Court Opinion

ID: 8936184
Source: CourtListenerOpinion
Date Created: 2022-11-27 07:31:07.054215+00
Date Added: 2024-06-11T17:09:37.690282
License: Public Domain

GIBBONS, Circuit Judge,
dissenting:

Randustrial’s Appeal

The issue presented in this portion of the appeal is whether the district court erred in awarding Randustrial only $5,000 in attorneys’ fees. Randustrial had requested that the court award it $15,033.08 for attorneys’ fees and expenses incurred in the prosecution of the contempt.
To determine whether to award attorneys’ fees to Randustrial, the district court held an evidentiary hearing. The only witness to present evidence on the issue of attorneys’ fees was William Randorf, President of Randustrial. Randorf testified that as of August 31, 1984, Randustrial had incurred legal fees and expenses in the amount of $15,033.08. This testimony was supported by the introduction into evidence of all the monthly statements for professional services submitted by Randustrial’s counsel. These billing records were quite detailed. Each statement contained an itemized account of the fees and expenses for the period covered. They identified each attorney who worked on the matter, the number of hours worked, the nature of the services performed, and the hourly rate charged. The hourly rates ranged from $45.00 to $165.00 per hour.
In addition, Randorf testified that he had reviewed and authorized the payment of each of the statements, that the fees requested were reasonable and that they had been or would be paid. He explained that Randustrial requires counsel to submit detailed billing statements and that he reviews all legal bills submitted to Randustrial. Joint Appendix 86. He testified that *1142he has dealt with a number of law firms, and that he evaluates their bills based on the work that was done and his own experience. Joint Appendix 90. He further stated that on those occasions when he believed a bill to be unreasonable, he would go to the attorneys and discuss the bill with them. Joint Appendix 92.
The only attempt that was made to challenge the evidence presented by Randustrial was Dunlap’s cross-examination of Randorf. Dunlap did not challenge the hourly billing rates directly, nor did he introduce testimony or affidavits indicating that the expenditure of hours or the billing rates were unreasonable. Dunlap limited his challenge to the fee application to cross-examining Randorf about three minor items in the billing statements. First, Dunlap’s counsel interrogated Randorf about an entry referring to the fictitious name registration of the Fashion Institute of Atlanta. Joint Appendix 100. Randorf responded that he had questioned his attorneys about the matter and that they had explained that they had inquired into corporate registrations in various states to determine the full extent of Dunlap’s operations. Joint Appendix 100-02. Second, Dunlap’s counsel inquired about some of the expenses listed in the bill for Randorf’s meals and lodging during the hearing. Randorf responded that his attorneys had paid those expenses, and that he believed they were compensable. Joint Appendix 105. Third, Dunlap’s counsel questioned Randorf about the charges incurred for the taking of Dunlap’s deposition. Randorf explained that two lawyers represented Randustrial and that Randustrial was charged for their time. Randorf also explained that Randustrial was billed for four hours, although the actual deposition took only one to two, to account for the total time Randustrial personnel spent with their attorneys that morning. Joint Appendix 103.
The district court, upon reviewing the evidentiary record, ruled that it would grant Randustrial only a portion of the requested attorneys’ fees — $5,000. The sole reason advanced by the district court for cutting the fee request from $15,033.08 to $5,000 was that Randorf’s characterization of the bill as reasonable could not be credited because he was a biased witness. Thus, the district court did not question the evidence on the number of hours worked, nor the billing rate charged — rather, the more than ten thousand dollar reduction was made on the basis that Randorf’s statement that the bills were reasonable was not credible.
The Third Circuit first articulated the standards for the computation of fee awards in Lindy Brothers Builders, Inc. v. American Radiator & Standard Sanitary Corp., 487 F.2d 161 (3d Cir.1973). See also In re Fine Paper Antitrust Litigation, 751 F.2d 562 (3d Cir.1984). First, the court must ascertain the number of hours worked by the attorneys on each aspect of the ease. 487 F.2d at 167. Second, the court must multiply the number of hours worked by a reasonable hourly rate. Id. The reasonable hourly rate generally is reflected in the attorneys’ normal billing rate. Id. The resulting numerical figure is “the lodestar” of the court’s fee determination, and constitutes the only reasonably objective basis for fixing a fee award. Id. at 167-68. The court then may adjust the lodestar amount either up or down by taking into account the probability of success and the quality of the attorneys’ work. Id. at 168.
In attorneys’ fees eases the trial court has discretion in fixing a fee. The judge, however, must set forth as specifically as possible the facts that support the fee award. Ursic v. Bethlehem Mines, 719 F.2d 670 (3d Cir.1983); Lindy Brothers Builders, Inc. v. American Radiator & Standard Sanitary Corp., 487 F.2d 161 (3d Cir.1973). See also Hensley v. Eckerhart, 103 S.Ct. 1933 (1983). Moreover, a court cannot make an adjustment in the lodestar figure without articulating the factual or evidentiary basis for the adjustment. See Prandini v. National Tea Co., 585 F.2d 47, 52 (3rd Cir.1978); Lindy Brothers Builders, Inc. v. American Radiator & Standard Sanitary Corp., 487 F.2d 161, 169 (3d Cir.1973). Where there is no evidence to support an adjustment in the *1143lodestar, “we may disturb the district court’s findings because sufficiency of the evidence is a matter of law subject to plenary review.” Ursic, 719 F.2d at 674-75.
In this ease, the district court seemingly accepted the lodestar calculation of $15,-033.08 since the court did not dispute the number of hours logged and the billing rates submitted by Randustrial’s counsel. Indeed these figures represented the only factual evidence before the district court. Instead, the court discredited Randorf’s characterization of the overall fee as reasonable, and from this apparently concluded that, on the basis of the evidentiary record, less than one-third of the requested sum was reasonable. This ruling constituted legal error. From the record it is clear that there is no evidentiary basis for this ruling. See Cunningham v. City of McKeesport, 753 F.2d 262 (3d Cir.1985). No facts or figures support an award of $5,000, or any award less than the lodestar amount. The mere fact that the district court considered Randorf to be a biased witness does not negate the weight of the uncontested factual evidence. The only evidence is that the witness was regularly in the market for attorneys’ fees, and, before knowing that his company would prevail in the contempt proceeding, made a market decision that the fees were reasonable and would be paid. The very object of the lodestar determination is to establish a market rate. Blum v. Stenson, 465 U.S. 886, 104 S.Ct. 1541, 1547, 79 L.Ed.2d 891 (1984). We have noted in other contexts that where there is no factual basis upon which an adjudicator rejects a witness’s testimony, the testimony stands unrebutted. Kent v. Sckweiker, 710 F.2d 110 (3d Cir.1983); Smith v. Califano, 637 F.2d 968 (3d Cir.1981). Although deference must be given to credibility judgments, they alone cannot carry the day. Accordingly, the district court’s one reference to the fact that the authenticating witness was biased is an insufficient basis for disregarding the only factual evidence in the case on reasonableness of a fee, negotiated before the litigation over fees, in the marketplace.
Because there is no evidentiary basis for the trial court’s decision, I would hold that the trial court erred in reducing the lodestar amount from $15,033.08 to $5,000. In addition, because there is no evidence in the record of, and because Dunlap made no attempt to establish, a factual basis for an award of attorneys’ fees in any lesser amount, an award of anything but the requested amount would be clearly erroneous. Therefore, I would remand the case to the district court with instructions to enter an attorneys’ fee award in the amount of $15,033.08. The majority’s remand suggests that on this record a reduction in the amount established in the marketplace would be permissible. Clearly it would be only for those members of the court who continue to be hostile to the principle that attorneys’ fees should be awarded against wrongdoers. Whatever may be said for the American Rule in other contexts, it has no place, in my judgment, in cases in which parties having the benefit of an injunction must pay market rates to attorneys in order to vindicate the court’s authority.