Deja Vu v. Metropolitan Government, 03-6521.

• Decision Date: 31 August 2005
• Docket Number: No. 03-6521.,03-6521.
• Parties: DEJA VU OF NASHVILLE, INC., a Tennessee corporation; Jerry C. Pendergrass, et al., Plaintiffs-Appellees, v. THE METROPOLITAN GOVERNMENT OF NASHVILLE AND DAVIDSON COUNTY, TENNESSEE, Defendant-Appellant.
• Court: U.S. Court of Appeals — Sixth Circuit

421 F.3d 417

DEJA VU OF NASHVILLE, INC., a Tennessee corporation; Jerry C. Pendergrass, et al., Plaintiffs-Appellees, v. THE METROPOLITAN GOVERNMENT OF NASHVILLE AND DAVIDSON COUNTY, TENNESSEE, Defendant-Appellant.

No. 03-6521.

United States Court of Appeals, Sixth Circuit.

Argued: April 20, 2005.

Decided and Filed: August 31, 2005.

ARGUED:

Francis H. Young, Metropolitan Department of Law, Nashville, Tennessee, for Appellant. Bradley J. Shafer, Shafer & Associates, Lansing, Michigan, for Appellees.

ON BRIEF:

Francis H. Young, James L. Charles, Paul J. Campbell, II, Metropolitan Department of Law, Nashville, Tennessee, for Appellant. Bradley J. Shafer, Andrea E. Adams, Shafer & Associates, Lansing, Michigan, for Appellees.

Before: BOGGS, Chief Judge; ROGERS, Circuit Judge; SHADUR, District Judge.^*

SHADUR, D.J., delivered the opinion of the court, in which BOGGS, C.J., joined.

ROGERS, J. (pp. 424-425), delivered a separate dissenting opinion.

OPINION

SHADUR, District Judge.

Nearly eight years ago Deja Vu¹ first challenged Chapter 6.54 of the Metropolitan Government of Nashville and Davidson County, Tennessee ("Metro") Code of Laws on First and Fourteenth Amendment grounds. That challenge has generated a lengthy and convoluted history that includes an earlier visit to this Court in 2001 ("Deja Vu I," 274 F.3d 377)-so that "deja vu" provides a particularly appropriate label for this second appeal, which concerns the district court's award of attorneys' fees and expenses pursuant to 42 U.S.C. § 1988.² We affirm.

Enacted on August 19, 1997, Chapter 6.54 required both (1) "sexually oriented" businesses to obtain operating licenses and (2) performers in such businesses to obtain permits. Deja Vu sought to enjoin its enforcement shortly after enactment. In their initial motion for injunctive relief, the original Deja Vu plaintiffs argued that Chapter 6.54 was unconstitutional because it did not provide prompt judicial review. On December 8, 1997 the district court agreed and entered a preliminary injunction. But almost a year later that injunction was dissolved in response to Metro's amendments to Chapter 6.54. Deja Vu appealed.

Two weeks later, on December 17, 1998, Deja Vu filed in the district court a second motion for a preliminary injunction that asserted its previously preserved constitutional claims. Metro responded in two ways: first by assuring the court that certain provisions would be severed and that others would be "subject to a limiting construction," and then by notifying the court that 92 amendments to the ordinance had been enacted. Even so, Deja Vu's motion was granted on October 4, 1999, with Metro being enjoined from enforcing Chapter 6.54 in its entirety. Some ten weeks later the preliminary injunction was made permanent. Although Metro appealed that order, it also enacted further amendments to the ordinance to address the constitutional infirmities identified by the district court. Metro then appealed again when the district court denied its Fed.R.Civ.P. 60(b) motion to dissolve the injunction based on the new amendments.

In Deja Vu I we addressed all of the substantive issues preserved for appeal by both Deja Vu and Metro. We concluded (1) that the injunction against enforcement of Chapter 6.54 should remain in effect because that Chapter's judicial review provisions were constitutionally inadequate and (2) that the statutory definition of "sexually oriented" was unconstitutionally broad but readily severable. Rehearing and rehearing en banc were denied on February 5, 2002, and the Supreme Court denied certiorari on May 13, 2002 (535 U.S. 1073, 122 S.Ct. 1952, 152 L.Ed.2d 855).

Deja Vu has filed Section 1988 motions for attorneys' fees on four separate occasions during the pendency of the action. Its first effort was an interim motion for fees based on its claimed "prevailing party" status as to the initial motion for preliminary injunction. That motion was eventually deemed a final application for fees after the district court entered the permanent injunction, and Deja Vu followed that entry with a second application based on its success on the second motion for injunctive relief. After we decided Deja Vu I, Deja Vu filed a third motion for fees associated with the appeal. And after the Supreme Court denied certiorari, Deja Vu filed its fourth and final motion.

Deja Vu's first three motions were considered together by the magistrate judge, who recommended that the motions be granted but did not recommend a specific award amount. That recommendation was approved by the district court on December 6, 2002, as was the parties' stipulation that the magistrate judge's findings, if upheld, called for an award of $431,099.56. Later the magistrate judge recommended that the fourth motion for $46,870 in fees also be granted and that Deja Vu's motion for costs and expenses (to which Metro had failed to respond) be granted in the amount of $58,565.66. Those recommendations were approved by the district court on September 30, 2003. Metro now appeals the combined award of $536,535.22.

Approval of the Fee Award

When a case is brought under of Section 1983, as this one has been, Section 1988 provides that "the court, in its discretion, may allow the prevailing party, other than the United States, a reasonable attorney's fee as part of the costs." Although "may allow" has a permissive ring to it, the Supreme Court has read it as mandatory where the plaintiff prevails and special circumstances are absent (see, e.g., Indep. Fed'n of Flight Attendants v. Zipes, 491 U.S. 754, 761, 109 S.Ct. 2732, 105 L.Ed.2d 639 (1989)). As to the determination of "prevailing party" status, Granzeier v. Middleton, 173 F.3d 568, 577 (6th Cir. 1999)(most citations omitted) has reconfirmed this circuit's standards:

To be a "prevailing party," a party must "succeed on any significant issue in litigation which achieves some of the benefit the parties sought in bringing suit." In Farrar v. Hobby, 506 U.S. 103, 113, 113 S.Ct. 566, 121 L.Ed.2d 494 (1992), the Court explained that "a plaintiff `prevails' when actual relief on the merits of his claim materially alters the legal relationship between the parties ... in a way that directly benefits the plaintiffs." The Supreme Court has rejected a "central issue test" which would require a party to succeed on the main issue of the litigation to be considered "prevailing." Rather, a party who partially prevails is entitled to an award of attorney's fees commensurate to the party's success.

In its current appeal Metro raises essentially three objections to the fee awards. First, it argues that the Supreme Court's decision in City of Littleton v. Z.J. Gifts, 541 U.S. 774, 124 S.Ct. 2219, 159 L.Ed.2d 84 (2004), which was decided after the fees were awarded, has stripped Deja Vu of its status as a "prevailing party." Second, it contends that even if Deja Vu is still properly considered a "prevailing party," Z.J. Gifts introduces "special circumstances" that render an award of fees unjust. Third, it advances the fallback position that even if Deja Vu is properly viewed as a "prevailing party" and even if no "special circumstances" exist, the specific amounts awarded by the district court were excessive and should be modified downward. For the reasons discussed here, we find none of those arguments persuasive.

"Prevailing Party" Status

It is beyond dispute that as of the dates that the attorneys' fees awards were entered, Deja Vu was a prevailing party under the well-established standards for such awards. After all, the net result of the litigation was the entry of a permanent injunction barring enforcement of Chapter 6.54. That certainly qualifies as an enforceable judgment on the merits that "materially alters the legal relationship between the parties by modifying the defendant's behavior in a way that directly benefits the plaintiffs" (Farrar, 506 U.S. at 111-12, 113 S.Ct. 566).

Metro understandably raises no serious objection along those lines. Instead it argues that the intervening decision in Z.J. Gifts has changed the legal landscape so that Deja Vu can no longer be considered a "prevailing party." Specifically, Metro contends that the only justifiable basis for a conclusion that Deja Vu was the prevailing party in the litigation is its success on its first motion for injunctive relief because its success on the second motion was de minimis. And because Metro views Z.J. Gifts as eviscerating the basis for Deja Vu's success on the first injunction, it concludes that Deja Vu is left without a predicate for prevailing party status.

On that score Metro's position misunderstands the effect that new decisions have on appeals such as this one. Harper v. Virginia Department of Taxation, 509 U.S. 86, 97, 113 S.Ct. 2510, 125 L.Ed.2d 74 (1993) requires that new Supreme Court rulings "must be given full retroactive effect in all cases still open on direct review." As Metro would have it, the pendency of this appeal renders the entire controversy between it and Deja Vu "on direct review," so that any new rule announced in Z.J. Gifts would be applicable to our disposition here because of Harper.

But because Harper is limited to cases "still open on direct review," it is important to understand just what is meant by that language. In that respect the Supreme Court has long recognized a distinction between cases "on direct review" and those involving collateral attack on a final judgment (see, e.g., Bradley v. Sch. Bd. of the City of Richmond, 416 U.S. 696, 710-11, 94 S.Ct. 2006, 40 L.Ed.2d 476 (1974)). As to the latter category, judgments become final when "the availability of appeal has been exhausted and lapsed, and the time to petition for certiorari has passed" (id. at 711 n. 14, 94 S.Ct. 2006). Under that standard the December 1999 entry of a permanent injunction against the enforcement of Chapter 6.54 certainly qualified as a final judgment: It was affirmed by this court, and...