Schwarz v. Secretary of Health & Human Services

• Decision Date: 22 December 1995
• Docket Number: No. 94-35974,94-35974
• Parties: 95 Cal. Daily Op. Serv. 9764, 95 Daily Journal D.A.R. 17,021 Loretta J. Brokeshoulder SCHWARZ, Plaintiff-Appellant, v. SECRETARY OF HEALTH & HUMAN SERVICES, Defendant-Appellee.
• Court: U.S. Court of Appeals — Ninth Circuit

Page 895

73 F.3d 895

95 Cal. Daily Op. Serv. 9764, 95 Daily Journal

D.A.R. 17,021

Loretta J. Brokeshoulder SCHWARZ, Plaintiff-Appellant, v. SECRETARY OF HEALTH & HUMAN SERVICES, Defendant-Appellee.

No. 94-35974.

United States Court of Appeals Ninth Circuit.

Argued and Submitted Nov. 13, 1995.

Decided Dec. 22, 1995.

Fredric J. Gross, Mount Ephraim, New Jersey, for plaintiff-appellant.

Barry F. Smith, United States Department of Health and Human Services, Washington, DC, and Ronald K. Silver, Assistant United States Attorney, Portland, Oregon, for defendant-appellee.

Appeal from the United States District Court for the District of Oregon.

Before: BROWNING, RYMER, and T.G. NELSON, Circuit Judges.

RYMER, Circuit Judge:

This appeal requires us to consider the scope of a district court's discretion to reduce the lodestar in a civil rights action for the time devoted to dismissed claims that the court found unrelated to a successful claim. We must also decide whether a reasonable attorney's fee under 42 U.S.C. Sec. 2000e-5(k) must be calculated by reference to the rates generally charged by attorneys in the area where the plaintiff's counsel practices or where a suit that is subsequently transferred was originally filed, instead of by reference to the local forum.

Loretta J. Brokeshoulder Schwarz appeals the amount of attorney's fees awarded at the end of a circuitous journey to Fredric J. Gross, her lead counsel. ¹ She originally brought a five-count employment discrimination action against the Secretary of Health and Human Services in the District of Columbia. It was quickly transferred to Phoenix because the allegations had to do with misconduct by personnel officials in the Phoenix office of the Indian Health Service and the relief sought was retroactive appointment to the position of Phoenix Area Financial Manager. A couple of years, extensive discovery and numerous motions later, the action wound up in Portland after all but one part of one claim had been dismissed and a second amended complaint had been filed changing the focus to conduct that occurred in the Portland office of the Indian Health Service and to a request for appointment as the Portland Area Financial Manager. Following summary judgment proceedings in Portland that left a "glass ceiling" claim intact, Schwarz settled her case, advantageously. The district court declined to award attorney's fees and costs for Schwarz's lead counsel on claims that had been dismissed before that action was transferred to Portland and that it found were unrelated to the glass ceiling claim on which she ultimately prevailed, but it did award fees on Schwarz's successful discrimination claim based on its approximation of the hours spent on the successful claim and the going rate in Phoenix and Portland, adjusted upward by 25% because Gross had the laboring oar as lead counsel.

We hold that the fee award was within the district court's discretion under Hensley v. Eckerhart, 461 U.S. 424, 436-37, 103 S.Ct. 1933, 1941, 76 L.Ed.2d 40 (1983), and Thorne v. City of El Segundo, 802 F.2d 1131, 1141 (9th Cir.1986). As we have jurisdiction under 28 U.S.C. Sec. 1291, we affirm.

I

Schwarz filed her original complaint in February 1989 in the District of Columbia, challenging the selection of a non-Indian male, instead of her, for the position of Financial Manager of the Phoenix Area Office of the Indian Health Service. She asserted five claims: (1) sex discrimination in violation of Title VII; (2) violation of the Indian Preference Act (IPA), 25 U.S.C. Sec. 472; (3) violation of the IPA requirement of separate job qualification criteria for Indians; (4) race discrimination in violation of Title VII; and (5) violation of anti-nepotism laws, 5 U.S.C. Sec. 3110(b). Her theory was that agency personnel and management officials, principally the Phoenix area personnel manager, B. Bowman-Ryan, improperly qualified and then selected Bowman-Ryan's husband instead of Schwarz for the position of IHS Phoenix Area Financial Manager. As to each claim, Schwarz sought retroactive appointment to the position of IHS Phoenix Area Financial Manager.

After the Secretary successfully moved for a change of venue to the District of Arizona, Schwarz filed an amended complaint in December 1989 which dropped her nepotism claim but added a claim under the Equal Pay Act (EPA), a provision of the Fair Labor Standards Act (FLSA), 29 U.S.C. Sec. 216(b). Schwarz continued to seek retroactive appointment to the Phoenix Financial Manager position, and now also sought back pay and statutory liquidated damages provided by the FLSA.

The Arizona District Court subsequently granted summary judgment for the Secretary on the third claim (for a violation of the IPA) to the extent that Schwarz sought retroactive appointment to the Phoenix position. Twenty months later, the court dismissed the EPA claim. One year after that, the court granted summary judgment for the Secretary on the second and third claims (violations of the IPA), the fourth claim (race discrimination), and the first claim (sex discrimination) to the extent Schwarz alleged that the Phoenix office discriminated against her based on her sex. That left Schwarz with one issue raised by her sex discrimination claim--that a pattern and practice of sex discrimination in the Portland office created a glass ceiling that resulted in the denial of promotions and disqualified her from area manager positions.

In May 1992, Schwarz filed a second amended complaint with a glass ceiling and a reprisal claim. In this pleading she sought retroactive appointment to the position of IHS Portland AFM, as well as compensatory damages. Schwarz successfully moved for transfer to Portland; there, after she filed a third amended complaint and the Secretary again sought summary judgment, which the district court denied, the case settled.

Schwarz then applied for costs and attorney's fees of almost $300,000 for four sets of counsel. This appeal relates only to Fredric J. Gross, her lead counsel, for whom Schwarz requested compensation for 529.50 hours of his time at the rate of $325/hour ($172,087.50); for 67.00 hours of his paralegal's time at $70/hour ($4,690.00), for a total fee request of $176,777.50; and for approximately 50 hours of Gross's expert witness's time at $150.00/hour, together with some of the expert's expenses, for a total expert witness request of $7,908.30. Schwarz also requested reimbursement of $7,531.96 for other expenses, such as travel and FAX. Finally, Schwarz requested payment of fees-on-fees for the 63.25 hours spent by Gross preparing the fee application (totalling $21,005.40 at $325/hour, plus $449.15 for expenses).

Following a hearing, the district court broke the case into two phases: the unproductive Washington, D.C./Phoenix phase, and the successful Portland phase. The court concluded that only the glass ceiling portion of one of the four distinct claims for relief raised before transfer survived the dismissals in Phoenix, and that the several unsuccessful claims and the lone successful claim were based on different factual and legal theories. The court found that 100% of the Portland phase hours were productive and assumed that all the hours spent on the sex discrimination claim (including the part that was dismissed) contributed to Schwarz's success on the glass ceiling portion of that claim in Portland. It therefore concluded that 25% of the pre-Portland hours were productive and contributed to Schwarz's favorable settlement.

The district court looked to the prevailing market rates in Portland and Phoenix to determine the hourly rate. Finding that to be $150/hour, it increased the basic rate to $200/hour for Gross due to his role as lead counsel. Accordingly, the court awarded $11,842.50 for the Phoenix phase (.25 X 236.85 hours X $200) and $49,690.00 for the Portland phase (1.00 X 248.45 hours X $200) for a total of $61,532.50. The district court then reduced by 50% the expert witness and legal assistant fees which Schwarz sought for Gross, as well as the amount she sought for his role in litigating the merits fees (so-called "fees-on-fees"). Schwarz filed this timely appeal of the fee award.

II

We review a district court's award of attorney's fees and costs for an abuse of discretion. Hensley, 461 U.S. at 437, 103 S.Ct. at 1941. But "any elements of legal analysis and statutory interpretation which figure in the district court's decision are reviewable de novo." Hall v. Bolger, 768 F.2d 1148, 1150 (9th Cir.1985). A district court's fee award does not constitute an abuse of discretion unless it "is based on an inaccurate view of the law or a clearly erroneous finding of fact." Corder v. Gates, 947 F.2d 374, 377 (9th Cir.1991).

III

A

In cases such as this, brought under 42 U.S.C. Sec. 2000e-16(a), "the court, in its discretion, may allow the prevailing party, other than the Commission or the United States, a reasonable attorney's fee (including expert fees) as part of the costs...." 42 U.S.C. Sec. 2000e-5(k). The parties agree that Schwarz is the "prevailing party"; indeed, the terms of the settlement itself are conclusive proof of that. The only issue before us is whether the district court abused its considerable discretion in determining what attorney's fee is "reasonable" under the circumstances of this case.

Our examination of the reasonableness of any fee award must begin with the Supreme Court's decision in Hensley, 461 U.S. 424, 103 S.Ct. 1933, 76 L.Ed.2d 40 (1983). ² Under Hensley, "[t]he most useful starting point for determining the amount of a reasonable fee is the number of hours reasonably expended on the litigation multiplied by a reasonable hourly rate." Id. at 433, 103 S.Ct. at 1939. But the district court has discretion to make a downward adjustment to the components or the product of this initial equation--typically known as the "lodestar"--for the "results obtained" in the litigation, which is a ...