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D ock e t N o . 11-3813

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UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT

_____________

No s . 11

- 3813 and 11

- 3814

_____________

INTERFAITH COMMUNITY ORGANIZATION; LAWRENCE BAKER; MARTHA WEBB HERRING;
MARGARET WEBB ; WINSTON CLARKE; MARGARITA NAVAS; HACKENSACK RIVERKEEPER, INC.;

WILLIAM SHEEHAN

v.

HONEYWELL INTERNATIONAL, INC, F/K/A

Alliedsignal, Inc; RONED REALTY OF JERSEY CITY, INC.; RONED REALTY OF UNION CITY, INC.; W.R. GRACE & CO;

ECARG INC; W.R. GRACE LTD;
*K ELLOGG STREET 80 PROPERTY; *KELLOGG

STREET 440 PROPERTY, LLC.; *KELLOGG STREET 60

PROPERTY, LLC

Honeywe ll International, Inc., Kellogg Street 80 Property,

LLC, Kellogg Street 440 Property, LLC, Kellogg Street 60

Property, LLC2 Appellants in No. 11

- 3 8 13

*(Pursuant to Fed. R. App. P. 12(a))

_____________

JERSEY CITY MUNICIPAL UTILITIES AUTHORITY; ELIZABETH ROSARIO; RAFAEL ROSARIO;
HACKENSACK RIVERKEE PER, INC.; WILLIAM

SHEEHAN; WINSTON CLARKE; LAWRENCE BAKER;
JERSEY CITY INCINERATOR AUTHORITY

v.

HONEYWELL INTERNATIONAL INC; PAUL TRENK;

STEVE GALLO; BOB CIASULLI; DEGEN OIL AND CHEMICAL CO; INLAND SOUTHEAST JERSEY CITY, LLC;
KELLOGG STREET 60 PROPE RTY, LLC; KELLOGG STREET 80 PROPERTY, LLC; KELLOGG STREET 440 PROPERTY, LLC; 100 KELLOGG STREET, LLC; NEW JERSEY CITY

UNIVERSITY; JERRAMIAH T. HEALY;
OREN DABNEY, In his official capacity as Director of Jersey City Incinerator Authority; JOHN YURCHAK , In his

official capacity as Director of Jersey City Department of Public Works; DANIEL BECHT,

Executive Director of Jersey City Municipal Utilities Authority;3 BAYONN E MUNICIPAL UTILITIES AUTHORITY; CARLOS M. HERNANDEZ, In his official capacity as
Pres ident of New Jersey City University

Honeywell International, Inc., Kellogg Street 80 Property, LLC, Kellogg Street/440 Property, LLC, Kellogg Street 60

Property, LLC, Appellants in 11

- 3814

___________
On Appeal from the United Stat es District Court
for the District of New Jersey (Civil Action No s

. 2

- 9 5

- cv

- 2097 & 2

- 05

- cv

- 05955 ) District Judge: Honorable Dennis M. Cavanaugh

___________
Argued December 20 , 2012

Before: McKEE, Chief Judge , SLOVITER and

VANASKIE

, Circuit Judges

( Filed : June 4, 2013 )

Lisa S. Blatt , Esq. [ARGUED]
Michael D. Daneker Dirk C. Phillips
R. Stanton Jones
Arnold & Porter 555 12th Street, N.W. Washington, D.C. 20004 Counsel for Appellants4 Bruce J. Terris Carolyn Smith Pravlick , Esq. [ARGUED]
Michelle Wea ver Terris, Pravlik & Millian, LLP 1121 12th Street, N.W. Washington, D.C. 20005

- 4632 Counsel for Appellees

___________

OPINION OF THE COURT

___________

VANASKIE, Circuit Judge.

“A request for attorney‟s fees should not re sult in a second major litigation.” Hensl ey v. Eckerhart , 461 U.S. 424, 437 (1983). Regrettably, requests for attorneys‟ fees in this protracted environmental clean

- up case have resulted not only in a second major litigation, but a third as well. An ear lier
multi

- million dollar fee award previously brought before us
was vacated and remanded for additional review by the
District Court

. Interfaith Cmty. Org. v. Honeywell Int’l, Inc. ( ICO I I ), 426 F.3d 694 (3d Cir. 2005). We are now
confronted with a chal lenge to another multi

- million dollar award. This latest appeal calls upon us to decide whether offers of judgment pursuant to Fed. R. Civ. P. 68 may be made in the context of attorney ‟s fee disputes under the fee

shifting provisions of the Resource Conse rvation and
Recover y Act (“RCRA”) , 42 U.S.C. §§ 6901, et seq. We are also called upon once again to determine whether the fee
award is excessive. Because we conclude that Rule 68 offers of judgment may be made in this context, we will reverse the
Distric t Court‟s declaration that the offer s of judgment in this5 case are null and void as well as its decision to bar any further offers of judgment. And, while we uphold as not clearly

erroneous the District Court‟s decisions with respect to the appropriate ho urly rates in this case

, we are unable to sustain
its conclusions with respect to the number of hours claimed by counsel because the District Court‟s findings lack sufficient explanation. Accordingly, we will vacate the fee award and remand for further pr oceedings.

I. Facts and Procedural History

Mutual Chemical Company of America (“Mutual”) operated a chrome manufacturing plant in Jersey City, New Jersey from 1895 to 1954. During that time, the company deposited approximately 1.5 million tons of indus tri al waste residue containing hexavalent chromium into wetlands along the Hackensack River. (Joint Appendix [“J.A.”] 1082

- 83 .) In 1954, Allied Corporation purchased the plant and ended the dumping. Allied Corporation was succeeded by AlliedSignal, Inc., a nd later by Honeywell International, Inc. (“Honeywell”) . Although the dumping stopped, the
contaminated area was not cleaned up.

In 1995, the Inte rfaith Community Organization and five residents of the nearby community (collectively, “ICO”)

, represented by the Washington, D.C. law firm of Terris, Pravlik & Millian, LLP (“Terris”), filed the original suit against AlliedSignal, then the owner of the site, seeking the cleanup of a contaminated a rea designated “Study Area 7.”
ICO sued AlliedSignal under the citizen suit provision of RCRA, which allows individuals to bring a civil action against any person “who has contributed or who is contributing to the past or present handling, storage,6 treatment, transportat ion, or disposal of any solid or
hazardous wast e which may present an imminent and substantial endangerment to health or the environment . . .

. ” 42 U.S.C. § 6972(a)(1)(B).

The District Court entered judgment for ICO in 2003, ordering Honeywell (which had succeeded AlliedSignal) to clean up Study A rea 7

. Interfaith Cmty. Org. v. Honeywell Int’l Inc. , 263 F. Supp. 2d 796, 802 (D

. N.J. 2003) . T his Court
affirmed. See 399 F.3d 248, 252 (3d Cir. 2005 )

.

In 2004, the District Court awarded ICO more than $4.5 million in fees and expenses for litigatin g the 1995 action, and also required Honeywell to pay the future fees and costs incurred by ICO in monitoring Honeywell‟s cleanup. Interfaith Cmty. Org. v. Honeywell Int’l, Inc. ( ICO I ) , 336 F. Supp. 2d 370, 40 3

- 0 4 (D.N.J. 2004). We affirme d in part and vacated in part. ICO II

, 426 F.3d 694, (3d Cir. 2005)

. Specifically, we sustained as not clearly erroneous the District Court‟s decision with respect to the hourly rates sought by ICO‟s counsel, i d

. at 707

- 10

, but rejected as inadequate the
District Cour t‟s review of the hours for which compensation

was claimed. I

d

. at 711

- 14 . Ac c ordingly, we vacated the fee award and remanded for further proceedings.

In 2005

, Hackensack Riverkeeper (“Riverkeeper”)

, also represented by Terris

, filed companion cases ag ainst Honeywell stemming from the same contamination but relating to areas adjacent to Study Area 7, designated as “Study Area 5 ” and “Study Area 6

. ” (J.A. 1140.) T he parties entered into a number of consent decrees in which Honeywell conceded responsibi lity, and agreed to remediate the additional contaminated sites. As part of the consent decrees,7 Honeywell also agreed to pay $5 million in fees and costs for the expenses incurred prior to the decrees, and to pay “reasonable” future fees and expenses inc urred in connection
with monitoring Honeywell‟s remediation efforts. (J.A. 334

- 35.)

Initially, the parties were able to reach agreement on fees and expenses. Beginning in the fall of 2009, however, Honeywell, on the one hand, and ICO and Riverkeeper (c ollectively, “Appellees”) on the other, failed to reach agreement with respect to the fees sought for monitor ing
H o ney well‟s work

.

Terris subsequently filed two separate fee applications, totaling more than $700,000

, for its monitoring work performed in 2009 and the first half of 2010 in connection
with the 1995 case. Terris filed a separate application, seeking almost $2.5 million, for work performed on the 2005 litigation. Honeywell filed objections to the fee applications. Specifically, Honeywell r enewed its previously

- rejected arguments that the f

orum rate rule should be applied so that
the hourly rates sought by Terris should be based upon the rates charged by New Jersey lawyers as opposed to Washington, D.C. lawyers, and that, even if D.C. rat es were used, Appellees applied the wrong method for calculating prevailing D.C. market rates. In addition, Honeywell once again contested the reasonableness of the hours and expenses claimed by counsel

. Honeywell also served offers of judgment pursuant to Rule 68 for the disputed fees. In response, Appellees asked the District Court to issue a declaratory judgment that Honeywell‟s Rule 68 offers are null
and void in the context of RCRA citizen suits.8 On September 8, 2011, the District Court issued an

o pinion that substantially upheld the Appellee s ‟ fee request. First, the District Court once again ruled that the forum

- rate rule need not be applied in this case so that Terris could be paid Washington, D.C. rates for work relating to a dispute in
New Jer sey. Interfaith Cmty. Org.v. Honeywell Int’l, Inc. ( ICO III ), 808 F. Supp. 2d 744, 749

- 50 (D.N.J. 2011). Second, the District Court evaluated two different methods for calculating prevailing D.C. market rat e s, and approved the
method requested by Appelle es. Id. at 750

- 51. Third, the
District Court rejected most of the challenges to the reasonableness of the hours expended by Appellees‟ counsel.
Id. at 751

- 55. And, f

inally, the District Court held that R ule
68 offers of judgment cannot be made in citiz en suits filed under RCRA, concluding that application of Rule 68 to
RCRA citizen suits would violate the Rules Enabling Act, 28 U.S.C. § 2072 , by discouraging the very citizen suits that Congress intended to promote

. Id

. This appeal followed.

II. Disc ussion

The District Court had jurisdiction under 42 U.S.C. §
6972 (a) , the citizen suit provision of RCRA, and we have appellate jurisdiction under 28 U.S.C. § 1291. We “review the legal interpretation of procedural rules de novo.” United
Auto. Workers Local 259 Soc. Sec. Dep’t v. Metro Auto Ctr.

, 501 F.3d 283, 286 (3d Cir. 2007). The standard the district court should “apply in calculating a fee award is a legal

que stion subject to plenary review, ” Evans v. Port Auth. of
N.Y. & N.J. , 2 73 F.3 d 346, 358 (3d Cir. 2001), but “[t] he determination of the appropriate billing rate is a factual finding which [this Court] review[s] for clear error.” ICO II

, 426 F.3d at 709. Finally, the amount of a fee award is within9 the district court‟s discretion, and we wi ll not disturb the district court‟s “determination of . . . the number of hours reasonably expended absent clear error.” Evans , 273 F.3d at
358.

A. Rule 68 Offers of Judgment

We must first decide whether offers of j udgment made pursuant to Federal R ule of Civil Procedure 68 apply to attorney ‟s fee disputes brought under the citizen suit provision of RCRA. As the Supreme Court has instructed, “[w]e give the Federal Rules of Civil Procedure their plain meaning, and generally with them as with a statut e, [w]hen we find the terms unambiguous , judicial inquiry is complete. ”
Pavelic & LeF lore v. Marvel Entm’t Group , 4 93 U.S. 120, 123 (1989) ( quotation marks omitted ) . Thus

, we begin, as we must, with the text of the rule. See United States v. Gonzales

, 5 20 U.S. 1, 4 (1997).

Federal Rule of Civil Procedure 68 provides, in pertinent part:

(a) Making an Offer; Judgment on an Accepted Offer. At least 14 days before the date set for trial, a party defending a claim may serve on an opposing party an offer to allow judgment on specified terms, with the costs then
accrued. . . .

. . . .

(c) Offer After Liability is Determined. When one party‟s liability to another has been10 determined but the extent of liability remains to be determined by further proceedi ngs, the party held liable may make an offer of judgment. . . .

(d) Paying Costs After an Unaccepted Offer. If the judgment that the offeree finally obtains is not more favorable than the unaccepted offer, the offeree must pay the costs incurred after t he
offer was made.

Fed. R. Civ. P. 68(a), (c)

- (d)

Rule 68 does not exempt from its purview any type of
civil action. See 12 C. Wright & A . Miller, Federal Practice & Procedure § 3001.1 (2d ed. 1987). Moreover , Rule 1 of the
Federal Rules of Civil Proc edure states that the rules apply to “all suits of a civil nature,” unless exempted by Rule 81. Fed. R. Civ. P. 1. Rule 81, in turn, does not set forth any restrictions on Rule 68‟s applicability to citizen suits under RCRA, or to suits seeking equitable relief generally. Thus, by its plain terms, Rule 68 is applicable to RCRA citizen
suits.

T he District Court

, however, held that Rule 68 is so incompatible with Congress‟ purpose in enacting RCRA that its application to cases brought under § 6972 would v iolate the Rules Enabling Act, 28 U.S.C. § 2072. The Rules Enabling Act gives the Supreme Court the power to “prescribe general rules of practice and procedure and rules of
evidence for cases in the United States district courts . . . and the courts of ap peals,” provided that “such rules [ do ] not abridge, enlarge or modify any substantive right.” § 2072(a)

- (b). Thus, if applying Rule 68 to § 6972 citizen suits abridges11 or modifies a substantive right, then Rule 68 offers are void in
this context notwiths tanding the plain meaning of the rule.

A rule of procedure does not run afoul of th is statutory limitation merely because it “affects a litigant‟s substantive rights; most procedural rules do.” Shady Grove Orthopedic Assocs., P.A. v. Allstate Ins. Co.

, 130 S. Ct. 1431, 1442 (2010) (Scalia, J., plurality opinion). As Justice Scalia
elaborated: “ What matters is what the rule itself regulates: If it governs only „the manner and the means‟ by w hich the litigants‟ rights are „enforced,‟ it is valid; if it a lters „ the rules of decision by which [the] court will adjudicate [th ose] rights,‟ it is not. ” Id. (quoting Mississippi Pub’g Corp. v. Murphree , 326 U.S. 438, 446 ( 1946)).

Applying the criteri on that a rule of procedure impermissibly “abridge[s], enlarge [s], or modif[ies] [a] substantive right,” 28 U.S.C. § 2072(b), only if it alters the rules for adjudicating a litigant‟s rights, we readily conclude that application of Rule 68 in the specific context of this case does not violate the Rules Enabling Act. No rule of decision governing the adjudication of the attorney ‟s fee dispute that is the subject of Honeywell‟s offers of judgment is affected by application of Rule 68 . The amount of the fee to be awarded remains governed by the same rules of decision r egardless of the interposition of an offer of judgment. At best, the only impact that Rule 68 has on the ultimate outcome of the attorney‟s fee dispute is to require Appellees to bear their post

- offer costs, including counsel fees, if the fee award is12 les s favorable than the offer of judgment

. 1 See Fed. R. Civ. P. 68(d); Marek v. Chesny , 473 U.S. 1, 11

- 12 (1985). 2

In light of Rule 68‟s laudatory purpose of facilitating settlement, Delta Airlines, Inc. v. August , 450 U.S. 346, 352 (1981) , the requirement that a plaintiff bear the fees incurred after it rejects an offer of judgment simply cannot be said to abridge some substantive right. In this regard, fees incurred

1 Presumably, the only post

- offer fees that may have to be borne by a plaintiff in the context presented here would be for time expended to continue to litigate the attor ney‟s fee dispute. In this context, therefore, the plaintiff is presented with the classic risk/reward consideration in evaluating any settlement offer: is it probable that continuation of the litigation will achieve an outcome that is worth more than the offer plus the costs incurred after the offer is received.

2 Marek held that where a statute includes attorney‟s fees within the term “costs,” such as 42 U.S.C. § 1988 does, “a defendant is not liable for the post

- offer attorney fees of a rejecting offer ee who obtains a judgment not more favorable than the offer.” 13 J. Moore, Moore‟s Federal Practice § 68.08[4][a] (3d ed. 2011). The citizen suit provision of RCRA provides that “[t]he court . . . may award costs of litigation (including reasonable attor ney and expert witness fees) to the prevailing or substantially prevailing party, whenever the court determines such an award is appropriate.” 42 U.S.C. § 6972(e). Thus, under Marek , Appellees could not recover post

- offer fees if the amount ultimately aw arded to them was less than the corresponding offer of judgment.13 after a party rejects an offer of judgment and recovers less than the offer are properly v iewed as being unreasonable.

The District Court, relying upon Public Interest Research Group of New Jersey v. Struthers

- Dunn, Inc. , Civ.
A. No. 87

- 1773, 1988 WL 147639 (D.N.J. Aug. 16, 1988), reasoned that Rule 68 offers would discourage citizens from
br inging suit and firms from accepting the cases, because there is no possibility for monetary relief in citizen suits and, therefore, the only source of compensation for law firms representing plaintiffs in these cases comes in the form of an
award of attor ney ‟s fees. ICO I I I , 808 F. Supp. 2d at 756

- 57.
T h e impact on a decision to pursue litigation, however, has nothing to do with whether the offer of judgment rule abridges or modifies some substantive right. It may very well be that a Rule 68 offer of ju dgment in the context of a RCRA attorney‟s fee dispute will require a plaintiff to make a hard choice between accepting what has been offered versus adjudicating the issues that are in dispute in such a case

-- the appropriate hourly rate and the reasonab leness of the hours expended. That Appellees may feel compelled to take less than the amount to which they believe they are entitled, however, has nothing at all to do with the determination of the appropriate hourly rate and the reasonableness of the
hou rs expended before the offer of judgment was made. Settlement offers often present difficult choices for a plaintiff, but that fact neither abridges n or modifies the substantive rights at issue. S peculation as to the potential “chilling”
effect of allowi ng Rule 68 offers of judgment in citizen suits
under RCRA , advanced in Struthers

- Dunn and embraced by the District Court in this case, is simply irrelevant to the pertinent inquiry: whether the rules of decision are altered by the offer of judgment.14 Th e Supreme Court has not considered Rule 68‟s impact on § 6972 citizen suits, but it has addressed the
interaction between Rule 68 and the fee

- shifting statute applicable to civil rights litigation, 42 U.S.C. § 1988. See
Marek , 473 U.S. 1

. While the major ity opinion in Marek did
not address whether application of Rule 68 in the context of civil rights litigation violated the Rules Enabling Act, its
rationale is indeed instructive here. In Marek , the Court
considered whether post

- offer of judgment “costs” to be borne by the plaintiff included plaintiff‟s attorney‟s fees when the ultimate recovery was less than the offer

. Id. at 3. Stated otherwise, the issue in Marek was whether a plaintiff who

rec e i ved a verdict that was less than the offer of judgment
could recover the fees incurred after the offer was made. The plaintiffs in Marek argued that a recovery of less than the offer of judgment should not preclude an award of all counsel fees, including post

- offer fees. Id. at 4. Much like the argument adv anced by Appellees in this case, the Marek plaintiffs asserted that a different reading of Rule 68 would unfairly burden civil rights plaintiffs by discouraging attorneys from bringing meritorious claims at the risk of losing attorney fees. Id. Notwithst anding the strong policy arguments favoring the encouragement of suits to vindicate important constitutional rights, the Court applied the plain meaning of Rule 68 to foreclose recovery of post

- offer fees. The Court concluded that the purpose of § 1988 (t o encourage meritorious civil rights claims) was distinct from and compatible with the purpose of Rule 68 (to encourage settlement). Id. at 11. Thus, the Court held that “nothing . . . in the policies underlying § 1988 constitutes „the necessary
clear ex pression of congressional intent‟ required „to exempt .15 . . [the ] statute from the operation of Rule 68.” Id. at 11

- 12 (citing Califano v. Yamasaki , 442 U.S. 682, 700 (1979) )

.

Appellees argue that Marek is distinguishable because civil rights plaintiffs are often motivated by the potential for personal gain , in contrast to RCRA plaintiffs

, who seek injunctive relief in furtherance of a purely public gain. 3 Although Appellees are correct that citizen plaintiffs suing under § 6972 cannot recover monetary damages , while plaintiffs in civil rights cases often can , they miss the point of the Court‟s analysis in Marek . The Court sustained application of Rule 68 to civil rights cases even though it
could chill the pursuit of litigation intended to vindicate
im portant rights. T he Court concluded that

, notwithstanding such potential, Rule 68 applied because the policies underlying Rule 68 and the fee shifting statute at issue there were compatible. 4

3 P rivate citizens bringing suit under 42 U.S.C. § 6972 are limited to mandatory and prohibitory injunctive relief. Meghrig v. KFC W., Inc. , 516 U.S. 479, 484 (1996).

4 Struthers

- Dunn , 1 988 WL 147639, on which the District Court relied to void the offers of judgment in this case, involved a Rule 68 offer of judgment in a somewhat different context than that presented here. At issue in
Struthers

- Dunn was the defendant‟s liability, not onl y for attorney‟s fees, but also for monetary penalties for established violations of the Clean Water Act, 33 U.S.C. §§ 1251, et seq

. Any monetary penalties in the citizen suit under the Clean Water Act would be payable, not to the plaintiffs, but to the
U nited States government. Struthers

– Dunn , 1988 WL 147639, at *2. Plaintiffs in Struthers

- Dunn argued, as do16 Appellees here, that application of Rule 68 served as a disincentive to bring a citizen suit, because plaintiffs did not have the possibility of re ceiving a monetary recovery and yet faced the specter of having to pay their own fees as well as defense costs, that could include defense counsel fees, if their ultimate recovery was less than the offer of judgment. The
District Court in Struthers

- Dunn o bserved that “[n]ot even the most altruistic litigant can be expected to persevere under such circumstances.” Id . at *4. Struthers

- Dunn , however, did not apply the correct criterion: whether Rule 68 changes the rule for adjudicating the parties‟ substant ive rights. Significantly, applying this criterion, the Supreme Court has rejected every Rules Enabling Act challenge to a rule of procedure. Shady Grove , 130 S. Ct. at 1432. Accordingly, the
conclusion in Struthers

- Dunn is fatally flawed.

Struthers

- D unn is fatally flawed for another reason: its rationale rested on the unsound assumptions that plaintiffs could not recover any fees in the event that the ultimate recovery was less than the offer, see id. at *4 (“plaintiffs in the present action would . . . be precluded from an award of attorney‟s fees if they obtained a judgment less favorable than defendant‟s Rule 68 offer”), and that plaintiffs may have to pay defense counsel fees incurred after the offer was made.
See id. at *4, n.7(“[I]f plaintiffs‟ i ncentive to vigorously prosecute this action would be chilled by the risk of having to pay defendant‟s costs, then plaintiffs‟ desire to pursue this litigation would be overcome from exposure at the prospect of being held accountable for defendants‟ attorn ey‟s fees.”) Contrary to the District Court‟s statement, a plaintiff who prevails on a fee

- shifting claim is entitled to fees incurred before the offer of judgment. See Marek, 473 U.S. at 4.17 The fact that only equitable reli ef is available under

se ction 69 72 does not alter this conclusion. Courts have applied Rule 68 to suits seeking equitable relief despite arguments that doing so would discourage such claims. See

, e.g. , NAACP v. Town of East Haven , 259 F.3d 113, 121 n.9 (2d Cir. 2001) (“[N]othin g in the Rule suggests that it applies only to cases seeking damages or other relief amenable to simple comparisons.”); Chathas v. Local 134 Int’l Bhd. of
Elec. Workers , 233 F.3d 508, 522 (7th Cir. 2000) (“Rule 68 offers are much more common in money cases than in equity cases, but nothing in the rule forbids its use in the latter type of case.”)

Furthermore, where a plaintiff has prevailed on its underlying claim, a defendant in a fee

- shifting case cannot recover attorney‟s fees under Rule 68 because in that circumstance it cannot be said that the plaintiff‟s action was “„frivolous, unreasonable or without foundation,‟” the general standard for awarding fees as part of “costs” to a prevailing defendant.
See Le v. Univ. of Pennsylvania , 321 F.3d 403, 410

- 11 (3d Cir. 2003); see also Emerson Enterprises, LLC v. Kenneth Crosby New York, LLC , 781 F. Supp. 2d 166, 177 (W.D.N.Y. 2011) (“For a defendant to qualify a s a prevailing party [in a RCRA case], it „must show that the plaintiffs' claim was frivolous, unreasonable, or groundless, or that the plaintiff[ ] continued to litigate after it clearly became so. . . .‟”). Thus, the District Court‟s reliance upon Strut hers

- Dunn in the matter presently before us was misplaced. Allowing offers of judgment in the context of this case does not expose Appellees to a complete denial of counsel fees or to payment of defense attorney‟s fees.18 The fee shifting provision of s ection 6972 encourages plaintiffs to bring meritorious suits to enforce environmental laws, while Rule 68 encourages settlement of civil suits. See Delta Airlines, 450 U.S. at 352 . “ There is nothing incompatible with these two objectives.” Marek , 473 U.S. at 4 (comparing purposes of §1988 with purposes of Rule 68). Accordingly, we conclude that nothing in the text of Rule 68

su ggests that such an exemption is warranted, and application
of Rule 68 in the context presented here does not violate the Rules Enabling Act.

Our Rule 68 inquiry is not yet complete, however. Appellees raise another challenge to Rule 68‟s applicability i n this case, contending that the rule does not apply to proceedings after judgment has been rendered on liability. Appellees point to the text of the rule, which states that an offer of judgment must be made “at least 14 days before the
date set for trial ,” or, if “one party‟s liability to another has been determined but the extent of liability remains to be
determine d by further proceedings . . . it must be served within a reasonable time . . . before the date set for a hearing
to determine the extent of liability.” Fed. R. Civ. P. 68(a), (c). Appellees interpret this language to mean that the rule only applies in two situations: first, before a trial; and, second, in a bifurcated proceeding after judgment has been
rendered but before the extent of liab ility is determined.

The first situation plainly does not apply here, and Appellees claim that this case does not fall within the second situation because attorney‟s fees cannot be regarded as part of Honeywell‟s liability. Specifically, Appellees asser t that the word “liability”

— even within the phrase “extent of19 liability”

— does not encompass a dispute over attorney fees. To support this interpretation of the text, Appellees point to Federal Rule of Civil Procedure 54, which provides definitions of “jud gment” and “costs.” See Fed. R. Civ. P. 54. Because Rule 54 includes attorney fees within the definition of “costs,” Appellees argue that fees cannot also be included within the definition of “liability.” (Appellee‟s Br. 55). Further, Appellees observe that “RCRA provides that „costs of litigation‟ include „reasonable attorney and expert witness fees,‟” and note that, under Marek , Rule 68 “costs” must also include attorney fees. (Appellee‟s Br. 55

- 56). Because “costs” include attorney fees for purpose s of Rule 68, Appellees argue, attorney fees cannot also be part of “liability.” (Id.)

Given the ordinary meaning of “liability

, ” s ee Black‟s Law Dictionary 997 (9th ed. 2009), the phrase “ e xtent of liability” encompasses all legal responsibilities. Th is appeal
is evidence that the extent of Honeywell‟s liability has yet to be determined.

This conclusion is consistent with our approach in Public Interest Research Group of New Jersey v. Windall ( PIRG ) , 51 F.3d 1 179 (3d Cir. 1995), where we implicitly treated a Rule 68 offer made at the attorney‟s fee stage of litigation as valid. In PIRG

, we vacated a fee award and
directed the district court to consider on remand whether the plaintiff reasonably continued to litigate the attorney‟s fee
issue after re fusing the defendant‟s Rule 68 offer. 51 F.3d at
1190. See also Sanchez v. Prudential Pizza , 709 F.3d 689, 691 (7th Cir. 2013) ( indicating that Rule 68 offers may include attorney‟s fees so long as the offer clearly states that
it includes fees and costs ).20 Moreover, t he policies underlying Rule 68 support this interpretation . Rule 68 was created to “encourage the settlement of litigation.” Delta Airlines, 450 U.S. at 352. The benefits of settlement are highest in the context of attorney fee disputes, which the Supreme Court has warned “should not result in a second major litigation.” Hensley

, 461
U.S. at 437

. Incentive to settle is beneficial where, as here

, the “litigation to resolve fee disputes has . . . taken on a life of its own.” ICO III , 808 F. Supp. 2d at 749. As the District Court noted, “the amount of litigation engendered by the present fee dispute has probably cost as much as the contested
amount.” Id. at 748. We are confident that encouragement to
settle is warranted in this context. Thus , because we believe
that a Rule 68 offer in this context both comports with the
ordina ry meaning of the phrase “extent of liability ” and is
consistent with the fee

- shifting provision of R CRA

, we conclude that Rule 68 offers of judgment apply to dispu tes over attorney fees after liability has been determined.

B. Forum

- Rate Rule

We now turn our attention to the District Court‟s departure from the forum

- rate rule. T he forum

- rate rule holds that “in most cases, the relevant rate [for calculating attor ney fees] is the prevailing rate in the forum of the litigation.” ICO
II , 426 F.3d at 705. We have recognized two exceptions to the rule: “first, when the need for the special expertise of counsel from a distant district is shown; and, second, when
local counsel are unwilling to handle the case.” Id

. (internal quotations omitted) (citing Report of the Third Circuit Task Force on Court Awarded Attorney Fees , 108 F.R.D. 237, 261(1985)). We sustained as not clearly erroneous the21 District Court‟s decision i n ICO I that the forum

- rate rule
should not be applied in this case. See ICO II , 426 F.3d at
707.

Our prior ruling presents us now with the question of
whether further litigation of th e forum

- rate rule is foreclosed by the doctrine of collateral esto p pe l . We have “identified four standard requirements for the application of collateral estoppel . . . (1) the identical issue was previously adjudicated; (2) the issue was actually litigated; (3) the previous determination was necessary to the decision; and (4) the party being precluded from relitigating the issue was fully represented in the prior action.” Jean Alexander Cosmetics, Inc. v. L’Oreal USA, Inc., 458 F.3d 244, 249 (3d Cir. 2006) (quotation marks omitted). We are satisfied that each element
is m et in this case.

In ICO II

, we adjudicated the identical issue presented here; namely, whether the “lack of northern New Jersey counsel willing to handle RCRA citizen suits without an immediate payment of fees and advanced out

- of

- pocket costs foreseeably amounting to over $1,000,000” justifies a departure from the forum

- rate rule. (Appellee‟s Br. 12.) We held that departure was jus tified in this case. Thus, the first
element is met. Second, the issue was actually litigated in this District Court and, on appeal, in this Court. See ICO II

, 426 F.3d at 703

- 07. Third, a determination about the forum

rate rule was necessary to this Court‟s decision about the proper rate for calculating attorney fees

. Finally, Honeywell was represented in the prior case. Honeywell fully litigated this issue in that case, and our decision was a valid, final judgment.22 Honeywell argues that collateral estoppel cannot apply because the issue in the first case was whether a departure
from the forum

- rate rule was justified “ i n the 1995 litigation ,” asserting that Appellees must prove that New Jersey counsel is not available to take the case now. (Reply Br. 8.) Honeywell mischaracterizes this litigation. This Court
determined in 2005 that a departure from the forum

- rate rule
was warranted. ICO II , 426 F.3d at 707. The instant litigation is part of the same case that began in 1995, including the now

- consolidated case brought by Riverk eeper in 2005

. As the District Court noted, “it would have been unreasonable to expect Plai ntiffs to change horses in mid

stream, and suddenly find, or need to document the inability to find, competent local counsel to continue the litigation in Study Areas 5 and 6.” ICO III , 808 F. Supp. 2d at 749. Thus,
we conclude that further litigation co ncerning the applicability of the forum

- rate rule is barred by collateral estoppel.

C. The Laffey Matrix

Because we have sustained the District Court‟ s decision to allow T erris to be compensated on the basis of Washington, D.C. r at es, we must now determ ine whether the District Court erred in deciding what these rates are. In this case, the District Court applied what is known as the “ Laffey
Matrix ” for purposes of determining the appropriate hourly

rates. 5 The Laffey Matrix “provides billing rates for

5 The Laffey Matrix was first util ized in Laffey v. Nw.
Airlines , 572 F. Supp. 354 (D.D.C. 1983), aff’d , 746 F.2d 4 (D.C. Cir. 1984), overruled in part on other grounds by Save23 attorneys in the Washington, D

. C

. market with various degrees of experience. ” ICO II , 426 F.3d at 708. The original Laffey Matrix set forth the prevailing market rates
from 1981

- 1982. In 1989, the Laffey Matrix was updated to
account for inflation. Se e Trout v. Ball , 705 F. Supp. 705, 709 n.10 (D.D.C. 1989) (approving updated Laffey Matrix).
Since 1989, courts have approved various methods f or updating the Laffey Matrix. Compare Salazar v. District of
Columbia , 123 F. Supp. 2d 8, 15 (D.D.C. 2011) (ut ilizing legal services component of the Consumer Price Index) with M.R.S. Enters., Inc. v. Sheet Metal Workers’ Int’l Ass’n , No.
05

- 1823, 2007 WL 950071, at *5 (D.D.C. 2007) (applying U.S. Attorney Office Matrix).

The parties agree that the initial Laffey Matrix was a valid index of Washington, D

. C

. rates in 1982. The parties further agree that an updated version of the Laffey Matrix,
which accounts for the rise in prevailing rates based on inflation, would be a valid vehicle for determining the applicabl e hourly rates in the D.C. legal market today. The parties disagree, however, about the proper method of updating the m atrix. Appellees favor the Legal Services Index (“LSI”) method, which accounts for “shifts in the consumer price index for legal servic es nationwide.” ICO I I I

, 808 F. Supp. 2d at 750. Honeywell prefers the U.S. Attorney Office (“USAO”) matrix, which “regularly updates the Laffey Matrix using the Consumer Price Index for the D.C. area.” (Appellant‟s Br. 31.) These divergent methods res ult in very

Our Cumberland Mountains v. Hodel , 857 F.2d 1516, 1525 (D.C. Cir. 1988) ( en banc ).24 different prevailing rates. 6 This Circuit has not specifically approved of either method, and both parties cite cases from the District of Columbia in support of their respective preferred methods.

Appellees point to Salazar in support of the ir preference for the LSI index. See Salazar , 123 F. Supp. 2d at 15. In that case, the District Court for the District of

6 The U.S. Attorney Matrix yie lds the following rates
for 2010

- 2011:

Years of Experience Hourly Rate

20+ $475

11

- 19 years $420
8

- 10 years $335

4

- 7 years $275

1

- 3 years $230 paralegals $135

The LSI

- updated Matrix yields the following rates for
2010

- 2011:

Years of Experience Ho urly Rate

20+ $709

11

- 19 years $589
8

- 10 years $522

4

- 7 years $362

1

- 3 years $293 paralegals $161

(JA 935

- 36.)25 Columbia weighed the advantages and disadvantages of both
the LSI index and the USAO matrix and determined that the LSI method “more accurately reflects the prevailing rates for legal services in the D.C. community.” 7 Id. In contrast, Honeywell cites multiple decisions applying the USAO
matrix rather than the LSI

- updated matrix. See

, e.g. , Heller v. District of Columbia , No. 03

- 213, 2011 WL 6826278, at *8

- 10 (D.D.C. 2011); Hayes v. D.C. Pub. Sch. , 815 F. Supp. 2d 134, 143 (D.D.C. 2011); M.R.S. Enters., Inc. v. Sheet Metal Workers’ Int’l Ass’n , No. 05

- 1823, 2007 WL 950071, at *5 (D.D.C. 2007).

The District Court, recognizing that “our Circuit has yet to specifically approve either version of updating the Laffey Matrix,” was persuaded by the methodology in Salazar

. ICO I

II , 808 F. Supp. 2d at 750. Furthermore, the District Court relied on this Court‟s prior opinion affirming

use o f the LSI methodology. See ICO II , 426 F.3d at 709

- 10;
ICO I II , 808 F. Supp. 2d at 750 (“[T]he Court will rely on the holding in the previous [ ICO I I ].”). In ICO II

, we stated:

7 Specifically, the Salazar court explained that the advantage of the LSI index is that it is based on the “legal services component of the Consumer Price Index rather than the general CPI on which the [USAO matrix] is based.” The Salazar court further explained that, although the advantage of the USAO Matrix is its reliance on data that is specific to the Washington, D.C. area, “the mark et for legal services in complex federal litigation in Washington, D.C. is not a local market.” Id. at 14, 15 n.5 (citing affidavit of Michael Kavanaugh ¶ 15). Thus, the Salazar court concluded that the
LSI

- updated Laffey Matrix was preferable to the USA O
index. Id. at 15.26 [W]e do agree . . . that the simple
fact that numerous courts in the
Distric t of Columbia have upheld the U.S. Attorney‟s Matrix as a reasonable measure of billing rates is not a sufficient ground for us to conclude that reliance by the District Court on [plaintiffs‟] updated Laffey Matrix was clearly

erroneous.

ICO II , 426 F.3d at 709

- 10.

We review the District Court‟s determination of the appropriate billing rate for clear error. ICO II , 426 F.3d at 709. Clear error exists only where factual findings “are unsupported by substantial evidence, lack adequate evidentiary support in the record, are against the clear weight
of the evidence or where the district court has misapprehended the weight of the evidence.” United States v. 6.45 Acres of Land , 409 F.3d 139, 145 n.10 (3d Cir. 2005). In light of our prior decision affirming the LSI methodology, as well as the District Court‟s assessment of the Salazar
court‟s reasoning as persuasive , we will not now hold that it
was clear error to once a gain rely on the LSI method . We thus affirm the District Court‟s use of the LSI

- updated L affey Matrix to determine the prevailing rates in the Washington,
D

. C

. market.

D. The Reasonableness of the Hours Expended27 Although we have a sufficient record for sustaining the District Court‟s determinations as to the appropriate hourly
rates, we can not say the same with respect to the other component of the fee calculation: the reasonableness of the hours expended by Terris. As we remarked in ICO II

,

[a] prevailing party is not automatically entitled to compensation for all the time its attorneys spent working on the case; rath er, a court awarding fees

must “ decide whether the hours set out were reasonably expended for each of the particular purposes
described and then exclude those that are excessive, redundant, or otherwise unnecessary. ”

426 F.3 d 711 (quoting PIRG , 51 F.3d at 1188) (internal quotation marks omitted)

.

The District Court “has „a positive and affirmative function in the fee fixing analysis , not merely a passive role.‟” Id. at 713 (quoting Loughner v. Univ. of Pittsburgh

, 260 F.3 d 173, 178 (3d Cir. 2001)). And, where, as here, an objecting party has challenged specific types of work and states why it is contended that the hours claimed are excessive, the reviewing court must support its findings with

a su fficient articulation of its rationale to allow for meaningful appellate review. Id.

Here, Honeywell did identify specific categories of work for which the hours claimed were purportedly28 unreasonable. Specifically, Honeywell objected to the following:

 299 hours

, amounting to $ 131,532 in fees

, for lobbying
activities. 8

 Approximately 2

, 400 hours, or nearly $1 million in fees, for identifying and supervising experts.

 More than 1

, 300 hours, approximating $600,000, to conduct a few Rule 30(b)(6) depositions.

 More than 2

, 600 hours, e xceeding $400,000 in fees, for document or database management

.

 Over 1

, 300 hours

, resulting in more than $400,000 in fees, for document review.

 837 hours, totaling $271,824 in fees

, for “pretrial
work.”

 331 hours, totaling more than $125,000, for
remediati on of one residential property.

 242 hours, amounting to more than $100,000 in fees

, for financial assurances from Honeywell

 578 hours, exceeding $400,000 in fees

, for Bruce Terris‟s time overseeing the work of the other Terris
partners.

 Almost 2

, 300 hours, amounting to over $1 million in fees, for intra

- office conferencing. 9

8 Although acknowledging that it was not likely that such work “was „crucial to safeguard the interests asserted,” the District Court approved 75% of the time expended. ICO
III , 808 F. Supp. 2d at 754 (citing Pennsylvania v. Del. Val ley Citizens’ Council for Clear Air , 478 U.S. 546 (1986)). No explanation was given as to why this amount of time on a clearly collateral matter was reasonable.29  Expert witness expenses totaling more than $1.3
million.

Although decrying the litigation tactics employed by Terris as “distasteful,” “aggressive,” and “unsavory,” id. at 751, 753, th e D istrict Court nonetheless chose to “credit[] [Appellees‟] arguments . . . as to the reasonableness of the legal and expert fees, expenses and hours charged,” explaining that it “will not second guess the staffing decisions
of either the Terris firms or its experts . . . .” Id . at 754

- 55. This perfunctory statement does not allow for meaningful appellate court review. As we said in ICO II , “where the opinion of the District Court „is so terse, vague, or conclusory that we have no basis to review it, we must vacate the fee

award order and remand for further proceedings.” 426 F.3d at 713 (quoting Gunter v. Ridgewood Energy Corp. , 223 F.3d 190, 196 (3d Cir. 2000)). Accordingly, we must once again vacate the District Court‟s latest fee awards and remand f or further proceedings. 10

9 The District Court reduced the fees in this category by 10%, but gave no explanation as to why a 10% reduction was adequate. ICO III , 808 F. Supp. 2d at 753.

10 We respectfully suggest that the District Court consider the appointment of a Special Master to review the fee applications in these now

- consolidated matters. The fee requests presen t a daunting task to a busy District Court,
which must handle a multitude of matters with limited resources. A report from a Special Master, who could be compensated equally by both Honeywell and Appellees, may facilitate the District Court‟s requisite “t horough and searching analysis” of the law firm‟s billing records. ICO II

,30 III.

For the foregoing reasons, we will reverse the District Court‟s ruling that Rule 68 offers of judgment are inapplicable in the context of environmental citizen suits brought under RCRA, direct that the previously made offers of judgment be reinstated, affirm the District Court‟s departure from the forum

- rate rule because review of this issue is barred by collateral estoppel, affirm the District Court‟s application of the LSI

- updated Laffey Matrix , vacate the District Court‟s fee award, and remand the case for further proceedings consistent with this opinion.

426 F.3d at 711 (quoting Evans , 273 F.3d at 362). We leave to the District Court‟s discretion, however, whether to enlist the services of a Special Master, as well as whether to

c onduct an evidentiary hearing on Honeywell‟s objections to the number of hours for which Terris claims compensation.