Opinion ID: 1390423
Heading Depth: 2
Heading Rank: 1

Heading: Fees for the fee-related litigation

Text: In its fee petition, HMRP sought $72,556 in compensation for the preparation and resolution of the dispute over the attorneys' fee award. The district court awarded only $30,083 for work preparing the fee petition and negotiating a possible settlement of the fees, both of which took place from December 15, 2005 until June 22, 2006. The court, noting that HMRP had refused to accept an earlier offer by the Shipbuilders to pay 80% of the requested lodestar amount, refused to grant any additional fees for the period after June 22 spent litigating the fee petition. We addressed the issue of fee-related litigation in the context of Title VII in Coulter v. Tennessee, 805 F.2d 146 (6th Cir.1986), cert. denied, 482 U.S. 914, 107 S.Ct. 3186, 96 L.Ed.2d 674 (1987). In Coulter, this Court observed that time spent in preparing, presenting, and trying attorney fee applications is compensable as part of the reasonable fee. Id. at 151 (emphasis added). At the same time, however, we cautioned that the prospect of large fees later on may discourage early settlement of cases by rewarding protracted litigation of both the civil rights case and the attorney fee case. Id. ; see also Hensley v. Eckerhart, 461 U.S. 424, 437, 103 S.Ct. 1933, 76 L.Ed.2d 40 (1983) (warning that a request for attorney's fees should not result in a second major litigation). Consequently, in the absence of unusual circumstances, the Coulter Court limited the compensable hours for preparing and successfully litigating a fee petition to three percent of the hours in the main case. Id. (noting that five percent would be the maximum where the main case involved a trial); see also Auto Alliance Int'l, Inc. v. United States Customs Serv., 155 Fed.Appx. 226, 229 (6th Cir.2005) (applying the 3% rule). The district court's decision to exclude altogether the time spent litigating the fee petition thus contradicts Sixth Circuit precedent. The Shipbuilders, however, make two arguments in urging us to affirm the district court's ruling. First, they seize upon the Coulter Court's use of successfully litigate and suggest that HMRP was somehow not successful in litigating its fee petition because the award was less than the amount sought. This assertion is inaccurate, for HMRP was awarded attorneys' fees precisely because their petition was successful. The Plaintiff's contention on appeal is merely that their success was inadequately compensated. Second, and more importantly, the Defendants argue that the decision to decline attorneys' fees is within a district court's discretion when the party seeking fees declines a substantial settlement offer. In support of this argument, they point to the following language from the Seventh Circuit: We reasoned that `attorney's fees accumulated after a party rejects a substantial offer provide minimal benefit to the prevailing party' and thus may not warrant being included in the fee award as a `reasonable attorney's fee.' Shott v. Rush-Presbyterian-St. Luke's Med. Ctr., 338 F.3d 736, 743 (7th Cir.2003) (quoting Moriarty v. Svec, 233 F.3d 955, 967 (7th Cir.2000)). Notably, however, the Seventh Circuit's Shott decision concerned settlement offers related to the underlying case and notas in the instant caseto the amount of attorneys' fees. The language from our Coulter decision controls the issue on appeal and warrants an additional payment for litigation related to the fee issue. Although we are aware of the important goal of limiting trials-after-trials, the Seventh Circuit authority cited by the Shipbuilders is not directly on point in this case. Because Coulter controls this situation, we apply the three percent rule to the district court's lodestar award of $1,749,245, yielding a product of $52,477, and subtract the $30,080 already awarded for preparing the fee petition. The Defendants must, therefore, pay an additional $22,397 in attorneys' fees, with interest, to the Plaintiff.