Opinion ID: 670806
Heading Depth: 2
Heading Rank: 2

Heading: recalculate or award interest

Text: 19 In December 1987, the district court found that plaintiffs' attorney had reasonably expended 579.2 hours litigating the case. Specifically, the district court determined that 245.7 hours were expended in 1985 at an hourly rate of $175 and 333.5 hours were expended in 1986 and 1987 at an hourly rate of $200. The district court added paralegal and photocopying costs of $3,218.75. Thus, the district court concluded that the full amount owed for services rendered through trial was $112,916.25. (After reducing this initial lodestar figure by 20%, the district court awarded $90,333.) 20 On remand, plaintiffs' attorney asserted that the district court should not simply restore the 20% reduction and award interest to compensate for the delay caused by the appeal. Plaintiffs' attorney argued that instead the district court should award all compensable hours at his current hourly rate of $350 per hour. The district court agreed, finding that the increased payment was justified because the case began over seven years ago. Thus, the district court awarded all 577.7 hours at $350 per hour, concluding that the full amount owed for services rendered through trial was $202,195. 3 21 In the course of recalculating the attorney's fee award, the district court awarded plaintiffs' attorney an additional $89,278.75 for his services rendered through trial. If the district court had instead awarded interest under 28 U.S.C. Sec. 1961, it would have awarded only an additional $42,315 for his services rendered through trial. 4 Thus, by choosing to compensate for the delay by recalculating the award rather than by awarding interest, the district court granted $46,963.75 more in additional attorney's fees. 22 Defendant-appellant contends that the district court abused its discretion by recalculating the lodestar figure. Defendant-appellant claims that a delay in payment occasioned by appeal is redressable solely by an award of interest. See 28 U.S.C. Sec. 1961. In support of this proposition, defendant-appellant cites Islamic Center of Miss., Inc. v. Starkville, Miss., 876 F.2d 465 (5th Cir.1989), and Black Grievance Comm. v. Philadelphia Elec. Co., 802 F.2d 648 (3d Cir.1986), vacated and remanded, 483 U.S. 1015, 107 S.Ct. 3255, 97 L.Ed.2d 754 (1987). Islamic Center and Black Grievance held that the period following the fee determination is covered by post-judgment interest provided for in 28 U.S.C. Sec. 1961. Islamic Center, 876 F.2d at 473; Black Grievance, 802 F.2d at 656; see also Foley v. Lowell, Mass., 948 F.2d 10, 22 (1st Cir.1991) (same). 23 Defendant-appellant further argues that the holding of Islamic Center and Black Grievance is a logical clarification of current Ninth Circuit case law. The court has already held that a 42 U.S.C. Sec. 1988 award is subject to 28 U.S.C. Sec. 1961 interest. Spain v. Mountanos, 690 F.2d 742, 745 (9th Cir.1982). Here, defendant-appellant contends, the court should hold that a Section 1988 award is subject only to 28 U.S.C. Sec. 1961 interest. 24 Plaintiffs contend that use of the current hourly rate rather than historic hourly rates cannot be an abuse of discretion. The Supreme Court has expressly approved this method of upward adjustment. In Missouri v. Jenkins ex rel. Agyei, 491 U.S. 274, 109 S.Ct. 2463, 105 L.Ed.2d 229 (1989), the Court held: 25 Clearly, compensation received several years after the services were rendered--as it frequently is in complex civil rights litigation--is not equivalent to the same dollar amount received reasonably promptly as the legal services are performed, as would normally be the case with private billings. We agree, therefore, that an appropriate adjustment for delay in payment--whether by the application of current rather than historic hourly rates or otherwise--is within the contemplation of [Section 1988]. 26 Id. at 283-84, 109 S.Ct. at 2469. 27 Defendant-appellant counters that Jenkins is distinguishable. Defendant-appellant argues that Jenkins applies only where a delay in payment is occasioned by lengthy trial litigation. For example, in Jenkins, the litigation began in 1977, but did not end until 1984. Thus, the district court determined the fee award seven years after services began. Here, however, the litigation began in January 1985 and was over in August 1987. Thus, the district court determined the fee award only two years after services began. Five of the seven years the district court judge referred to were spent contesting attorney's fees, not litigating substantive civil rights issues. Thus, defendant-appellant concludes, Jenkins should not apply. 28 This is an issue of first impression in the Ninth Circuit. Where litigation spans several years, a plaintiff's attorney does suffer significant costs due to the time value of money. When the district court formulates an attorney's fee award, the award will be a monetarily inaccurate assessment of attorney's fees incurred, if left uncorrected. But, where as here, the litigation was relatively short-lived, a plaintiffs' attorney does not suffer such costs. When the district court formulates an award, the award is monetarily accurate. The plaintiff's attorney only suffers costs due to the time value of money if the award is appealed and the appeal lasts several years. But, once an award is determined, it becomes a judgment. See Spain, 690 F.2d at 747-48. Because the award is a judgment, the judgment holder is entitled to interest. See 28 U.S.C. Sec. 1961 (expressly providing for an award of interest on a judgment). Thus, the costs incurred by plaintiff's attorney due to the time value of money should be compensated through interest. Accordingly, we hold that a delay in payment occasioned by appeal is redressable solely by an award of interest. See Islamic Center, 876 F.2d at 473; Black Grievance, 802 F.2d at 656; 5 Foley, 948 F.2d at 22. 29 Thus, although the determination of an attorney's fee award is primarily a matter of district court discretion, see Blum v. Stenson, 465 U.S. 886, 896-97, 104 S.Ct. 1541, 1547-48, 79 L.Ed.2d 891 (1984), we find that the district court abused its discretion in recalculating the lodestar figure using the current hourly rate of plaintiffs' attorney. The district court's use of the current hourly rate resulted in a significant windfall for plaintiffs' attorney. We reverse and remand to the district court to award Section 1961 interest.