Court Opinion

ID: 3036977
Source: CourtListenerOpinion
Date Created: 2015-10-13 22:55:24.197083+00
Date Added: 2024-06-11T07:37:52.892760
License: Public Domain

United States Court of Appeals
                            FOR THE EIGHTH CIRCUIT
                                   ___________

                                   No. 04-1748
                                   ___________

Citizens Legal Environmental Action    *
Network, Inc.,                         *
                                       *
            Plaintiff-Appellant,       *
                                       *
United States of America,              *
                                       *
            Intervenor,                *
                                       *
      v.                               *
                                       *
Premium Standard Farms, Inc.,          *   Appeal from the United States
                                       *   District Court for the Western
            Defendant-Appellee,        *   District of Missouri.
                                       *
Carol Browner, Administrator, United   *
States Environmental Protection        *
Agency, in her official capacity,      *
Dennis Grams, Region VII               *
Administrator of the United States     *
Environmental Protection Agency, in    *
his official capacity, Environmental   *
Protection Agency, of the United       *
States of America,                     *
                                       *
            Defendants.                *
                                       *
                                       *
Citizens Legal Environmental Action   *
Network, Inc.,                        *
                                      *
            Plaintiff-Appellant,      *
                                      *
      v.                              *
                                      *
Continental Grain Company,            *
                                      *
            Defendant-Appellee.       *
                                 ___________

                             Submitted: December 15, 2004
                                 Filed: February 1, 2005
                                  ___________

Before MELLOY, BRIGHT, and BOWMAN, Circuit Judges.
                            ___________

BRIGHT, Circuit Judge.

       Appellant, Citizens Legal Environmental Action Network, Inc. (“CLEAN”),
appeals from the district court’s denial of certain attorney fees. In the underlying
actions, begun in 1997, CLEAN sued appellees Premium Standard Farms
(“Premium”) and Continental Grain Company (“Continental”) for violations of
various federal environmental laws. The case was settled in 2001, and the district
court determined that CLEAN prevailed and could collect attorney fees under 33
U.S.C. § 1365(d) and other fee-collecting statutes. We affirm on the basis of the
district court’s memorandum and order.1

      1
       The Honorable Howard F. Sachs, United States District Judge for the Western
District of Missouri. The district court’s order was entered on September 10, 2003,
in cases 97-6073-CV-SJ-HFS and 98-6099-CV-SJ-HFS.

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                                        I.

       From the inception of the actions until August 2000, CLEAN was represented
by the law firm of Armstrong Teasdale (“Armstrong”), with its partner Charles Speer
as lead attorney for CLEAN. In August 2000, Speer resigned from Armstrong and
joined the law firm of Payne and Jones, Chartered. CLEAN discharged Armstrong
and hired the Payne firm as counsel in the underlying actions, again with Speer as
lead attorney.

      Before the settlement was reached in May 2001, and while the parties were
negotiating, Armstrong, without CLEAN’s knowledge, directly negotiated with
Premium and Continental and came to an agreement by which Premium and
Continental paid a discounted amount of Armstrong’s fees for work on the underlying
actions. By this agreement, Armstrong assigned back to Premium and Continental
any additional money Armstrong might receive out of an award of attorney fees to
CLEAN. (Thus, if CLEAN were awarded fees for Armstrong’s work, Premium and
Continental would pay the fees to CLEAN, CLEAN would presumably be required
to pay them to Armstrong, and Armstrong would give the money back to Premium
and Continental.) CLEAN learned of the proposed fee agreement and protested it.

      Following the settlement of its action against Premium and Continental,
CLEAN requested that the district court award fees for Armstrong’s work. CLEAN
sought approximately $7 million in attorney fees, in total – including about $5.9
million for Armstrong’s work. Armstrong had already accepted $1.7 million directly
from Premium and Continental in full satisfaction of any fees owed to it.

       CLEAN argued to the district court, as it argues on appeal, that Armstrong’s
agreement with Premium and Continental was of no effect. CLEAN argued,
additionally, that by the terms of its retainer agreement with Armstrong, CLEAN was

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entitled to keep any attorney fees awarded for Armstrong’s work, and CLEAN
evinced an intention to keep the money.

     The district court denied any award of additional fees to CLEAN for
Armstrong’s work. CLEAN appeals the denial of $5.9 million in fees for
Armstrong’s work.

                                          II.

      An award of attorney fees pursuant to the federal fee-shifting statutes is not
automatic but rather is subject to the district court’s discretion. See, e.g., 33 U.S.C.
§ 1365(d) (“[t]he court . . . may award . . . whenever the court determines such award
is appropriate”). We review the district court’s grant or denial of attorney fees for
abuse of that discretion. Hayes v. Faulkner County, Ark., 388 F.3d 669, 676 (8th Cir.
2004). When necessary, however, we may review de novo legal conclusions that
inform the court’s exercise of its discretion. See Lewis v. Anderson, 692 F.2d 1267,
1269 (9th Cir. 1982).

        CLEAN devotes its lengthy briefs almost entirely to questions of law that are
not dispositive. The crux of the matter for the district court was that CLEAN sought
payment of attorney fees but intended to keep the money for itself, rather than using
it to pay the attorneys who earned the fees and who had declared themselves satisfied
with the fees already received. Fundamentally, the district court denied the attorney
fees in question because, “if plaintiff [CLEAN] is not committed to paying Armstrong
the full recovery made for Armstrong’s services, it is not equitably or appropriately
entitled to a full assessment of the fees it claims, even though they would otherwise
be classified as ‘reasonable.’”2 Appellant's App. at A11-A12. The district court’s

      2
      While we find CLEAN’s reading of the retainer agreement – which CLEAN
claims entitles it to keep any fees awarded for Armstrong’s work – wholly

                                         -4-
decision rested on equitable considerations, the judgment of which lies within the
court’s sound discretion.

       CLEAN says nothing to throw in doubt the district court’s judgment of what
is equitable and appropriate in this matter. CLEAN does argue that Armstrong’s
direct agreement with Premium and Continental deprived CLEAN of a bargaining
chip that might have been used to negotiate a better settlement with Premium and
Continental. The Supreme Court has held that a prevailing party controls
negotiations for attorney fees and has the power and discretion to use such fees as a
bargaining chip in settlement negotiations – to the extent of bargaining away such
fees altogether. Evans v. Jeff D., 475 U.S. 717, 731-32 (1986). Control of fee
negotiations thus is valuable to a prevailing party, and loss of control harms a party
that seeks to use it to get a better deal in a settlement.3 The loss of control, however,
has no practical consequence – and negligible equitable significance – if the
prevailing party is not in fact inclined to use control of fee negotiations to bargain for
a better settlement.

unconvincing, this does not render CLEAN’s claim of entitlement unimportant.
Clearly, if such fees were awarded, CLEAN would at least force Armstrong to sue in
order to receive the fees it had earned. CLEAN’s position thus is properly considered
by the district court as affecting the balance of equities relevant to an attorney fee
award. Additionally, if Armstrong’s assignment of any additional fee recovery to
Premium and Continental is valid (an issue we do not decide), Armstrong could not
recover the fee award – thus either giving CLEAN a windfall in the form of money
for attorney fees that is never paid over to the attorneys or rendering the fee award an
empty gesture.
      3
        Control of negotiations for fees does not imply that the prevailing party is
entitled to keep whatever fees are recovered instead of paying the money to the
attorney who earned it. See Image Technical Svc., Inc. v. Eastman Kodak Co., 136
F.3d 1354, 1359 (9th Cir. 1998).

                                          -5-
       If CLEAN had been substantially prejudiced in settlement negotiations by
Armstrong’s separate peace with Premium and Continental, and the district court had
not considered such prejudice, the court’s decision would give us pause. But that is
not the case. The district court did consider whether CLEAN had been prejudiced,
deeming this the most important question, and noted, “No actual prejudice is asserted
here.” See Appellant's App. at A13 n.4. On appeal, Premium and Continental declare

      [A]t no time during the negotiations did CLEAN ever seek to use its
      claim for Armstrong’s fees as a bargaining chip to obtain greater relief[,]
      [l]ikewise, [with the Payne & Jones fees] . . . . In fact, CLEAN refused
      to even disclose the amount of fees incurred by Payne & Jones, causing
      settlement negotiations to stall. Without information about the amount
      of fees incurred, there could be no negotiated resolution of the fee claim.

              Had CLEAN really been interested in bargaining away its
      attorney fee claim in exchange for other relief, surely CLEAN would
      have indicated some willingness to compromise this claim at some point
      during the more than two years of settlement negotiations that resulted
      in the Consent Decree. But CLEAN never even hinted during settlement
      negotiations that it was interested in waiving its fee claim.

Appellees’ Br. at 49-50. CLEAN makes no answer to these statements by the district
court and by Premium and Continental, except to state generally that its bargaining
power was reduced by Armstrong’s agreement with Premium and Continental.

       CLEAN has said nothing to call into question the court’s judgment of what is
equitable and appropriate in this matter. CLEAN settled the underlying actions in a
manner favorable to it, and did so, so far as the record shows, without suffering
prejudice from Armstrong’s direct agreement with Premium and Continental as to
fees. CLEAN thus suffered no harm in settlement negotiations for which it could
now seek redress. The fees CLEAN seeks would, if awarded, either be retained by
CLEAN as a windfall or be forwarded to Armstrong, which has declared itself
satisfied with the fees it has already received, or (if the assignment of additional fees

                                          -6-
that Armstrong agreed to is valid) be returned to Premium and Continental. There is,
then, no potential recipient with a strong equitable interest in the fee award that is
sought.

       Additionally, in the trial court’s view, Armstrong’s separate agreement as to
fees bore no equitable taint. Armstrong had done the great bulk of the work for
CLEAN. CLEAN’s lead counsel, Speer, had left Armstrong partly over
disagreements involving this very case. Given these unique circumstances, the
district court took note of the possibility of bad faith negotiation by CLEAN as to fees
for Armstrong’s work. In the court’s view, therefore, Armstrong’s separate
agreement reasonably addressed this possibility and gave no reason to award fees to
CLEAN for Armstrong’s work. We agree.

      Judge Sachs, an able and experienced district judge, thoughtfully and properly
balanced the equities presented by this novel case and concluded that it was not
equitable and appropriate to award CLEAN fees for Armstrong’s work.

      Accordingly, we affirm.
                     ______________________________

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