Underwood v. Pierce

• Decision Date: 25 March 1982
• Docket Number: No. 79-1318-HP.,79-1318-HP.
• Citation: 547 F. Supp. 256
• Court: U.S. District Court — Central District of California
• Parties: Myrna UNDERWOOD, et al., Plaintiffs, v. Samuel R. PIERCE, et al., Defendants.

547 F. Supp. 256

Myrna UNDERWOOD, et al., Plaintiffs, v. Samuel R. PIERCE, et al., Defendants.

No. 79-1318-HP.

United States District Court, C. D. California.

March 25, 1982.

Patricia Tenoso Sturdevant, Mary S. Burdick, Western Center of Law and Poverty, Inc., Los Angeles, Cal., for plaintiffs.

J. Paul McGrath, Asst. Atty. Gen., Washington, D. C., Andrea Sheridan Ordin, U. S. Atty., Los Angeles, Cal., Stephen D. Peterson, Asst. U. S. Atty., Sheila Lieber, June Rose Carbone, Raphael O. Gomez, Civil Division, Dept. of Justice, Washington, D. C., for defendants; Stephen M. Goldstein, Dept. of Housing and Urban Development, Washington, D. C., of counsel.

MEMORANDUM AND ORDER GRANTING WESTERN CENTER ON LAW AND POVERTY'S MOTION FOR DETERMINATION OF ENTITLEMENT TO AN AWARD OF ATTORNEYS' FEES

PREGERSON, Circuit Judge, Sitting by Designation.

This court has been asked to determine whether Western Center on Law and Poverty, Inc. (Western Center) is entitled to attorneys' fees in this litigation for work performed in representing a class of low-income tenants who resided in certain federally subsidized housing projects.

Western Center, a public-interest law firm that acts as an advocate on behalf of low-income persons, contends that it is entitled to an award of fees under both the common fund/common benefit doctrine and the Equal Access to Justice Act of 1980, 28 U.S.C. § 2412. Counsel for defendant, Samuel R. Pierce, Secretary of Housing and Urban Development (HUD), denies the applicability of either ground for entitlement to fees.

The court concludes that the common fund/common benefit doctrine is inapplicable, that the Equal Access to Justice Act applies, and that Western Center is entitled to an award of fees under that act.

BACKGROUND

In 1974 Congress passed section 236 of the Housing and Community Development Act. 12 U.S.C. § 1715z-1(f)(3) and (g). That legislation created a reserve fund to subsidize low-income tenants of certain federally assisted housing projects so that they would not bear the full burden of rising tax and utility costs. HUD, charged with implementing the tax and utility subsidy program, refused to do so. As a result, numerous lawsuits, including the instant Underwood litigation, were filed in district courts throughout the country.¹ Eventually, after extended litigation, HUD and the plaintiff classes in eleven of the lawsuits entered into a settlement agreement, which the District Court of Connecticut approved on February 23, 1979.²

Under the settlement, HUD turned over a $60 million fund (representing the amount of money HUD should have paid to tenants under the subsidy program) to an escrow agent who, pursuant to the provisions of the agreement, invested the fund for the benefit of the class members. Eventually, checks were mailed for past due tax and utility subsidy payments to over 150,000 eligible low-income tenants who were located after a nationwide search that involved, among other things, distributing claim forms to 4,613 federally subsidized housing projects.³

Western Center was not only involved in the lengthy and complex litigation that led to the $60 million settlement, but also played an important and extensive role in the administration and distribution of the fund.

I. Common Fund/Common Benefit Doctrine

Western Center asserts that it is entitled to attorneys' fees under the equitable common fund/common benefit doctrine. The Ninth Circuit, in Southeast Legal Defense Group v. Adams, 657 F.2d 1118 (9th Cir. 1981), outlined the prerequisites for an award of attorneys' fees under this rule:

To qualify for an award under the equitable common fund or common benefit doctrine, the successful litigant must either impart a substantial nonmonetary benefit or create or preserve a common fund for an identifiable class of beneficiaries. Mills v. Electric Auto-Lite Co., 396 U.S. 375, 90 S.Ct. 616, 24 L.Ed.2d 593 (1970); Hall v. Cole, 412 U.S. 1, 93 S.Ct. 1943, 36 L.Ed.2d 702 (1973). The litigant is then entitled to recover attorneys fees from the benefitted class. Without such benefit accruing to or being preserved for an identifiable class, the litigant alone must bear the cost for the enrichment which may flow to others. In Alyeska Pipeline Service Co. v. Wilderness Society, 421 U.S. 240, 95 S.Ct. 1612, 44 L.Ed.2d 141 (1975), the Supreme Court acknowledged the viability of this doctrine, but limited its application to only where the class of beneficiaries is sufficiently identifiable, the benefits can be accurately traced, and the fee can be "shifted with some exactitude to those benefitting." Id. at 265 n.39, 95 S.Ct. at 1625 n.39. See also, Stevens v. Municipal Court, 603 F.2d 111 (9th Cir. 1979).

657 F.2d at 1122-33.

Western Center contends that its role in successfully representing the plaintiff class in the instant litigation satisfies these criteria and that the $60 million fund, plus earned interest, constitutes a "common fund" from which attorneys' fees may be paid. The settlement agreement, however, governs the distribution of the fund. That agreement explicitly provides that "none of the funds distributed may be used to pay attorneys' fees." The term "funds distributed" is defined in paragraphs 2 and 3(f) of the agreement to include both principal and interest earned by the fund. There is, therefore, no reachable "common fund" from which an award of attorneys' fees may be made and the common fund/common benefit doctrine is inapplicable.

II. The Equal Access to Justice Act

The Equal Access to Justice Act furnishes an alternative ground for granting attorneys' fees. The act provides that

a court shall award to a prevailing party ... fees and other expenses ... incurred by that party in any civil action ... brought by or against the United States ... unless the court finds that the position of the United States was substantially justified or that special circumstances make an award unjust.

28 U.S.C. § 2412(d)(1)(A). See generally Dods and Kennedy, The Equal Access to Justice Act, 50 UMKC L.Rev. 48 (1981). Congress passed this provision to improve citizen access to courts and administrative proceedings by lessening the deterrent effect of litigation expenses incurred by persons who challenge governmental action. H.R.Conf.Rep.No. 96-1434, 96th Cong., 2d Sess. 21 (1980), reprinted in 1980 U.S.Code Cong. & Ad.News 5003, 5010.

Through a favorable settlement, Western Center's clients prevailed in a suit against the United States, thereby satisfying one of the prerequisites for an award under the Equal Access to Justice Act.⁴ HUD's counsel, however, challenges Western Center's request for attorneys' fees on four grounds.

First, HUD notes that the Equal Access to Justice Act explicitly applies to actions "pending on, or commenced on or after" October 1, 1981, Pub.L. 96-481, § 208, 94 Stat. 2330 (1980), 28 U.S.C. § 2412, and asserts that this case was not "pending" on the act's effective date.

No appellate courts have interpreted the word "pending" as employed in the Equal Access to Justice Act.⁵ The legislation is, however, analogous to the Civil Rights Attorney's Fees Awards Act of 1976, Pub.L.No.94-559, 90 Stat. 2641, amending 42 U.S.C. § 1988. Under that statute, litigation is considered pending even if the only unresolved issue is whether to award attorneys' fees.

In discussing the Civil Rights Attorney's Fees Award Act in Rainey v. Jackson State College, 551 F.2d 672 (5th Cir. 1977), the Fifth Circuit said:

the Supreme Court's decision in Bradley v. School Board of City of Richmond, 416 U.S. 696, 94 S.Ct. 2006, 40 L.Ed.2d 476 (1973), strongly suggests that a case is still pending even if the only remaining issue is that of attorneys' fees. In Bradley, the Court authorized an award of attorneys' fees to plaintiffs in a school desegregation case under § 718 of the Education Acts Amendments of 1972, 20 U.S.C. § 1617, even though (a) there were no pending or appealable orders in the case except for attorneys' fees and (b) § 718 had not been enacted until after initial submission of the case to the Court of Appeals. Although the Court in Bradley obviously did not consider the statute in the present case, the teachings of that case have direct applicability to the case at bar for two reasons. First, Bradley was not grounded on a specific consideration of § 718 but on the general principle that

a court is to apply the law in effect at the time it renders its decision, unless doing so would result in manifest injustice or there is statutory direction or legislative history to the contrary.

416 U.S. at 711, 94 S.Ct. at 2016, 40 L.Ed.2d at 488. Second, several times in the legislative history of the Civil Rights Attorney's Fees Awards Act of 1976 Bradley was cited as a prototypical case for awarding attorneys' fees in pending cases. Neither the statute itself nor its legislative history gives any indication of a congressional intent not to have the Act apply to cases in which attorneys' fees is the only pending issue.

551 F.2d at 676 (emphasis added) (footnote omitted). See also Hartmann v. Gaffney, 446 F.Supp. 809 (D.Minn.1977).

In Sethy v. Alameda City Water District, 602 F.2d 894 (9th Cir. 1979), cert. denied, 444 U.S. 1046, 100 S.Ct. 734, 62 L.Ed.2d 731 (1980), the Ninth Circuit adopted a similar position. There, the court reversed a district court's ruling that attorneys' fees could not be awarded because the case was not "pending" when the Civil Rights Attorney's Fees Awards Act was passed. When the act was passed, the only matter pending was the issuance of the circuit court's mandate, pursuant to Fed.R. App.P. 41(a), after an affirmance on appeal. Even though the Ninth Circuit had resolved all issues in an opinion filed before the act's effective date, the court held that the technical lack of finality due to the non-issuance of its mandate sufficed to keep the case "pending." Id. at 897. In the instant case more is pending than a technical stamp of...