Postow v. Oriental Bldg. Ass'n
Decision Date | 06 July 1978 |
Docket Number | Civ. A. No. 2017-73. |
Citation | 455 F. Supp. 781 |
Parties | Elliott POSTOW and Joan Postow, Plaintiffs, v. ORIENTAL BUILDING ASSOCIATION, Defendant. |
Court | U.S. District Court — District of Columbia |
Benny L. Kass, Steven A. Skalet, Washington, D. C., for class plaintiffs.
Jay S. Weiss, Washington, D. C., for plaintiffs Mr. and Mrs. Morton Schrier.
Thomas S. Jackson, Patricia D. Gurne, James A. Crooks, Washington, D. C., for defendant.
This Court heretofore found for the class plaintiffs on their claim that defendant did not comply with the timely disclosure requirement of the Truth in Lending Act (15 U.S.C. sec. 1639(b)).1 Thereafter on November 3, 1977, this Court found that class plaintiffs were entitled to $22,350.42 statutory damages.2 Since then class plaintiffs have petitioned for an award of attorneys' fees and costs, which defendant opposes. In addition to the question of attorneys' fees, class plaintiffs seek a review by the Court of the Clerk of Court's disallowance of certain claimed costs and defendant's opposition to such a review as well as its contention that class plaintiffs are not entitled to any costs.
Class plaintiffs' claim to an award of attorneys' fees and costs is based on the following provision in the Truth in Lending Act:
Plaintiffs have petitioned for attorneys' fees calculated at $75.00 an hour for approximately 270 hours' work and for a matching bonus award to compensate them for the risks involved in litigation prosecuted for a fee contingent on success. Plaintiffs have also petitioned for attorneys' fees for the services of "law clerks" calculated at $30.00 an hour for approximately 40 hours. Finally, plaintiffs seek costs which were denied by the Clerk of the Court for a $1,414.20 fee charged by plaintiffs' expert witness and for $452.82 spent by the attorneys in out-of-pocket disbursements and in taking depositions.
While the statute authorizes the Court to award reasonable fees, in determining what is reasonable the Court must consider the twelve factors delineated in Evans v. Sheraton Park Hotel, 164 U.S.App.D.C. 86, 503 F.2d 177 (1974). In structuring their memoranda to the Court on this determination, the parties have treated with those factors. Defendant has additionally asserted two threshold challenges to the award of any fees in this case: first, it attacks the constitutionality of the statutory provision for fees to prevailing plaintiffs and not to prevailing defendants as denial of due process to and equal protection for defendants in Truth in Lending litigation; second, it asserts that plaintiffs were not "successful" in this action as required by the express language of the provision.
Defendant's constitutional challenge raises what may either be phrased a due process or an equal protection issue by its contention that the unilateral award of attorneys' fees to successful plaintiffs impairs creditors' access to the courts to defend themselves against allegations of violating the Truth in Lending laws. Defendant states that this discrimination presents creditors with a no-win alternative in going to court: if they succeed in their defense, they are still out the cost of litigation which may exceed the penalty for the alleged violation; if they fail, they are then liable for the cost of the plaintiffs' prosecution in addition to their own litigation expenses and any damages that may be awarded.
The defendant cites Boddie v. Connecticut, 401 U.S. 371, 91 S.Ct. 780, 28 L.Ed.2d 113 (1971) as support for its constitutional position. There the Supreme Court held that it was a violation of due process for a state to deny access to indigents to the state's divorce courts because of a filing fee that such indigents were unable to pay. Justice Brennan concurred on the ground that denial of judicial process to persons on the basis of wealth was a denial of equal protection of the laws. Boddie was subsequently elaborated upon and clarified by the Court in United States v. Kras, 409 U.S. 434, 93 S.Ct. 631, 34 L.Ed.2d 626 (1973). In Kras, the Court noted that the Boddie case involved the absolute denial to the indigent-plaintiffs of the only legal avenue to adjust the marital relationship and the fundamental associational interests that surround the establishment, maintenance, and dissolution of that relationship. The Court strongly emphasized the basic importance of marriage to society and the state's monopolization of the divorce process, noting that the holding in Boddie was expressly restricted to the constitutional concerns evoked by this particular combination. In Kras, the Court refused to extend this limited holding to the similar denial of access to federal bankruptcy courts to indigents unable to pay a filing fee. The Court dismissed due process concerns because it noted that the adjustment of the creditor-debtor relationship at issue in Kras was not in the exclusive control of the government, but that the parties had the option of private settlement "however unrealistic that remedy may be in a particular situation." 409 U.S. at 445, 93 S.Ct. at 638. Nor did the Court find in Kras that the creditor-debtor relationship and its adjustment through federal bankruptcy proceedings concerned a fundamental interest or that debtors were a suspect class such that the Court must scrutinize the filing fee requirement for a "compelling governmental interest" necessary to sustain its constitutionality under either due process or equal protection analysis. Rather, the Court found that this financial bar to the bankruptcy courts concerned matters of economics and social welfare for which the applicable standard in determining the propriety of Congress' action is that of "rational justification." The Court found a rational justification for the fee requirement to be readily apparent: a self-sufficient system paid for by its users rather than by the general taxpayer. 409 U.S. at 446, 93 S.Ct. 631.
In the present case the provision of attorneys' fees to successful plaintiffs and the denial of attorneys' fees to successful defendants does not bar the latter's access to the courts. It may encourage settlement, but it does not force it. Moreover, the very availability of settlement cuts against defendant's constitutional challenge because it removed the due process concern found in Boddie in the government's monopolization of the legal means to adjust a relationship. As in Kras, the creditor-debtor relationship present in the instant case involves no fundamental interest and the discrimination of plaintiffs over defendants effects no suspect classification that compels this Court to scrutinize the attorneys' fees provision for a compelling governmental interest.
The Court must therefore inquire only as to the existence of a rational justification for the discriminatory award of attorneys' fees provided by the Act. Such a justification is readily apparent: to provide for the supplementary enforcement of the Act by encouraging suits brought by injured consumers.3 Numerous courts have recognized that the Congress intended such supplementary enforcement by these so-called "private attorneys general." E. g., McGowan v. Credit Center of North Jackson, Inc., 546 F.2d 73, 77 (5th Cir. 1977); Sosa v. Fite, 498 F.2d 114, 121-122 (5th Cir. 1974); Ratner v. Chemical Bank New York Trust Co., 329 F.Supp. 270, 280 (S.D.N.Y. 1971). Alleged violations of the Act run into the thousands with over ten thousand law suits filed so far and more being filed each day at a rate of greater than two thousand suits a year.4 Most of these suits are for statutory rather than actual damages, because of difficulties in proving the latter or the purely technical nature of the violation.5 Statutory damages, however, have somewhat conservative maximum limits, making it not unusual for the costs of litigation to exceed the damages awarded.6 Without fee awards, therefore, consumers would have little practical incentive and perhaps even less financial ability to bring suits under the Act.
It might be argued that discrimination could have been avoided by making fee awards available for both parties. There is no question that defendants can be awarded attorneys' fees when plaintiffs bring suits in bad faith. See Alyeska Pipeline Co. v. Wilderness Society, 421 U.S. 240, 258-259, 95 S.Ct. 1612, 44 L.Ed.2d 141 (1975). But to provide attorneys' fees to successful defendants against plaintiffs who have acted in good faith would obviously retard, if not totally frustrate, the encouragement of supplementary private enforcement of the Act.
In a different legal context, the Supreme Court has identified two equitable considerations which support a finding of a rational justification for the discriminatory award of attorneys' fees to successful plaintiffs. In Christianburg Garment Co. v. EEOC, 434 U.S. 412, 98 S.Ct. 694, 54 L.Ed.2d 648 (1978), the Court outlined a judicially created discrimination between parties for courts to consider in the award of attorneys' fees to "prevailing parties" as provided by Title VII of the Civil Rights Act of 1964, as amended: 42 U.S.C. section 2000e-5(k). There, the Court ruled that prevailing plaintiffs should be awarded attorneys' fees in "all but special circumstances," and that prevailing defendants should be awarded fees only when plaintiffs' suits are "frivolous, unreasonable, or without foundation." The Court made this ruling despite the otherwise obvious inference of equal treatment in the phrase "pr...
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