Prandini v. National Tea Co.
| Decision Date | 07 June 1978 |
| Docket Number | No. 77-2261,77-2261 |
| Citation | 585 F.2d 47 |
| Parties | 18 Fair Empl.Prac.Cas. 700, 18 Empl. Prac. Dec. P 8764 Jean H. PRANDINI, Individually, and on behalf of all other persons similarly situated v. NATIONAL TEA COMPANY and the Amalgamated Food Employees Union Local 590. Appeal of Jean H. PRANDINI, Individually, and on behalf of all other persons similarly situated, the representative Plaintiffs, and class Plaintiffs, above named, and their counsel, Michael P. Malakoff, Louise R. Malakoff, and Berger, Kapetan & Malakoff. . Submitted Under Third Circuit Rule 12(6) on Appellant's Brief Only |
| Court | U.S. Court of Appeals — Third Circuit |
Michael P. Malakoff, Louise Reiber Malakoff, Berger, Kapetan & Malakoff, Pittsburgh, Pa., for appellant.
Joseph M. Maurizi, Balzarini, Walsh & Maurizi, Jerome B. Lieber, Berkman, Ruslander, Pohl, Lieber & Engel, Jack J. Rosenberg, Raphael, Sheinberg & Barmen, P. A., Martin Lubow, Pittsburgh, Pa., for appellee.
Before ADAMS, WEIS and GARTH, Circuit Judges.
This case, involving an award of attorneys' fees in a Title VII class action settlement, is before us for a second time. Although we conclude that the district court did not err in many aspects of its fee award order, a recent decision of this court, filed after the district court's order, and the district court's misconception of Lindy II with respect to compensation for time spent litigating the issue of attorneys' fees, require us reluctantly to vacate the district court's order and remand for redetermination of the proper fee award.
The defendant National Tea Co. (National) had settled the plaintiff's claims by agreeing to pay the plaintiff class approximately $100,000, plus expenses (calculated at $18,000). The settlement also provided that National would pay reasonable attorneys' fees as awarded by the district court, up to $50,000. Thus two "funds" were created, a "damages fund" payable in full to the plaintiffs, and an "attorneys' fees fund" payable as approved by the court to the attorneys. To the extent the "attorneys' fees fund" exceeded the amount awarded as reasonable by the district court, that excess would revert to the defendants.
After a hearing on attorneys' fees, the district court awarded a total of $35,000 in fees. On appeal, this court vacated the district court judgment and remanded for further proceedings, holding that the district court had not made the findings required by Lindy Brothers Builders, Inc. of Philadelphia v. American Radiator & Standard Sanitary Corp., 487 F.2d 161 (3d Cir. 1973) (Lindy I ) and Lindy Brothers Builders Inc. of Philadelphia v. American Radiator & Standard Sanitary Corp., 540 F.2d 102 (3d Cir. 1976) (Lindy II ). Prandini v. National Tea Co., 557 F.2d 1015 (3d Cir. 1977) (Prandini I ). 1 On remand, the district court made findings required by Lindy I and Lindy II. In fixing the lodestar, the district court judge reduced attorneys Lubow's and Michael Malakoff's hourly rate from the $60 claimed to $40. The court reasoned that because Malakoff and Lubow had initially agreed to pay one-third of their fee to attorney Roberts (See note 1 Supra ), with no understanding that she was to do any work, they in effect had agreed to provide legal services at no more than a net return of $40 per hour.
The district court also reduced the "number of hours" (a component of the lodestar) by 10% For all attorneys except Roberts. In Lubow's case, this reduction was based on the duplication of work involved when he turned the case over to new counsel. In Michael Malakoff's case, the 10% Reduction was based on a purported overlapping of work with prior counsel, and evidence of overlapping work in the parallel and nearly identical case of Vallo v. The Great Atlantic and Pacific Tea Co., Civil No. 72-871 (W.D.Pa.), which was before the same district judge. In Louise Malakoff's case, the reduction was due to "considerable duplication in the work descriptions of Michael P. and Louise R. Malakoff. . . ." Dist.Ct.Op. of Aug. 18, 1977 at 3, App. at 268a.
The district court in accordance with Lindy I then allowed a contingency factor increase of 25%, and a quality factor increase of 25%, for both Malakoffs. The court allowed only 12 of the 22.75 hours claimed by Roberts, finding that only 12 hours of her time contributed to the advancement of the case.
Finally, the district court refused to award any attorneys' fees for the time spent in successfully appealing the first fee award (I. e., in Prandini I ), and in preparing the fee petitions.
The final district court award was as follows:
Berger, Kapetan & Malakoff $26,797.50
Rosenberg & Lubow $11,920.00
Sylvia Roberts $1,200.00
The remainder of the $50,000, I.e. $10,082.50, as well as all accumulated interest (over $3,000), was to be returned to the defendant National. The firm of Berger, Kapetan & Malakoff has appealed. As in Prandini I, Lubow and Roberts have not appealed.
With respect to the $20 hourly rate reduction, the appellant attorneys contend that it was in reality a penalty for what the district court viewed as an unethical fee-splitting arrangement. They argue that a fee award may not be reduced because the trial judge finds that some of their conduct was unethical, that in any case their conduct was not unethical, and that the Disciplinary Rule 2 which allegedly proscribes such conduct is inconsistent with the policy of Fed.R.Civ.P. 23 and is an unconstitutional abridgement of the fee petitioners' first amendment associational rights and the litigants' right to petition for redress of grievances.
We need not pass upon these arguments, however. 3 Instead, we regard the district court's determination in this respect as no more than a Finding that the actual value that Lubow and Malakoff had assigned to their services (subject to eventual victory in the litigation) was $40 per hour, since they had agreed to pay one-third of their fee (I. e., one-third of $60 per hour, or $20 per hour) to Roberts without requiring that Roberts perform any services. Based on the evidence in the record, we cannot say that such a factual finding as to "hourly rate" is clearly erroneous. It will therefore be upheld. See Lindy II, supra, 540 F.2d at 109.
Appellants next challenge the district court's 10% Reduction based on alleged duplication of services between this case and Vallo. The court based this determination on the similarity of briefs and papers filed in the two cases. 4
As noted in Prandini I, we agree with the district court that "double payment for the same effort should be avoided by some apportionment of the fee between the two cases." 557 F.2d at 1091 n.3. Accordingly, if the evidence in the record supported a finding that time charged in Prandini had previously been charged in Vallo for the exact same work, the district court would not have abused its discretion if it had rejected the duplicated hours in Prandini. By the same token, if evidence in the record supported a finding that certain hours benefited both cases equally (as, for example, might well be the case where common legal research is incorporated into briefs in both cases), the district court would not have abused its discretion if it had prorated the hours between the two cases. 5 Neither of these two situations is presented by the record in this case.
Here, although the same district court judge passed upon the fee applications in Vallo and Prandini, there is no evidence in the record before this court that the hours attributed by Malakoff to his work in Prandini were the same hours for which charges were made in Vallo. (To the contrary, the evidence in this record indicates that Malakoff had not duplicated charges, but rather had charged Either Prandini or Vallo for his time.) Similarly, there is no evidence, nor are there any findings, as to which hours benefited both cases equally. Absent evidence to support the district court's finding of duplication or overlap, we cannot sustain the 10% Fee reduction imposed by the district court.
We also recognize that the district court's Method of proration Viz a reduction of 10% "across the board" is in general inconsistent with the requirement of Lindy I and Lindy II that fee awards must be based upon record evidence, and in particular does not comport with our recent case of Hughes v. Repko, 483 F.2d 578 (3d Cir. 1978).
In Hughes, which involved an award of attorneys' fees under the Civil Rights Attorney's Fees Awards Act, 42 U.S.C. § 1988, the district court had reduced the lodestar (number of hours X hourly rate) by 66 2/3% Because the plaintiffs had not prevailed on two-thirds of their claims. This court, in Chief Judge Seitz's majority opinion, rejected the district court's approach and held that "an unanalyzed allocation of hours will not be permissible in arriving at the lodestar." Hughes v. Repko, supra, at 487. Instead, we required that the district court make findings as to the number of hours reasonably necessary to litigate the claims on which plaintiffs prevailed.
The clear thrust of Hughes is that district courts, in awarding attorneys' fees, may not reduce an award by a particular percentage or amount (albeit for justifiable reasons) in an arbitrary or indiscriminate fashion. If the court believes that a fee reduction in the lodestar is indicated, it must analyze the circumstance requiring the reduction and its relation to the fee, and it must make specific findings to support its action. See also In the Matter of Meade Land and Development Co., Inc., 577 F.2d 858 (3d Cir. 1978).
Thus, in the case Sub judice, if the district court judge is of the opinion that the "number of hours" to be compensated must be reduced because some of those hours were charged to or directly benefited a parallel case, the overlapping hours must be identified in the record, and the district court must make findings as to the number of...
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