Introduction

Cole v. Foxmar, Inc. presents a recurring and consequential question in fee-shifting litigation: may a trial court reduce a prevailing plaintiff’s attorney’s fee award on the ground that it is disproportionate to the plaintiff’s monetary recovery? Applying Vermont law to fee-shifting provisions in the Vermont Occupational Safety and Health Act (VOSHA), 21 V.S.A. §§ 201–232, and the Vermont Earned Sick Time Act (VESTA), 21 V.S.A. §§ 481–487, the Second Circuit holds that proportionality is not a permissible basis to reduce a reasonable fee award. While trial courts may consider the plaintiff’s “degree of success,” they may not equate success with the ratio between fees and damages, nor treat a larger fee than damages as a “windfall.”

The case arises from Thomas Cole’s successful jury verdict against his former employer, Foxmar, Inc., for retaliation under VOSHA and VESTA. After an initial trial produced a multimillion-dollar verdict including $3 million in punitive damages, the district court ordered a new trial on damages; the second jury awarded $55,000 in compensatory damages and no punitive damages. Cole then sought fees and costs. The district court granted fees, but imposed two across-the-board reductions: 25% for excessive hours and an additional 30% to account for Cole’s “overall success,” driven by perceived disproportionality between fees and damages. Cole appealed.

The Second Circuit affirms the 25% reduction (excessive hours) as within the district court’s discretion, but vacates the 30% reduction, holding it rests on an impermissible proportionality analysis under Vermont law. The case clarifies Vermont’s lodestar method, the role of “degree of success,” and the inapplicability of any damages-to-fee proportionality rule—especially in one-sided, public-welfare fee-shifting statutes like VOSHA and VESTA.

Summary of the Opinion

• Governing law: Because VOSHA and VESTA create the substantive right to fees, Vermont law controls the calculation of “reasonable attorney’s fees.”
• Method: Vermont uses a two-step lodestar framework: (1) calculate the lodestar (reasonable hours × reasonable rate), then (2) adjust up or down as appropriate, including consideration of the results obtained.
• 25% reduction affirmed: The district court reasonably concluded that plaintiff’s counsel billed excessive time for routine tasks and on litigation steps (e.g., an unsuccessful certiorari effort) that did not warrant the hours claimed. This reduction reflects traditional reasonableness factors and is supported by the record.
• 30% reduction vacated: The district court improperly relied on proportionality between damages and fees, effectively deeming a fees award unreasonable because it exceeded a $55,000 damages award. Vermont law prohibits using proportionality as a measure of “degree of success.”
• Remand: The fee award is vacated and remanded for recalculation consistent with Vermont law. The district court may consider “degree of success” but cannot let proportionality be outcome-determinative or substitute for reasonableness analysis.
• Methodological note: The panel observes the district court applied both percentage reductions to the same pre-lodestar figure, producing a slightly larger total cut than if the court had first set the lodestar and then adjusted. Although not dispositive, the opinion underscores that adjustments should follow a lodestar determination.

Detailed Analysis

Precedents Cited and Their Role

The opinion synthesizes Vermont Supreme Court authority and persuasive federal cases to demarcate the lawful contours of fee awards under Vermont’s fee-shifting statutes.

• Vermont lodestar and reasonableness:
  • Perez v. Travelers Ins. ex rel. Ames Department Stores, 915 A.2d 750 (Vt. 2006): “Reasonableness” is the touchstone of Vermont fee awards.
  • Kwon v. Eaton, 8 A.3d 1043 (Vt. 2010): Vermont’s two-step lodestar method—compute lodestar, then adjust considering factors including results obtained; proportionality is not the question.
  • L’Esperance v. Benware, 830 A.2d 675 (Vt. 2003): Adopts Hensley’s framework; recognizes that fees need not be proportionate to damages and that “degree of success” is relevant but distinct from proportionality.
  • Spooner v. Town of Topsham, 9 A.3d 672 (Vt. 2010), and Trevor v. Icon Legacy, 217 A.3d 496 (Vt. 2019): Confirm deference to trial courts and the propriety of considering time, labor, novelty, skill, and attorney experience.
  • Walsh v. Cluba, 117 A.3d 798 (Vt. 2015); Construction Drilling, Inc. v. Engineers Construction, Inc., 236 A.3d 193 (Vt. 2020): Reiterate that proportionality to damages is not the measure; affirmed fees exceeding damages by multiples.
  • Evans v. Cote, 107 A.3d 911 (Vt. 2014): Upholds reductions for limited success, illustrating “results obtained” analysis when appropriately tethered to case demands rather than ratios.
  • Anderson v. Johnson, 19 A.3d 86 (Vt. 2011): Even nominal or no damages may warrant fees if litigation vindicates rights or serves public purposes; shows why proportionality rules are inapt.
  • Vastano v. Killington Valley Real Estate, 996 A.2d 170 (Vt. 2010); McKinstry v. Fecteau Residential Homes, Inc., 131 A.3d 1123 (Vt. 2015): Consumer protection context—fees may dwarf damages to effectuate legislative goals.
  • Bisson v. Ward, 628 A.2d 1256 (Vt. 1993); State v. Whitingham School Board, 438 A.2d 394 (Vt. 1981); Gramatan Home Investors Corp. v. Starling, 470 A.2d 1157 (Vt. 1983): Vermont recognizes one-sided fee-shifting to encourage private enforcement serving the public interest.
• Persuasive federal guidance (used by Vermont courts and the panel):
  • Hensley v. Eckerhart, 461 U.S. 424 (1983): Lodestar baseline; “results obtained” is a key factor.
  • City of Riverside v. Rivera, 477 U.S. 561 (1986): Rejects a proportionality rule; fees may exceed damages in civil rights cases.
  • Farrar v. Hobby, 506 U.S. 103 (1992): Nominal damages may still support fees depending on broader purposes achieved.
  • Millea v. Metro-North R.R. Co., 658 F.3d 154 (2d Cir. 2011); Kassim v. City of Schenectady, 415 F.3d 246 (2d Cir. 2005); Fisher v. SD Protection Inc., 948 F.3d 593 (2d Cir. 2020); Quaratino v. Tiffany & Co., 166 F.3d 422 (2d Cir. 1999): Proportionality cannot be outcome-determinative; fee-shifting aims to generate fees that may be disproportionate to recovery to ensure enforcement of rights.
  • Riordan v. Nationwide, 977 F.2d 47 (2d Cir. 1992): State law governs fee calculation when the right to fees is state-created.

Legal Reasoning

• Vermont law controls and requires a lodestar-first analysis. Because VOSHA and VESTA create the substantive right to fees, Vermont’s two-step approach applies: establish a reasonable hourly rate and reasonable hours to produce the lodestar, then consider adjustments for case-specific factors. The district court largely followed this structure but, as the panel notes, applied both percentage reductions to the same pre-lodestar figure instead of calculating the lodestar and then adjusting—a methodological point to correct on remand.
• The 25% hours reduction was within “wide discretion.” The district court reasonably found excessive time for routine tasks and for litigation moves unlikely to affect relief (e.g., seeking Supreme Court review). Vermont authority permits across-the-board reductions when adequately explained and grounded in recognized factors such as time and labor required, novelty, and demands of the case.
• The 30% “degree of success” reduction impermissibly relied on proportionality. While Vermont permits considering “results obtained,” it forbids using the ratio of damages-to-fees as the measure of success. The district court’s emphasis on what a “reasonable paying client” would spend for a $55,000 recovery and its characterization of a large fee as a “windfall” effectively imposed a proportionality rule, which Vermont law rejects—especially in one-sided, public-welfare statutes designed to incentivize enforcement.
• Purpose of VOSHA and VESTA confirms the no-proportionality rule. These statutes shift fees to defendants to make representation viable in cases where damages may be modest. Conditioning fees on proportionality would thwart legislative intent by deterring meritorious suits and undercutting private enforcement of workplace safety and retaliation protections.
• Damages can be considered, but not determinatively and not by ratio. Vermont allows courts to consider damages as one part of “degree of success,” but requires the ultimate inquiry to remain: is the fee reasonable given the demands of the case? A mechanical comparison of fees to damages (or the client’s willingness to pay those fees out-of-pocket) cannot control the analysis.

Impact and Practical Implications

Cole has immediate and broad implications for fee litigation under Vermont law, both in Vermont state courts and in federal courts adjudicating Vermont claims:

• No proportionality reductions in one-sided fee-shifting statutes. Courts may not reduce fees simply because they exceed (even substantially) the plaintiff’s monetary award. This applies not only to VOSHA and VESTA, but, by parity of reasoning, to other Vermont statutes with similar purposes (e.g., the Consumer Protection Act, Fair Employment Practices Act, Residential Rental Agreements Act).
• “Reasonable paying client” as a proxy for proportionality is out. Framing the inquiry as whether a rational client would pay the fee for the damages recovered improperly reintroduces proportionality. Vermont’s focus is reasonableness as a function of the case’s demands, not private market willingness to pay.
• Attorneys can confidently pursue modest-damages cases. The decision reinforces that fee-shifting is meant to attract competent counsel even when expected monetary relief is small, preserving incentives to enforce public-welfare rights.
• District courts should hew to the lodestar sequence and avoid double counting. On remand—and in future cases—courts should: (1) explicitly set the lodestar; (2) separately assess any adjustments; and (3) ensure factors (e.g., excessive hours) are not counted twice. Across-the-board cuts remain permissible if well-explained and tied to the record.
• Litigation strategy and settlement dynamics. Defendants should prioritize attacking unreasonable hours, duplication, or unrelated unsuccessful claims rather than pressing proportionality. Plaintiffs should document efficiency, staffing, and the public significance of results to support any upward or neutral adjustment.

Complex Concepts Simplified

• Fee-shifting statute: A law requiring the losing party (here, the employer who violated VOSHA/VESTA) to pay the prevailing plaintiff’s reasonable attorney’s fees. One-sided fee-shifting (benefiting only plaintiffs) incentivizes enforcement of public-interest rights.
• Lodestar: The starting figure for a fee award—calculated by multiplying a reasonable hourly rate by the reasonable number of hours reasonably expended. Courts may then adjust the lodestar up or down for case-specific factors.
• Degree of success vs. proportionality: “Degree of success” is a holistic look at what the lawsuit achieved (e.g., compensatory relief, deterrence, vindication of rights). “Proportionality” is a mechanical ratio comparing fees to damages. Vermont permits the former but rejects the latter.
• Abuse of discretion: An appellate standard granting trial courts latitude but allowing reversal where the court applies the wrong legal rule (here, proportionality), relies on clearly erroneous facts, or reaches a decision outside the range of permissible outcomes.
• Across-the-board percentage reductions: A method courts use to reduce hours or the overall fee when billing is excessive or records are imprecise. Permissible if grounded in the record and recognized factors; impermissible if based on an improper legal standard like proportionality.
• Administrative vs. legal work: Time spent on clerical or administrative tasks may be compensated at a lower rate or excluded; here, the district court made a small itemized downward adjustment for such work.

Methodological Pointers from the Opinion

• Calculate the lodestar first. Determine reasonable rates and hours, make any itemized adjustments (e.g., remove administrative time or excessive hours), and arrive at a clear lodestar figure.
• Then adjust, if needed. Consider recognized factors (novelty, complexity, attorney experience, and results obtained). Avoid double counting (e.g., don’t reduce hours for inefficiency and then reduce again for the same inefficiency under “results obtained”).
• Explain the reductions. Across-the-board cuts are permissible but must be justified with reference to the record and Vermont’s factors.
• Do not let proportionality control. The size of the damages award can be one piece of the “degree of success” inquiry, but no fee may be deemed unreasonable solely because it exceeds, even substantially, the damages awarded.

Application to the Cole Record

• Affirmed 25% reduction (hours): The district court reasonably found above-average time on routine matters and hours not justified by case demands (including an unsuccessful certiorari bid). This aligns with Vermont’s deference to trial courts on reasonableness and billing judgment.
• Vacated 30% reduction (success): The district court equated “overall success” with fees-to-damages proportionality and a “reasonable paying client” metric—both inconsistent with Vermont law for one-sided fee-shifting statutes serving public purposes. On remand, the court may consider the absence of punitive damages or other litigation outcomes as part of “results obtained,” but cannot reduce fees merely because damages were $55,000 or because fees exceed damages.
• Sequential calculation on remand: The district court should identify the lodestar after the 25% hours cut and administrative-time adjustment, then assess any further adjustment, ensuring no duplication and no reliance on proportionality.

Key Takeaways

• Under Vermont law, proportionality between damages and attorney’s fees is not a permissible basis to reduce a fee award under VOSHA, VESTA, or similar one-sided fee-shifting statutes.
• Courts may consider “degree of success,” but must not let the fees-to-damages ratio be determinative; success is holistic and includes public-benefit and rights-vindication aspects.
• Across-the-board reductions for excessive or unreasonable hours are allowed when grounded in the record and Vermont’s recognized factors.
• Fee calculations should follow the lodestar sequence: set the lodestar, then adjust; avoid double counting and ensure clear explanations.
• This decision strengthens private enforcement of public-welfare statutes in Vermont by ensuring attorneys can be compensated reasonably even in modest-damages cases.

Conclusion

Cole v. Foxmar, Inc. is a clarifying decision that reinforces foundational principles of Vermont fee-shifting jurisprudence. It approves a well-explained reduction for excessive hours while emphatically rejecting any reduction grounded in proportionality between fees and damages. The opinion harmonizes Vermont’s commitment to a lodestar-based reasonableness inquiry with the public-enforcement objectives that animate one-sided fee-shifting provisions. On remand, and in future Vermont fee cases, trial courts should continue to scrutinize hours and rates rigorously, consider “results obtained” sensibly, and resist any gravitational pull toward proportionality—so that fee awards remain faithful to legislative design and the practical necessities of rights enforcement.