Court Opinion

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Opinions of the United
1998 Decisions                                                                                                             States Court of Appeals
                                                                                                                              for the Third Circuit

8-11-1998

Pennsylvania Env'l Def. Fndtn v. Canon McMillan
Schl. Dist.
Precedential or Non-Precedential:

Docket 97-3136

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Recommended Citation
"Pennsylvania Env'l Def. Fndtn v. Canon McMillan Schl. Dist." (1998). 1998 Decisions. Paper 192.
http://digitalcommons.law.villanova.edu/thirdcircuit_1998/192

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Filed August 11, 1998

UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT

No. 97-3136

PENNSYLVANIA ENVIRONMENTAL DEFENSE
FOUNDATION (P.E.D.F.),
       Appellant

v.

CANON-MCMILLAN SCHOOL DISTRICT

On Appeal from the United States District Court
for the Western District of Pennsylvania
(D.C. No. 94-cv-00534)

Argued: January 21, 1998

Before: SLOVITER, LEWIS* and GARTH, Circuit Judges

Reargued May 22, 1998

Before: SLOVITER, RENDELL and GARTH, Circuit Judges

(Opinion Filed August 11, 1998)

John E. Childe, Jr. (Argued)
Palmyra, PA 17078

 Attorney for Appellant

_________________________________________________________________
*Judge Lewis heard argument in this matter on January 21, 1998 but,
due to illness, the panel was reconstituted and this matter was reargued
on May 22, 1998.
       Steven M. Petrikis (Argued)
       Rose, Schmidt, Hasley & DiSalle
       Pittsburgh, PA l5222

        Attorney for Appellee

OPINION OF THE COURT

SLOVITER, Circuit Judge.

The factors that should be considered in a court's
determination of a counsel fee award and the procedure to
be used in that connection, issues that occupied all levels
of the federal judiciary for numerous years, havefinally
been resolved through a series of decisions of the United
States Supreme Court. The question before us is whether,
after all the effort that went into that resolution, we will
allow the courts of this circuit to bypass the Supreme
Court's explicit directions merely because counsel failed to
interpose an objection to the procedure.

I.

Before us is an appeal by the Pennsylvania
Environmental Defense Foundation ("PEDF"), a non-profit
environmental action group, from an order of the district
court awarding it attorneys' fees following the entry of a
consent decree in its suit against Canon-McMillan School
District under the Clean Water Act, 33 U.S.C. S 1365.

PEDF, which had sent the School District its detailed
statutorily required Notice of Intent to Sue on August 20,
1993, brought suit on March 30, 1994, alleging that there
were "repeated violations" of the terms of the School
District's National Pollution Discharge Elimination System
permit because of discharges from the Wylandville
Elementary School sewage system into a tributary of Little
Chartiers Creek in North Strabane Township, Pennsylvania.
PEDF alleged that the violations were damaging the creek
in violation of 33 U.S.C. SS 1311(a) and 1342 and sought
injunctive relief, civil penalties and costs. PEDF was not the
only entity concerned about this pollution. The

                                2
Pennsylvania Department of Environmental Resources
("DER") had renewed the School District's NPDES permit on
March 17, 1994. DER also informed the School District of
measures it needed to take to come into compliance with its
permit limits. The Environmental Protection Agency, which
had been conducting a contemporaneous investigation,
submitted a Notice of Proposed Assessment of a Civil
Penalty against the School District on August 30, 1994 and
also directed it to come into compliance.

After the School District made what it referred to as
several "minor process adjustments," it was apparently in
full compliance with all of its permit limits by January
1995. On February 16, 1995, the School Districtfiled both
a Motion for Stay and a Motion for a Protective Order,
arguing that the litigation should be stayed and discovery
halted because it was in complete compliance with its
permit. The district court denied those motions on February
22, 1995, and PEDF continued with its preparation. In
March of 1995, the district court granted PEDF's motion to
file a reply brief to the School District's memorandum in
opposition to PEDF's motion for partial summary judgment.
PEDF filed that reply brief on March 23, 1995.

Thereafter, the parties reached a settlement and
submitted to the district court a Consent Decree, which it
signed on June 23, 1995. The settlement reserved the issue
of the award of attorneys' fees, and shortly thereafter PEDF
filed a motion for attorneys' fees and submitted a statement
of fees and expenses. The district court held oral argument
on the fees and then issued an order on December 2, 1996
that directed the parties to submit proposed findings of fact
and conclusions of law. The court's order stated, inter alia:

       [E]ach party shall submit a proposed order which shall
       set forth, in specific detail, its proposal for completely
       resolving this issue. The court will adopt as its own the
       proposed findings and sign, without modification, the
       one proposed order which, in the judgment of the court,
       is most reasonable under the circumstances.

App. at 94 (emphasis in original). Neither party objected to
this order, and both filed the required proposedfindings
and conclusions.

                               3
PEDF's proposed findings of fact and conclusions of law
requested a total of $70,282.09. It arrived at thatfigure by
the formula set out in Hensley v. Eckerhart, 461 U.S. 424
(1983), through calculating a "lodestar" based on a
proposed "reasonable hourly rate" of $160 per hour for
attorney John E. Childe and $60 per hour for Paralegal
Cindy Smith, multiplied by "hours reasonably expended."
App. at 95, 118. PEDF submitted a detailed account of
these charges and accompanying time slips. The School
District's proposed findings of fact and conclusions of law
suggested the much lower fee of $20,414.62. The district
court adopted verbatim the School District's proposed
findings of fact and conclusions of law, except that it
submitted its own short introduction. It follows that
although we will refer to the court's order, it must be
remembered that the "order" is in fact in the language
prepared by the School District.

Although the order was highly critical of certain aspects
of PEDF's fee request, including the proposed rates and the
expenditure of time on certain issues, it did not explicitly
reduce the hours that PEDF billed for these services.
Instead, it was keyed to the determination that PEDF was
entitled to no fee for the period after which the School
District was in "full compliance." It stated,"By January of
1995, it is thus undisputed that no further violations were
occurring at the Wylandville Elementary School system,
and the expenditure of $18,000 for structural modifications
assured that the problems would not recur . . . . By its own
calculations, PEDF had expended $8,963 in attorney's fees
as of the date when the Wylandville Elementary School
system was in full compliance. . . ." D.C. Opinion at 7. On
the basis that PEDF had needlessly pursued the litigation
after January 1995, after the violations had been abated,
the order adopted by the district court granted PEDF all of
the attorneys' fees it had requested for the time period
through January 1995, but no fees for time spent after that
date, except for $1,910 in connection with the consent
decree. It also awarded PEDF $3,000 for fees in connection
with the fee litigation and $6,541.62 in costs. D.C. Opinion
at 21-22.

The order, in language stemming from the School
District, concluded that "the total of $20,414.62 is

                               4
generous under the circumstances, and, although the facts
and law relating to duplicative billing, hourly rates and
degree of difficulty would justify a reduction of this amount,
the Court will award this amount at this time." D.C.
Opinion at 22. We have jurisdiction over PEDF's appeal
pursuant to 28 U.S.C. S 1291.

II.

The award of attorneys' fees in this case is authorized
under the citizens' suit provision of the Clean Water Act,
which provides that a court "may award costs of litigation
(including reasonable attorney and expert witness fees) to
any prevailing or substantially prevailing party, whenever
the court determines such award is appropriate." 33 U.S.C.
S 1365(d). The statute places no restriction on the award
other than that the party entitled to the award be
"prevailing or substantially prevailing."

In Hensley v. Eckerhart, 461 U.S. 424 (1983), and
Pennsylvania v. Delaware Valley Citizens' Council for Clean
Air, 478 U.S. 546 (1986), the Supreme Court adopted the
approach first set forth in this court's opinions in Lindy
Bros. Builders, Inc. v. American Radiator & Standard
Sanitary Corp., 487 F.2d 161 (3d Cir. 1973), and Lindy
Bros. Builders, Inc. v. American Radiator & Standard
Sanitary Corp., 540 F.2d 102 (3d Cir. 1976), with respect to
the appropriate procedure and considerations for a district
court to follow in awarding attorneys' fees. Central to the
Supreme Court's decisions has been its adoption of the
"lodestar" formula, which requires multiplying the number
of hours reasonably expended by the reasonable hourly
rate. See Blanchard v. Bergeron, 489 U.S. 87, 94 (1989);
Delaware Valley Citizens' Council, 478 U.S. at 564; Blum v.
Stenson, 465 U.S. 886, 888 (1984); Hensley , 461 U.S. at
433.

The "starting point" in determining the appropriate
hourly rate is the attorneys' usual billing rate. Public
Interest Research Group of N.J., Inc. v. Windall, 51 F.3d
1179, 1185 (3d Cir. 1995). The Supreme Court has directed
that the district court should then consider the"prevailing
market rates" in the relevant community. Blum , 465 U.S. at

                                5
895 (1984); see also Missouri v. Jenkins, 491 U.S. 274, 285
(1989). In calculating the second part of the lodestar
determination, the time reasonably expended, "[t]he district
court should review the time charged, decide whether the
hours set out were reasonably expended for each of the
particular purposes described and then exclude those that
are `excessive, redundant, or otherwise unnecessary.' "
Windall, 51 F.3d at 1188 (quoting Hensley , 461 U.S. at
433-34). Once the court has calculated the lodestar it may
adjust that amount, primarily based on the degree of
success that the plaintiff obtained. See Hensley , 461 U.S.
at 435. However, the cases make clear that before any
adjustments are made, the district court must calculate a
lodestar. See Windall, 51 F.3d at 1190.

In Windall, this court considered a district court's award
of attorneys' fees under S 1365(d) of the Clean Water Act,
which presented a situation where the public interest group
plaintiffs had been awarded injunctive relief but no
monetary damages. The district court had applied a 50
percent negative multiplier to the lodestar because of the
failure to obtain monetary relief. Id. at 1189. On appeal, we
held that the use of the negative multiplier was error,
rejecting the "rough mathematical" approach applied by the
district court. Id. at 1189-90.

Throughout the opinion we emphasized the importance of
adherence to the formulaic approach set out by the
Supreme Court. At the outset, we stated that the amount of
a fee award is within the district court's discretion "so long
as it `employs correct standards and procedures and makes
findings of fact not clearly erroneous.' " Id. at 1184
(emphasis added) (quoting Northeast Women's Ctr. v.
McMonagle, 889 F.2d 466, 475 (3d Cir. 1989)). Thus, we
held that rather than apply the across-the-board
percentage reduction reflecting its view of the result
achieved, the district court should have considered the
relationship between the degree of success and the amount
of the award. That step could only be taken after the court
had calculated the lodestar. "It is, however, essential to
calculate the lodestar before considering adjustments. Only
after the lodestar is determined does the district court have
discretion to consider results obtained and, in doing so, to

                               6
exclude some or all of the time spent on unsuccessful
claims." Id. at 1190.
 718We also stressed the importance of the court's

articulation of the basis for the award. We stated that the
district court must "provide a concise but clear explanation
of its reasons for [a] fee award.' " Id. at 1188 (quoting
Hensley, 461 U.S. at 437). The defendant in Windall had
contended in its cross-appeal that the district court had
failed to consider some of its specific objections regarding
the hours expended. In response, we stated,

       [t]he magistrate judge did not consider the Air Force's
       objections to particular time charges. The magistrate
       judge was reluctant to second guess counsel's
       judgments about what time and attention particular
       legal problems should be given. Hensley, however,
       directs district courts to consider a party's objections
       to particular time charges and make their findings on
       the hours that should be included in calculating the
       lodestar. The district court failed to make any such
       findings here.

Id. at 1189. Our view of the necessary procedure was made
explicit in the passage in which we stated, "[t]he district
court seems to have thought that its negative multiplier
made attention to the Air Force's specific objections
unnecessary. Hensley does not permit such a short cut." Id.
at 1189 n.14 (emphasis added).

The Supreme Court continued to follow the lodestar
approach after Hensley, but emphasized that the district
court was permitted to adjust the fee depending on the
situation. See Delaware Valley Citizens' Council , 478 U.S.
at 565. However, in the case before us, the district court
decided to dispense with that process, which may be
arduous and is often adversarial, and determined in
advance to adopt the findings and conclusions of one party
or the other "without modification." App. at 94. That
procedure forced each party to adjust its submission
because of the knowledge that the district court would only
choose one of the two options. In effect, the district court
conducted a variation of a "silent auction," with the parties
bidding against themselves and each other. While there is

                               7
nothing wrong with encouraging a party who seeks a fee to
compromise its request, there is no justification for the use
of the "silent auction" procedure in setting a statutory fee
and no party has cited any authority which would allow it.
The instances in which courts may not have followed the
lodestar approach have been, as far as we know, instances
where the parties have reached an agreement as to the
amount of fee. Regrettably, such a resolution was not
reached in this case.

In support of the procedure used by the district court,
the School District refers us to our opinion in Lansford-
Coaldale Joint Water Auth. v. Tonolli Corp., 4 F.3d 1209 (3d
Cir. 1993), where we stated that "a district court's findings,
when adopted verbatim from a party's proposed findings, do
not demand more stringent scrutiny on appeal." Id. at
1215. We adhere to our own precedent, notwithstanding
other views on this issue. See, e.g., Sierra Club v. Cedar
Point Oil Co., 73 F.3d 546, 574 (5th Cir. 1996) (stating on
review of an order assessing a penalty, that "the court
adopted Sierra Club's proposed findings and conclusions
with minimal revision. Under such circumstances, we
review the court's findings of fact with caution"); In re
Colony Square Co., 819 F.2d 272, 274-75 (11th Cir. 1987)
(citing cases admonishing trial courts for verbatim adoption
of proposed order drafted by litigants).

Our concern here goes beyond the verbatim adoption of
a party's proposed findings of fact and conclusions of law.
We agree with the court in Odeco, Inc. v. Avondale
Shipyards, Inc., 663 F.2d 650 (5th Cir. 1981), that the
"mere fact" that a district court adopts a party's factual
findings verbatim "does not itself indict them." What is key
is whether those findings are in fact reflective of the district
court's views. Thus, such a verbatim adoption was
acceptable to the appellate court in Odeco because "[t]he
record reflects that the trial court fully comprehended the
factual and legal issues and adequately performed the
decision reaching process." Id. at 652-53 (citation omitted).
The central issue is whether the district court has made an
independent judgment. See In re Colony Square , 819 F.2d
at 275-76.

                               8
In this case, because the circumstances underlying the
entry of the order are clear from the record, we cannot
presume that the district court made an independent
judgment about the law and then decided that one party's
proposed findings of fact and conclusions of law precisely
expressed its judgment. Instead, because the court
announced in advance it would use this procedure, we
cannot discount the possibility that the district court may
not have agreed in totality with the findings of fact or legal
conclusions in either of the proposals, but chose one simply
because it came closest to its own view. While this course
of action may have facilitated the decision for the district
court, it is not only contrary to the established procedure
for awarding attorneys' fees but also offends our belief that
a judge's findings and conclusions should represent that
judge's view, no more and no less.1

III.

The School District concedes that the procedure used by
the district court did not adhere to the steps directed by the
Supreme Court for fixing of a contested counsel fee.
Instead, the School District argues that PEDF waived its
objection to any defects in the procedure by failing to object
when it was announced by the district court. It is an
argument that is not without some merit. In the usual
circumstance, a party's failure to object will result in waiver
of an issue on appeal. See Fleck v. KDI Sylvan Pools, Inc.,
981 F.2d 107, 116 (3d Cir. 1992). Here, PEDF did not
interpose any objection to the district court's
announcement that it would set the fee by accepting one
party's submission or the other. Notwithstanding PEDF's
attempt at justification and rationalization, the fact remains
that it did not object.
_________________________________________________________________

1. Our dissenting colleague notes that we cite no authority that
disapproves the district court's "either/or" protocol. As far as we know,
in no other case has a district court applied that procedure, and
certainly not in connection with fixing a disputed attorney's fee subject
to a Supreme Court's instruction on the procedure to be followed. What
may be appropriate for baseball salary arbitration is not necessarily
appropriate for the law courts.

                               9
Nonetheless, we have recognized that the concept of plain
error may be applied in the civil context despite the lack of
objection when a district court has committed a serious
and flagrant error that jeopardized the integrity of the
proceeding. See generally Walden v. Georgia-Pacific Corp.,
126 F.3d 506, 520-21 (3d Cir. 1997), cert. denied, 118
S. Ct. 1516 (1998). The clear deviation from an established
legal rule can qualify as plain error. Of course, this is a
power we exercise only "sparingly." See Chemical Leaman
Tank Lines, Inc. v. Aetna Cas. & Sur. Co., 89 F.3d 976,
993-94 (3d Cir. 1996). In this instance, because the
manner in which the order was entered goes to the heart of
the judicial process, we will address the procedure,
notwithstanding PEDF's lack of objection. In doing so, we
do not condone PEDF's failure to bring before the district
court its lack of approval of the course on which the court
was embarking, and its silence may have, and probably did,
mislead the district court.

Once we review the court's ruling, the error is plain.
There can be no serious dispute that PEDF qualified as the
"prevailing party." It follows that the district court should
have first decided the reasonable hourly rate based on the
"prevailing market rate" rule and multiplied that rate by the
time reasonably expended to obtain the "lodestar." The
court should have then made adjustments, if any, based at
least in part on the degree of success of the litigation.

Regarding the hourly rate, the district court's order
stated that "PEDF's proposed hourly rate is high even by
Pittsburgh standards. Plaintiff's counsel, whose office is in
Hummelstown, a small community near Harrisburg, has
not offered any evidence that the typical hourly rate for
legal services to public non-profit organizations in his
community exceeds $80.00 per hour." D.C. Opinion at
14-15. Despite this comment, the court allowed the hourly
rate requested through January of 1995. Similarly,
although the order questions the propriety of time claimed
in the PEDF fee petition in several respects, such as failing
to apportion time for preparation of the complaint in this
case with that spent in drafting a similar complaintfiled by
PEDF, the court never found what was a reasonable time
for each task. Instead the court apparently made the

                               10
adjustments it may have believed desirable by accepting the
School District's proposed "cut-off" date for the entire
action. PEDF points out that this is inconsistent with the
court's rulings after that date which rejected the School
District's request for a stay and which authorized, even if it
did not necessarily encourage, further action by PEDF.

The School District argues that the district court order
does implicitly calculate a "lodestar" by adopting the rate of
$160 and $60 per hour from PEDF's original fee petition,
and multiplying that by the amount of hours expended
before January of 1995. We find this assertion
unpersuasive because it requires us to make assumptions
that have no support in the order which, contrary to
adopting the lodestar, contains statements questioning the
components of a calculated lodestar.

Nor is there any indication that the district court made a
separate calculation for fees in connection with the fee
petition, as required by Windall. 51 F.3d at 1190. PEDF
had sought $12,802 for preparing its original fee petition
and $8,560 for preparation of the proposed findings of fact
and conclusions of law. The order awarded PEDF $3,000.
This figure is never explained in terms of the required
separate calculation of a lodestar for the fees in connection
with the fee petition and a subsequent adjustment to that
figure based on the allowed criteria. The order merely states
that the fees requested were unreasonable and notes that
the request for fees in preparing the fee request is nearly 25
percent of the total fee request and may be duplicative of
requests in other litigation. That explanation is not
sufficient to constitute compliance with the direction of
Windall.

The School District contends that even if the district
court failed to employ the correct legal principles, it was
"harmless." It argues that if the district court had
calculated a lodestar, and then made an adjustment, PEDF
would have received a lesser amount than it did, and thus
PEDF did not suffer from the district court's possible error.
We reject this contention because it is speculative. We
simply cannot know from this record what the court would
have done.

                               11
Both parties have addressed the merits of the amount
ultimately awarded. We do not reach that issue. Instead, we
will await such time as we have a district court order that
follows the accepted protocol. Were it not for the
importance of the issue raised in this case we would be
most reluctant to visit this satellite litigation again on the
district court. It would be preferable were the parties to
resolve the remaining issue by negotiation or mediation, a
course we can only suggest and not direct.

IV.

For the above reasons, we will reverse the order of the
district court awarding attorneys' fees to PEDF, and
remand for further proceedings consistent with this
opinion.

                               12
Garth, Circuit Judge, dissenting.

The district court utilized a novel procedure to determine
the amount of attorneys' fees to which Appellant PEDF, as
the prevailing party, was entitled. Neither PEDF nor the
School District ever objected to this procedure, although
they were afforded ample time and opportunity to do so.
Notwithstanding this fact, PEDF now appeals the use of the
district court's procedure and the majority reverses.

I.

I must dissent from the opinion of the panel majority for
two (2) fundamental reasons.

First, PEDF acquiesced to the district court's procedure,
and therefore waived its right to raise this issue on appeal.
PEDF admittedly understood the district court's"either/or"
and "without modification" order, and nevertheless,
strategically chose not to object. The authority cited by the
majority requiring a lodestar calculation has no relevance
to this case. Here, both parties had waived all objection to
the district court's order. Viewed in this light, I do not feel
that the majority has satisfactorily explained why PEDF
should be permitted to recant its previous acquiescence of
the district court's protocol, particularly where no
substantial rights of any parties have been implicated.

Second, the majority has not explained why cases where
the calculation of the lodestar amount is disputed should
govern cases such as this case where it is the procedure
giving rise to the attorneys' fee award itself -- and not the
calculation pursuant to the lodestar formula -- that is at
issue. The majority has cited no authority holding that
procedures of this kind (in this case, the district court's
"either/or" and "without modification" order of December 2,
1996) are illegal. Parties can agree to an attorneys' fee
award, and the majority acknowledges that such
agreements are not governed by the lodestar calculus. The
majority fails to explain, however, why the parties cannot
also agree to the procedure that the district court employs
in determining those fees.

By holding that the lodestar formula must be employed
even in the absence of an objection, the majority effectively

                                13
holds that the lodestar analysis must be utilized in every
attorneys' fee application that comes before the district
courts of this Circuit. Thus, according to the majority,
parties can agree to a fee outside the reach of the lodestar,
but they cannot agree to an alternative procedure to
determine those fees.

As I believe this is no precedent for this unjustified and
far-reaching holding, I respectfully dissent.

II.

The facts are simple and straightforward:

(1) The parties reached a settlement agreement aft er one
year of litigation, and memorialized their agreement in a
consent decree. The consent decree did not resolve the
issue of attorneys' fees, but instead left that issue for the
district court to address.

(2) On December 2, 1996, the district court issued an
order directing each party to submit its proposedfindings
of fact and conclusions of law regarding the issue of
attorneys' fees. That order provided:

       [E]ach party shall submit a proposed order which shall
       set forth, in specific detail, its proposal for completely
       resolving this issue. The court will adopt as its own the
       proposed findings and sign, without modification, the
       one proposed order which, in the judgment of the court,
       is the most reasonable under the circumstances.

Order, Dec. 2, 1996 (emphasis in original).

(3) On February 13, 1997, the district court adopt ed
without modification the School District's proposed
findings.

(4) Although nearly two and a half months had elap sed
from the time the district court established the protocol to
which both parties acquiesced and the time the court
announced its decision, at no time did either party object to
the district court's order.

(5) On February 24, 1997, PEDF filed a Motion fo r
Reconsideration, but in that motion still did not object to

                                14
the "either/or" and "without modification" protocol that the
district court had adopted.

(6) During oral argument,1 coun sel for PEDF conceded
that he understood the district court's December 2, 1996,
order as proposing an "either/or" situation:"either (the
district court) was going to accept our proposedfindings or
he was going to accept the School District's." According to
counsel for PEDF, "there was no question about that."

III.

I believe that PEDF has waived its right to pursue this
appeal on the basis of the procedure utilized by the district
court in determining attorneys' fees. At oral argument,
counsel for PEDF conceded that he understood the district
court's adopted procedure and the ramifications of that
procedure. PEDF acknowledged that "there was no
question" that the district court would either accept PEDF's
proposed findings and fee award or it would accept the
School District's proposed findings and fee award. Thus,
PEDF made a strategic decision not to object to the district
court's proposed procedure in the hope that the district
court might accept its -- PEDF's -- proposal without
modification instead of accepting the School District's.

That PEDF's deliberate choice not to object to the district
court's procedure subsequently turned out to have been
disadvantageous cannot be a basis for reversing the district
court's decision. See Bivens Garden Office Bldg., Inc. v.
Barnett Banks, 140 F.3d 898 (11th Cir. 1998) (holding that
plaintiffs waived the issue of the district court's recusal
when the plaintiffs strategically decided not to raise the
recusal issue before trial despite their awareness of facts
upon which the motion for recusal would have been based).
Indeed, it was only after the district court adopted the
School District's proposed findings that PEDF-- for the first
time -- complained by filing a Motion for Reconsideration,
and even in that motion PEDF did not identify the district
_________________________________________________________________

1. These concessions were made during the first oral argument held on
January 21, 1998. The panel was reconstituted and a second argument
held after Judge Lewis fell ill.

                               15
court's procedure as the gravamen of its complaint. Quite
simply, by not objecting, PEDF waived its right to appeal
the district court's attorneys' fee procedure. See Fleck v.
KDI Sylvan Pools, Inc., 981 F.2d 107, 116 (3d Cir. 1992).

In Continental Casualty Co. v. D'Andrea, Inc. , ___ F.3d
___, 1998 WL 381721 (3d Cir. July 10, 1998), this Court
recently upheld a magistrate judge's attorney fee sanction
of $38,000 where no objection or appeal to the district
court had been taken by counsel. In Continental , the
magistrate judge required the defendant, D'Andrea, to pay
his opposing party's attorneys' fees and costs for additional
discovery as a condition to permitting D'Andrea to amend
his answer nearly two (2) years after the original answer
had been filed.

D'Andrea did not object to the magistrate judge's
condition, and at no time did he raise the issue for review
before the district court. In speaking for the Court, Judge
Rosenn concluded that in the absence of an objection,
D'Andrea accepted the condition imposed upon him in
exchange for the privilege to amend his answer. See id. at
6. Judge Rosenn reasoned, as I do now, that the failure to
object for strategical reasons constituted a waiver. See id.
("Presumably, [D'Andrea's counsel] reasoned that, even with
the imposition of the attorneys' fees and costs, it was
strategic for his client to pay them under the
circumstances.")

Furthermore, even if D'Andrea had not accepted the
magistrate judge's condition, in terms as applicable to the
case at hand as they were to Continental, Judge Rosenn
commented that this Court should not interfere with a
lower court ruling in the absence of an objection because
such procedures

       would allow a party to sandbag the district court and
       other parties by allowing or inviting the court to make
       an error and then springing the issue on the other
       party on appeal. See 9A Charles A. Wright & Arthur R.
       Miller, Federal Practice & Procedure S 2472, at 93-95
       (1995). Explicit opposition to or an objection on the
       record to a proposed order permits the court to
       consider the position of the opposing party and modify,

                               16
       or even possibly abandon, the order in light of the
       arguments raised.

Continental, 1998 WL 381721, at 7 (citations omitted).

In the present case, PEDF knew and accepted the fact
that the district court was not going to engage in any
adjustments or make any of its own computations when
determining the appropriate fee in this case, as it very well
might have done if PEDF had objected to the district court's
procedure and the court had then employed a traditional
lodestar approach under Hensley v. Eckerhart, 461 U.S.
424 (1983). Given the district court's explicit language in its
December 2, 1996 order, and counsel for PEDF's
acknowledged understanding of that language, it was
incumbent upon PEDF to make its position known at that
time and object to the "either/or" and"without
modification" procedure if it opposed such a protocol. It did
not. The benefit of hindsight cannot change this procedural
infirmity.

Furthermore, the majority has turned a blind eye toward
the strict standards that a litigant must satisfy to seek
review under our "plain error" jurisprudence. Under the
plain error standard, three requirements must be met:
(1) there must be an actual error -- a deviation from or
violation of a legal rule; (2) the error must be p lain -- i.e.,
clear and obvious under current law; and (3) the e rror
must affect substantial rights. See Walden v. Georgia-Pac.
Corp., 126 F.3d 506, 520-21 (3d Cir. 1997), cert. denied,
118 S. Ct. 1516 (1998) (citing United States v. Olano, 507
U.S. 725, 732-34 (1993)); see also Fleck, 981 F.2d at 116
(stating that the error must be "fundamental and highly
prejudicial" that results in a "miscarriage of justice" to
warrant a reversal when party did not object during
proceeding below). It has been our practice to exercise our
power to reverse for plain error sparingly. See Walden, 126
F.3d at 520.

In this case, not only was there no error -- let alone plain
error -- in the district court's choice of protocol, as I
discuss below, but the majority has not explained how the
district court's order affected PEDF's "substantial rights" or
resulted in a "miscarriage of justice." Instead, the majority

                               17
has by-passed this critical element of "plain error" review
by announcing that the district court's alleged error
"jeopardized the integrity of the proceeding." Majority Op. at
10. In so stating, the majority has failed to appreciate the
fact that jeopardizing the integrity of a proceeding is only
meaningful in the context of the substantial rights that
were supposedly prejudiced.

In this case, PEDF received $20,414.62, instead of the
$70,282.09 it had requested. Apart from the fact that no
one can predict that PEDF will receive a different fee award
after the majority's remand,2 the majority cites no authority
holding that the nature of attorneys' fees and the amounts
involved here implicate PEDF's substantial rights and result
in manifest injustice such that we should exercise our
review under the plain error doctrine. Indeed, I am
compelled to point out that the majority has cited no
authority at all which would in any way repudiate the
protocol utilized by the district court. Accordingly, I would
hold that the issue has been waived.

IV.

My second basis of contention with the majority stems
from the fact that there is simply nothing illegal or
improper about the procedure the district court employed
for determining attorneys' fees. Citing only inapposite
attorneys' fee appeals -- inapposite because as noted
above, none of the cases cited in the majority opinion
involve a dispute over the district court's procedure -- the
majority of this Court reverses the district court for
implementing a procedure that has never been disapproved
by any court. While the majority has acknowledged that
where the parties have agreed to a particular attorneys' fee,
their agreement need not follow nor comply with the
lodestar approach delineated in Hensley v. Eckerhart and
its progeny, it has refused to recognize that PEDF's failure
to object to the protocol ordered in this case was
tantamount to an acceptance of the outcome of that
_________________________________________________________________

2. We defer to the district court's discretion in making fee awards. See
Public Interest Research Group, Inc. v. Windall, 51 F.3d 1179, 1184 (3d
Cir. 1995).

                               18
procedure. That acceptance by PEDF and the School
District is not one whit different in substance than an
agreement by the parties to a particular fee arrangement.

In the case before us, the majority has cited and
discussed only cases where the parties have contested the
calculation of the lodestar, not the use of the lodestar
formula itself. See Pennsylvania v. Delaware Valley
Citizens' Council, 478 U.S. 546 (1986) (contesting lodestar
calculation based on the enhancement of a fee for superior
performance by opposing counsel); Hensley v. Eckerhart,
461 U.S. 424 (1983) (reversing district court's lodestar
calculation because court failed to consider the relationship
between the success of the prevailing party and the amount
of the fees granted); Public Interest Research Group v.
Windall, 51 F.3d 1179 (3d Cir. 1995) (contesting district
court's lodestar calculation applying negative multiplier,
using incorrect market as basis for hourly rate, failing to
deduct duplicative and excessive time). The calculation of
the lodestar, however, has nothing to do with cases where
the parties have either consented to a particular fee (i.e., a
fee agreement) or have agreed to a particular formula
utilized by a district court in order to determine that fee,
such as the formula adopted by the district court here.

When parties settle the issue of outstanding fees, it is
without our realm to instruct them how to arrive at a
mutually acceptable amount. If the amount of attorneys'
fees is accepted by all parties, no case in controversy exists
for us to exercise judicial oversight or judicial review
regardless of how those fees were ultimately determined or
what procedure or principle, if any, the parties employed in
their calculations. When the parties consent or stipulate to
a fee award, they are necessarily consenting to the
procedure employed to derive that award even though that
procedure may not have involved a traditional lodestar
analysis. It is not within our province to question the
consensual nature of that agreement.

By the same token, there is no difference between the
protocol that was employed by the district court in this case
without objection -- i.e., accepting one of the party's
proposed findings without modification -- and the means
by which both parties typically settle or agree upon

                               19
attorneys' fees. In the latter instance where the parties
agree on the amount of attorneys' fees to be awarded to the
successful party, the parties rarely, if ever, employ a
traditional lodestar calculation. Moreover, in each instance
-- where no objection is raised to a particular method
proposed by the district court for its fee determination, or
where all parties agree on the amount of fees to be awarded
-- no lodestar analysis is indicated, nor, contrary to the
majority's assertions, must it be utilized. In both situations
-- agreement to the procedure or agreement to the fees
themselves -- the award is valid irrespective of the protocol
used and must be upheld.3

Yet, the Court has now held that unless the lodestar
approach is used, any attorneys' fee determination made by
the district court is illegal. Not only does this conclusion
fail to account for those cases where the parties have
agreed to a particular sum and have not based that sum
upon the lodestar -- which the majority acknowledges is
clearly acceptable -- but as I have pointed out it also runs
counter to the spirit of innovation that this Court has
encouraged district courts to nurture when faced with
varying situations.4 See, e.g., Krell v. Prudential Ins. Co. (In
_________________________________________________________________

3. Similarly, had the district court informally suggested that PEDF and
the School District meet outside of the district court's chambers and
seek to settle the issue of attorneys' fees without court intervention,
any
agreed upon amount would have been valid despite the fact that
traditional lodestar principles were not involved. The majority does not
object to such an agreement, as the majority acknowledges that the
lodestar approach is not always used in determining attorneys' fees:

       [t]he instances in which courts may not have followed the lodestar
       approach have been, as far as we know, instances where the parties
       have reached an agreement as to the amount of the fee. Regrettably,
       such a resolution was not reached in this case.

Majority Op. at 8. Furthermore, the majority concludes by stating that
"[i]t would be preferable were the parties to resolve the remaining issue
by negotiation or mediation," id. at 12, neither of which is conditioned
upon a lodestar calculus. See also Hensley, 461 U.S. at 437 ("Ideally, of
course, litigants will settle the amount of a fee.")

4. Furthermore, there is authority to support a court's use of an
"either/or" procedure in making a determination. See, e.g., Mobil Oil

                               20
re: Prudential Ins. Co.), Nos. 97-5155, 97-5156, 97-5217,
97-5312, 1998 WL 409156, at 44 (3d Cir. July 23, 1998)
(upholding as "appropriate" and "innovative" the district
court's novel use of a bifurcated fee structure in large,
nationwide class action suit). Indeed, as I have pointed out,
the majority would have preferred that the parties had
reached a fee agreement in this case, irrespective of
whether that settlement would have been based upon the
lodestar calculation. See n.3, supra.5

Despite the majority's disapprobation, the protocol
employed by the district court -- choosing one of the
parties' proposals without modification -- is neither illegal
nor radical. Such a dispute-resolving procedure has been
used in major league baseball salary arbitrations with great
success for nearly 25 years. See Roger I. Abrams, Legal
Bases: Baseball and the Law 87-89 (Temple Univ. Press
1998). Under baseball's salary arbitration scheme, a
neutral arbitrator

       selects either the final demand of the eligible player or
       the final offer of the employing [baseball team]. The
       arbitrator may not mediate or compromise . . . A greedy
       player who sets his demand too high or a stingy club
       that makes an offer too low is likely to lose . . . .

Id. at 87-88 (emphasis added). The author explains that not
only does this system encourage settlement between the
parties, but it also has the effect of bringing the salary offer
and the player's demand closer together, as both sides
_________________________________________________________________

Exploration Co. v. Federal Energy Regulatory Comm'n , 814 F.2d 998 (5th
Cir. 1987), op. clarified by Mobil Oil Exploration Co. v. Federal Energy
Regulatory Comm'n, 814 F.2d 1001 (5th Cir. 1987) (holding that venue
was properly determined by the toss of a coin where the same proceeding
was instituted in two circuits at the same).

5. In light of the district court's "either/or" and "without modification"
protocol, I make no comment about the lodestar's applicability to this
case. I recognize, however, that the district court was of the view that
it
had adhered to a lodestar calculation, accepting PEDF's rate and hours
up until January 31, 1995, the date that the district court determined
the School District had been in compliance with the permit and effluent
emissions allowed under its permit.

                               21
attempt to predict how the arbitrator will rule. See id. at
88. Hence, just as district courts have been encouraged to
employ alternative dispute resolution techniques, so too
should they be encouraged to look to other disciplines and
to employ other labor-saving techniques so as to adopt
efficient, time-saving, and effective means of disposing of
controversies and disputes.

Thus, while I agree that a district court should employ a
traditional lodestar analysis when the procedure or
standard is disputed, I cannot agree that the lodestar
calculation must be employed in every attorney fee
determination that arises before the district court. Our
jurisprudence is sufficiently flexible to allow for varied
approaches, depending upon the circumstances of the case
and the will of the parties. In my view, parties may by
agreement or without objection, as they did here, utilize an
alternative procedure for calculating fees without offending
our jurisprudence.

V.

In conclusion, I fear that the ramifications of this Court's
decision transcend the issue of attorneys' fees and may
have the effect of stifling innovative and non-traditional
approaches to case and issue management in the district
courts. If district courts cannot inaugurate a new procedure
without the interference of this Court -- a procedure, I
might add, that has never been declared illegal or improper
by this or any other court until today -- then we will be
guilty of discouraging the development of modern litigation
techniques and practices in the face of ever increasing
dockets and the sky-rocketing expense of litigation. By
reversing the district court for using a different and novel
protocol to which the parties acquiesced, the majority's
decision may have the unfortunate effect of chilling district
court innovation and efficient case management.

I suggest that the majority here has turned this Court
into a micro-manager. In so doing, it has unjustifiably
permitted PEDF a "second bite at the apple" without PEDF
ever having made known any objection to the district
court's protocol. Accordingly, I would affirm the district
court's February 13, 1997, order.

                                22
Because the majority has held otherwise, I respectfully
dissent.

A True Copy:
Teste:

       Clerk of the United States Court of Appeals
       for the Third Circuit

                               23