Balark v. City of Chicago

• Decision Date: 02 May 1996
• Docket Number: Nos. 95-1181,95-1182,s. 95-1181
• Parties: Bertha BALARK, et al., Plaintiffs-Appellants, v. CITY OF CHICAGO, a municipal corporation, et al., Defendants-Appellees.
• Court: U.S. Court of Appeals — Seventh Circuit

Page 658

81 F.3d 658

34 Fed.R.Serv.3d 454

Bertha BALARK, et al., Plaintiffs-Appellants, v. CITY OF CHICAGO, a municipal corporation, et al.,

Defendants-Appellees.

Nos. 95-1181, 95-1182.

United States Court of Appeals, Seventh Circuit.

Argued Nov. 3, 1995.

Decided April 5, 1996.

Rehearing and Suggestion for Rehearing En Banc Denied May 2,

1996. ^*

Appeals from the United States District Court for the Northern District of Illinois, Eastern Division. Nos. 77 C 1939, 79 C 2493 and 79 C 4119--John F. Grady, Judge.

Cecile Singer, Chicago, IL, Edward T. Stein (argued), Chicago, IL, for Plaintiffs-Appellants in No. 95-1181.

Jerome Schur, Pretzel & Stouffer, Chicago, IL, John B. Cashion and Edward T. Stein (argued), Chicago, IL, for Plaintiff-Appellant in No. 95-1182.

William Wenzel, Office of the Corporation Counsel, Chicago, IL, James D. Montgomery, Montgomery & Associates, Chicago, IL, Dodge Wells, Department of Justice, Civil Division, Washington, DC, Sharon Baldwin, Lawrence Rosenthal, Eileen Brewer, Diane M. Pezanoski, Brian Trubitt, Benna R. Solomon (argued), Stuart D. Fullerton, Susan S. Sher, Office of the Corporation Counsel, Appeals Division, Chicago, IL, Locke E. Bowman, III, Chicago, IL, for Defendants-Appellees.

Before EASTERBROOK, DIANE P. WOOD, and EVANS, Circuit Judges.

DIANE P. WOOD, Circuit Judge.

More than twenty years ago, Sylvia Evans settled a wrongful death action against the City of Chicago for $67,500. That lawsuit, and the later action brought by the Balark plaintiffs, gave rise to the litigation that now comes before this Court for the fourth time. In the Evans and Balark class actions, the plaintiffs challenged the City's practice of paying tort judgments of $1,000 and less before it paid larger judgments. Between May 20, 1984 and June 29, 1994, the plaintiff classes and the City were parties to a consent decree that governed the order in which judgments would be paid, methods for funding payments, and ancillary matters. Eventually, for reasons that we explain below, the consent decree was vacated pursuant to Fed.R.Civ.P. 60(b)(5). The question before us today is narrow: are the plaintiffs entitled to attorneys' fees as "prevailing parties" under 42 U.S.C. § 1988 for their efforts in obtaining and maintaining the decree while it was in effect, or does the fact that they ultimately lost the decree defeat this claim? We conclude that parties who win a consent decree in a case brought under 42 U.S.C. § 1983 qualify as "prevailing parties," and thus may obtain appropriate attorneys' fees under § 1988, even if the decree is later modified or terminated pursuant to Rule 60(b).

I

The relevant facts for present purposes have more to do with the procedural history of this case than with the underlying claims. The Evans plaintiffs and the Balark plaintiffs brought separate suits against the City under § 1983 raising constitutional challenges to the City's delays in paying tort judgments and its practice of paying smaller judgments ($1000 or less) before earlier-entered larger ones. The district court certified two distinct classes: the Evans class included tort judgment creditors holding judgments larger than $1,000 whose payments were more than one year overdue, and the Balark class included tort judgment creditors holding judgments larger than $1,000 whose payments were less than one year overdue. On January 28, 1981, the district court consolidated the two actions for disposition and entered partial summary judgment for both. The judgment was broad in scope, striking down several Illinois laws that authorized the City's practice, finding violations of both the Equal Protection and Due Process clauses of the Constitution, and enjoining the City's practice of paying the judgments of $1,000 or less before earlier-entered larger judgments. See Evans v. City of Chicago, 689 F.2d 1286, 1291 (7th Cir.1982) (Evans I).

Plaintiffs appealed and the City cross-appealed from the judgment. Applying the equal protection analysis set forth in San Antonio Independent School District v. Rodriguez, 411 U.S. 1, 93 S.Ct. 1278, 36 L.Ed.2d 16 (1973), the Court was able to discern no rational basis for the City's decision to create two categories of tort judgment holders, those with "large" and those with "small" judgments. Evans I at 1299-1300. It therefore upheld most of the district court's order, with the exception of a section declaring Ill.Rev.Stat., ch. 85, § 9-104(b), unconstitutional and setting forth minimum procedural safeguards.

Upon remand to the district court, the parties negotiated the consent decree that underlies the current appeal. On May 31, 1984, the district court approved a consent decree that required the City to pay all judgments in the order in which they were entered, and to pay all judgments promptly. It also required the City to appropriate sufficient funds annually to satisfy its anticipated tort liabilities. The decree was prospective in nature, in that it expressly left open all claims for damages. It covered all tort judgments that remained unpaid as of December 31, 1983, and the payment of future judgments beginning in 1984. See Evans v. City of Chicago, 873 F.2d 1007, 1012 (7th Cir.1989) (Evans II); Evans v. City of Chicago, 995 F.2d 1393, 1396-1398 (7th Cir.1993), vacated and rev'd, 10 F.3d 474 (7th Cir.1993) (en banc) (Evans III).

As of May 31, 1984, then, the question of injunctive relief appeared to be resolved. The City was subject to the consent decree, and to the best of our knowledge it was complying with the decree. Two additional questions remained before the district court: the question of damages that the decree had left open, and the question of attorneys' fees. The case returned to the district court in 1987 for computation of damages. Plaintiffs then made a decision that they have surely regretted with the benefit of hindsight: they re-opened the question of liability that this Court had settled in Evans I, and they argued that the City's practice of distinguishing between tort judgments and other judgments (known as enterprise and contract judgments) also violated the Equal Protection clause. The district court agreed and expanded the scope of the Evans I injunction accordingly. In addition, it awarded damages to the plaintiffs.

The City appealed from the new judgment, challenging both the 1987 rulings and asking this Court to revisit its Evans I decision. We noted that the plaintiffs' decision to go beyond the scope of the remand for computation of damages and to reopen the equal protection issue had allowed the City in turn to introduce more evidence explaining its conduct. That new evidence left the Court in substantial doubt as to the correctness of its original decision, which persuaded the Court to invoke an exception to the law of the case doctrine and to reconsider Evans I. The result of that reconsideration was the finding in Evans II that the City's practice of paying small tort judgments in advance of larger ones was supported by a rational basis. This in turn required a reversal of the earlier finding of an equal protection violation and the damages that had been computed at the second phase of the trial. The Court similarly found that the City's decision to treat tort judgments differently from contract or enterprise judgments was supported by a rational basis. Evans II concluded: "[w]e find that the City's failure to establish a single order of payment of all judgment creditors did not violate equal protection. Therefore, the decision of the district court is REVERSED." 873 F.2d at 1018.

Following Evans II, on November 27, 1989, the City moved to vacate the 1984 consent decree pursuant to Fed.R.Civ. P. 60(b)(5), which states that "[o]n motion and upon such terms as are just, the court may relieve a party or a party's legal representative from a final judgment, order, or proceeding for the following reasons: ... (5) the judgment has been satisfied, released, or discharged, or a prior judgment upon which it is based has been reversed or otherwise vacated, or it is no longer equitable that the judgment should have prospective application." The district court initially granted the motion, but then it reversed itself because it believed the consent decree had also compromised due process claims that were unaffected by this Court's decisions. A divided panel of this Court agreed with the latter holding, 995 F.2d 1393, but its decision was vacated and reversed by the en banc decision in Evans III.

Judge Easterbrook's opinion for the plurality of the en banc Court did not rest on the proposition that the plaintiffs' claims were frivolous, or that the consent decree had somehow never existed. To the contrary, he stated squarely that "[t]he decree was properly supported when the district court entered the injunction in 1984." Evans III, 10 F.3d at 480. Once Evans II had been decided, however, the "substantial basis" in federal law for the consent decree evaporated, both under the Equal Protection clause and under the Due Process clause. This meant, in the language of Rule 60(b)(5), that it was "no longer equitable" that the consent decree should continue. Judge Ripple concurred, stating that "it is sufficient to conclude that this court's decision in [Evans II] changed the prevailing law to such a degree as to make further enforcement of the consent decree by the district court inappropriate under the standards set forth by the Supreme Court in Rufo v. Inmates of the Suffolk County Jail, 502 U.S. 367, 112 S.Ct. 748, 116 L.Ed.2d 867 (1992)." Evans III, 10 F.3d at 483.

Once again, the case returned to the district court. On June 29, 1994, in compliance with this Court's mandate, the court granted the City's motion to vacate the consent decree and reserved ruling on plaintiffs' motion for attorneys' fees under § 1988. On November 9, 1994, the court entered the order from which plaintiffs appeal, denying attorneys fees. In its order, the district...