Underwood v. Pierce

• Decision Date: 23 May 1985
• Docket Number: No. 83-5773,83-5773
• Citation: 761 F.2d 1342
• Parties: Myrna UNDERWOOD, Sheila Fazande, Annie Johnson, Jerome Smith, Cora Ewers, Frances Jardin, Lura R. Stentz, Charlotte West, Aritisha McGee, individually and on behalf of all others similarly situated, Plaintiffs-Appellees, v. Samuel R. PIERCE, Jr., Secretary of Housing and Urban Development, Defendant-Appellant.
• Court: U.S. Court of Appeals — Ninth Circuit

Page 1342

761 F.2d 1342

53 USLW 2601

Myrna UNDERWOOD, Sheila Fazande, Annie Johnson, Jerome Smith, Cora Ewers, Frances Jardin, Lura R. Stentz, Charlotte West, Aritisha McGee, individually and on behalf of all others similarly situated, Plaintiffs-Appellees, v. Samuel R. PIERCE, Jr., Secretary of Housing and Urban Development, Defendant-Appellant.

No. 83-5773.

United States Court of Appeals Ninth Circuit.

Argued and Submitted Nov. 8, 1983.

Decided May 23, 1985.

Mary S. Burdick, Western Center of Law and Poverty, Inc., Los Angeles, Cal., for plaintiffs-appellees.

James R. Madison, Orrick, Herrington & Sutcliffe, San Francisco, Cal., amicus curiae.

Sheila Lieber, Robert Greenspan, Merril Hirsh, Attys., U.S. Dept. of Justice, Washington, D.C., for defendant-appellant.

Appeal from the United States District Court For the Central District of California.

Before HUG and FLETCHER, Circuit Judges, and CARROLL, ^* District Judge.

PER CURIAM:

This case requires us to consider the calculation of awards of attorneys' fees under the Equal Access to Justice Act. The Secretary of Housing and Urban Development was ordered to pay $1,129,450 to the attorneys representing low income tenants in a class action against the Secretary. The fee award calculation included time for services performed in litigating the case and time spent by the attorneys in administering a settlement agreement.

We hold that the plaintiff class is entitled to a fee award for its attorneys' litigation and settlement administration services. We also hold that ordering payment of fees at a rate in excess of $75 per hour was not an abuse of discretion on these facts. Finally, we hold that Congress did not intend to authorize the use of a multiplier to compound

awards granted under the Equal Access to Justice Act.

I FACTS

This action was brought by tenants of government-subsidized housing to challenge the refusal of the Secretary of Housing and Urban Development to implement a subsidy program authorized by the National Housing Act, 12 U.S.C. Sec. 1715z-1 (1982). The Act authorized the Secretary to make payments to owners of government-subsidized apartment houses to cover increased costs for utilities and local taxes. The purpose of the payments was to prevent the shifting of those costs to low income tenants through rent increases. As provided by 12 U.S.C. Sec. 1715z-1(g), the Secretary had accumulated a rental reserve fund to finance the operating subsidies. However, he had refused to distribute that fund.

Underwood brought this action in the District of Columbia as a class action on behalf of all persons nationwide who reside or had resided in apartments subsidized under 12 U.S.C. Sec. 1715z-1. That district court granted a summary judgment for the class and entered a permanent injunction and writ of mandamus requiring the Secretary to disburse the operating subsidy fund. See Underwood v. Hills, 414 F.Supp. 526, 532 (D.D.C.1976), aff'd, Hills v. Underwood, 429 U.S. 892, 97 S.Ct. 250, 50 L.Ed.2d 175 (1976).

The Supreme Court granted a stay of mandate. It also granted certiorari in two cases raising identical claims, Ross v. Community Services, Inc., 544 F.2d 514 (4th Cir.1976), cert. granted sub nom., Harris v. Ross, 431 U.S. 928, 97 S.Ct. 2630, 53 L.Ed.2d 243 (1977), remanded for consideration of settlement, 439 U.S. 1001, 99 S.Ct. 607, 58 L.Ed.2d 675 (1978), and Abrams v. Hill, 547 F.2d 1062 (9th Cir.1976), cert. granted sub nom., Harris v. Abrams, 431 U.S. 928, 97 S.Ct. 2630, 53 L.Ed.2d 243 (1977), remanded for consideration of settlement, 439 U.S. 1001, 99 S.Ct. 607, 58 L.Ed.2d 675 (1978). Prior to hearing before the Court, the parties in Ross, Abrams, and the instant case entered into a settlement agreement. It was agreed that the Secretary would deposit $60 million with an escrow agent to create a settlement fund. The fund was to be distributed to owners of housing subsidized under the Act or directly to tenants in those projects where rents had been increased because no operating subsidy had been received. Price Waterhouse & Co. in Los Angeles contracted to distribute the fund, and Underwood's counsel was designated lead counsel for the settlement administration. Because these appointments focused the settlement activities in Los Angeles, the District of Columbia court transferred the case to the Central District of California.

After execution of the settlement agreement had begun under the district court's supervision, Congress enacted the Equal Access to Justice Act ("EAJA"), 28 U.S.C. Sec. 2412 (1982). Underwood sought an award under EAJA to compensate her attorneys for time spent in litigating the initial action and in supervising the distribution of the settlement fund. The district court concluded that Underwood was entitled to fees under EAJA as the prevailing party in an action brought against the United States. The court determined that Underwood's attorneys had provided 3,304 hours of service and applied an hourly rate ranging from $80 to $120, based on the prevailing market rates in the year the service was performed and the individual attorney's expertise. This resulted in a lodestar figure of $322,700, to which a multiplier of three-and-one-half was applied. The resulting award to Underwood was $1,129,450.

On appeal, the Secretary challenges both Underwood's entitlement to an award and the district court's calculation of the award. We are required to determine the following issues: (1) Did the settlement agreement preclude a fee award? (2) Was the Secretary's position substantially justified? (3) Do special circumstances make the award unjust? (4) Did the district court err in

                calculating the award?    (5) Did Congress intend that a multiplier be applied to awards granted under EAJA
                

II EFFECT OF SETTLEMENT AGREEMENT

The Secretary claims that in entering into the settlement agreement, Underwood waived all claims for fees and is therefore barred from asserting a statutory claim. He relies on three provisions of the agreement:

(1) Section 3, which governs distribution of the fund, provides in subsection (f): "None of the sums distributed may be used to pay attorney's fees";

(2) Subsection 3(e) provides for the return to the Secretary of "any money which remains after all claims are paid"; and

(3) Section 4 of the agreement, which governs the mechanics of distribution, assigns certain costs of administration to HUD in subsection (d). It concludes that "distribution of the settlement fund shall involve no other substantial costs or expenditures by HUD."

The Secretary contends these three provisions, read together, demonstrate a clear intent to draw no attorneys' fees from the settlement fund. Because the fund was the only possible source of fees when the agreement was signed, he reads the agreement as Underwood's promise to relinquish all claims to fees.

The district court interpreted the agreement as precluding the payment of fees from the settlement fund. Underwood v. Pierce, 547 F.Supp. 256, 262 (C.D.Cal.1982). It determined that Underwood's attorneys intended to waive such fees because "[w]hen the settlement was negotiated the common fund/common benefit doctrine provided the only realistic basis for a fee award, which plaintiffs' counsel agreed to forego since that could have reduced the amounts paid to low-income class members." Id. at 263. The court found, however, that the parties had no intent to preclude the possibility of a recovery of fees under EAJA. Id.

The district court's interpretation of the settlement agreement presents a question of law subject to de novo review. In re U.S. Financial Securities Litigation, 729 F.2d 628, 631-32 (9th Cir.1984).

The first two settlement agreement terms on which the Secretary relies--sections 3(e) and 3(f) of the agreement--do not support his contention. Those sections merely indicate that no fees may be paid from the settlement fund itself. The two provisions are thus entirely consistent with the district court's findings that Underwood's attorneys had no intention of depleting the fund, but that the parties did not foreclose an award from sources outside the fund.

Nor does section 4(d) of the agreement in any way preclude an award of attorneys' fees. Attorneys' fees were dealt with exclusively in section 3(f) of the agreement. Reading the agreement as a whole, it is plain that section 4(d) was not intended to address the question of the availability of attorneys' fees at all, but was rather concerned with miscellaneous "housekeeping" expenses. We therefore conclude that the Secretary has failed to establish that the parties intended to waive all attorneys' fees attendant to the administration of the settlement agreement.

We agree with the district court that the agreement does not foreclose recovery under EAJA for legal expenses for litigation and settlement administration.

III SUBSTANTIAL JUSTIFICATION

Section 2412(d)(1)(A) requires the district court to award fees unless it finds the position of the United States was substantially justified. To evaluate the government's position, we consider the totality of the circumstances present prior to and during litigation. Timms v. United States, 742 F.2d 489, 492 (9th Cir.1984); Rawlings v. Heckler, 725 F.2d 1192, 1196 The district court found that the Secretary's position was not substantially justified because tenants of subsidized housing had brought numerous previous actions to require disbursement of the operating subsidy funds and in each the district court had held that payment of the subsidies was mandatory under 12 U.S.C. Sec. 1715z-1. 547 F.Supp. at 257 & n. 1. We agree that these prior adverse decisions are relevant to the substantial justification question. See Save Our Ecosystems v. Clark, 747 F.2d 1240, 1250-51 (9th Cir.1984); Southern Oregon Citizens Against Toxic Sprays, Inc. v. Clark, 720 F.2d 1475, 1481 (9th Cir.1983), cert. denied, --- U.S. ----, 105 S.Ct. 446, 83 L.Ed.2d 372 (1984); Hoang Ha v....