Burlington Northern, Inc. Employment Practices Litigation, In re
| Decision Date | 28 October 1987 |
| Docket Number | No. 86-1916,86-1916 |
| Citation | 832 F.2d 430 |
| Parties | 53 Fair Empl.Prac.Cas. 112, 45 Empl. Prac. Dec. P 37,691 In re BURLINGTON NORTHERN, INC., EMPLOYMENT PRACTICES LITIGATION. Appeal of DAVIS, BARNHILL & GALLAND, P.C., Freeman, Freeman & Salzman, P.C., and William E. McBride, et al. |
| Court | U.S. Court of Appeals — Seventh Circuit |
Lee A. Freeman, Jr., Freeman, Freeman & Salzman, P.C., Chicago, Ill., for appellant.
Christopher T. Lutz, Steptoe & Johnson, Washington, D.C., for appellee.
Before BAUER, Chief Judge, and WOOD, Circuit Judge, and GRANT, Senior District Judge. *
This appeal and another related appeal we decide today 1 arise from a massive Title VII race discrimination class action filed against the Burlington Northern railroad in the late 1970s. The case finally seems to be winding to a close with these appeals seeking a second round of attorneys' fees and costs. 2 This appeal principally raises the question of whether the lodestar reduction principles described in Hensley v. Eckerhart, 461 U.S. 424, 103 S.Ct. 1933, 76 L.Ed.2d 40 (1983), apply to attorneys' fees sought for litigating an attorneys' fees award. The district court held that they do. We affirm.
In the late 1970s a series of race discrimination actions was filed under Title VII against Burlington Northern. One of these actions, McBride v. Burlington Northern, No. 78 C 269 (N.D.Ill.), was certified in 1978 as a class action. The following year many similar cases pending in other federal districts, including an intervening action by the Equal Employment Opportunity Commission, were consolidated with the class action; the result was essentially a single surviving case against Burlington Northern, although several plaintiffs retained individual status and did not become a part of the class. The district court appointed two attorneys as lead counsel for the class, 3 leaving class members free to seek concurrent representation by their own attorneys.
After years of discovery and other trial preparation the class action settled in November 1983 just hours before trial was to begin. The settlement was subsequently embodied in a consent decree approved by the district court. Pursuant to the consent decree Burlington Northern deposited $10 million into bank accounts held in the district court's name for eventual allocation to plaintiffs. Burlington Northern, its liability established, had no further interest in the settlement fund or its distribution. At this point the case moved into two new phases that progressed simultaneously. One phase was the allocation among plaintiffs of the $10 million settlement fund. Lead counsel, subject to district court approval, were charged with administering and allocating the fund. The other phase was the payment of reasonable attorneys' fees to plaintiffs' counsel by Burlington Northern.
The district court required plaintiffs' counsel to file petitions for attorneys' fees in the months following the approval of the consent decree, which by its terms provided for the award of such fees. Both lead counsel and other counsel for plaintiffs filed petitions for attorneys' fees. With the exception of lead counsel, Burlington Northern was able to reach settlements with all of plaintiffs' counsel on their claims for attorneys' fees. In October and November 1984 the district court entered orders approving the settlements for attorneys' fees with those counsel. 4 For lead counsel, however, the district court was required to hold three days of hearings to review the disputed claims for attorneys' fees. The dispute focused on two aspects of lead counsels' claim for attorneys' fees: a basic lodestar amount and an appropriate multiplier. The district court, however, declined to apply a multiplier, but awarded a lodestar of nearly $2.2 million in fees and costs to lead counsel. See EEOC v. Burlington Northern, Inc., 618 F.Supp. 1046 (N.D.Ill.1985), aff'd in part and rev'd in part sub nom. In re Burlington Northern, Inc., 810 F.2d 601 (7th Cir.1986).
Lead counsel then filed second petitions for attorneys' fees and costs for the time and money spent in seeking fees through the first petition. In May 1986 the district court awarded attorneys' fees and costs a second time to lead counsel for seeking fees initially, but the court awarded less than lead counsel sought because lead counsels' success in litigating the initial fee award had been limited. Lead counsel appeal that second award of fees. 5
This appeal raises the question of whether the principles for recovering attorney's fees laid out in Hensley v. Eckerhart, 461 U.S. 424, 103 S.Ct. 1933, 76 L.Ed.2d 40 (1983), apply to fees recoverable for litigating fee awards. Deciding whether or not the principles of a particular case apply to a specific set of facts is something a district court does as a matter of law. We review a district court's legal determinations de novo. United States v. Montoya, 827 F.2d 143, 146 (7th Cir.1987); Gianukos v. Loeb Rhoades & Co., 822 F.2d 648, 652 (7th Cir.1987).
A subsidiary question raised in this appeal is, if Hensley does apply, whether the district court properly determined that a fee reduction was justified and whether the amount of the reduction was appropriate. On appeal, "we are loath to disturb a ruling by a district judge on a request for second-round attorneys' fees," and because such a ruling is within the district court's broad discretion, we will do so only in "extraordinary circumstances." Muscare v. Quinn, 680 F.2d 42, 44, 45 (7th Cir.1982). In other words, our standard of review for reviewing fee awards is abuse of discretion. Berberena v. Coler, 753 F.2d 629, 632 (7th Cir.1985); Lynch v. City of Milwaukee, 747 F.2d 423, 426 (7th Cir.1984) ().
Awards of attorneys' fees in federal court are governed by the American Rule, which posits that absent statutory authorization, contractual agreement, or exceptional circumstances, parties bear their own attorneys' fees. Alyeska Pipeline Service Co. v. Wilderness Society, 421 U.S. 240, 247, 95 S.Ct. 1612, 1616, 44 L.Ed.2d 141 (1975); Lowe v. Letsinger, 772 F.2d 308, 315 (7th Cir.1985). When a statute does authorize fee shifting, the court may award fees to the winning party in accordance with the statute. Under the fee-shifting provision of Title VII applicable in this case, 6 the district court awarded attorneys' fees to lead counsel as prevailing parties in the litigation over the initial claim for fees. Lead counsel sought an award of a full lodestar, 7 but the district court awarded a reduced amount because, based on the principles set out in Hensley v. Eckerhart, 461 U.S. 424, 103 S.Ct. 1933, 76 L.Ed.2d 40 (1983), lead counsel had achieved limited success in their initial claim for fees.
Hensley deals in part with lodestar adjustment. The Supreme Court explained in Hensley that, as to lodestar adjustment, "[t]he standards set forth in this opinion are generally applicable in all cases in which Congress has authorized an award of fees to a 'prevailing party.' " Id. at 433 n. 7, 103 S.Ct. at 1939 n. 7 (emphasis added). Other courts have held that the Hensley standards for lodestar adjustment specifically apply to fee awards for litigating fee awards. 8
But in spite of this, lead counsel argue that Hensley does not apply to their fee award for seeking attorneys' fees. They argue that "in the absence of abuse by the petitioners, district courts should award a reasonable hourly fee for all hours reasonably spent to present the fee petition without regard to how much petitioners 'prevailed' in the fee proceedings." As support for this argument, lead counsel rely mainly on our decision in Muscare v. Quinn, 680 F.2d 42 (7th Cir.1982).
In Muscare plaintiff's lawyer sought $41,000 in fees for successfully suing on some of plaintiff's civil rights claims. Although the district court awarded the reduced sum of $25,000, defendant appealed. We held plaintiff was entitled to only a portion of the fees he sought and remanded. On remand the district court awarded only $8,000 in fees. Plaintiff did not contest the award, but sought $10,000 for litigating the fees claim. The district court awarded nothing on the lawyer's claim for second round attorney's fees and we affirmed on appeal. We held that the question of the amount of fees to be awarded to a prevailing party is determined by the "reasonableness" of the award "in light of all the circumstances of the case." Id. at 44. The circumstances of that case were that plaintiff had achieved only limited success in his battle for fees ($41,000 sought versus only $8,000 awarded) and consequently his award for litigating the initial fees award could be reduced accordingly--even to zero.
We cannot see how our holding in Muscare prevents the application of Hensley's principles to the fee award in this case. Hensley, decided almost a year after Muscare, holds that a fees award may be reduced to make it "reasonable in relation to the success achieved." 461 U.S. at 436, 103 S.Ct. at 1941. Muscare, by comparison, holds that a fees award for fees litigation can be reduced, even to nothing, so that the award is "reasonable" when considered "in light of all the circumstances of the case." 680 F.2d at 44. We believe that our analysis in Muscare does not conflict with the analysis in Hensley, but rather comports with it. 9 Both cases analyze the reasonableness of a proposed fee award by looking to the particular circumstances of the case, i.e., plaintiff's relative success or lack thereof. Consequently we hold that Hensley by its own terms applies to a fees award for seeking fees and that nothing in our holding in Muscare detracts from Hensley's application. 10
Lead counsel argue, however, that even if Hensley does apply in this case, the...
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