New York State Ass'n for Retarded Children, Inc. v. Carey, 484

CourtUnited States Courts of Appeals. United States Court of Appeals (2nd Circuit)
Citation711 F.2d 1136
Docket NumberNo. 484,D,484
PartiesNEW YORK STATE ASSOCIATION FOR RETARDED CHILDREN, INC., et al., Plaintiffs-Appellees, v. Hugh L. CAREY, Individually and as Governor of the State of New York, et al., Defendants-Appellants. ocket 82-7531.
Decision Date15 June 1983

Frederick K. Mehlman, Asst. Atty. Gen., New York City (George D. Zuckerman, Asst. Sol. Gen., Frederic L. Lieberman, Asst. Atty. Gen., New York City, on the brief), for defendants-appellants.

John E. Kirklin, New York City (Archibald R. Murray, Kalman Finkel, The Legal Aid Soc., Christopher A. Hansen, N.Y. Civil

Liberties Union, New York City, on the brief), for plaintiffs-appellees.

Before FRIENDLY and NEWMAN, Circuit Judges, and WYZANSKI, District Judge. *

NEWMAN, Circuit Judge:

The "American Rule" that each party to a lawsuit bears its own attorney's fees has been substantially modified by some 120 Congressional enactments that permit a prevailing party in specified types of litigation to recover attorney's fees from its adversary. In 1976, Congress added a new provision that authorizes fees to prevailing parties in civil rights cases. Civil Rights Attorney's Fees Awards Act of 1976, Pub.L. No. 94-559, 90 Stat. 2641 (codified at 42 U.S.C. § 1988 (Supp. IV 1980)). This provision, which has proved to be the most frequently used of all the fee-shifting enactments, provides that the fee to be recovered shall be a "reasonable" one, without affording further guidance as to how the fee award should be calculated. Inevitably the generality of such a standard has precipitated a variety of disputes concerning the correctness of a fee calculation. Several of those disputes are presented by this appeal, which arises in the context of a fee award claimed by two non-profit organizations, the Legal Aid Society of New York City and the New York Civil Liberties Union, for services rendered by attorneys in their employ.

The appeal arises out of litigation conducted during the last ten years on behalf of a class of mentally retarded persons confined at the Willowbrook Developmental Center. Defendants-appellants are the Governor of the State of New York and various state officials with responsibilities for the care of the mentally retarded, collectively referred to hereinafter as the State. The litigation, brought pursuant to 42 U.S.C. § 1983 (Supp. IV 1980), resulted in the entry of a consent decree and elaborate subsequent proceedings challenging compliance with the decree. On June 15, 1982, the District Court for the Eastern District of New York (John R. Bartels, Judge) awarded plaintiffs attorney's fees and costs of $1,406,751.39. 544 F.Supp. 330 (E.D.N.Y.1982). Although this litigation evolved into a prolonged contest raising complex legal issues, we nevertheless believe that the District Court's fee award was excessive and unreasonable. As we have warned in the past, attorney's fees are to be awarded "with an 'eye to moderation,' seeking to avoid either the reality or the appearance of awarding 'windfall fees.' " Beazer v. New York City Transit Authority, 558 F.2d 97, 101 (2d Cir.1977) (quoting City of Detroit v. Grinnell Corp., 495 F.2d 448, 469-70 (2d Cir.1974) (Grinnell I )), rev'd on other grounds, 440 U.S. 568, 99 S.Ct. 1355, 59 L.Ed.2d 587 (1979). Because we conclude that the fees awarded in this case constitute a substantial windfall for plaintiffs' attorneys, we reverse the District Court's order and remand the matter for further proceedings. We have also concluded that this appeal affords an appropriate occasion for providing trial courts with additional guidance in calculating attorney's fee awards.

I. Factual Background and District Court Decision

Representatives of the Willowbrook class filed this suit in March 1972, alleging constitutional violations in the conditions at the Willowbrook Developmental Center and requesting injunctive relief. After the District Court granted the plaintiffs' motion for a preliminary injunction in April 1973 but before a final ruling on the merits of the case, the parties negotiated a settlement of their dispute. On April 30, 1975, the Court signed a consent decree that included a 29-page appendix of "Steps, Standards, and Procedures" for improving the conditions at the Willowbrook facility and gradually placing all but the most severely handicapped members of the Willowbrook class in smaller community facilities. See New York State Association for Retarded Children, Inc. v. Carey, 393 F.Supp. 715 (E.D.N.Y.1975).

The consent decree did not end the case. As the District Court recognized when it approved the settlement, further judicial orders would be "necessary or appropriate for the construction of, implementation of, or enforcement of compliance" with the consent decree. For these purposes, the Court retained jurisdiction over the case. Since 1975, both sides of this litigation have regularly invoked this jurisdiction to return to the District Court for guidance in interpreting the consent decree, and plaintiffs have sought relief from alleged violations of the settlement agreement. 1

In addition to retaining jurisdiction, the District Court, in its April 30, 1975, order, reserved the question whether the plaintiffs' attorneys should be awarded attorney's fees and costs. At the time of this reservation, the common-law authority of federal courts to award attorney's fees in such cases was in question. Two weeks after the consent decree was signed, however, the Supreme Court resolved the issue by ruling, with exceptions not pertinent to this case, that federal courts could not award attorney's fees absent explicit statutory authorization. See Alyeska Pipeline Service Co. v. The Wilderness Society, 421 U.S. 240, 95 S.Ct. 1612, 44 L.Ed.2d 14 (1975). At the time, there was no statute authorizing the award of fees in section 1983 suits.

The next year, however, Congress passed the Civil Rights Attorney's Fees Awards Act of 1976, 42 U.S.C. § 1988 (Supp. IV 1980), granting courts the discretion to award prevailing parties in section 1983 litigation "a reasonable attorney's fee as part of the costs." Plaintiffs' attorneys then applied to the District Court for attorney's fees under section 1988. On March 22, 1978, the District Court concluded that section 1988 could be applied to prevailing parties whose cases were pending on October 19, 1976, the effective date of section 1988. Finding the litigation pending on that date, the District Court ruled on March 22, 1978, that plaintiffs were entitled to attorney's fees under section 1988.

Two and a half years later the plaintiffs filed a detailed application for reimbursement. In requesting attorney's fees, plaintiffs conformed to the "lodestar" approach, endorsed by this Circuit in the Grinnell opinions. See City of Detroit v. Grinnell Corp., 560 F.2d 1093 (2d Cir.1977) (Grinnell II ); Grinnell I, supra; accord Lindy Bros. Builders, Inc. v. American Radiator & Standard Sanitary Corp., 540 F.2d 102 (3d Cir.1976) (en banc). Under the lodestar approach, attorney's fees are calculated by multiplying the number of billable hours that the prevailing party's attorneys spend on the case by "the hourly rate normally charged for similar work by attorneys of like skill in the area." Grinnell II, supra, 560 F.2d at 1098. After calculating a base fee from these relatively objective considerations, the District Court then has discretion to adjust the fee award in light of more subjective factors, such as the risk of the litigation, the complexity of the issues, and the skill of the attorneys. Id. Pursuing the lodestar approach, plaintiffs' application claimed 16,410 hours of attorneys' and law students' time, 2 at rates ranging up to $140 an hour, for a base fee of $1,312,642, plus a bonus of $1,208,753. The total award sought was $2,542,430, which included a claim for traditional taxable costs of $21,035.

The plaintiffs' application for attorney's fees sparked a new round of litigation, focusing primarily on the question whether the plaintiffs' attorneys had, in fact, spent 16,410 billable hours on the Willowbrook litigation. While the plaintiffs submitted substantial documentation, contemporaneous time records were included for only a small fraction of the total hours claimed. The plaintiffs' attorneys estimated the majority of their time by reconstruction. The District Court explained the reconstruction process as follows:

Five of the attorneys have used a list of contemporaneous documents ("Greenbook") to help them more accurately approximate part of the time claimed. In addition, the eight lawyers and two law students have submitted affidavits summarizing hours expended and have answered interrogatories ....

There is a wide range in the quality of the applications in terms of specificity, but all are wanting to a degree. The attorneys' reconstruction of time is based on present recollection of hours spent years before, in some instances as many as eight years ago. Although five attorneys used a list of documents to refresh their recollection, only one of the attorneys consistently reexamined the documents, and all estimated at least a portion of their time without reference to a supporting document list.

544 F.Supp. at 338.

Unsatisfied with the reconstruction efforts of the plaintiffs' attorneys, the State of New York opposed the plaintiffs' motion for attorney's fees. The State submitted an extensive memorandum and included a detailed appendix responding to each of the hourly estimates claimed by the plaintiffs' attorneys as time spent on the more than 3,000 documents included in the "Greenbook." The State argued that the plaintiffs' reconstructions were duplicative and excessive. By its own calculations, the State reasoned that the plaintiffs' lawyers had expended only 3,353 compensable hours, rather than the 16,410 hours claimed. Moreover, the State argued that the hourly rate of compensation...

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