N. A. A. C. P. v. Wilmington Medical Center, Inc.

Decision Date08 November 1982
Docket NumberNo. 82-1072,82-1072
Citation689 F.2d 1161
Parties30 Empl. Prac. Dec. P 33,054 NATIONAL ASSOCIATION FOR the ADVANCEMENT OF COLORED PEOPLE, Puerto Rican Civil Rights League, Inc., Older Americans Coalition, Wilmington United Neighborhoods, Brandywine Trinity Methodist Church, on behalf of their members and others similarly situated, and Raymond W. Brown, Maria Galindez, for herself and as parent and guardian for her minor children, Reynaldo Galindez and Pedro Galindez, Milagro Quinones, Denise Smokes, on behalf of themselves and others similarly situated; and City of Wilmington, a municipal corporation, Appellants, v. The WILMINGTON MEDICAL CENTER, INC., and Crawford H. Greenwalt, as Chairman of the Board of Trustees, and Joseph A. Dallas, as Chairman of the Board of Directors.
CourtU.S. Court of Appeals — Third Circuit

Alan W. Houseman, Marilyn G. Rose, Washington, D.C., Douglas Shachtman, Wilmington, Del., for appellants.

William J. Wade, Richards, Layton & Finger, Wilmington, Del., for appellee.

Before GIBBONS and HUNTER, Circuit Judges and POLLAK, * District Judge.

OPINION OF THE COURT

GIBBONS, Circuit Judge.

This appeal arises out of the district court's denial of an application for attorney's fees made pursuant to the Civil Rights Attorneys Fee Awards Act, 42 U.S.C. § 1988, by the NAACP (plaintiffs), after trial on a claim of discrimination by the Wilmington Medical Center, Inc. (WMC). The district court denied the plaintiffs' application because it found that the plaintiffs were not the prevailing party in the litigation. We reverse and remand to the district court for computation of the amount of a fee award.

I.

The plaintiffs' class action complaint was filed on September 10, 1976 and alleged that WMC violated Title VI of the 1964 Civil Rights Act, 42 U.S.C. § 2000d, 1 and section 504 of the Rehabilitation Act of 1973, 29 U.S.C. § 794, 2 by

selecting a site for the relocation and removal of certain inpatient and outpatient services which has the effect of excluding persons from participation in, denying them the benefits of, and subjecting them to discrimination and segregation on the basis of race, national origin, or physical handicap.

Complaint P 29, App. 27. The Secretary of the United States Department of Health, Education and Welfare (HEW), the Director of the Bureau of Comprehensive Health Planning (BCHP) and the Chairman of the Health Planning Council, Inc. were also named as defendants for having approved the relocation plans under section 1122 of the Social Security Act, 42 U.S.C. § 1320a-1, without regard to compliance with Title VI and section 504.

Plan Omega, as WMC's hospital relocation plan was called, involved closing two of WMC's Wilmington hospitals, building a new hospital south of Wilmington (the Southwest Division), and renovating a downtown hospital (the Delaware Division). The plaintiff class, consisting of blacks, Puerto Ricans and handicapped persons, alleged that Plan Omega would result in inadequate access to health care for minorities, diminished quality of health care at the Delaware Division and racial identifiability of the Delaware Division. The plaintiff classes sought declaratory and injunctive relief against Plan Omega.

Late in 1976, cross motions for summary judgment were filed by HEW, the state planning agencies and the plaintiffs. HEW also filed a motion to dismiss. WMC was not involved in these motions since it had previously moved for a separate trial on the substantive issue of discrimination.

The government agencies argued that plaintiffs had failed to exhaust their administrative remedies with regard to the civil rights claims. Plaintiffs contended that pursuit of administrative remedies would be futile, since HEW lacked experience and resources with which to conduct hospital relocation investigations, and because HEW had taken the position that procedures under section 1122 of the Social Security Act did not contemplate an investigation. See NAACP v. Wilmington Medical Center, Inc. (WMC), 599 F.2d 1247, 1249 n. 6 (3d Cir. 1979).

Over plaintiffs' objections, the district court on January 19, 1977 temporarily stayed the action and ordered HEW to conduct a civil rights investigation. NAACP v. WMC, 426 F.Supp. 919, 925 (D. Del. 1977). The district court wrote:

In view of the grave doubt created by plaintiffs over (HEW's) capability to perform the appropriate review, (HEW) will be requested to submit ... a detailed plan for processing plaintiffs' complaint.... If it later appears that (HEW) is unable or unwilling to conduct (its) review in a timely fashion ... the Court may find that exhaustion of administrative remedies would be futile....

Id.

The HEW investigation began on January 19, 1977. On July 5, 1977 HEW's Office for Civil Rights issued a letter which concluded that the proposed relocation plan constituted a prima facie violation of Title VI and section 504 because it would have a disparate impact based on race and handicap and was not "justified by substantial considerations unrelated to race, national origin or handicap."

On November 1, 1977, after extensive negotiations between HEW and WMC, they entered into a Contract of Assurances (Supplemental Agreement), in which WMC promised to provide transportation between the Delaware and Southwest Divisions, institute a system to allocate patients to preclude racial identification of the Delaware Division and alter construction plans to comply with requirements of section 504. 3

Plaintiffs filed a second amended complaint challenging the Supplemental Agreement, and claiming that WMC violated Title VI and section 504 by entering into it. The district court on April 7, 1978 held that HEW's decision that the modified Plan Omega complied with Title VI and section 504 was not arbitrary or capricious and therefore did not violate the Administrative Procedure Act, and that plaintiffs had no private cause of action to challenge the agreement. NAACP v. WMC, 453 F.Supp. 280 (D. Del. 1978). In a separate opinion, the district court also rejected plaintiffs' contention that they had a due process right to a hearing before the agency. NAACP v. WMC, 453 F.Supp. 330 (D. Del. 1978). 4 On appeal, this court reversed the district court's private cause of action holding and remanded the case for proceedings on the merits of the discrimination claim. NAACP v. WMC, 599 F.2d 1247 (3d Cir. 1979). 5 On remand the district court dismissed HEW and the state planning agencies as defendants. Plaintiffs filed a third amended complaint on September 4, 1979, which added the City of Wilmington as a party plaintiff and alleged causes of action under the Age Discrimination Act of 1975, 42 U.S.C. § 6102 and for intentional discrimination under Title VI and section 504.

A month-long trial without a jury was held. On May 13, 1980, the district court issued its opinion finding that plaintiffs failed to prove discrimination on any of their claims. NAACP v. WMC, 491 F.Supp. 290 (D. Del. 1980). This court, sitting en banc, affirmed. NAACP v. WMC, 657 F.2d 1322 (3d Cir. 1981).

After trial, the plaintiffs moved under the Civil Rights Attorney's Fee Awards Act, 42 U.S.C. § 1988 (1976), and the attorneys fee provision of the Rehabilitation Act, 29 U.S.C. § 794a(b) for an award of attorney's fees in the amount of $313,390.73. 6 In an opinion and order dated December 21, 1981, the district court denied the application on the ground that plaintiffs were not "prevailing parties" with respect to WMC and rejected plaintiffs' argument that they were entitled to fees for work done in connection with the private right of action issue, because their success on that procedural issue had done "nothing to advance the plaintiffs' claims for relief...." App. at 283. The district court also rejected plaintiffs' contention that, since they filed the lawsuit, they were the "catalyst" which prompted the court to order the HEW investigation which resulted in the Supplemental Agreement. The court found that the catalysts which had resulted in the HEW investigation were the motions to dismiss or alternatively for summary judgment filed by HEW and BCHP. Since WMC neither participated in nor supported these motions, the district court concluded:

It would be most illogical to saddle WMC with attorney's fees for the extensive work of plaintiffs in resisting the motion of HEW and BCHP and the Court's direction to HEW to conduct an administrative review when WMC did not participate in the briefing of these issues at all. Thus, it cannot be said that plaintiffs prevailed over WMC on this phase of the litigation.

App. at 286-87.

The district court also denied fees for work done by plaintiffs in connection with the Supplemental Agreement because the plaintiffs were not parties to the HEW investigation or negotiations over the Supplemental Agreement, and because "any benefit conferred by the Supplemental Agreement were (sic) not casually (sic) related to plaintiffs' efforts, but were (sic) instead the result of HEW and WMC's independent efforts." App. at 288.

On January 18, 1982 the NAACP filed its notice of appeal from the district court order denying the fee application.

II. Fees for Establishing a Private Cause of Action Under Title VI

There is no question that a prevailing party can be awarded fees before the conclusion of protracted litigation. Awards of fees pendente lite are specifically approved in the legislative history accompanying the Fee Act. The Senate Report states that fee awards are "especially appropriate where a party has prevailed on an important matter in the course of litigation, even when he ultimately does not prevail on all issues." Sen. Rep. No. 1011, 94th Cong., 2d Sess. 5, reprinted in 1976 U.S. Code Cong. & Ad. News 5908, 5912 (Senate Report). The House Report likewise states that fees should be...

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