2013 Decisions

Opinions of the United

States Court of Appeals

for the Third Circuit

6-4-2013

Interfaith Comm Orgn v. Honeywell Intl Inc

Precedential or Non-Precedential: Precedential

Docket No. 11-3813

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PRECEDENTIAL

UNITED STATES COURT OF APPEALS

FOR THE THIRD CIRCUIT

_____________

Nos. 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;

*KELLOGG STREET 80 PROPERTY; *KELLOGG 

STREET

440 PROPERTY, LLC.; *KELLOGG STREET 60 

PROPERTY, LLC

 Honeywell International, Inc., Kellogg Street 80 Property, 

LLC, 

Kellogg Street 440 Property, LLC, Kellogg Street 60 

Property, LLC
2

 

Appellants in No. 11-3813

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

_____________

JERSEY CITY MUNICIPAL UTILITIES AUTHORITY; 

ELIZABETH ROSARIO; RAFAEL ROSARIO; 

HACKENSACK RIVERKEEPER, 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 PROPERTY, 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

BAYONNE MUNICIPAL UTILITIES AUTHORITY;

CARLOS M. HERNANDEZ, In his official capacity as 

President 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 States District Court

for the District of New Jersey

(Civil Action Nos. 2-95-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 Appellants
4

Bruce J. Terris

Carolyn Smith Pravlick, Esq. [ARGUED]

Michelle Weaver

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 result in a 

second major litigation.” Hensley 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 earlier 

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 II), 426 F.3d 694 (3d Cir. 2005). We are now 

confronted with a challenge 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 feeshifting provisions of the Resource Conservation and 

Recovery 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 

District Court‟s declaration that the offers of judgment in this 
5

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 hourly 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 proceedings.

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 industrial 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., and later by Honeywell International, Inc. 

(“Honeywell”). Although the dumping stopped, the 

contaminated area was not cleaned up.

In 1995, the Interfaith 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 area 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, transportation, or disposal of any solid or

hazardous waste 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 Area 7. Interfaith Cmty. Org. v. Honeywell 

Int’l Inc., 263 F. Supp. 2d 796, 802 (D.N.J. 2003). This 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 litigating 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, 403-04 (D.N.J. 2004). We affirmed 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, id. at 707-10, but rejected as inadequate the 

District Court‟s review of the hours for which compensation 

was claimed. Id. at 711-14. Accordingly, we vacated the fee 

award and remanded for further proceedings.

In 2005, Hackensack Riverkeeper (“Riverkeeper”),

also represented by Terris, filed companion cases against 

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.) The parties 

entered into a number of consent decrees in which Honeywell 

conceded responsibility, 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 incurred 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 

(collectively, “Appellees”) on the other, failed to reach 

agreement with respect to the fees sought for monitoring

Honeywell‟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 renewed its previously-rejected 

arguments that the forum 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. rates 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 

opinion that substantially upheld the Appellees‟ 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 Jersey. 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 rates, and approved the 

method requested by Appellees. 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, finally, the District Court held that Rule 

68 offers of judgment cannot be made in citizen 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. Discussion

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 

question subject to plenary review,” Evans v. Port Auth. of 

N.Y. & N.J., 273 F.3d 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 within 
9

the district court‟s discretion, and we will 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 judgment made 

pursuant to Federal Rule 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 statute, [w]hen 

we find the terms unambiguous, judicial inquiry is complete.” 

Pavelic & LeFlore v. Marvel Entm’t Group, 493 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, 

520 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 been 
10

determined but the extent of liability remains to 

be determined by further proceedings, 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 the 

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 Procedure 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.

The 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 violate

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 appeals,” 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 abridges 
11

or modifies a substantive right, then Rule 68 offers are void in 

this context notwithstanding the plain meaning of the rule. 

A rule of procedure does not run afoul of this 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 which the 

litigants‟ rights are „enforced,‟ it is valid; if it alters „the rules 

of decision by which [the] court will adjudicate [those] 

rights,‟ it is not.” Id. (quoting Mississippi Pub’g Corp. v. 

Murphree, 326 U.S. 438, 446 (1946)).

Applying the criterion 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 regardless 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 is 
12

less 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 attorney‟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 offeree 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 attorney 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 awarded 

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 viewed 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 

bringing 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 attorney‟s fees. ICO III, 808 F. Supp. 2d at 756-57. 

The 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 judgment 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 reasonableness 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 

hours expended before the offer of judgment was made. 

Settlement offers often present difficult choices for a plaintiff, 

but that fact neither abridges nor modifies the substantive 

rights at issue. Speculation as to the potential “chilling” 

effect of allowing 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

The 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 majority 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 

received 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 advanced 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. Notwithstanding 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 (to 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 expression 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

important rights. The 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

 Private 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, 1988 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 only 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 

United States government. Struthers–Dunn, 1988 WL 

147639, at *2. Plaintiffs in Struthers-Dunn argued, as do 
16

 

Appellees here, that application of Rule 68 served as a 

disincentive to bring a citizen suit, because plaintiffs did not 

have the possibility of receiving 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 observed 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‟ substantive 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-Dunn 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‟ incentive 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‟ attorney‟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 relief is available under 

section 6972 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]othing 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 as 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 Struthers-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 section 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 

suggests 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 in 

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 

determined 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 liability 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 assert that the 

word “liability”—even within the phrase “extent of 
19

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 “judgment” 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 purposes of Rule 68, 

Appellees argue, attorney fees cannot also be part of 

“liability.” (Id.)

Given the ordinary meaning of “liability,” see Black‟s 

Law Dictionary 997 (9th ed. 2009), the phrase “extent of 

liability” encompasses all legal responsibilities. This 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 1179 (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 refusing 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, the 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 

ordinary meaning of the phrase “extent of liability” and is 

consistent with the fee-shifting provision of RCRA, we 

conclude that Rule 68 offers of judgment apply to disputes 

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. The forum-rate rule holds 

that “in most cases, the relevant rate [for calculating attorney 

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 the 
21

District Court‟s decision in 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 the forum-rate rule is foreclosed 

by the doctrine of collateral estoppel. 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 met 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 justified 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 forumrate 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 “in 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 Riverkeeper 

in 2005. As the District Court noted, “it would have been 

unreasonable to expect Plaintiffs to change horses in midstream, 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 concerning 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 Terris to be compensated on the basis of 

Washington, D.C. rates, we must now determine 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. 5The Laffey Matrix “provides billing rates for

 

5

The Laffey Matrix was first utilized 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 Save 
23

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. See 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 for

updating the Laffey Matrix. Compare Salazar v. District of 

Columbia, 123 F. Supp. 2d 8, 15 (D.D.C. 2011) (utilizing 

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 

applicable hourly rates in the D.C. legal market today. The 

parties disagree, however, about the proper method of 

updating the matrix. Appellees favor the Legal Services 

Index (“LSI”) method, which accounts for “shifts in the 

consumer price index for legal services nationwide.” ICO III, 

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 result 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 their 

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 yields 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 Hourly 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 III, 808 F. Supp. 2d at 750. Furthermore, the 

District Court relied on this Court‟s prior opinion affirming 

use of the LSI methodology. See ICO II, 426 F.3d at 709-10; 

ICO III, 808 F. Supp. 2d at 750 (“[T]he Court will rely on the 

holding in the previous [ICO II].”). 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 market 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 USAO 

index. Id. at 15.
26

[W]e do agree . . . that the simple 

fact that numerous courts in the 

District 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 again rely on the LSI method. We 

thus affirm the District Court‟s use of the LSI-updated Laffey 

Matrix to determine the prevailing rates in the Washington, 

D.C. market.

D. The Reasonableness of the Hours Expended
27

Although we have a sufficient record for sustaining the 

District Court‟s determinations as to the appropriate hourly 

rates, we cannot 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; rather, 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.3d 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.3d 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 sufficient 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 purportedly 
28

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, exceeding $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 

remediation 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. Valley 

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, the District 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 feeaward 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 for 

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 present 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 “thorough 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 

conduct an evidentiary hearing on Honeywell‟s objections to 

the number of hours for which Terris claims compensation.