Opinion
C.A. No. 99A-12-004 HDR.
Submitted: May 31, 2000.
Decided: July 14, 2000.
Upon Claimant's Appeal from a Decision of the Industrial Accident Board REVERSED and REMANDED
John J. Schmittinger, Esq. and Walt F. Schmittinger, Esq. of Schmittinger Rodriguez, P.A., Dover, Delaware, for Claimant Below-Appellant.
Francis X. Nardo, Esq. and Susan A. List, Esq. of Tybout Redfearn Pell, Wilmington, Delaware, for Employer Below-Appellee.
OPINION
I. BACKGROUND
On November 9, 1995, Employee Below-Appellant, Stewart Robinson, suffered a compensable industrial accident while working for Employer Below-Appellee, Metal Masters, Inc. At the time of the accident, Robinson was twenty-five years old and was working as a machine operator. His job responsibilities included operating a punch press. His injury occurred when the punch press came down on his right arm and severed it above the wrist. The injury resulted in the amputation of Robinson's hand just below the wrist, about eight inches from the elbow. Two faint white spots are visible at the end of the stump, where the bones of the forearm were cut.
On September 17, 1999, Robinson filed a Petition to Determine Disfigurement Benefits with the Industrial Accident Board (the "Board"). The Board conducted a hearing on the petition on November 15, 1999. At the disfigurement hearing, Robinson testified about how the injury has affected him psychologically. People notice his hand has been amputated and tend to stare at him, and children often react to the disfigurement by screaming out loud. Robinson became depressed and irritable because of his appearance. The injury caused him to have low self-esteem and made him reluctant to go out of the house. After the accident, he had difficulty sleeping and lost thirty to forty pounds. According to Robinson, the psychological impact of the injury also caused him to lose his fiancee. He still suffers from low self-esteem and depression, and continues to have nightmares and flashbacks concerning the accident. Robinson has been taking anti-depressant medication and has seen two psychiatrists and a psychologist for his condition. The psychologist and psychiatrists helped him to some extent, but did not cure his condition completely. Robinson displayed his injury to the Board and also presented the Board with several photographs depicting his disfigurement.
James Kurtz, Ph.D., a clinical psychologist, testified by deposition regarding the psychological impact the amputation had on Robinson. Dr. Kurtz treated Robinson from December, 1995 until March, 1999. Dr. Kurtz diagnosed Robinson with depression and post-traumatic stress disorder. He described Robinson as being extremely self-conscious, and very aware of how people react to his disfigurement. Dr. Kurtz stated that although Robinson's condition has improved somewhat and has stabilized, he continues to feel depressed and self-conscious.
At the close of the evidence, Robinson's counsel, John J. Schmittinger, offered an Affidavit Regarding Attorneys' Fees. The affidavit requested attorneys' fees in the amount of the statutory maximum (the lesser of $2,250 or 30% of the award) and represented that Schmittinger had spent nine hours in preparation for the hearing. Metal Masters' counsel objected to the affidavit on the basis that nine hours of preparation seemed excessive.
The Board awarded Robinson the maximum disfigurement award of 300 weeks of compensation, for a total of nearly $75,000.00. The Board also awarded him attorneys' fees in the amount of $1,250 and medical witness fees.
On December 15, 1999, Robinson filed a limited appeal of the Board's decision, contesting only the award of attorneys' fees. After receiving Robinson's opening brief, Metal Masters filed a motion to affirm the Board's decision. In an order dated February 28, 2000, this Court denied the motion and required full briefing on the merits of the appeal.
Robinson argues that the Board abused its discretion by granting $1,250 in attorneys' fees instead of awarding the statutory maximum amount of $2,250. In General Motors Corporation v. Cox, the Delaware Supreme Court enumerated the factors that must be considered in calculating an award of reasonable attorneys' fees in a worker's compensation case. Robinson contends that the Board did not properly analyze these factors. Metal Masters, on the other hand, maintains that the Board properly applied the Cox factors and acted within its discretion in determining the amount of the award.
304 A.2d 55, 57 (1973).
II. STANDARD OF REVIEW
On appeals from the Industrial Accident Board, the Superior Court must limit its scope of review to correcting errors of law and determining whether substantial evidence exists in the record to support the Board's findings of fact and conclusions of law. "Substantial evidence means such relevant evidence as a reasonable mind might accept as adequate to support a conclusion." It is more than a scintilla of evidence, but less than a preponderance. On appeal, this Court may neither reweigh the evidence, determine questions of credibility, nor make its own factual findings. The Court must give deference to "the experience and specialized competence of the Board" and must take into account the purposes of the Worker's Compensation Act.
Histed v. E.I. DuPont deNemours Co., Del. Supr., 621 A.2d 340, 342 (1993); Johnson v. Chrysler Corp., Del. Supr., 213 A.2d 64, 66 (1965).
Olney v. Cooch, Del. Supr., 425 A.2d 610, 614 (1981).
Id.
ILC of Dover, Inc. v. Kelley, Del. Super., r., C.A. No. 99A-02-002, 1999 WL 1427805 at *1, Witham, J. (Nov. 22, 1999).
Histed, 621 A.2d at 342.
Absent an abuse of discretion or an error of law, the Court will not disturb an award of attorneys' fees. The Board commits an abuse of discretion when it "exceed[s] the bounds of reason" in light of the circumstances, or "so ignore[s] recognized rules of law or practice" as to produce an injustice. If the record reveals that the Board based its decision on improper or inadequate grounds, an abuse of discretion has occurred and the Court must reverse the decision.
DiGiacomo v. Board of Public Education, Del. Supr., 507 A.2d 542, 546 (1986).
Floudiotis v. State, Del. Supr., 726 A.2d 1196, 1202 (1999) (quoting Lilly v. State, Del. Supr., 649 A.2d 1055, 1059 (1994), and Firestone Tire Rubber Co. v. Adams, Del. Supr., 541 A.2d 567, 570 (1988)).
City of Wilmington v. Clark, Del. Super., C.A. No. 90A-FE-2, 1991 WL 53441 at *3, Barron, J. (Mar. 20, 1991) (Mem. Op.).
III. DISCUSSION
19 Del. C. § 2320 (g)(1) requires the Board to award "[a] reasonable attorney's fee in an amount not to exceed 30 percent of the award or $2,250, whichever is smaller, . . . to any employee awarded compensation. . . ." The purpose of this provision is to reduce the depleting effect of attorneys' fees on worker's compensation benefits by decreasing or eliminating the amount of attorneys' fees that employees must pay from the proceeds of their awards.The Board has discretion in determining the amount of attorneys' fees it awards. However, the Board must exercise this discretion in a manner consistent with the purposes of the Worker's Compensation Act. General Motors Corp v. Cox sets forth the factors that the Board must consider in calculating an award of attorneys' fees. These factors are:
See Simmons v. Delaware State Hospital, Del. Supr., 660 A.2d 384, 389 (1995).
Histed, 621 A.2d at 342.
(1) The time and labor required, the novelty and difficulty of the questions involved, and the skill requisite to perform the legal service properly; (2) The likelihood, if apparent to the client, that the acceptance of the particular employment will preclude other employment by the lawyer; (3) The fees customarily charged in the locality for similar legal services; (4) The amount involved and the results obtained; (5) The time limitations imposed by the client or by the circumstances; (6) The nature and length of the professional relationship with the client; (7) The experience, reputation, and ability of the lawyer or lawyers performing the services; (8) Whether the fee is fixed or contingent; (9) The employer's ability to pay; and (10) Whether the employee's counsel has received, or expects to receive, compensation from any other source.
Id.; DiGiacomo, 507 A.2d at 546.
In its decision in the present case, the Board provided the following analysis regarding the issue of attorneys' fees:
Claimant's attorney attested that he spent nine hours preparing for the hearing, which lasted approximately one hour. His first contact with Claimant was in February 1996. Claimant's attorney has been practicing law in Delaware for over thirty years. Most disfigurement cases are straightforward matters that do not require much time and do not involve factual disputes. As such, the Board generally awards an attorney's fee in the range of $150 to $300. The instant case, however, involved expert testimony and the parties disagreed as to the psychological impact of the disfigurement. Based on these factors, and on the results obtained, the Board awards one attorney's fee in the amount of $1250.
Robinson v. Metal Masters, Inc., I.A.B. No. 1069569 at 5 (Nov. 23, 1999) (Bd. Op.).
The Board referred to some, but not all, of the Cox factors in its decision. It made reference to the first factor (the time and labor required) when it stated that claimant's attorney spent nine hours preparing for the hearing, which lasted about an hour. With respect to this factor, the Board also noted that, although most disfigurement cases are straightforward matters that do not require much time and do not involve factual disputes, this case was more complex, because it "involved expert testimony and the parties disagreed as to the psychological impact of the disfigurement." The Board identified the fourth factor (the amount involved and the results obtained) when it declared that it had based its decision, in part, on the results obtained. The Board alluded to the sixth factor (the nature and length of the professional relationship) when it stated that counsel's first contact with claimant was in February of 1996. Finally, in reference to the seventh factor (the experience, reputation, and ability of the lawyer) the Board remarked that claimant's attorney had been practicing law in Delaware for over thirty years. The Board did not make any mention of the second or fifth factors (the likelihood that other employment will be precluded, and the time limitations imposed by the case, respectively). However, Robinson's attorneys acknowledge that any failure to analyze these two factors was harmless error, as worker's compensation cases usually do not affect counsel's ability to engage in the representation of other clients and do not impose undue time limitations.
The Board's decision incorrectly applies the third factor (the fees customarily charged for similar services). The Board attempted to address this factor by commenting that it usually awards attorneys' fees in the amount of $150 to $300 in less complicated disfigurement cases. The Board mistakenly interpreted this factor to mean the fees customarily awarded by the Board rather than the fees customarily charged by attorneys in the locality for similar work. The proper analysis of this factor involves the consideration of the hourly rate customarily charged in worker's compensation cases by lawyers of the same experience, reputation and ability in the same county.
See Seaford Feed Company, Inc. v. Moore, Del Super., 1989 WL 48692 at *2, Ridgely, J. (Apr. 19, 1989) (ORDER).
Even more significantly, the Board's decision omits any discussion of the eighth, ninth and tenth factors (whether the fee is fixed or contingent, the employer's ability to pay and the fees counsel may receive from other sources, respectively). Because the Board's decision makes no reference to these three factors, this Court is unable to ascertain whether the Board applied them in calculating the award of attorneys' fees. "The Court cannot properly exercise its function on appeal without an adequate statement of findings by the Board." It "should not be compelled to speculate or make assumptions" as to what factors the Board considered in making its determination.
City of Wilmington v. Clark, C.A. No. 90A-FE-2, 1991 WL 53441 at *8.
Id.
Despite the Board's wide discretion, it must act in accordance with the purposes of the Worker's Compensation Act. The purpose of 19 Del. C. § 2320 (g)(1) is to reduce or eliminate the depleting effect of attorneys' fees on worker's compensation benefits.
Histed, 621 A.2d at 342.
ILC of Dover, Inc. v. Kelley, C.A. No. 99A-02-002, 1999 WL 1427805 at *2; see DiGiacomo, 507 A.2d at 547.
IV. CONCLUSION
In calculating the award of attorneys' fees in the present case, the Board incorrectly applied the third Cox factor and failed to address the eighth, ninth and tenth factors. Because the Board based its decision on improper or inadequate grounds, there has been abuse of discretion which requires reversal. On remand, the Board should reassess the award of attorneys' fees on the basis of all ten of the factors enumerated in Cox. In analyzing the third factor, the Board should consider the hourly rate customarily charged in worker's compensation cases by lawyers m Kent County of the same experience, reputation and ability as claimant's counsel. In addition, the Board should specifically address the eighth, ninth and tenth Cox factors in its decision. The Board's decision regarding the award of attorneys' fees is REVERSED and this matter is REMANDED for further proceedings consistent with this opinion.IT IS SO ORDERED.