Opinion ID: 885550
Heading Depth: 2
Heading Rank: 1

Heading: the law of the lodestar.

Text: ¶ 25 A party who prevails in an action under 42 U.S.C. § 1983 is entitled to a reasonable attorney fee under § 1988 unless special circumstances would render an award unjust. See Hensley v. Eckerhart (1983), 461 U.S. 424, 429, 103 S.Ct. 1933, 1937, 76 L.Ed.2d 40, 48. The starting point for determining the amount of a reasonable fee consists of multiplying a reasonable hourly rate by the number of hours reasonably expended on the litigation. Ihler I, 259 Mont. at 243, 855 P.2d at 1011 (citing Audit Serv., 252 Mont. at 153, 827 P.2d at 1250). This initial amount has been referred to as the lodestar. See Ihler I, 259 Mont. at 243, 855 P.2d at 1011.
¶ 26 1. Whether the District Court abused its discretion in denying the Patients' request for out-of-state hourly rates for their out-of-state attorneys? ¶ 27 Under § 1988, the reasonable hourly rate is calculated according to the prevailing market rates in the relevant community. Barjon, 132 F.3d at 500 (quoting Blum v. Stenson (1984), 465 U.S. 886, 895, 104 S.Ct. 1541, 1547, 79 L.Ed.2d 891, 900). Generally, the relevant community is the forum in which the district court sits. Barjon, 132 F.3d at 500 (citation omitted). However, in circumstances where it is reasonable to retain attorneys from other communities, the rates in those communities may also be considered. See Rum Creek Coal Sales, Inc. v. Caperton (4th Cir.1994), 31 F.3d 169, 175 (reversing district court denial of out-of-forum rates because prevailing party acted reasonably in selecting out-of-forum representation due to complex and politically sensitive nature of issues). ¶ 28 In their fee application, the Patients sought out-of-state rates for their out-of-state attorneys. The District Court stated that it was not convinced that out-of-state representation was necessary because the Patients had neither submitted affidavits from attorneys who had refused to accept the case, nor demonstrated that Montana attorneys were unqualified to handle such a case. Consequently, the court found that the relevant community for purposes of an award of attorney fees was the State of Montana and refused to adjust the hourly rate for the Patients' out-of-state attorneys. ¶ 29 The Patients contend that the District Court erred by requiring them to prove that resort to out-of-state representation was necessary. The Patients assert that the correct standard is not whether out-of-state representation was necessary, but whether resort to out-of-state representation was reasonable. The Patients also contend that they submitted sufficient evidence of the reasonableness of seeking out-of-state representation and that this evidence was unrebutted by the Hospital. ¶ 30 In particular, the Patients point to the affidavits of Allen Smith and Mary Gallagher. Mr. Smith, an attorney employed by the State Mental Disabilities Board of Visitors, stated: After discussions with Montana attorneys it was recognized that we would be unable to secure, in Montana, sufficient resources and the legal assistance that was necessary to successfully litigate this case.... ... While several Montana attorneys were interested in assisting in this litigation, we were unable to secure a commitment from Montana counsel with the available time and the legal expertise necessary for this case. There is no way this litigation could have been initiated and continued without the financial and legal assistance provided by the American Civil Liberties Union Foundation and the Mental Health Law Project. ¶ 31 Ms. Gallagher, also employed as an attorney for the Board of Visitors until March 8, 1991, and thereafter employed as a private attorney, stated: When this litigation commenced ... neither myself nor Al Smith, the Board of Visitors' co-counsel, were qualified to take on a case of this complexity or magnitude, given our level of legal experience. Our discussions with various attorneys in the state indicated that there was no expertise in the field of mental health law in the state. Litigator Mark Connell was initially contacted and my understanding was that he would be willing to assist at times but he was not willing to be lead counsel on a case of this complexity and he was not experienced in mental health issues. Additionally, Steve Ungar, the then-president of Montana ACLU was unable to procure other counsel in Montana with any experience in this area of law. It was my experience that very few attorneys knew anything at all about the field of mental health law and the issues we were facing. I did not consider anyone in the State to be qualified to take on the case and we therefore contacted the Mental Health Law Project. ¶ 32 At the outset, we note that although appellate courts generally review a trial court's award of attorney fees for an abuse of discretion, the deferential review inherent in the abuse of discretion standard is inappropriate when the issue is whether a trial court applied the appropriate standard. See Corder v. Gates (9th Cir.1996), 104 F.3d 247, 249 (However, we review de novo any elements of legal analysis which figure in the district court's decision.); Rum Creek, 31 F.3d at 174 (deferential review modified when issue is whether district court applied the appropriate criteria); Coleman v. Kaye (3rd Cir.1996), 87 F.3d 1491, 1497, cert. denied, 519 U.S. 1084, 117 S.Ct. 754, 136 L.Ed.2d 691 (1997) (plenary review when district court fails to apply the appropriate standard); Barjon, 132 F.3d at 500 (a fee award which is based on an inaccurate view of the law is an abuse of discretion). ¶ 33 Upon a review of relevant case law, it appears that federal appellate courts have articulated two standards to determine whether to award out-of-forum hourly rates. Some courts have asked whether resort to out-of-forum counsel was reasonable. See Rum Creek, 31 F.3d at 178-79; National Wildlife Fed'n v. Hanson (4th Cir.1988), 859 F.2d 313, 317-18 (affirming award of out-of-forum rates because prevailing party acted reasonably in selecting out-of-forum attorney when its local counsel was unable to take the case and nearest counsel with requisite experience in complex environmental litigation and willingness to forgo compensation temporarily was from out-of-forum); Chrapliwy v. Uniroyal, Inc. (7th Cir.1982), 670 F.2d 760, 769, cert. denied, 461 U.S. 956, 103 S.Ct. 2428, 77 L.Ed.2d 1315 (1983) (Pertinent questions where, as here, a court is fixing a fee to be paid by an opponent are whether services of like quality are truly available in the locality where the services are rendered, and whether the party choosing the attorney from elsewhere acted reasonably in making that choice.). ¶ 34 Other courts have asked whether in-forum counsel was unavailable. See Barjon, 132 F.3d at 501-02 (affirming denial of out-of-forum rates; prevailing party did not prove that local counsel was unavailable because the same declarations offered by prevailing party to prove unavailability of local counsel also revealed declarants themselves who had previously represented similar parties); Gates v. Deukmejian (9th Cir.1992), 987 F.2d 1392, 1405 (affirming award of out-of-forum rates because prevailing party submitted substantial evidence demonstrating that issues were extremely complex and thus required experienced and sophisticated counsel unavailable in the forum). ¶ 35 Regardless of the standards articulated by other courts, the primary concern in an attorney fee case is that the fee awarded be reasonable. Hadix v. Johnson (6th Cir.1995), 65 F.3d 532, 535 (citing Blum, 465 U.S. at 893, 104 S.Ct. at 1545). Moreover, the standard of reasonableness is clearly explicit in the language of the statute itself. Under § 1988, a district court may allow the prevailing party ... a reasonable attorney's fee. (Emphasis added.) Accordingly, we conclude that the District Court erred. A prevailing party does not have the burden of proving that resort to out-of-forum counsel was  necessary ; instead, a prevailing party has the burden of proving that resort to out-of-forum counsel was reasonable. In doing so, a prevailing party is not required to submit affidavits from in-forum attorneys who refused to accept their case. Rather, a party seeking an award of out-of-forum fees must prove that legal services with whatever degree of skill may have been reasonably required by their case were not readily available at a lower charge or rate in the area where the services were to be performed. See Chrapliwy, 670 F.2d at 769. ¶ 36 We conclude that the Patients submitted sufficient evidence to demonstrate that resort to out-of-forum representation was reasonable because adequate representation was not readily available in Montana. In its findings of fact, the District Court acknowledged that this case was complex and lengthy and that the Patients submitted numerous affidavits from attorneys in Montana which demonstrated that they were reluctant to accept civil rights cases such as this one. [1] The Patients also submitted affidavits from Smith and Gallagher, the attorneys responsible for deciding to seek out-of-state representation, which indicated that, upon consultation with Montana attorneys, they believed there was not qualified counsel within the State with the time and expertise to devote to their case. Notably, this evidence was not rebutted by the Defendants. Under these circumstances, we do not think there is any reason to reject the numerous affidavits submitted by the Patients which demonstrate the reasonableness of seeking out-of-forum counsel. Cf. Hanson, 859 F.2d at 318 (noting that defendant did not controvert evidence of reasonableness of seeking out-of-state representation); Brinker v. Guiffrida (3d Cir. 1986), 798 F.2d 661, 668 (We note that in statutory fee cases where an opposing party has been afforded the opportunity to raise a material fact issue as to the accuracy of representations as to the hours spent or the necessity for their expenditure and declines to do so, there is ordinarily no reason for a court to disregard the uncontested affidavits of a fee applicant.); Washington v. Philadelphia County Court of Common Pleas (3d Cir.1996), 89 F.3d 1031, 1036 (Where, as here, the plaintiff has met his prima facie burden under the `community market rate' lodestar test, and the opposing party has not produced contradictory evidence, the district court may not exercise its discretion to adjust the requested rate downward.). ¶ 37 Furthermore, we point out that an award of out-of-state attorney fees on remand was implicit in our holding in Ihler I. In Ihler I, we reversed the District Court's award of a 50 percent enhancement to the lodestar to reflect contingent risks. In remanding the case to the District Court, we stated: [A]s stated in Dague, some accounting for the risk of contingency is normally figured into the computation of the lodestar, by either greater hours claimed or higher hourly wages. In this case, we cannot determine if the District Court would have reached the same reasonable hourly rates and reasonable compensable hours if it had not subsequently increased the lodestar amount by 50 percent for contingency. On remand, therefore, the District Court should recompute the lodestar amount the reasonable hourly rates multiplied by the reasonable compensable hoursin light of the principles in set forth in Dague. Ihler I, 259 Mont. at 246, 855 P.2d at 1013. ¶ 38 On remand, the District Court noted that it had previously granted an enhancement because the Patients had established that without such an enhancement for contingency they would have faced substantial difficulties in finding counsel in the relevant market. However, despite explicitly acknowledging that this fact was not reflected in its initial lodestar determinationthus justifying the 50 percent enhancementthe court refused to recalculate the lodestar on remand. In Dague, the Supreme Court stated that enhancements for contingency are inappropriate because one of the factors motivating a contingent enhancement, the difficulty in establishing the legal and factual merits of a claim, should be subsumed in the lodestar figure either through a higher number of hours expended to overcome the difficulty, or in the higher hourly rate of an attorney skilled and experienced enough to do so. Dague, 505 U.S. at 562, 112 S.Ct. at 2641. We think that given our instruction to recalculate the lodestar in light of Dague, it was clear that the District Court should have accounted for the reluctance of Montana attorneys to accept cases like this one by making an allowance in the lodestar for out-of-state representation. ¶ 39 We note that the necessity of reducing the protracted costs of what other courts have referred to as the inevitable attorney's fee proceeding militates in favor of granting great deference to a trial court's fee award. Ustrak v. Fairman (7th Cir. 1988), 851 F.2d 983, 986. However, we do not want to prevent Montana citizens from being able to attract counsel with the time and expertise to represent them in actions enforcing their civil rights. See Hadix, 65 F.3d at 535 (A reasonable fee is one that is adequate to attract competent counsel....). We also believe that under § 1988 losing defendants should bear the reasonable costs of actions to enforce civil rights. ¶ 40 For the foregoing reasons, we reverse and remand to the District Court for a redetermination of a reasonable hourly rate for attorneys Helen Hershkoff, Len Rubenstein, Ira Burnim, Susan Stefan, and Victor Bolden. In finding the reasonable hourly rate for non-Montana attorneys, the District Court shall determine the historic rate prevailing in the relevant community for similar work performed by attorneys of comparable skill, experience, and reputation based on all the evidence presently in the record. ¶ 41 2. Whether the District Court abused its discretion in determining the reasonable in-state hourly rate for Montana attorneys? ¶ 42 The Patients requested the following hourly rates for Montana attorneys: between $120 to $150 for James Goetz, $125 for Jeffrey Renz, $85 for Brian Gallik, and $80 for Mary Gallagher (Andrea Olsen's affidavit does not contain an hourly rate). The District Court awarded the Patients attorney fees at the hourly rate of $75 for Brian Gallik, Andrea Olsen, and Mary Gallagher, and awarded the Patients attorney fees at an hourly rate of $110 for James Goetz and Jeffrey Renz. The District Court stated that its hourly rate determination was based on the rates requested by the Patients' Montana attorneys, the novelty and complexity of the litigation, the skill and experience of the individual attorneys, and the affidavits of Erik Thueson, Timothy Whalen, and James Reynolds. ¶ 43 The Patients contend that the District Court abused its discretion in determining reasonable in-state rates. In particular, the Patients contend that the prevailing rate established by the record for the least experienced attorneys such as Mr. Gallik, Ms. Gallagher, and Ms. Olsen was $80 to $95 an hour. The Patients also assert that Mr. Goetz and Mr. Renz should have been awarded their requested hourly rate because it falls within the in-state range. ¶ 44 As mentioned above, reasonable fees under § 1988 are normally to be calculated according to the prevailing market rates in the relevant community. See Blum, 465 U.S. at 895, 104 S.Ct. at 1547. The prevailing market rate is the rate prevailing in the community for similar work performed by attorneys of comparable skill, experience, and reputation. Barjon, 132 F.3d at 502 (quoting Chalmers v. City of Los Angeles (9th Cir.1986), 796 F.2d 1205, 1210-11). The fee applicant has the burden of producing satisfactory evidencein addition to the attorney's own affidavitsthat the requested rates are in line with those prevailing in the community. See Blum, 465 U.S. at 895 n. 11, 104 S.Ct. at 1547 n. 11. ¶ 45 We conclude that the $75 hourly rate the court awarded the Patients for their inexperienced counsel is clearly erroneous. This rate is not consistent with the information upon which the District Court expressly relied nor is it consistent with the relevant evidence in the record. Based on the affidavits upon which the District Court expressly relied in establishing a market rate, the range of the prevailing market rate in Montana was between $80 and $150. [2] Inexperienced counsel involved in the case requested a rate of between $80 and $85 an hour. The District Court did not cite any evidence which would indicate that the hourly rates requested by inexperienced counsel were unreasonable. In fact, the evidence cited by the court indicates that the rates requested by inexperienced counsel are exactly where one would reasonably expect them to beat the very lowest end of the prevailing range. ¶ 46 Counsel for the Hospital claims that these lower rates can be justified with reference to a bar survey and the rates charged by defense counsel. However, as a matter of logic, neither a general bar survey nor the particular rates charged by defense counsel could, on their own, enable the court to establish the prevailing market rate for plaintiff's civil rights work. See Trevino v. Gates (9th Cir.1996), 99 F.3d 911, 925 (reversing district court's determination of a reasonable hourly rate for prevailing plaintiff because court used defense attorneys' rates as a starting point); see also Davis v. City & County of San Francisco (9th Cir.1992), 976 F.2d 1536, 1547, vacated in part on reh'g, 984 F.2d 345 (9th Cir.1993) (affirming exclusion of general bar survey as irrelevant to determination of prevailing rate for practitioners in same or similar market). Furthermore, the court clearly stated the facts it was relying upon in making its rate determination, making no mention of either the general bar survey or the rates charged by defense attorneys. ¶ 47 Accordingly, we conclude that the District Court abused its discretion by awarding an hourly rate of $75 to the Patients for the work of Mr. Gallik, Ms. Olsen, and Ms. Gallagher. See, e.g., Coleman, 87 F.3d at 1509-10 (observing that a court must rely upon evidence in the record when setting attorney fees). We conclude that the rates requested by the Patients for the work of Mr. Gallik and Ms. Gallagher were reasonable hourly rates being that they were at the very lowest end of the range of rates prevailing in Montana and that the rate of $80 is a reasonable hourly rate for Ms. Olsen given her similar level of experience. ¶ 48 We conclude that the District Court did not abuse its discretion in awarding a $110 hourly rate for the work performed by Mr. Goetz and Mr. Renz. These fees are clearly within the range of prevailing market rates for experienced civil rights litigators as established by the affidavits submitted by the Patients and relied upon by the court.
¶ 49 Whether the District Court abused its discretion by reducing the Patients' requested hours? ¶ 50 The second factor that a trial court must determine in reaching a lodestar figure is the number of hours reasonably expended by the prevailing party's attorneys. The Patients contend that their counsel made a good faith effort to exclude inefficient and duplicative hours and that the District Court abused its discretion by reducing their billable hours further without explaining how it arrived at a specific percentage reduction. ¶ 51 The Supreme Court has described the determination of reasonable hours as follows: The party seeking an award of fees should submit evidence supporting the hours worked and rates claimed. Where the documentation of hours is inadequate, the district court may reduce the award accordingly. The district court also should exclude from this initial fee calculation hours that were not reasonably expended. S.Rep. No. 94-1011, p. 6 (1976). Cases may be overstaffed, and the skill and experience of lawyers vary widely. Counsel for the prevailing party should make a good faith effort to exclude from a fee request hours that are excessive, redundant, or otherwise unnecessary, just as a lawyer in private practice ethically is obligated to exclude such hours from his fee submission. In the private sector, `billing judgment' is an important component in fee setting. It is no less important here. Hours that are not properly billed to one's client also are not properly billed to one's adversary pursuant to statutory authority. Copeland v. Marshall (D.C.Cir.1980), 641 F.2d 880, 891 (en banc). Hensley, 461 U.S. at 433-34, 103 S.Ct. at 1939-40. ¶ 52 Following the lead of the Supreme Court, other courts have stressed that the familiarity of a trial court with the underlying litigation warrants considerable deference to its findings on such matters as whether the hours claimed by prevailing counsel are redundant. See, e.g., Davis, 976 F.2d at 1544 (citing Hensley, 461 U.S. at 437, 103 S.Ct. at 1941). We agree. Unlike determinations of the prevailing market rate or the relevant community which are capable of a more thorough review because of a trial court's necessary reliance on facts submitted to it by the parties, a trial court's determination that the hours claimed by a prevailing party are redundant or inefficient can be based entirely on its personal observations. However, this does not mean that a district court can decide arbitrarily to reduce the hours claimed by a prevailing party. A district court must provide a concise but clear explanation of the lodestar, including a discussion of the factors it relied upon in determining the number of hours reasonably expended and, if it employs a percentage reduction, how it arrived at the chosen percentage. See Stewart v. Gates (9th Cir. 1993), 987 F.2d 1450, 1453 (citation omitted). ¶ 53 In determining a reasonable number of hours, the District Court stated: 11. This case was significantly overstaffed by Plaintiffs. For example, at times there were four Plaintiffs' attorneys present at depositions. During the trial Plaintiffs had as many as six attorneys in attendance. One attorney, Andrea Olsen, spent more than 100 hours on post-trial work, which was in addition to the significant number of hours on such work by other members of Plaintiffs' legal team; although Ms. Olsen's fee request already reflects a 25 percent reduction in the number of hours, a further reduction is warranted. 12. The use of out-of-state attorneys also resulted in additional and unnecessary hours. For example, Victor Bolden's hours include, in addition to travel time for each trip to Montana, the one-hour trip between his home and the New York airport. While travel time is generally compensable, in this case the number of hours was excessive. 13. Two attorneys, James Goetz and Helen Herskoff, played no significant role in this case and their efforts largely duplicated the work of other attorneys. .... 22. The number of hours spent on [the fee petition] is excessive, particularly in light of Mr. Renz's skill and experience in this area. The issues are neither novel nor complex. The court finds that 25 percent of the hours requested were unnecessary. ¶ 54 We think that this is a sufficiently concise but clear explanation of the District Court's reason for reducing the Patient's requested hours. We do not agree with the Patient's assertion that the District Court should rely upon the plaintiff's good faith effort [to exercise billing judgment] when it determines the basic fee. A trial court is required to independently review a submission of billable hours by a prevailing party to determine the number of hours reasonably expended. See Deukmejian, 987 F.2d at 1401. Furthermore, we note that the Patients have not pointed us to any specific examples where their attorneys exercised billing judgment by reducing the number of hours charged for the categories specifically noted by the District Court, namely, multiple representation at both the depositions and at trial. For example, as the Hospital points out, the Patients billed for two attorneys, Mr. Bolden and Ms. Olsen, for taking notes at trial. Accordingly, we conclude that the District Court's finding that the services the Patient's attorneys provided were inefficient or duplicative is not clearly erroneous. ¶ 55 However, in light of our conclusion that the Patients acted reasonably in seeking out-of-forum representation, we conclude that the District Court erred to the extent that it reduced the hours of out-of-state attorneys solely because they incurred more travel time or other additional, unnecessary hours as compared with what an in-state attorney would have incurred. Because it was reasonable for the Patients to seek out-of-state representation, it was also reasonable for the Patients to incur the extra expenses associated with out-of-state representation, including travel time. We remand to the District Court for a redetermination of its reduction of the hours of out-of-state counsel which were based solely on the fact that those counsel incurred travel time.