (3) Thomas F. Liotti, Esq., each testified on behalf of Liotti; plaintiff Cheryl E. Farb testified on behalf of herself and co-plaintiff Newman. The parties have consented to the jurisdiction of the undersigned magistrate judge for the purposes of this Motion. For the reasons that follow, Liotti is not entitled to compensation for his representation of plaintiffs.


I. Facts and Procedural History of Underlying Case

Plaintiff Farb was employed as a dean at Baldwin Middle School in the Baldwin Union Free School District ("School District"). (Tr. 159). She shared the job with her co-dean, Alvis Brown. (Tr. 71-72). After Farb filed a sexual harassment and discrimination complaint with the assistant superintendent of the School District, she was referred by a family friend to Liotti. (Tr. 161, 174-75). On January 21, 2004, the Law Offices of Thomas F. Liotti filed a Notice of Claim against the School District on behalf of Farb and Newman alleging various civil rights violations and state law torts. (SUF ¶ 2; Exh. 5). On January 22, 2004, Farb signed a retainer agreement with the Law Offices of Thomas F. Liotti to represent her in a potential action against the School District and James Brown, Principal of Baldwin Middle School. (Proposed Stipulation of Undisputed Facts*fn1 ("SUF") ¶ 1; Tr. 160-63; Hearing Exhibit ("Exh.") 2; Exh. 3). Liotti was to be paid on a contingency basis, receiving one-third of the amount recovered in the action. (Exhs. 2, 3). At some point after Liotti was retained, he hired Farb's husband, plaintiff Newman, as an associate attorney at the law firm, but assured Farb that Newman would not work on her case. (SUF ¶ 3; Tr. 165-66). Farb was eventually fired from her position at the school. (Tr. 160-61).

On June 9, 2004, Oeser-Sweat represented Farb at a hearing held pursuant to New York State General Municipal Law section 50-h, which allows a municipal defendant, including a school district, to examine a claimant who has filed a notice of claim against it. See N.Y. Gen. Mun. Law § 50-h; (Exh. 6, at 1-3; Tr. 17). Personnel at the Law Offices of Thomas F. Liotti also drafted and filed a complaint on behalf of Farb with the New York State Commission on Human Rights, claiming Farb was discriminated against on the basis of sex and race, as well as retaliated against for her opposition to such discrimination. (Tr. 22-23, 49-51; Exh. 7).

At some point, Farb informed Alvis Brown, her co-dean at the school, that she was being represented in a legal action by Liotti. (Tr. 181, 187-88). On June 30, 2004, Alvis Brown retained Liotti to represent him in a discrimination action against the School District. (Exh. 25; Tr. 168-69, 182). The Alvis Brown case was treated as a "companion case" to the Farb matter because Farb and Brown had experienced similar problems with the School District. (Tr. 70-71). Alvis Brown testified as a plaintiffs' witness in the trial of Farb's underlying action. (Tr. 78).

The Complaint in the instant case was filed on February 2, 2005. (Exh. 12). It included claims for sexual and racial harassment; religious discrimination; intentional infliction of emotional distress; negligent infliction of emotional distress; defamation; retaliation by a public employer for whistleblowing; tortious interference with contract; and, on behalf of Newman, loss of consortium. (Id.). It named as defendants the School District, the School District's Board of Education, and four School District employees: James Brown, Arlene Guerrero, Kathy Weiss, and Lee Chapman. (Id.).

On or about March 6, 2005, Farb and Newman discharged Liotti, and Newman quit his job with the firm, taking the case file with him without Liotti's consent. (Tr. 101; Exh. 21). Liotti objected to the removal of the file. (Exh. 21). On March 17, 2005, Farb, Newman, and Liotti executed a Consent to Change Attorney form. (Exhs. 13, 14; Tr. 196). On April 5, 2005, Liotti was ordered terminated as attorney of record and Newman became attorney of record. (Exh. 13). On the same date, Newman was ordered terminated as attorney of record and Fred P. Bennett was substituted. (Id.). Thereafter, Liotti filed a Notice of Lien of Outgoing Attorneys with this Court. (Exh. 15).

Defendants filed a Motion to Dismiss, which the District Court granted in part on March 3, 2006. The Court first asserted that the Complaint's "lack [of] clarity and structure" hindered resolution of the motion. Memorandum and Order at 7, Farb v. Baldwin Union Free Sch. Dist., No. 05-cv-0596 (Mar. 3, 2006), ECF No. 37. The District Court then dismissed (1) the Title VII claims against the individual defendants, noting that it is well-established in the Second Circuit that individuals are not subject to liability under Title VII, see id. at 7-8; (2) the religious discrimination claim, pointing out that the Complaint mentioned Farb's religion only once and "did not allege any facts giving rise to an inference that the harassing conduct directed at Farb was because of her religion," id. at 9; (3) the §§ 1981 and 1983 claims against defendant Weiss in her individual capacity, noting that the Complaint was not clear as to whether all individual defendants were even charged under the sections, see id.; (4) all of plaintiff's emotional distress claims except for those against James Brown, see id. at 15-18; (5) the defamation claim, see id. at 23, 24; (6) the claim under New York's Whistleblower statute, noting that only equitable remedies were available under the statute and plaintiff failed to seek such remedies, see id. at 24-26; and (7) a respondeat superior "cause of action," emphasizing that it is not a cause of action but a theory of liability, see id. at 27.

On March 30, 2006, plaintiffs, through attorney Bennett, filed an Amended Complaint, which Liotti's firm did not prepare. (See Tr. 109; Exh. 20). The Amended Complaint alleged sexual harassment and racial discrimination against the School District, Board of Education, James Brown, Guerrero, and Chapman; intentional and negligent infliction of emotional distress against James Brown; tortious interference with contract against all defendants; and, on behalf of Newman, a claim against James Brown for loss of consortium. (Exh. 20). Bennett was later removed and Leeds, Morelli & Brown was substituted with Rick Ostrove serving as lead attorney for plaintiffs. (Exh. 13).

As the trial neared, plaintiffs' attorney Ostrove approached attorney Ciaravino, who was assigned to the Alvis Brown case, to ask whether Alvis Brown would testify as a witness on Farb's behalf. (Tr. 70, 75-76). The trial began on April 27, 2009. See Minute Entry, Farb v. Baldwin Union Free Sch. Dist., No. 05-cv-0596 (Apr. 27, 2009), ECF No. 114. Alvis Brown ultimately testified on behalf of Farb. (Tr. 78). A jury awarded Farb $4 million in compensatory damages and $1 million in punitive damages, and awarded Newman $250,000 for his loss of consortium claim. See Memorandum & Order at 4, Farb v. Baldwin Union Free Sch. Dist., No. 05-cv-0596 (Feb. 3, 2010), ECF No. 157. The Court reduced to $500,000 the jury's award of $4 million in compensatory damages on plaintiffs' Title VII retaliation claim*fn2 and intentional infliction of emotional distress claim, finding that the award exceeded the statutory maximum for Title VII damages against employers with more than 500 employees, and that the award was excessive for the intentional infliction of emotional distress claim. See id. at 11-16. The Court also found the $1 million punitive damages award excessive, ruling that $500,000 was a sufficient punitive damages award. See id. at 19. The Court thus reduced the damages to $1.25 million in a conditional remittitur. See id. at 4, 19 & n. 5. The case eventually settled for $1.6 million. (Tr. 116).

II. Motion for Attorneys' Fees and Hearing

On January 26, 2011, Liotti filed the instant Motion. The Motion asserts that Liotti's firm performed various legal services in connection with the Farb matter, such as drafting correspondence, press releases, and various legal papers, including the original Complaint in this action; attending Farb's 50-h hearing; and cooperating with Farb's trial counsel by helping to prepare Alvis Brown for his testimony in the trial. (See Affirmation in Support of Motion ("Liotti Aff.") at 3-5). Liotti states that his firm "devoted 127.05 hours" to the matter (Liotti Aff. at 3) and supports this number with a document purporting to be a record of legal services the firm performed (see Motion, Exh. E). As compensation, Liotti asks for one-third of the total attorneys' fees awarded in the action.*fn3 (Motion at 2; Liotti Aff. at 2). Plaintiffs' opposition asserts that Liotti was discharged for cause and is therefore not entitled to attorneys' fees. (See Plaintiffs' Memorandum of Law in Opposition to Mr. Liotti's Re-Filed Motion ("Opp.") at 2-3).

As noted above, an evidentiary hearing was held on May 26, 2011. Oeser-Sweat, an attorney formerly employed by Liotti's firm, Ciaravino, an attorney employed there, and Liotti testified on Liotti's behalf. Farb testified on behalf of herself and co-plaintiff Newman.

A. Alan Ansell

Alan Ansell is a former attorney who was suspended in 1991 by the Appellate Division, Second Judicial Department, for five years for neglect of numerous actions and subsequent attempts to conceal the neglect from his clients, as well as failure to cooperate with investigations into his neglect. See In re Ansell, 572 N.Y.S.2d 366, 366-68 (App. Div. 1991). In 1995, Ansell was disbarred when he defaulted in proceedings charging him with further professional misconduct, including "conduct involving dishonesty, fraud, deceit, and misrepresentation." In re Ansell, 628 N.Y.S.2d 604, 604-05 (App. Div. 1995). Like the order suspending Ansell, the order disbarring him prohibited him from "practicing law in any form, either as principal or as agent, clerk, or employee of another" and from "giving to another an opinion as to the law or its application or any advice in relation thereto," among other restraints. In re Ansell, 572 N.Y.S.2d at 368; In re Ansell, 628 N.Y.S.2d at 605. All of this, of course, is a matter of public record. The relevant period of time that Farb and Newman were represented by Liotti is from January 21, 2004, until March 6, 2005. (See Exhs. 5, 21).

At the time that Liotti employed Ansell as a law clerk in his office, Liotti knew that Ansell was not a member of the bar. (See Tr. 142-43; see also Proposed Findings of Fact and Conclusions of Law ("Liotti's Proposed Findings") at 13). Specifically, Liotti stated, "I was under the impression, because he told me this, that he had just been suspended. And for whatever reason had not reapplied for admission. And the suspension, which was documented, had ended." (Tr. 142). Liotti further asserted that he did not find out until late 2005 that Ansell had been disbarred. (Tr. 142). However, an affidavit by Ansell, which Liotti submitted to the Court after the evidentiary hearing, states that Ansell informed Liotti of his disbarrment at the end of 2004. (See Liotti's Proposed Findings, Exh. C ("Ansell Aff.") at 2). Between the conflicting evidence in the record before me, I credit the Ansell affidavit on the issue of when Liotti was informed. Oeser-Sweat testified that while he was employed at Liotti's firm he "heard some rumbling" that Ansell had been disbarred. (Tr. 56). Liotti further acknowledged that his research showed that, "a disbarred lawyer certainly should not work in a law office. A suspended lawyer probably shouldn't either. But . . . [two] bar associations in their opinions said that the disbarred or suspended lawyer ...

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