Decided November 23, 2004

The primary issue in this case is whether the interpretation of a federal anti-discrimination law should apply to a New York City anti-discrimination law.

The three Plaintiffs, who were transsexuals, sued Toys “R” Us in federal court alleging that store employees harassed them as they shopped at Toys “R” Us. The Plaintiffs alleged that the harassment was a violation of the New York City Human Rights Law (NYCHRL), which prohibits discrimination in public accommodations. The court held that the conduct of the employees violated the NYCHRL, but only awarded the Plaintiffs damages of $1.00 each. Following the trial, the Plaintiffs sought $206,000 from Defendants to pay their attorneys’ fees.

The federal court asked the New York State Court of Appeals to determine whether under the NYCHRL attorneys’ fees may be awarded to a prevailing party if the damage award is nominal. The attorneys’ fees provisions in civil rights statutes are generally intended to allow the vindication of important rights regardless of the amount of money at stake and to encourage attorneys to take valid and important civil rights cases. The question in this case was whether the Plaintiffs, who did not obtain the damage award they sought of close to $1 million but were only awarded nominal damages of $3 total, could have their lawyers’ bills paid by Defendants.

The United States Supreme Court in Farrar v. Hobby (506 U.S. 103, 121 L. Ed. 2d 494, 113 S. Ct. 566) decided this issue when interpreting a federal civil rights law that similarly provided attorneys’ fees for prevailing parties. In that case, the Supreme Court decided that although one who wins a nominal damage award is a prevailing party, the victory is only partial and so the court must make a determination regarding the reasonableness of an attorneys’ fee award. It said that in most cases “when a plaintiff recovers nominal damages…the only reasonable fee is usually no fee at all.” If, however, the litigation accomplished some “significant public purpose,” then attorneys’ fees are reasonable and may be awarded.

Initially, the New York State Court of Appeals had to decide whether to apply the rule interpreting a federal civil rights law in Farrar to this case being decided under a city ordinance, the NYCHRL. The Court stated that where a state or local civil rights statute is “substantively and textually similar” to a federal statute, the Court has generally interpreted the state or local statute consistently with the federal precedent. Here the Court found that the language regarding attorneys’ fees in the NYCHRL was indistinguishable from the federal civil rights statute and that nothing in the legislative history of the NYCHRL indicated that it should be interpreted differently from the federal law. The Court therefore concluded that the standard set forth in Farrar was applicable to attorney’s fee claims under the NYCHRL.

Then the Court was asked to decide whether the litigation served a “significant public purpose” so that attorneys’ fees in this case might be reasonably awarded to the Plaintiffs. The Court considered that this case was the first public accommodation discrimination case to go to verdict under the NYCHRL and the first judgment in favor of transsexuals. Although the NYCHRL was amended (after this action was commenced but shortly before the trial began) to specifically include a prohibition of discrimination against transsexuals, this action could be considered to serve a “significant public purpose” of increasing “awareness as to the plight of a disadvantaged class. Particularly in the civil rights arena, a jury verdict can communicate community condemnation of unlawful discrimination.”

Learning Activities

Terms to Know

- Legislative history

- Nominal damages

- Prevailing party

- Public accommodation

Compare and Contrast

In the United States Supreme Court case Gibbons v. Ogden (22 U.S.1 (1824)), a New York State law that gave exclusive rights to certain individuals to use steam navigation on all the waters in the state was found to conflict with a federal law regulating the licensing of ships and vessels in coastal trade and fisheries. The Supreme Court found the New York State prohibition against vessels navigating the waters of its state unconstitutional and void.

In McGrath v. Toys “R” Us there was a federal statute and a city ordinance that both regulated civil rights. In Gibbons v. Ogden, there was a federal statute and a state statute that both regulated navigation on coastal waters within New York State. In McGrath the NYS Court of Appeals reconciled the two laws to find them consistent with one another while in Gibbons the US Supreme Court found the New York State law unconstitutional. Why were the outcomes different?

Answer: This question goes to the heart of our federalist system and the Supremacy Clause. When Congress has the authority legislate, as it did in Gibbons pursuant to the Commerce Clause, then its acts will preempt any conflicting state or local law. There was no conflict between the federal civil rights law and the city civil rights ordinance in McGrath while the limitation of New York’s law in Gibbons directly conflicted with the federal law on the same subject.

Critical Thinking

Why do you think city councils and state governments continue to pass civil rights laws when there are federal civil rights laws already on the books?

Some suggested answers: (a) Some times state and local governments wish their laws to be more protective than the federal laws. So, for example, if the federal law does not provide protection against discrimination for transsexuals or gay and lesbian people (as it does not as of this writing) the state or local governments can; (b) procedures for enforcement of civil rights protections can vary making easier or harder to bring civil rights claims to court or administrative review, for example, different deadlines, filing requirements, or attorneys’ fees provisions; or (c) the cynics answer: It is purely political: Politicians sometimes wish to show their support for civil rights in this manner.