UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK
February 28, 1986
JULIO HUERTAS, et al., Plaintiffs,
EAST RIVER HOUSING CORP., et al., Defendants
The opinion of the court was delivered by: CARTER
ROBERT L. CARTER, United States District Judge
This case has been in litigation since September 12, 1977. The action was commenced by individual Hispanic and black plaintiffs and two organizations (It's Time, Inc. and the Lower East Side Joint Planning Council on Housing) representing blacks and Hispanics. Throughout its pendency, the litigation has been handled by counsel on the legal staff of the Puerto Rican Legal Defense and Educational Fund, Inc. The case was certified as a class action on March 6, 1978, and the class was defined as: "All Puerto Rican, other Hispanic and Black homeseekers who have completed or will complete applications for occupancy in the cooperative apartments owned by the defendants and who have been or may be denied the opportunity to purchase those apartments because of their national origin or race; and (b) all Puerto Rican, other Hispanic and Black homeseekers who have had or will have an interest in buying a cooperative apartment owned by defendants but who have been discouraged and dissuaded from completing an application to do so by any act of defendants prohibited by" federal laws prohibiting violation of one's civil rights (42 U.S.C. §§ 1981 and 1982) and discrimination in housing (42 U.S.C. § 3601 et seq.).
Defendants are four housing developments on the Lower East Side of New York run and maintained by the East River Housing Corp., Seward Park Housing, Corp., Hillman Housing Corp., and Amalgamated Dwellings, Inc. In addition, Harold Ostroff, as President and Board member of Seward Park Housing Corp., and Ralph Lippman, as President and Board member of the other three corporations, were named as individual defendants.
In February, 1981, the case was tried to the court without a jury. Thereafter, at the court's urging, beginning in December, 1981, counsel and the parties met periodically to seek a settlement. In March, 1982, the parties and counsel conferred with the court on a proposed settlement. The proposal was accepted by the defendants but rejected by plaintiffs. Beginning approximately in July, 1984, again at the court's urging, the parties and counsel conferred in an attempt to reach an acceptable solution. Finally, in January, 1985, the parties and counsel reached an agreement in principle. Counsel worked together on a stipulation of settlement which was reduced to final form and agreed to by the parties in September, 1985.
Not included in the stipulation of settlement is the issue of attorneys' fees sought by counsel for the plaintiffs. Defendants have not signed the stipulation of settlement, although agreeing to all of its terms, apparently because they felt they could not accept it until they knew what the award to plaintiffs' counsel would be. Defendants are bound by the settlement whether or not they are contented with the court's decision on the attorneys' fee.
The court has the inherent power and, indeed, a duty to enforce a settlement in a case pending before it. Meetings & Expositions, Inc. v. Tandy Corp., 490 F.2d 714, 717 (2d Cir. 1974); Ozyagcilar v. Davis, 701 F.2d 306, 308 (4th Cir. 1983); Dankese v. Defense Logistics Agency, 693 F.2d 13, 16 (1st Cir. 1982); Wiltgen v. Hartford Accident and Indemnity Co., 634 F.2d 398, 400 (8th Cir. 1980). See also In re Air Crash Disaster at John F. Kennedy International Airport on June 24, 1975, 687 F.2d 626, 629 (2d Cir. 1982) ("district court erred in not reducing the award of costs to reflect the [settlement] agreement that the claims of certain plaintiffs were settled 'without costs'").
In January, 1985, the court met with representatives of the parties authorized to act on their behalf. Over a number of hours the court met with the parties jointly and separately to discuss various provisions of the proposed settlement. When one side raised reservations about a particular provision with the court, modifications were proposed until finally a full settlement was reached in principle. As the Ninth Circuit stated in Dacanay v. Mendoza, 573 F.2d 1075, 1078 (9th Cir. 1978), "a litigant can no more repudiate a compromise agreement than he could disown any other binding contractual relationship."
The agreement was arrived at in lengthy arms length negotiations and seems fair and reasonable and in the best interests of the plaintiffs' class and, indeed, to defendants as well. If defendants find themselves unhappy about the court's attorneys' fee award, their remedy is to challenge it in the Court of Appeals. The settlement itself is binding on them.
Now to that unresolved issue. Plaintiffs seek $585,134.50 in attorneys' fees as well as costs and expenses totalling $28,083.63. The attorneys' fees applications consist of a lodestar figure of $292,252.25 with a multiplier of 2.0 which by my calculations brings the total sought to $584,504.50, not $585.134.50.
Defendants object on a variety of grounds but only a few of their contentions have merit. Defendants argue that plaintiffs are not the "prevailing party" because they did not obtain all they sought. Indeed, the plaintiffs in January, 1985, accepted settlement terms substantially similar to those they had rejected in 1982. That they received less than they sought is irrelevant. The critical factor is whether plaintiffs succeeded on the central issue of the litigation; this is demonstrated by whether the primary relief sought has been obtained. Iranian Students Association v. Edwards, 604 F.2d 352 (5th Cir. 1979); American Constitutional Party v. Munro, 650 F.2d 184, 188 (9th Cir. 1981) (to be characterized as a prevailing party, one must establish "some sort of clear, causal relationship between the litigation brought and the practical outcome realized") (emphasis in the original). Defendants are hard pressed to contend seriously that plaintiffs do not meet that standard. They have secured a settlement that secures the plaintiff class against discrimination and provides that a certain percentage of defendants' vacancies will, over time, be filled by members of the plaintiff class. The fact that these results were produced through settlement negotiations rather than by court decree is of little consequence. Robinson v. Kimbrough, 652 F.2d 458, (5th Cir. 1981).
Defendants argue that the plaintiffs are entitled to an award of attorneys' fees only under the Fair Housing Act, 42 U.S.C. § 3601 et seq., and not under § 1988. Under the former statute the prerequisite to any award is a showing of the plaintiffs' inability to pay. Plaintiffs invoked both statutes. The settlement explicitly eliminates language specifying fault, and the court has made no findings on that score. Indeed, the settlement renders any such findings both unnecessary and potentially harmful. However, plaintiffs should not be penalized for reaching a settlement by being precluded from seeking attorneys' fees under the more liberal § 1988 standard. Since plaintiff sought relief under both the Fair Housing and the Civil Rights Act, are the prevailing parties, and no determination has been made on the merits under either statute, they are entitled to apply for attorneys' fees under § 1988. Gagne v. Maher, 594 F.2d 336 (2d Cir. 1979), aff'd, 448 U.S. 122, 65 L. Ed. 2d 653, 100 S. Ct. 2570 (1980).
Courts have rejected the notion that fee awards should be affected by the status of the losing party, the theory being that the "reasonable value of the attorneys' time does not depend on who his or her adversary is." Rodriguez v. Taylor, 569 F.2d 1231, 1249 n.32 (3d Cir. 1977), cert. denied, 436 U.S. 913, 56 L. Ed. 2d 414, 98 S. Ct. 2254 (1978); Dennis v. Chang, 611 F.2d 1302, 1304-07 (9th Cir. 1980). Thus, that defendants are not-for-profit organizations, or that the cost of the award may have to be absorbed by the cooperators in higher carrying charges is not a factor to be considered.
Defendants argue that the fee award should be based on a "cost plus" analysis; that is, that the fee award should be calculated on the basis of salaries paid to its lawyers by the Puerto Rican Legal Defense and Educational Fund. This could undoubtedly result in an award below market rates. However, the United States Supreme Court expressly rejected this approach in Blum v. Stenson, 465 U.S. 886, 104 S. Ct. 1541, 1547, 79 L. Ed. 2d 891 (1984) and held that reasonable attorneys' fee awards are to be based on "prevailing market rates in the relevant community, regardless of whether plaintiff is represented by private or nonprofit counsel."
In determining the appropriate award, the court calculates the reasonable time expended multiplied by reasonable hourly rates to arrive at the lodestar figure, see e.g., City of Detroit v. Grinnell Corp., 560 F.2d 1093 (2d Cir. 1977), and then adjusts the lodestar figure upward or downward. Id. at 1098.
Defendants do not question the appropriateness of the $75 hourly rate for Barbara Schulman, the $65 rate for Migdalia Maldonado, $75-$100 rates in 1979-1980 and 1981-82 respectively for Lizette Cantres, and the $75 and $100 rates in 1981-82 and (1982-84 for Rosaria Esperon. They do question the $150, $175 and $200 rates for Kenneth Kimerling for 1978-80, 1981-82 and 1983-84 respectively.
Plaintiffs are entitled to an award based on the prevailing market rates in New York. Because most of the period in question is past, the court must seek to determine the hourly rates that should be applied to Kimerling from 1978 to 1985. Kimerling is a 1969 graduate of Columbia University Law School, and has specialized in civil rights litigation during his entire professional career. Since courts are admonished to avoid windfall determinations, Beazer v. New York City Transit Authority, 558 F.2d 97, 101 (2d Cir. 1977), quoting from City of Detroit v. Grinnell Corp., 495 F.2d 448, 469-70 (2d Cir. 1974) (Grinnell I), reversed on other grounds, 440 U.S. 568, 99 S. Ct. 1355, 59 L. Ed. 2d 587 (1979), plaintiffs are entitled to be awarded attorneys' fees for Kimerling's work based on hourly rates normally charged by attorneys of like skill for similar work. City of Detroit v. Grinnell, 560 F.2d 1093, 1098 (2d Cir. 1977) (Grinnell II).
The appropriate comparison for Kimerling is to an attorney in a medium sized firm, not one in a large firm which, because of increased overhead, charges higher rates. The historic rates sought seem somewhat high. Lawyers in the class of 1969 could in 1978-80 command $125 per hour and $165 in 1981-82. The hourly rate of $200 in 1983-85, however, is somewhat lower than the class could command since by 1984 the hourly rate was slightly over $200 and was at least $225 by 1985. However, the court cannot award more than has been sought. Therefore, we will use $125 as Kimerling's hourly rate for 1978-1980; $165 for his hourly rate in 1981-82 and $200 for his hourly rate thereafter.
Defendants contend that Rosaria Esperon's time should be excluded because she was both a plaintiff and a witness in this case, as well as a lawyer. In Rybicki v. State Board of Elections, 584 F. Supp. 849 (N.D. Ill. 1984) a pro se litigant lawyer who also appeared as a witness was denied an award of attorney's fees. Esperon appeared as a witness at trial, but did not participate in the trial itself. She seeks compensation for work done both before and after trial. No purpose is served by denying plaintiffs an award for her work. The denial in Rybicki was meant to discourage lawyers from trying cases and appearing simultaneously as witnesses. She did not do that. Accordingly, I see no reason to have her time excluded.
Plaintiffs' documentation does not appear to conform to the requirements of the circuit. As I understand it, the request in In re Hudson & Manhattan R.R. Co., 339 F.2d 114, 115 (2d Cir. 1964) that fee applications be accompanied by accurate and current records of work done and time spent has since, by virtue of New York State Association for Retarded Children v. Carey, 711 F.2d 1136, 1147 (2d Cir. 1983), become mandatory. While the records submitted may meet the circuit's accuracy requirement, they are not current records. Current records, as I understand the term, means contemporaneous records made at the time the work was done or shortly thereafter. These records do not meet that standard and, I believe, for that reason the lodestar figure is subject to an overall reduction of 10%.
Defendants contend that no award should be made for time spent between March, 1982, when a proposed settlement was accepted by defendants and rejected by plaintiffs, and January, 1985, when plaintiffs accepted a settlement substantially similar to the proposal earlier rejected. Defendants make a valid point. The settlement agreed to now is not markedly different from the original proposal. It puts plaintiffs in eight (8) years where they would have been in ten (10), but since the starting time is two years later, the same result is reached at the same year under either proposal. Defendants should not be required to pay for time during at least part of that period. All time spent between March, 1982, and July, 1984, is eliminated. In July, 1984, negotiations recommenced and plaintiffs are entitled to compensation for time after July. I am eliminating 46.55 hours from Kimerling's time and 24.00 hours from Esperon's time to account for that.
There is no merit to the argument to exclude time related to Richard Faust's testimony. Defendants' argument borders on the absurd and smacks of Monday morning quarterbacking. Faust was regarded by plaintiffs as a key witness, and plaintiffs duly prepared his testimony. That it may not have been as compelling as plaintiffs anticipated is beside the point. It was relevant. The argument about anecdotal testimony is somewhat disingenuous. The testimony was designed to establish a pattern of discriminatory treatment. While statistical evidence may sometimes suffice, the actual experiences of rejected applicants reinforce the statistical picture. Indeed, if the case went to determination and the court took the view of Faust's testimony as to defendants, plaintiffs would have been largely left with only anecdotal experiences.
Defendants' contention that all time spent prior to filing the complaint should be excluded has no merit. Indeed, probably the most important aspect of litigation is prefiling preparation. At this time a plaintiff canvasses the statutory and case law and evaluates various legal strategies. In a housing discrimination case such as this, it selects and instructs sets of testers to make applications and, based on their treatment, begins to form a final strategy. The time during this period for which fees are sought is reasonable. Except for the elimination of time from March, 1982, to July, 1984, all time for which compensation is sought is reasonable, and with the adjustments to Kimerling's rate indicated, the rates are reasonable.
Accordingly, Barbara Schulman in 1977-78 spent 498.9 hours at $75 an hour for a total of $37,417.50; Maldonado in 1977-78 expended 280.4 hours at $65 an hour for a total of $18,226; Cantres in 1979-80 spent 336.95 hours at $75 per hour for a total of $25,271.25, and in 1981-82 spent 286.85 hours at $100 an hour for a total of $28,685.00; Rosaria Esperon spent in 1981-82, 67.9 hours at $75 an hour for a total of $5,092.50 and in 1982-84 spent 33 hours at $100 an hour minus 24 hours for a total of $1,100. Kimerling spent 452.95 hours in 1978-80 at $125 an hour for a total of $56,618.75; 353 hours minus 11 hours or 342 hours in 1981-82 at $165 an hour for a total of $56,430; and 109.05 hours minus 35.55 or 73.50 hours for a total of $14,700. An hourly rate of $20 an hour for three paralegals and $20 an hour for Norma Santamaria for a total of $14,360.00 seems reasonable.
The lodestar figure is $240,543, with a reduction of ten percent across the board ($24,054.30) for not providing contemporaneous records brings the lodestar figure to $216,488.70. Plaintiff is entitled to $10,930 for time spent on the fee application and $28,083.63 for costs and expenses.
The final issue is whether the figure should have a multiplier. Plaintiffs contend that the case was exceptional; defendants argue that it was run of the mill. The court would place it in between. It is doubtful that plaintiffs could have lost a housing discrimination case in this court in 1982, when the case was tried or in 1977 when initial strategy was formulated. The law was reasonably well settled by that time. Nonetheless, the difficulty of proving discrimination was a substantial hazard to plaintiffs when they filed the lawsuit in 1977. Moreover, defendants conceded nothing, hired high priced, skilled lawyers to defend the suit. The outcome was not a foregone conclusion, and defendants only make that contention now because it serves their interest. However, neither the case nor the outcome can be classified as exceptional. Plaintiffs, however, have obtained excellent results, but my reading of the United States Supreme Court's holding in Hensley v. Eckerhart, 461 U.S. 424, 103 S. Ct. 1933, 1940, 76 L. Ed. 2d 40 (1983), is that under these circumstances an award that compensates fully for time spent at reasonable hourly rates is sufficient. Accordingly, no multiplier is utilized.
Plaintiffs are awarded judgment against defendants for counsel fees of $227,418.70 and $28,083.63 for costs and expenses.
IT IS SO ORDERED.
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