Opinion ID: 222706
Heading Depth: 2
Heading Rank: 1

Heading: Community versus out-of-district hourly rates

Text: Asserting that California counsel were entitled to be reimbursed at California rates rather than the rate awarded to counsel in the forum, plaintiffs first contend that the district court erred because no other local counsel were willing to assist Garrigan in this complex class action. They also contend that a recent Supreme Court decision supports an award to plaintiffs' counsel that matches the rates allegedly paid by Lufkin to its Houston attorneys. See Perdue v. Kenny A. ex rel. Winn, ___ U.S. ___, 130 S.Ct. 1662, 176 L.Ed.2d 494 (2010). Lufkin, for its part, seeks an even larger reduction in the fee award for work performed by plaintiffs' counsel on unsuccessful claims in the litigation. We are constrained to vacate the fee award and remand for re-calculation. The precedents and purposes governing fee-shifting awards in civil rights cases are well established. The awards facilitate plaintiffs' access to the courts to vindicate their rights by providing compensation sufficient to attract competent counsel. Fee awards must, however, be reasonable. Hensley v. Eckerhart, 461 U.S. 424, 433, 103 S.Ct. 1933, 1939, 76 L.Ed.2d 40 (1983). The linchpin of the reasonable fee is the lodestar calculation, a product of the hours reasonably expended by the law firms and the reasonable hourly rate for their services. Id. Charges for excessive, duplicative, or inadequately documented work must be excluded. Watkins v. Fordice, 7 F.3d 453, 457 (5th Cir.1993). Seminal to this case is the principle that reasonable hourly rates are to be calculated according to the prevailing market rates in the relevant community. Blum v. Stenson, 465 U.S. 886, 895, 104 S.Ct. 1541, 1547, 79 L.Ed.2d 891 (1984). Further, Blum noted, the burden is on the applicant to produce satisfactory evidence... that the requested rates are in line with those prevailing in the community for similar services by lawyers of reasonably comparable skill, experience and reputation. Id. at 896 n. 11, 104 S.Ct. 1541. In an unbroken and consistent line of precedent, this court has interpreted rates prevailing in the community to mean what it says. Thus, as early as 1974, this court required district courts to consider the customary fee for similar work in the community. Johnson, 488 F.2d at 718; see also Van Ooteghem v. Gray, 774 F.2d 1332, 1338 (5th Cir.1985) (Title VII guarantees fair compensation and not whatever lions at the bar may command); Alberti v. Klevenhagen, 896 F.2d 927, 931 (5th Cir.1990) vacated in part on reh'g, 903 F.2d 352 (1990); Islamic Ctr of Miss., Inc. v. City of Starkville, Miss., 876 F.2d 465, 469 (5th Cir.1989); Watkins, 7 F.3d at 458-59; Green v. Adm'rs of Tulane Educ. Fund, 284 F.3d 642, 662 (5th Cir.2002); Tollett v. City of Kemah, 285 F.3d 357, 368 (5th Cir.2002); Scham v. District Courts Trying Criminal Cases, 148 F.3d 554, 558 (5th Cir.1998). Most telling, perhaps, is this court's decision in a landmark affirmative action case reducing the fee of plaintiffs' counsel, a former U.S. Assistant Attorney General and subsequent U.S. Solicitor General, from the rates he charged in Washington, D.C., to the prevailing rate in the forum, Austin, Texas. Hopwood v. State of Texas, 236 F.3d 256, 281 (5th Cir.2000) (discussing Ted Olson's billing rates). A number of our sister circuits, however, have taken the position that out-of-district counsel may be entitled to the rates they charge in their home districts under certain limited circumstances. The Sixth Circuit has observed that [w]hen fees are sought for an out-of-town specialist, courts must determine (1) whether hiring the out-of-town specialist was reasonable in the first instance, and (2) whether the rates sought by the out-of-town specialist are reasonable for an attorney of his or her degree of skill, experience, and reputation. Hadix v. Johnson, 65 F.3d 532, 535 (6th Cir.1995) (citing Chrapliwy v. Uniroyal, Inc., 670 F.2d 760, 768-69 (7th Cir. 1982)). Other circuits have used a similar approach. See Zolfo, Cooper & Co. v. Sunbeam-Oster Co., 50 F.3d 253, 259-60 (3d Cir.1995); Casey v. City of Cabool, Mo., 12 F.3d 799, 805 (8th Cir.1993); Nat'l Wildlife Fed'n v. Hanson, 859 F.2d 313, 317 (4th Cir.1988); Maceira v. Pagan, 698 F.2d 38, 40 (1st Cir.1983); Donnell v. United States, 682 F.2d 240, 252 (D.C.Cir.1982). But the two-prong Hadix test is applied cautiously: even courts that concluded out-of-district counsel were necessary often affirmed reduced fees for those attorneys. See Casey, 12 F.3d at 806 (approving a rate reduction for out-of-district counsel from $195 per hour to $150 per hour); Zolfo, 50 F.3d at 259-61 (noting that under 11 U.S.C. § 330, the starting point for a fee calculation should be the attorneys' home district, but nevertheless affirming the district court's use of in-district rates as the starting point because it achieved substantially the same result). Indeed, these circuits have stressed that appellate courts should be particularly reluctant to find an abuse of discretion. See, e.g., Nat'l Wildlife, 859 F.2d at 317 (The computation of attorneys fees is primarily the task of the district court, and we are not entitled to disturb a district court's exercise of discretion even though we might have exercised that discretion quite differently.); Zolfo, 50 F.3d at 261 (The bankruptcy court cut Zolfo Cooper's total compensation request approximately twelve percent. When faced with a reduction of ten percent in a similar case, we stated that `[n]o court, viewing a record of this magnitude from the distance inherent in appellate review, could assess the reasonability of a reduction as slight as ten percent with flawless precision.' (citation omitted)). To fulfill the purpose of Section 1988 fee awards, while accommodating Blum 's and this court's focus on local forum rates for attorney fees, we hold that where, as here, abundant and uncontradicted evidence proved the necessity of Garrigan's turning to out-of-district counsel, the co-counsel's home rates should be considered as a starting point for calculating the lodestar amount. Because local rates may well reflect a lower cost of living in the forum, which will also be indicative of lower potential damage awards, the district court retains discretion to adjust the lodestar and achieve an overall reasonable fee award. [5] Here, the district court carefully reviewed the hours billed by all counsel and assessed counsel's rates. In doing so, it adjusted the local prevailing rate upward to award the principal trial counsel, Mr. Garrigan, a local attorney, $400 per hour. The court, however, adjusted the claimed hourly rates of the Goldstein Demchak attorneys downward from those prevailing in their hometown California market ($650 per hour for partners and proportionately lower for associates and paralegals) to those prevailing in the Eastern District of Texas. The court reasoned that: (1) it had not been shown that attorneys from outside the Eastern District of Texas were necessary to the representation of the plaintiff class; (2) the Fifth Circuit requires compensation at locally prevalent rates rather than the rates charged in one of the highest priced legal markets in the United States; (3) the Goldstein Demchak attorneys performed second-chair trial duties, which did not entitle them to be paid at rates fifty percent higher than those of Garrigan. Unfortunately, the district court clearly erred in finding that local counsel were readily available to assist Garrigan, and it legally erred in suggesting that local community rates are always required when out-of-district counsel are employed. These errors require us to reverse and remand the award to the Goldstein Demchak lawyers for further consideration. Some further elaboration is useful. First, as was discussed above, the record is replete with affidavits from a variety of expert employment lawyers who swore that no Texas attorneys were willing and able to assist in such a large case that might drag on for years without any guarantee of financial remuneration. Lufkin provided no rebuttal evidence. The district court explained only that it was aware of many attorneys in the Eastern District experienced in employment law and complex litigation, and it named two attorneys, neither of whom is otherwise mentioned in the evidence. Yet, [t]he hourly fee awarded must be supported by the record; the district court may not simply rely on its own experience in the relevant legal market to set a reasonable hourly billing rate. League of United Latin Am. Citizens v. Roscoe I.S.D., 119 F.3d 1228, 1234 (5th Cir.1997). The district court clearly erred in finding contrary to the record that local attorneys were available to assist in the representation. Second, we here clarify our adherence to the common view of circuit courts that in the unusual cases where out-of-district counsel are proven to be necessary to secure adequate representation for a civil rights plaintiff, the rates charged by that firm are the starting point for the lodestar calculation. See generally Hadix, 65 F.3d at 535; Zolfo, Cooper & Co., 50 F.3d at 259-61; Casey, 12 F.3d at 805-06; Nat'l Wildlife Fed'n, 859 F.2d at 317; Maceira, 698 at 40. This court's focus on local community rates, like that of the Supreme Court in Blum, sets a floor for compensation, to emphasize that civil rights litigation under a fee-shifting statute is not a pro bono enterprise. On the other hand, the statutes' purposes are not fulfilled if counsel reap a windfall at the expense of a defendant by overcharging for their services. See Riverside v. Rivera, 477 U.S. 561, 580, 106 S.Ct. 2686, 91 L.Ed.2d 466 (1986) (Congress intended that statutory fee awards be adequate to attract competent counsel, but not produce windfalls to attorneys. (internal quotations and citations omitted)). Nor, as we have put it, are counsel necessarily entitled to what lions at the bar command. See Van Ooteghem, 774 F.2d at 1338. The trial court legally erred by using the Eastern District of Texas rates for Goldstein Demchak as its starting point in this unusual situation. As a consequence of these problems, the fee award to Goldstein Demchak must be recalculated on remand. The firm's California rates ought not be simply inserted into the court's previous calculations; that they are the new starting point does not require them to be the end point of analysis. See cases cited supra. It is apparent that the court carefully tailored the award, adjusting it, inter alia, for the second chair role played by the firm, approving hourly rates for travel time, removing a small amount of duplicative work and as will be noted, discounting the hours spent on unsuccessful claims in the litigation. To the extent the court deems appropriate, it may have to reconsider all aspects of the fee award to achieve reasonable compensation in light of the results obtained for the class members.