Coulter v. State of Tenn.

• Decision Date: 18 December 1986
• Docket Number: No. 85-5109,85-5109
• Citation: 805 F.2d 146
• Parties: 42 Fair Empl.Prac.Cas. 305, 41 Empl. Prac. Dec. P 36,705, 55 USLW 2265 Mary Lucille COULTER, Plaintiff-Appellant, v. STATE OF TENNESSEE; Department of Transportation of the State of Tennessee, Department of Personnel of the State of Tennessee; and Darrell D. Akins, Commissioner of the Department of Personnel, Defendants-Appellees.
• Court: U.S. Court of Appeals — Sixth Circuit

Page 146

805 F.2d 146

42 Fair Empl.Prac.Cas. 305,

41 Empl. Prac. Dec. P 36,705, 55 USLW 2265

Mary Lucille COULTER, Plaintiff-Appellant, v. STATE OF TENNESSEE; Department of Transportation of the State of Tennessee, Department of Personnel of the State of Tennessee; and Darrell D. Akins, Commissioner of the Department of Personnel, Defendants-Appellees.

No. 85-5109.

United States Court of Appeals Sixth Circuit.

Argued Jan. 17, 1986.

Decided Oct. 29, 1986.

Rehearing and Rehearing En Banc Denied Dec. 18, 1986.

Robert Belton, Harvard Law School, Cambridge, Mass., Barry L. Goldstein (argued), Washington, D.C., for plaintiff-appellant.

Michael Lee Parsons, Asst. Atty. Gen., Nashville, Tenn., Diane Stamey (argued), for defendants-appellees.

Before LIVELY, Chief Judge, and MERRITT and WELLFORD, Circuit Judges.

MERRITT, Circuit Judge.

This is an attorney fee appeal arising from a Title VII case. Robert Belton, a Vanderbilt University law professor who teaches in the employment discrimination field, was associated by another lawyer as co-counsel for a plaintiff who ultimately won her case. Mr. Belton challenges the District Court's order reducing his separate attorney fee award against the losing defendants from $22,532 to $14,167. The appeal raises significant issues respecting the applicable hourly rate to be used under the "lodestar" approach to attorney's fees ¹ and the approach to be followed in measuring excessive hours.

FACTUAL BACKGROUND

Aleta Arthur and Robert Belton represented plaintiff Coulter in a Title VII sex discrimination suit against the State of Tennessee and certain Tennessee agencies and officials. District Judge Morton ruled in favor of plaintiff on the issue of liability. The parties by agreement then submitted a consent order which disposed of all the remedial issues, awarded plaintiff a promotion and a small amount of compensation, awarded Ms. Arthur $13,621.25 in attorney's fees at the rate of $85 an hour, and reserved the question of attorney's fees due Mr. Belton for later determination.

Mr. Belton subsequently petitioned the District Court for an attorney fee award of $22,532.90 calculated on a total of 185.59 hours worked at rates of $110 per hour for services rendered during 1982 (4.25 hours) and at $125 per hour for 1983 (60.92 hours) and 1984 (120.42 hours). Judge Morton reduced the hourly rate to $85 for 1982 and $110 for 1983 and 1984, and he refused to award Mr. Belton a fee for 55.83 hours, which he considered unreasonably expended. Taking these reductions into account, Judge Morton ordered the defendants to pay Mr. Belton attorney's fees in the amount of $14,167.35. Judge Morton found that Ms. Arthur was the "lead" lawyer, a seasoned and effective trial lawyer, who conducted all of the trial and all the deposition examinations. Mr. Belton assisted in legal research and conceptualization of the case and in the review of documents and preparation of court papers. Judge Morton characterized the case as "simple," "tried in less than half a day," and "decided from the bench."

HOURLY RATES

In adopting some 131 attorney fee shifting statutes, ² including the civil rights statute applicable here, 42 U.S.C. Sec. 2000e-5(k) (1982) (awarding "reasonable" fees to prevailing parties in the "discretion" of the court), Congress intended to provide an economic incentive for the legal profession to try meritorious cases defining and enforcing statutory policies and constitutional rights in a variety of fields of legal practice. Congress did not intend that lawyers, already a relatively well off professional class, receive excess compensation or incentives beyond the amount necessary to cause competent legal work to be performed Mr. Belton requested that his fee be calculated on an hourly rate of $100 per hour for services rendered in 1982 and $125 per hour in 1983 and 1984. Judge Morton reduced the hourly rates to $85 for 1982 and $110 for 1983 and 1984 as reasonably reflecting the prevailing market rates for lawyers in this field in Nashville, Tennessee, the community in which both Mr. Belton and Ms. Arthur practice.

                in these fields.  Legislative history speaks of "fees which are adequate to attract competent counsel, but which do not produce windfalls," S.Rep. No. 94-1011, p. 6 (1976), U.S.Code Cong. & Admin.News 1976, pp. 5908, 5913, and cautions against allowing the statute to be used as a "relief fund for lawyers," 122 Cong.Rec. 33314 (1976) (remarks of Sen. Kennedy). 3   The statutes use the words "reasonable" fees, not "liberal" fees.  Such fees are different from the prices charged to well-to-do clients by the most noted lawyers and renowned firms in a region.  Under these statutes a renowned lawyer who customarily receives $250 an hour in a field in which competent and experienced lawyers in the region normally receive $85 an hour should be compensated at the lower rate. 4   We therefore apply the principle that hourly rates for fee awards should not exceed the market rates necessary to encourage competent lawyers to undertake the representation in question
                

This finding is supported by the fact that Mr. Belton requested and was awarded fees based on an $85 rate for services rendered in 1982 in another Title VII action before Judge Morton. Perkins v. State Board of Education, No. 77-3552 (M.D.Tenn. March 11, 1983). Mr. Belton argues that his hourly rate was low in Perkins because Perkins was decided before the Supreme Court's decision in Blum v. Stenson, 465 U.S. 886, 104 S.Ct. 1541, 79 L.Ed.2d 891 (1984), and did not use the "market rate" theory the Court espoused in Blum. In Blum the Court rejected the argument that attorney fee awards for nonprofit counsel should be calculated in a cost-based method and should be lower than fees calculated under a market rate theory for private "for profit" counsel. Mr. Belton's argument implies that his fees in Perkins were lower because they reflected his lower cost of practicing law resulting from his free access to office space and law library resources at Vanderbilt Law School.

This argument is not valid. In an earlier opinion in Perkins, Judge Morton did note the argument that Mr. Belton's fee should be lower because he was a law professor, but the judge awarded fees "based on prevailing rates in the area." "It is true," he said, "that one of the underlying factors in setting the rate may be overhead, but to the recipient thereof the components have no pertinency. The plaintiff is entitled to recover fees based on their reasonable worth, i.e., market value." Perkins v. State Board of Education, No. 77-3552 slip op. at 3-4 (M.D.Tenn. Nov. 4, 1980). The text of Judge Morton's orders undermines Mr. Belton's assertion that his fee was not calculated based on market rates as required by Blum. In addition, in Perkins Judge Morton awarded Richard Manson, a Nashville attorney in private practice, a fee calculated at a rate of $75 per hour for 1982.

The reduction in Mr. Belton's rates is also supported by the fact that in this case Ms. Arthur requested an attorney fee calculated at the rate of $85 per hour for all three years. The parties agree that under the consent order Ms. Arthur was paid $85 per hour for all of the work she did. Mr. Belton argues that this reference to Ms. Arthur's rate constitutes the admission of a "settlement ... to reduce the amount of a claim" in contravention of Rule 408 of the Federal Rules of Evidence. Belton's Brief at 18-19. Rule 408 does prohibit the admission of "[e]vidence of ... accepting ... valuable consideration in compromising ... a claim which was disputed as to either validity or amount, ... to prove liability for or invalidity of the claim or its amount." However, the rule allows the admission of such evidence for other purposes. In this case, reference to the settlement is for the statistical purpose of establishing the market rate prevailing in Nashville for the sort of legal services rendered by Mr. Belton. Laying the settlement aside, record evidence establishes that Ms. Arthur, described by Judge Morton as an "excellent" and highly effective trial lawyer in Nashville, sought $85 per hour for her services in the same Title VII case. The reduced figures reasonably reflect the market rates in Nashville at the time the services were rendered, the rates necessary to hire a competent lawyer to undertake the work in question in accordance with the principle stated above that "fee awards should not exceed the market rates necessary to encourage competent lawyers to undertake the representation in question."

HOURS EXPENDED

The second issue--the reasonableness of the hours claimed by Mr. Belton--illustrates an obvious inadequacy in the "lodestar" method of calculation. The rates-times-hours approach is a sufficient standard when there is no problem about the hours of service performed, but it does not solve the problem of excessive hours. See Report of Third Circuit Task Force, 108 F.R.D. 237, 247-49 (1985). Hours spent in court and at depositions can be verified and reviewed. Hours spent in reviewing records, talking to other lawyers or experts, preparing legal documents and the like cannot be fully verified and require the court to trust the lawyer's word that the hours claimed represent necessary work actually performed. Depending on the situation, the lawyer may have strong economic incentives to spend too many hours on a piece of work or to exaggerate the number of hours spent or the necessity or importance of the work. Similarly, it is often difficult to assess the need for two lawyers at a deposition, an interview, or a trial.

Mr. Belton requested fees for 185.59 hours. Judge Morton cut out 55 hours. The District Judge eliminated as excessive or unnecessary 8 of the 13 hours claimed for preparing his fee request; all of the 16.75 hours claimed for preparing, filing, and arguing what the District Judge characterized as a "futile" summary judgment motion; 22 of the 44 hours in preparing...