Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-ca8-04-01748/USCOURTS-ca8-04-01748-0/pdf.json

Parties Involved:
Carol Browner
Not Party
Citizens Legal Environmental Action Network
Appellant
Continental Grain Company
Appellee
Environmental Protection Agency
Not Party
Dennis Grams
Not Party
Premium Standard Farms
Appellee
United States of America
Not Party

Document Text:

United States Court of Appeals

FOR THE EIGHTH CIRCUIT

___________

No. 04-1748

___________

Citizens Legal Environmental Action *

Network, Inc., *

*

Plaintiff-Appellant, *

*

United States of America, *

*

Intervenor, *

*

v. *

*

Premium Standard Farms, Inc., * Appeal from the United States

* District Court for the Western

Defendant-Appellee, * District of Missouri.

*

Carol Browner, Administrator, United *

States Environmental Protection *

Agency, in her official capacity, *

Dennis Grams, Region VII *

Administrator of the United States *

Environmental Protection Agency, in *

his official capacity, Environmental *

Protection Agency, of the United *

States of America, *

*

Defendants. *

*

 *

Appellate Case: 04-1748 Page: 1 Date Filed: 02/01/2005 Entry ID: 1861747 
1

The Honorable Howard F. Sachs, United States District Judge for the Western

District of Missouri. The district court’s order was entered on September 10, 2003,

in cases 97-6073-CV-SJ-HFS and 98-6099-CV-SJ-HFS.

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Citizens Legal Environmental Action *

Network, Inc., *

*

Plaintiff-Appellant, *

*

v. *

*

Continental Grain Company, *

*

Defendant-Appellee. *

___________

Submitted: December 15, 2004

 Filed: February 1, 2005

___________

Before MELLOY, BRIGHT, and BOWMAN, Circuit Judges.

___________

BRIGHT, Circuit Judge.

Appellant, Citizens Legal Environmental Action Network, Inc. (“CLEAN”),

appeals from the district court’s denial of certain attorney fees. In the underlying

actions, begun in 1997, CLEAN sued appellees Premium Standard Farms

(“Premium”) and Continental Grain Company (“Continental”) for violations of

various federal environmental laws. The case was settled in 2001, and the district

court determined that CLEAN prevailed and could collect attorney fees under 33

U.S.C. § 1365(d) and other fee-collecting statutes. We affirm on the basis of the

district court’s memorandum and order.1

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I.

From the inception of the actions until August 2000, CLEAN was represented

by the law firm of Armstrong Teasdale (“Armstrong”), with its partner Charles Speer

as lead attorney for CLEAN. In August 2000, Speer resigned from Armstrong and

joined the law firm of Payne and Jones, Chartered. CLEAN discharged Armstrong

and hired the Payne firm as counsel in the underlying actions, again with Speer as

lead attorney. 

Before the settlement was reached in May 2001, and while the parties were

negotiating, Armstrong, without CLEAN’s knowledge, directly negotiated with

Premium and Continental and came to an agreement by which Premium and

Continental paid a discounted amount of Armstrong’s fees for work on the underlying

actions. By this agreement, Armstrong assigned back to Premium and Continental

any additional money Armstrong might receive out of an award of attorney fees to

CLEAN. (Thus, if CLEAN were awarded fees for Armstrong’s work, Premium and

Continental would pay the fees to CLEAN, CLEAN would presumably be required

to pay them to Armstrong, and Armstrong would give the money back to Premium

and Continental.) CLEAN learned of the proposed fee agreement and protested it. 

Following the settlement of its action against Premium and Continental,

CLEAN requested that the district court award fees for Armstrong’s work. CLEAN

sought approximately $7 million in attorney fees, in total – including about $5.9

million for Armstrong’s work. Armstrong had already accepted $1.7 million directly

from Premium and Continental in full satisfaction of any fees owed to it. 

CLEAN argued to the district court, as it argues on appeal, that Armstrong’s

agreement with Premium and Continental was of no effect. CLEAN argued,

additionally, that by the terms of its retainer agreement with Armstrong, CLEAN was

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2

While we find CLEAN’s reading of the retainer agreement – which CLEAN

claims entitles it to keep any fees awarded for Armstrong’s work – wholly

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entitled to keep any attorney fees awarded for Armstrong’s work, and CLEAN

evinced an intention to keep the money.

The district court denied any award of additional fees to CLEAN for

Armstrong’s work. CLEAN appeals the denial of $5.9 million in fees for

Armstrong’s work.

II.

An award of attorney fees pursuant to the federal fee-shifting statutes is not

automatic but rather is subject to the district court’s discretion. See, e.g., 33 U.S.C.

§ 1365(d) (“[t]he court . . . may award . . . whenever the court determines such award

is appropriate”). We review the district court’s grant or denial of attorney fees for

abuse of that discretion. Hayes v. Faulkner County, Ark., 388 F.3d 669, 676 (8th Cir.

2004). When necessary, however, we may review de novo legal conclusions that

inform the court’s exercise of its discretion. See Lewis v. Anderson, 692 F.2d 1267,

1269 (9th Cir. 1982).

CLEAN devotes its lengthy briefs almost entirely to questions of law that are

not dispositive. The crux of the matter for the district court was that CLEAN sought

payment of attorney fees but intended to keep the money for itself, rather than using

it to pay the attorneys who earned the fees and who had declared themselves satisfied

with the fees already received. Fundamentally, the district court denied the attorney

fees in question because, “if plaintiff [CLEAN] is not committed to paying Armstrong

the full recovery made for Armstrong’s services, it is not equitably or appropriately

entitled to a full assessment of the fees it claims, even though they would otherwise

be classified as ‘reasonable.’”2

 Appellant's App. at A11-A12. The district court’s

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unconvincing, this does not render CLEAN’s claim of entitlement unimportant.

Clearly, if such fees were awarded, CLEAN would at least force Armstrong to sue in

order to receive the fees it had earned. CLEAN’s position thus is properly considered

by the district court as affecting the balance of equities relevant to an attorney fee

award. Additionally, if Armstrong’s assignment of any additional fee recovery to

Premium and Continental is valid (an issue we do not decide), Armstrong could not

recover the fee award – thus either giving CLEAN a windfall in the form of money

for attorney fees that is never paid over to the attorneys or rendering the fee award an

empty gesture.

3

Control of negotiations for fees does not imply that the prevailing party is

entitled to keep whatever fees are recovered instead of paying the money to the

attorney who earned it. See Image Technical Svc., Inc. v. Eastman Kodak Co., 136

F.3d 1354, 1359 (9th Cir. 1998).

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decision rested on equitable considerations, the judgment of which lies within the

court’s sound discretion.

CLEAN says nothing to throw in doubt the district court’s judgment of what

is equitable and appropriate in this matter. CLEAN does argue that Armstrong’s

direct agreement with Premium and Continental deprived CLEAN of a bargaining

chip that might have been used to negotiate a better settlement with Premium and

Continental. The Supreme Court has held that a prevailing party controls

negotiations for attorney fees and has the power and discretion to use such fees as a

bargaining chip in settlement negotiations – to the extent of bargaining away such

fees altogether. Evans v. Jeff D., 475 U.S. 717, 731-32 (1986). Control of fee

negotiations thus is valuable to a prevailing party, and loss of control harms a party

that seeks to use it to get a better deal in a settlement.3

 The loss of control, however,

has no practical consequence – and negligible equitable significance – if the

prevailing party is not in fact inclined to use control of fee negotiations to bargain for

a better settlement.

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If CLEAN had been substantially prejudiced in settlement negotiations by

Armstrong’s separate peace with Premium and Continental, and the district court had

not considered such prejudice, the court’s decision would give us pause. But that is

not the case. The district court did consider whether CLEAN had been prejudiced,

deeming this the most important question, and noted, “No actual prejudice is asserted

here.” See Appellant's App. at A13 n.4. On appeal, Premium and Continental declare

[A]t no time during the negotiations did CLEAN ever seek to use its

claim for Armstrong’s fees as a bargaining chip to obtain greater relief[,]

[l]ikewise, [with the Payne & Jones fees] . . . . In fact, CLEAN refused

to even disclose the amount of fees incurred by Payne & Jones, causing

settlement negotiations to stall. Without information about the amount

of fees incurred, there could be no negotiated resolution of the fee claim.

 Had CLEAN really been interested in bargaining away its

attorney fee claim in exchange for other relief, surely CLEAN would

have indicated some willingness to compromise this claim at some point

during the more than two years of settlement negotiations that resulted

in the Consent Decree. But CLEAN never even hinted during settlement

negotiations that it was interested in waiving its fee claim.

Appellees’ Br. at 49-50. CLEAN makes no answer to these statements by the district

court and by Premium and Continental, except to state generally that its bargaining

power was reduced by Armstrong’s agreement with Premium and Continental. 

CLEAN has said nothing to call into question the court’s judgment of what is

equitable and appropriate in this matter. CLEAN settled the underlying actions in a

manner favorable to it, and did so, so far as the record shows, without suffering

prejudice from Armstrong’s direct agreement with Premium and Continental as to

fees. CLEAN thus suffered no harm in settlement negotiations for which it could

now seek redress. The fees CLEAN seeks would, if awarded, either be retained by

CLEAN as a windfall or be forwarded to Armstrong, which has declared itself

satisfied with the fees it has already received, or (if the assignment of additional fees

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that Armstrong agreed to is valid) be returned to Premium and Continental. There is,

then, no potential recipient with a strong equitable interest in the fee award that is

sought.

Additionally, in the trial court’s view, Armstrong’s separate agreement as to

fees bore no equitable taint. Armstrong had done the great bulk of the work for

CLEAN. CLEAN’s lead counsel, Speer, had left Armstrong partly over

disagreements involving this very case. Given these unique circumstances, the

district court took note of the possibility of bad faith negotiation by CLEAN as to fees

for Armstrong’s work. In the court’s view, therefore, Armstrong’s separate

agreement reasonably addressed this possibility and gave no reason to award fees to

CLEAN for Armstrong’s work. We agree.

Judge Sachs, an able and experienced district judge, thoughtfully and properly

balanced the equities presented by this novel case and concluded that it was not

equitable and appropriate to award CLEAN fees for Armstrong’s work. 

Accordingly, we affirm.

______________________________

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