Opinion ID: 372830
Heading Depth: 1
Heading Rank: 4

Heading: the 1977 award

Text: 35 A. Retroactivity of the Fees Awards Act: This issue has been firmly resolved by this Court. The Fees Awards Act applies to any case which is pending or which had not been finally resolved prior to its passage. This is not a matter of retroactivity, it is simply an application of the traditional rule that a court applies the law which is in existence at the time it renders its opinion, unless there is statutory history to the contrary or doing so would result in manifest injustice. 36 This Court has already ruled that § 1988 authorizes compensation for services rendered prior to its enactment, and both Supreme Court authority and clear legislative history support our conclusion. In Weisenberger v. Huecker, supra, 593 F.2d 49, the merits of the case were resolved well before passage of the Act, but the application for attorneys' fees had not been resolved when the Act became effective. This Court held that (s)ince the Act was in existence at the time the district court made the fee awards, it is applicable to the instant cases. Id. at 53. The legislative history expressly states that the statute is intended to apply to all pending cases, and pending means that all the issues in the case have not been finally resolved. So long as there was an active controversy in the case at the time the Act became effective, the Act applies to authorize fees for the entire case, unless special circumstances exist which would make an award manifestly unjust. The posture of this case at the time the award was made was indistinguishable from that in Bradley v. School Bd. of Richmond, 416 U.S. 696, 94 S.Ct. 2006, 40 L.Ed.2d 476 (1974). In Bradley, the Supreme Court was faced with another protracted school desegregation case. Relying on its equitable powers, the district court had awarded fees for services performed during the year prior to the passage of the Emergency School Aid Act. While the award was on appeal, the Act became effective. The Court of Appeals held, however, that only services rendered after the effective date of the Act were compensable. The Supreme Court reversed, applying the principle that a court is to apply the law in effect at the time it renders its decision unless doing so would result in manifest injustice or there is statutory direction or legislative history to the contrary. Id. at 711, 94 S.Ct. at 2016. 37 In this case, plaintiffs filed their application for fees in 1974, relying upon the Emergency School Aid Act and the district court's equitable powers. In 1976, while the issue was still pending before the district court, the Civil Rights Attorney's Fees Awards Act was passed. The district court erred in refusing to apply the new statute to the pending application for fees. The situation is indistinguishable from Bradley, and the court had the benefit of an express instruction from Congress that the new statute was to apply to all pending cases. See Sen.Rep. No. 94-1011, Supra. 38 After concluding that the lack of specific guidelines and the resulting trial and error experimentation in school desegregation cases prior to 1968 when the Supreme Court decided Green precluded an equitable award of fees based on the defendant's bad faith in the conduct of the suit, the district court went on to comment, in Dicta, that even if it was wrong about the retroactivity of the attorney's fees statutes, the Same considerations, coupled with the plaintiffs' failure to request fees at an earlier date, precluded a statutory award of fees. The district court stated that, in its opinion, these factors amounted to special circumstances which would render an award of fees manifestly unjust. We disagree. 39 We have the benefit of a Supreme Court decision discussing the special circumstances which would be necessary to defeat a statutory fee award. Bradley, supra, 416 U.S. at 716, 94 S.Ct. 2006, explored aspects of this special judicial limitation on the statute. It noted that such injustice was particularly likely in a private suit between two parties. The factors to be considered were (a) the nature and identity of the parties, (b) the nature of their rights, and (c) the nature of the impact of the change in law upon those rights. Id. at 717, 94 S.Ct. at 2019. The Court pointed out that plaintiffs in school desegregation cases were private attorneys general operating at a tremendous disadvantage to the defendants in terms of finances and resources. These cases are a matter of great national concern, and are not mere differences between private individuals. Also, in an attorney's fee issue, a change in the law has no effect on any party's right that has matured or become unconditional. Id. at 720, 94 S.Ct. at 2020. Finally, no additional or unforeseeable obligation is being imposed upon the defendants because attorney's fees may ultimately have been awarded against them based on the court's equitable power; the new statute merely serves to create an additional basis or source for the Board's potential obligation to pay attorney's fees. Id. at 721, 94 S.Ct. at 2021. 40 Once again, we find the factors in Bradley to be indistinguishable from those here. This case is also a school desegregation case involving great disparity between the resources of the parties. The new statute affects no vested or matured rights of the defendant. Finally, the statute simply confirms the possibility of an award of attorney's fees; not only was there always the possibility that the court would invoke its equitable powers to award fees, but it in fact did so, finding as a fact that the School Board had engaged in obstinate and obdurate behavior during at least a portion of this case. 41 Thus the district court was incorrect in its ruling that it had no statutory authority to award fees for services rendered prior to 1972, and the case must be remanded for a determination of a reasonable fee for that period. The fee awarded should cover at least the period back to 1968 when the suit became active again following the Supreme Court's Green decision. 42 This is not to say that a retroactive award of attorney's fees must be made in all school desegregation cases. Certain interim aspects of the case may have been subject to a final order settling the issue of attorney's fees to that point, rendering the reopening of long-settled aspects of the case unfair. In some circumstances, it would be unfair to award fees against defendants who entered the suit principally as amici curiae to give the court another perspective on the issues involved. See Wilderness Society v. Morton, 161 U.S.App.D.C. 446, 495 F.2d 1026 (D.C. Cir. 1974), Reversed on other grounds, 321 U.S. 240, 95 S.Ct. 1612, 44 L.Ed.2d 141 (1975). However, we reject the notion that mere uncertainty in the law is a special circumstance justifying rejection of the statutory remedy. A major purpose of the Fees Awards Act was to encourage the bringing of suits in new and undeveloped areas of civil rights law, and it would be anomalous indeed if we were to deny fees for the very reason the statute was passed. Finally, the plaintiffs' delay in applying for fees (which was largely due to the fact that there was no earlier appropriate time to pause for litigation of the fee issue, at least not since 1966) is hardly grounds for denying fees. The defendants have failed to point to any prejudice or harmful effects on them as a result of the plaintiffs' delay. The prejudice, if any, has inured to the plaintiffs' attorneys who have provided years of service without compensation in hand. This is not a case where, years after a case has been finally disposed of, the prevailing party seeks to reopen the case to litigate the fee issue. Cf. United States v. Pinto, 44 F.R.D. 357 (W.D.Mich.1968). 43 There is an unresolved dispute concerning the pre-1968 period, which we leave to the district court to resolve. The School Board contended below that the district court action of July 29, 1966, the last action before the Supreme Court's Green decision, was a consent order which undertook to dispose of all outstanding phases of the case, including fees and costs. It is true that a long, complicated case of this sort can result in several final orders, which in the interests of finality are deemed to dispose of all foregoing issues. Absent a timely appeal, a party is bound by the order and any later challenge is deemed to be a collateral attack judged by different, and more stringent standards than on direct review. Bradley, supra, 416 U.S. at 710-11, 94 S.Ct. 2006. If the defendants are correct in their characterization of the 1966 action in the interest of finality, plaintiffs should not be permitted to reopen that judgment in order to obtain attorneys' fees. We leave this matter to the district court. However, from 1968 until shortly before the application for fees was made by the plaintiffs, the case was in continuous, active litigation. Not only was there no final judgment which could reasonably be said to settle the issue of fees during that period, but there was no time to raise the matter of fees at all. 44 B. The Prevailing Party Problem: This legal issue is common to both awards. The district court concluded that the plaintiffs were the prevailing party, thus entitling them to fees under the statutes. However, it then concluded that those fees could be cut because the plaintiffs had Not prevailed on some issues or parts of issues. In the first award, the district court cut the plaintiffs' attorneys' hours by half to account for this factor, and in the second award, reduced the award by 20 per cent. 45 This approach is not proper under the Fees Awards Act. The question as to whether the plaintiffs have prevailed is a preliminary determination, necessary before the statute comes into play at all. Once that issue is determined in the plaintiffs' favor, they are entitled to recover attorneys' fees for all time reasonably spent on a matter. The fact that some of that time was spent in pursuing issues on research which was ultimately unproductive, rejected by the court, or mooted by intervening events is wholly irrelevant. So long as the party has prevailed on the case as a whole the district courts are to allow compensation for hours expended on unsuccessful research or litigation, unless the positions asserted are frivolous or in bad faith. There are numerous practical reasons why a court may not be permitted to dissect a lawsuit into issues and parts of issues as to which the plaintiffs did not prevail, especially by decimating the total hours claimed with arbitrary percentages. Suffice it to say, however, that Congress has mandated that a prevailing party's attorney should be compensated as is traditional with attorneys compensated by a fee-paying client, for all time reasonably expended on a matter. We know of no traditional method of billing whereby an attorney offers a discount based upon his or her failure to prevail on issues or parts of issues. Furthermore, it would hardly further our mandate to use the broadest and most flexible remedies available to us to enforce the civil rights laws if we were so directly to discourage innovative and vigorous lawyering in a changing area of the law. That mandate is best served by encouraging attorneys to take the most advantageous position on their clients' behalf that is possible in good faith. The fact that these lawyers advocated a desegregation remedy of broader scope and faster pace than was ultimately adopted cannot be considered to be unreasonable. Their clients have prevailed; the Memphis school system is desegregated. 46 The district court also cut certain hours from the plaintiffs' request against the City of Memphis, primarily those hours spent on the suit which had been filed against the city but which was dismissed when the City agreed to supply adequate gasoline to the School Board. In spite of the lack of a formal order, the plaintiffs still obtained the relief which they sought, and are entitled to compensation. As noted in the Senate Report, prompt and reasonable settlement is to be encouraged, and thus the notion of prevailing party is to be interpreted in a practical, not formal, manner. 47 C. The Calculation of a Reasonable Fee: This Court has been disturbed by the extraordinary variations in fee awards that have come before it on review, and by a marked failure on the part of the district courts to explain their reasoning, make necessary findings of fact, or demonstrate the calculations used to arrive at a fee. Such awards may well constitute an abuse of discretion while rendering the award virtually unreviewable. We therefore conclude that a uniform approach to awarding fees, with a requirement that the district court make clear and adequate findings of fact on the record, is necessary in order that we may discharge our statutory duty to award a reasonable fee. That which is arbitrary or conclusory is not reasonable, and is not fair to either of the parties involved. 48 i. Hours of service provided: We conclude that a fee calculated in terms of hours of service provided is the fairest and most manageable approach. The district court should indicate on the record the number of hours it finds the plaintiffs' attorneys have expended on the case. This finding must first take into account the affidavits of counsel. The hours claimed need not be automatically accepted by the district court, but to the extent that hours are rejected, the court must indicate some reason for its action, so that we may determine whether the court properly exercised its discretion or made an error of law in its conclusion. Hours may be cut for duplication, padding or frivolous claims. In complicated cases, involving many lawyers, we have approved the arbitrary but essentially fair approach of simply deducting a small percentage of the total hours to eliminate duplication of services. Oliver v. Kalamazoo Bd. of Educ., 576 F.2d 714 (6th Cir. 1978). Such an approach seems preferable to an attempt to pick out, here and there, the hours which were duplicative. 49 Beyond this allowance for duplicative services, however, we hold that if a district court decides to eliminate hours of service adequately documented by the attorneys, it must identify those hours and articulate its reasons for their elimination. The district court's failure to do so in this case renders its award virtually unreviewable. It has simply eliminated, without comment, hundreds of hours of documented service. The 1977 Award must therefore be remanded for entry of findings of fact and conclusions of law adequate to permit our review of the award. Monroe v. Bd. of Comm'rs of Jackson, 505 F.2d 105, 109 (6th Cir. 1974). To the extent that the district courts' unspoken assumptions about awards of attorneys' fees are inconsistent with this opinion, the award should be recalculated. 50 The plaintiffs have attempted, largely by guesswork, to identify which hours of service in the 1977 Award were excluded from consideration. While this Court does not render advisory opinions, it appears that many of the hours were excluded for improper reasons. Therefore, we review a few established principles of law, for the benefit of the district court on remand. While necessary services performed by attorneys which could reasonably have been performed by less expensive personnel may be compensated at a lower rate than an attorney's normal billing rate, they should not be excluded altogether. Services relating to the various appeals taken in this case are compensable, and the district court, with its greater facility for evidentiary hearings and fact-finding, should make awards for appellate services in the first instance, subject to our review. Weisenberger v. Huecker, supra, 593 F.2d 49, Perkins v. Standard Oil Co. of Calif., 399 U.S. 222, 90 S.Ct. 1989, 26 L.Ed.2d 534 (1970). Services devoted to reasonable monitoring of the court's decrees, both to insure full compliance and to ensure that the plan is indeed working to desegregate the school system, are compensable services. They are essential to the long-term success of the plaintiff's suit. While we express no opinion as to whether Prospective fees may be awarded to cover anticipated monitoring services, as was done in Lindy Bros. Builders, Inc. v. American Radiator & Stand. Sanitary Corp., 540 F.2d 102, 121 (3d Cir. 1976) (en banc), it is clear that if such services have already been rendered, they should be compensated. Pete v. U. M. W. Welfare & Retirement Fund of 1950, 171 U.S.App.D.C. 1, 17, 517 F.2d 1275, 1291 (D.C. Cir. 1975). Finally, this Court has recently held that in order to effectuate the purposes of the Civil Rights Attorney's Fees Awards Act, the plaintiffs should recover attorneys' fees for the time spent litigating the fees issue itself. Weisenberger, supra, 593 F.2d 49. 51 A factor which the district court did expressly take into account in eliminating hours was its view that the services of the NAACP Legal Defense Fund had not been shown to be necessary. As noted above, the use of a number of attorneys frequently results in some duplication of effort, and a district court may take this factor into account by deducting some small percentage of the total hours. It is impermissible, however, to eliminate wholesale the services of attorneys without identifying the particular services which are regarded as duplicative. The NAACP attorneys provided the plaintiffs with many hours of service which were not provided by anyone else, particularly in connection with litigation in this Court and the Supreme Court. The services provided by the Legal Defense Fund clearly had to be provided by someone, and in fact, the attorneys' intimate familiarity with the issues involved in desegregation litigation undoubtedly meant that their time was far more productive in this area than would be that of a local attorney with less expertise. We hold that the district court's exclusion of the services of the Legal Defense Fund from consideration for a fee award was an abuse of discretion. 52 ii. A reasonable hourly rate: We have indicated in several opinions that it is desirable, whenever possible, to vary the hourly rate awarded depending upon the type of service being provided. Again turning to our mandate to award fees as is traditional with attorneys compensated by a fee-paying client, a scale of fees as is used by most law firms is appropriate to use in making fee awards pursuant to Section 1988. The use of broad categories, differentiating between paralegal services, in-office services by experienced attorneys and trial service, would result in a fair and equitable fee. 53 In determining what the level of compensation for each category of service should be, the court should look to the fair market value of the services provided. In most communities, the marketplace has set a value for the services of attorneys, and the hourly rate charged by an attorney for his or her services will normally reflect the training, background, experience and skill of the individual attorney. For those attorneys who have no private practice, the rates customarily charged in the community for similar services can be looked to for guidance. 54 Focussing on the fair market value of the attorney's services will best fulfill the purposes of the Fees Awards Act, by providing adequate compensation to attract qualified and competent attorneys without affording any windfall to those who undertake such representation. The entire purpose of the statutes was to ensure that the representation of important national concerns would not depend upon the charitable instincts of a few generous attorneys. 55 For the same reason, as we established in Oliver v. Kalamazoo Bd. of Educ., 576 F.2d 714 (6th Cir. 1978), a bonus multiplier, awarded to compensate the attorneys for vindicating important but often unpopular constitutional rights, Id., at 715, is not authorized by either the Emergency School Aid Act or by Section 1988. Such a bonus would indeed be a windfall, unnecessary to attract competent counsel, and grossly unfair to the defendants, who in most cases will be paying the award out of public funds. We see no reason to allow individual attorneys, no matter how important the rights they have vindicated, to receive unearned personal gain at the public expense. 56 This does not mean that the routine hourly rate charged by attorneys is the maximum which can or should be awarded. In many cases that rate is not reasonable, because it does not take into account special circumstances, such as unusual time constraint, or an unusually unpopular cause, which affect the market value of the services rendered. Perhaps the most significant factor in these cases which at times renders the routine hourly fee unreasonably low is the fact that the award is contingent upon success. An attorney's regular hourly billing is based upon an expectation of payment, win, lose or draw. If he or she will only be paid in the event of victory, those rates will be adjusted upward to compensate for the risk the attorney is accepting of not being paid at all. Some cases under the civil rights statutes, those in which the facts are strong and the law clear, pose little risk of losing, and the attorney's normal billing rate will be adequate compensation. Others, in developing areas of law or where the facts are strongly disputed, will require a substantial upward adjustment to compensate for the risk. We also note that in a long and complicated lawsuit such as this one, only a portion of the time expended can be reasonably regarded as contingent; once liability is established the attorney is assured of compensation for establishing the appropriate remedy, monitoring the decree, and recovering his fee. The contingency factor is not a bonus but is part of the reasonable compensation to which a prevailing party's attorney is entitled under § 1988. 57 The dissent argues that it is not proper to treat the allowance of plaintiff's attorneys fees in such cases on a contingency fees basis since, with rare exceptions, the plaintiffs have prevailed in practically every school desegregation case which they have instituted. It is quite accurate to state that history now establishes that the plaintiffs have prevailed in virtually all past desegregation cases, and for sake of argument, that future plaintiffs may similarly be virtually assured in advance of success. However, that situation did not prevail during the early days of the present litigation, when most of the services at issue were performed. In holding that the contingency of compensation is a proper factor for consideration in determining reasonable payment for those services, we of course do not lay down a standard for guidance in situations where the fact of payment has never been in doubt. 58 iii. Costs & expenses: The plaintiffs have also challenged the district court's award of statutory costs and out-of-pocket expenses. The district court did not explain its award of costs, but simply itemized those costs which it was granting. It excluded all pre-1971 costs, apparently assuming that if attorney's fees were not recoverable, neither were costs. Fed.R.Civ.P. 54(d) has long provided, however, that costs shall be allowed as of course to the prevailing party unless the court otherwise directs. Plaintiffs in this case are the prevailing party, and we can see no reason to deny them their costs. The district court was in error in fixing 1971 as the cutoff date for the award of the costs. 59 Because of these errors, the entire award of costs and expenses must be recalculated. The plaintiffs have also challenged the award made for costs after 1971, however. The district court denied over $11,500 in costs, again without any explanation as to its reasons, and we thus must remand for adequate findings of fact and conclusions of law. However, it eliminated costs in four major categories, providing some basis for review so that we may provide guidance for the district court on remand. Those four categories were expert witness fees, transcript costs, counsels' travel expenses and photocopying. 60 There are two separate sources of authority to award out-of-pocket expenses. Some expenses are included in the concept of attorney's fees, as incidental and necessary expenses incurred in furnishing effective and competent representation, and thus are authorized by section 1988. See remarks of Congressman Drinan, 122 Cong.Rec. H12160 (daily ed. 1 Oct. 1976), Beazer v. New York City Transit Authority, 558 F.2d 97 (2d Cir. 1977), Rev'd on other grounds, 440 U.S. 568, 99 S.Ct. 1355, 59 L.Ed.2d 587 (1979). The authority granted in section 1988 to award a reasonable attorney's fee included the authority to award those reasonable out-of-pocket expenses incurred by the attorney which are normally charged to a fee-paying client, in the course of providing legal services. Reasonable photocopying, paralegal expenses, and travel and telephone costs are thus recoverable pursuant to the statutory authority of § 1988. 61 Other costs are on a different footing. These include those costs incurred by a party to be paid to a third party, not the attorney for the case, which cannot reasonably be considered to be attorney's fees. See Wheeler v. Durham Bd. of Educ., 585 F.2d 618 (4th Cir. 1978). These include, among others, docket fees, investigation expenses, deposition expenses, witness expenses, and the costs of charts and maps. Most of these expenses have long been recoverable, in the court's discretion as costs, pursuant to 28 U.S.C. § 1920, which provides: 62 § 1920. Taxation of costs 63 A judge or clerk of any court of the United States May tax as costs the following: 64 (1) Fees of the clerk and marshal; 65 (2) Fees of the court reporter for all or any part of the stenographic transcript necessarily obtained for use in the case; 66 (3) Fees and disbursements for printing and witnesses; 67 (4) Fees for exemplification and copies of papers necessarily obtained for use in the case; 68 (5) Docket fees under section 1923 of this title. 69 Rule 39(e), Fed.R.App.P. also provides for the taxing of similar costs incurred on appeal, and there are other statutes and rules which may be relevant in a particular case. 70 The standards for the awarding of such taxable costs are well-settled and need not be repeated here. Suffice it to reemphasize that the authorization for the allowance of such costs is not related to the separate authorization for attorney's fees provided in section 1988. We have a mandate from Congress that § 1988 is to be liberally construed to achieve the public purpose underlying the Act, Seals v. Quarterly County Court, supra, 562 F.2d at 393, and we will therefore closely review an award of attorney's fees under that section in order to assure that its purpose is fulfilled. However, the plaintiffs are in the same posture as the prevailing party in any other case with regard to costs which are not part of attorneys' fees. The award of statutory costs is a matter for the district court, in its best judgment as to what was reasonable and necessary, and the appellate courts will not normally interfere with the exercise of that discretion. Fey v. Walston & Co., 493 F.2d 1036 (7th Cir. 1974). It would be advisable for litigants to obtain authorization from the district court before incurring large items of expense; though, of course, failure to do so does not bar reimbursement if the trial court should decide that the expenditures were nevertheless reasonable and necessary.