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New York State Association for Retarded Children Inc. v. Carey

decided: June 15, 1983.


Appeal from the June 15, 1982, order of the District Court for the Eastern District of New York (John R. Bartels, Judge), 544 F. Supp. 330 (E.D.N.Y. 1982), awarding plaintiffs attorney's fees and costs totalling $1,406,751.39 under 42 U.S.C. § 1988 (Supp. IV 1980). Reversed and remanded. Judge Friendly and Judge Wyzanski concur with separate opinions.

Friendly and Newman, Circuit Judges, and Wyzanski, District Judge.*fn* Friendly, Circuit Judge, concurring. Wyzanski, Senior District Judge, concurring.

Author: Newman

NEWMAN, Circuit Judge:

The "American Rule" that each party to a lawsuit bears its own attorney's fees has been substantially modified by some 120 Congressional enactments that permit a prevailing party in specified types of litigation to recover attorney's fees from its adversary. In 1976, Congress added a new provision that authorizes fees to prevailing parties in civil rights cases. The Civil Rights Attorney's Fees Awards Act of 1976, Pub. L. No. 94-559, 90 Stat. 2641 (codified at 42 U.S.C. § 1988 (Supp. IV 1980)). This provision, which has proved to be the most frequently used of all the fee-shifting enactments, provides that the fee to be recovered shall be a "reasonable" one, without affording further guidance as to how the fee award should be calculated. Inevitably the generality of such a standard has precipitated a variety of disputes concerning the correctness of a fee calculation. Several of those disputes are presented by this appeal, which arises in the context of a fee award claimed by two non-profit organizations, the Legal Aid Society of New York City and the New York Civil Liberties Union, for services rendered by attorneys in their employ.

The appeal arises out of litigation conducted during the last ten years on behalf of a class of mentally retarded persons confined at the Willowbrook Developmental Center. Defendants-appellants are the Governor of the State of New York and various state officials with responsibilities for the care of the mentally retarded, collectively referred to hereinafter as the State. The litigation, brought pursuant to 42 U.S.C. § 1983 (Supp. IV 1980), resulted in the entry of a consent decree and elaborate subsequent proceedings challenging compliance with the decree. On June 15, 1982, the District Court for the Eastern District of New York (John R. Bartels, Judge) awarded plaintiffs attorney's fees and costs of $1,406,751.39. 544 F. Supp. 330 (E.D.N.Y. 1982). Although this litigation evolved into a prolonged contest raising complex legal issues, we nevertheless believe that the District Court's fee award was excessive and unreasonable. As we have warned in the past, attorney's fees are to be awarded "with an 'eye to moderation,' seeking to avoid either the reality or the appearance of awarding 'windfall fees.'" Beazer v. New York City Transit Authority, 558 F.2d 97, 101 (2d Cir. 1977) (quoting City of Detroit v. Grinnell Corp., 495 F.2d 448, 469-70 (2d Cir. 1974) (Grinnell I)), rev'd on other grounds, 440 U.S. 568, 59 L. Ed. 2d 587, 99 S. Ct. 1355 (1979). Because we conclude that the fees awarded in this case constitute a substantial windfall for plaintiffs' attorneys, we reverse the District Court's order and remand the matter for further proceedings. We have also concluded that this appeal affords an appropriate occasion for providing trial courts with additional guidance in calculating attorney's fee awards.


Factual Background and District Court Decision

Representatives of the Willowbrook class filed this suit in March 1972, alleging constitutional violations in the conditions at the Willowbrook Developmental Center and requesting injunctive relief. After the District Court granted the plaintiffs' motion for a preliminary injunction in April 1973 but before a final ruling on the merits of the case, the parties negotiated a settlement of their dispute. On April 30, 1975, the Court signed a consent decree that included a 29-page appendix of "Steps, Standards, and Procedures" for improving the conditions at the Willowbrook facility and gradually placing all but the most severely handicapped members of the Willowbrook class in smaller community facilities. See New York State Association for Retarded Children, Inc. v. Carey, 393 F. Supp. 715 (E.D.N.Y. 1975).

The consent decree did not end the case. As the District Court recognized when it approved the settlement, further judicial orders would be "necessary or appropriate for the construction of, implementation of, or enforcement of compliance" with the consent decree. For these purposes, the Court retained jurisdiction over the case. Since 1975, both sides of this litigation have regularly invoked this jurisdiction to return to the District Court for guidance in interpreting the consent decree, and plaintiffs have sought relief from alleged violations of the settlement agreement.*fn1

In addition to retaining jurisdiction, the District Court, in its April 30, 1975, order, reserved the question whether the plaintiffs' attorneys should be awarded attorney's fees and costs. At the time of this reservation, the common-law authority of federal courts to award attorney's fees in such cases was in question. Two weeks after the consent decree was signed, however, the Supreme Court resolved the issue by ruling, with exceptions not pertinent to this case, that federal courts could not award attorney's fees absent explicit statutory authorization. See Alyeska Pipeline Service Co. v. The Wilderness Society, 421 U.S. 240, 44 L. Ed. 2d 141, 95 S. Ct. 1612 (1975). At the time, there was no statute authorizing the award of fees in section 1983 suits.

The next year, however, Congress passed the Civil Rights Attorney's Fees Awards Act of 1976, 42 U.S.C. § 1988 (Supp. IV 1980), granting courts the discretion to award prevailing parties in section 1983 litigation "a reasonable attorney's fee as part of the costs." Plaintiffs' attorneys then applied to the District Court for attorney's fees under section 1988. On March 22, 1978, the District Court concluded that section 1988 could be applied to prevailing parties whose cases were pending on October 19, 1976, the effective date of section 1988. Finding the litigation pending on that date, the District Court ruled on March 22, 1978, that plaintiffs were entitled to attorney's fees under section 1988.

Two and a half years later the plaintiffs filed a detailed application for reimbursement. In requesting attorney's fees, plaintiffs conformed to the "lodestar" approach, endorsed by this Circuit in the Grinnell opinions. See City of Detroit v. Grinnell Corp., 560 F.2d 1093 (2d Cir. 1977) (Grinnell II); Grinnell I, supra; accord Lindy Bros. Builders, Inc. v. American Radiator & Standard Sanitary Corp., 540 F.2d 102 (3d Cir. 1976) (en banc). Under the lodestar approach, attorney's fees are calculated by multiplying the number of billable hours that the prevailing party's attorneys spend on the case by "the hourly rate normally charged for similar work by attorneys of like skill in the area." Grinnell II, supra, 560 F.2d at 1098. After calculating a base fee from these relatively objective considerations, the District Court then has discretion to adjust the fee award in light of more subjective factors, such as the risk of the litigation, the complexity of the issues, and the skill of the attorneys. Id. Pursuing the lodestar approach, plaintiffs' application claimed 16,410 hours of attorneys' and law students' time,*fn2 at rates ranging up to $140 an hour, for a base fee of $1,312,642, plus a bonus of $1,208,753. The total award sought was $2,542,430, which included a claim for traditional taxable costs of $21,035.

The plaintiffs' application for attorney's fees sparked a new round of litigation, focusing primarily on the question whether the plaintiffs' attorneys had, in fact, spent 16,410 billable hours on the Willowbrook litigation. While the plaintiffs submitted substantial documentation, contemporaneous time records were included for only a small fraction of the total hours claimed. The plaintiffs' attorneys estimated the majority of their time by reconstruction. The District Court explained the reconstruction process as follows:

Five of the attorneys have used a list of contemporaneous documents ("Greenbook") to help them more accurately approximate part of the time claimed. In addition, the eight lawyers and two law students have submitted affidavits summarizing hours expended and have answered interrogatories . . . .

There is a wide range in the quality of the applications in terms of specificity, but all are wanting to a degree. The attorneys' reconstruction of time is based on present recollection of hours spent years before, in some instances as many as eight years ago. Although five attorneys used a list of documents to refresh their recollection, only one of the attorneys consistently reexamined the documents, and all estimated at least a portion of their time without reference to a supporting document list.

544 F. Supp. at 338.

Unsatisfied with the reconstruction efforts of the plaintiffs' attorneys, the State of New York opposed the plaintiffs' motion for attorney's fees. The State submitted an extensive memorandum and included a detailed appendix responding to each of the hourly estimates claimed by the plaintiffs' attorneys as time spent on the more than 3,000 documents included in the "Greenbook." The State argued that the plaintiffs' reconstructions were duplicative and excessive. By its own calculations, the State reasoned that the plaintiffs' lawyers had expended only 3,353 compensable hours, rather than the 16,410 hours claimed. Moreover, the State argued that the hourly rate of compensation requested by the plaintiffs for their attorneys was too high, and that a bonus for plaintiffs' attorneys was inappropriate. The State concluded that the plaintiffs were entitled, at most, to only $167,813 in attorney's fees.

The District Court considered the plaintiffs' application and the defendants' opposition in a memorandum decision filed on June 15, 1982. 544 F. Supp. 330 (E.D.N.Y. 1982). In that opinion, the Court criticized the plaintiffs' attorneys for failing to keep contemporaneous time records, and noted that this failure was particularly inexcusable after the March 22, 1978, ruling, once it was clear that attorney's fees were to be awarded in this case. However, notwithstanding plaintiffs' inadequate documentation, the District Court accepted the application and proceeded to determine how much of the time claimed was compensable under section 1988. Although Judge Bartels believed that "counsel have generally attempted to be conservative in their reconstruction of hours," id. at 339, he also concluded that the application for fees was inaccurate in some respects and included instances of excess and duplication. The District Court, therefore, disallowed a significant number of the hours claimed by the plaintiffs. These disallowances can be divided into four groups. First, the District Court disallowed all 2,420 hours claimed for work done by two law students. The only support for this portion of the application was the general recollections of the law students themselves. Their affidavits and responses to interrogatories gave only cursory accounts of the manner in which these hours were expended. Judge Bartels could not determine which of the law students' hours were compensable under section 1988 as legal services and which represented educational activities of little or no value to the plaintiff class; he decided that any ambiguities arising out of poor records should be resolved against the applicant, see EEOC v. Sage Realty Corp., 521 F. Supp. 263, 273-74 (S.D.N.Y. 1981), and therefore disallowed fees for any of the law students' time.

Second, the District Court disallowed the majority of hours claimed by the three attorneys who participated in only the early stages of the litigation and whose applications suffered from a particularly serious lack of specificity. Robert Feldt, Kalman Finkel, and Douglas Leonard together reported 1,365 hours of work, all but ten hours done before December 31, 1975. Unwilling to accept an estimate of attorneys' time which is "almost entirely unsupported by daily records," In re Hudson & Manhattan Railroad Co., 339 F.2d 114, 115 (2d Cir. 1964), Judge Bartels chose to make his own conservative calculations of how much time these three attorneys should be allowed, and concluded that their combined efforts justified an allowance of 271 hours. By recalculating the hours of these three attorneys, the District Court reduced the requested hours by 1,094 hours.

Third, the District Court considered the applications of the five attorneys principally responsible for representing the Willowbrook class: Bruce Ennis, Christopher Hansen, John Kirklin, Anita Barrett, and Carol Kellermann. Together, these five had reported 12,625 hours of time spent on the Willowbrook litigation. Prompted by objections raised in the defendants' motion in opposition, the District Court disallowed a small number of their hours as not compensable. These small reductions, comprising 141 hours, eliminated time spent by the attorneys on internecine disputes, time spent working on related litigation, and excessive time spent on preparing the application for fees.

Finally, the District Court considered defendants' more general complaint that the plaintiffs' application contained numerous excessive or duplicative entries. Rather than assess separately each objection raised by the defendants, Judge Bartels chose to acknowledge the general force of the defendants' attack and to make percentage reductions in the hours allowed for each of the principal attorneys. These percentage reductions ranged from five percent to twenty percent of the hours requested (after subtracting the specific hour reductions mentioned above). In determining the appropriate percentages, the Court considered duplicative claims, excessive claims for certain tasks, inadequate detail in documentation, and inconsistencies between the amount of time claimed by different attorneys for similar or identical tasks. The District Court's percentage cuts for the five lead attorneys eliminated another 1,722 hours of attorney time.

In the aggregate, the District Court eliminated 5,377 hours of the 16,410 hours claimed by plaintiffs, a reduction of close to one-third.

Having determined the number of compensable hours, the District Court had then to fix the appropriate hourly rate of compensation in order to calculate the lodestar figure under Grinnell. On this matter, the District Court accepted the rates proposed in the plaintiffs' application. Those rates were based primarily on the billing rates charged for associates' time by the New York City law firm of Cravath, Swaine & Moore (Cravath), one of whose partners was a director of the Legal Aid Society and testified on the fee application. The Court's compensation schedule, which we will discuss subsequently, set a minimum rate of $70 per hour for work done by attorneys with less than two years of experience and a maximum of $140 per hour for attorneys with more than thirteen years of experience. Though conceding that these rates were "somewhat high in comparison to fees awarded counsel in local civil rights cases," Judge Bartels believed that they were not excessive. 544 F. Supp. at 337. Moreover, he noted that the legislative history of the Civil Rights Attorney's Fees Awards Act required that section 1988 awards "be governed by the same standards which prevail in other types of equally complex Federal litigation, such as antitrust cases and not be reduced because the rights involved may be nonpecuniary in nature." S. Rep. No. 1011, 94th Cong., 2d Sess. 6 (1976) [hereinafter cited as Senate Report ], reprinted in 1976 U.S. Code Cong. & Ad. News 5908, 5913. The District Court concluded that, since the plaintiffs' attorneys were of comparable skill to the Wall Street lawyers working for Cravath, the proposed compensation schedule was appropriate because it reflected "fees that would be charged for similar work by attorneys of like skill in the area." Cohen v. West Haven Board of Police Commissioners, 638 F.2d 496, 506 (2d Cir. 1980).

The District Court then applied the schedule of rates to the compensable hours. Taking into account the amount of experience of each attorney at the various stages of the litigation, the Court compensated the attorneys who participated in the entire litigation at higher rates for work done in later years of the case, as they gained more experience. The District Court's calculation, detailed in the margin,*fn3 produced a lodestar figure of $978,052 for the 11,034 allowable hours. The average rate per hour was $88.64.

After determining the lodestar figure, the District Court concluded that a bonus would also be appropriate in this case. The Willowbrook litigation, the Court noted, had been a pathbreaking piece of institutional reform, whose success was very much in doubt at the start. Moreover, plaintiffs' attorneys' representation had been outstanding, and they had achieved impressive results for the plaintiff class. The Court therefore decided that the plaintiffs' attorneys should receive a fifty percent bonus for work done before the consent decree was signed, and a twenty-five percent bonus for work done after that date, by which time the success of the litigation was largely assured. No bonus, however, was added to time spent on the ...

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