Va. Academy of Clinical Psychologists v. Blue Shield

• Decision Date: 07 May 1982
• Docket Number: Civ. A. No. 81-1069-A-R.
• Parties: VIRGINIA ACADEMY OF CLINICAL PSYCHOLOGISTS, et al., v. BLUE SHIELD OF VIRGINIA, et al.
• Court: U.S. District Court — Eastern District of Virginia

543 F. Supp. 126

VIRGINIA ACADEMY OF CLINICAL PSYCHOLOGISTS, et al., v. BLUE SHIELD OF VIRGINIA, et al.

Civ. A. No. 81-1069-A-R.

United States District Court, E. D. Virginia, Richmond Division.

May 7, 1982.

COPYRIGHT MATERIAL OMITTED

Timothy J. Bloomfield, Warwick R. Furr, II, Thomas M. Brownell, Lewis, Mitchell & Moore, Vienna, Va., for plaintiffs.

R. Gordon Smith, Gilbert E. Schill, Jr., McGuire, Woods & Battle, Richmond, Va., for defendants.

MEMORANDUM OPINION

WARRINER, District Judge.

This matter is before the Court on plaintiff's motion for attorney's fees pursuant to Section 16 of the Clayton Antitrust Act as amended by Section 302(3) of the Hart-Scott-Rodino Antitrust Improvements Act of 1976, 15 U.S.C. § 26 (hereinafter the "Antitrust Fee Act"). The facts giving rise to the action on the merits are set out in prior opinions of this Court and that of the Court of Appeals for the Fourth Circuit. See Virginia Academy of Clinical Psychologists v. Blue Shield of Va., 469 F.Supp. 552 (E.D.Va.1979), aff'd in part and vacated in part, 624 F.2d 476 (4th Cir. 1980), cert. denied, 450 U.S. 916, 101 S.Ct. 1360, 67 L.Ed.2d 342 (1981). A procedural review, however, is helpful to an understanding of the Court's fee award.

I

The underlying suit grew out of an effort by the Virginia Academy of Clinical Psychologists (VACP) to overturn the reimbursement policy of the Blue Shield plans that required clinical psychologists to bill through a licensed physician. VACP initially contacted Warwick R. Furr, Esq., to determine the feasibility of an antitrust action. Furr agreed to conduct a preliminary study at the rate of $50.00 per hour.¹ In May 1978, Furr joined the firm of Lewis, Mitchell & Moore which agreed to undertake the VACP suit along with the firm of Dunnells, Duvall, Bennett & Porter.

VACP was concerned from the outset about the costs of the prospective litigation. Furr and Timothy J. Bloomfield, Esq., who was the senior counsel from the Dunnells, Duvall firm involved in the VACP case, agreed to a $10,000.00 ceiling on costs for the first year of litigation with a reassessment thereafter.² They informed VACP that they expected to receive full compensation pursuant to the fee provisions of the Antitrust Fee Act. Their one caveat was that if the case were resolved during the first year, VACP would pay them the difference between $10,000 and any lesser amount that was actually expended on costs incurred pursuing the litigation. As a practical matter the $10,000 mark was reached long before the expiration of one year.

VACP and several of its members filed suit on 14 July 1978, in Alexandria, Virginia, against Blue Shield of Virginia (BSV), Blue Shield of Southwest Virginia (BSSW), the Neuropsychiatric Society of Virginia (NSV), and the Medical Society of the District of Columbia (MSDC). The suit was hotly contested and defendants fusilladed plaintiffs with every conceivable motion that could be asserted under the Federal Rules of Civil Procedure. Intense discovery was conducted in a period of five and one-half months. On 10 October 1978, the Court dismissed a companion suit to the instant matter proceeding under the style of McCready v. Blue Shield of Virginia, C.A. No. 78-0497-A (E.D.Va. 10 Oct. 1978). MSDC was dismissed as a defendant by joint motion on 31 October 1978.

The trial, which was held in Richmond, Virginia, for the Court's convenience, lasted four days and was followed by submission of post trial briefs. Judgment was entered for all defendants in April 1979. Plaintiffs successfully appealed to the Court of Appeals for the Fourth Circuit which affirmed this Court's decision as to NSV but reversed as to BSV and BSSW. Plaintiffs successfully resisted defendants' efforts to obtain a rehearing in the Fourth Circuit and a petition for writ of certiorari to the United States Supreme Court.

The mandate from the Fourth Circuit was returned to this Court in July 1980. Since then, defendants have endeavored by all available means to minimize the effect of that Court's mandate. Though defendants' efforts have painfully protracted the matter, such that the post-remand proceedings seem to dwarf all that has gone before, they have been generally unsuccessful.

The battle over attorney's fees is certainly the most intensely contested aspect of the entire suit, reflected in the morass of nine briefs and several volumes of exhibits. Defendants have based their challenge to plaintiffs' claim for fees on whether plaintiffs "substantially prevailed" on the merits, whether concurrent events mooted plaintiffs' claim for relief, and whether plaintiffs fees should be reduced to reflect aspects of the case where plaintiffs did not prevail.

Following the denial of certiorari by the Supreme Court in February of 1981, this Court entered judgment in favor of plaintiffs and directed defendants to take certain actions. That order was subsequently modified when it became apparent that the need for prospective injunctive relief was no longer necessary.³ In the end, this Court only had to require defendants to notify practicing Virginia clinical psychologists of the Fourth Circuit's decision and to direct them to retain certain records.

On 9 March 1982, VACP and BSSW advised the Court that all matters between them had been compromised and settled, leaving only BSV as a party defendant to the litigation. In response to BSV's motion for an order to disclose the terms of the settlement, plaintiffs filed a description of the terms of the settlement under seal. As updated by a subsequent filing under seal, these papers purportedly set forth the terms of settlement between VACP and BSSW, including the allocation for attorneys' fees.

At a hearing held on 20 April 1982, the Court determined the effect that the BSSW settlement would have on BSV's liability for attorneys' fees.⁴ The Court also determined that it would open the sealed documents only after determining the proper fee award for the case as a whole.

II

The Court has previously determined that plaintiffs "substantially prevailed" within the meaning of § 16 of the Clayton Act. 15 U.S.C. § 26. Virginia Academy of Clinical Psychologists v. Blue Shield of Va., C.A. No. 78-496-A (now C.A. No. 81-1069-A-R) (E.D.Va. 30 Mar. 1981) (vacated in part and modified by orders of 5 August and 6 October 1981). The Court emphasized then that plaintiffs had gained relief to which they were not otherwise entitled under the State proceedings, and that the existence of alternative State administrative remedies did not warrant this Court disregarding the gains made in federal court. Id.

The Court reaffirms that plaintiffs "substantially prevailed" in this action. Defendants' argument to the contrary is without merit. This Court denied plaintiffs prospective relief only because of the chronology of circumstances. Plaintiffs were clearly entitled to the relief they sought and this Court would have granted such relief if it had been necessary at the time plaintiffs appeared before the Court. The minimal relief ultimately required by circumstances in no way detracts from plaintiffs' accomplishments in this litigation. Plaintiffs have "substantially prevailed" and will be awarded fees and costs accordingly. Young v. Kenley, 641 F.2d 192 (4th Cir. 1981), cert. denied, ___ U.S. ___, 102 S.Ct. 1476, 71 L.Ed.2d 681 (1982); Bonnes v. Long, 599 F.2d 1316 (4th Cir. 1979). See also Grumman Corp. v. LTV, 533 F.Supp. 1385 (E.D.N. Y.1982).

III

Section 16 mandates this Court to award plaintiffs, "the costs of the suit, including a reasonable attorney's fee." 15 U.S.C. § 26. The heart of the present litigation and the source of considerable inconclusive litigation elsewhere is centered on the necessary determination of what is "reasonable."

The Fourth Circuit, in Barber v. Kimbrell's, Inc., 577 F.2d 216 (4th Cir.), cert. denied, 439 U.S. 934, 99 S.Ct. 329, 58 L.Ed.2d 330 (1978), adopted the Fifth Circuit's general procedure for handling statutory attorney fee awards. Id. at 226, citing Johnson v. Georgia Highway Express, Inc., 488 F.2d 714 (5th Cir. 1974). Barber directs that fees shall be awarded based upon the Court's consideration of twelve enumerated factors.⁵ In Anderson v. Morris, 658 F.2d 246 (4th Cir. 1981), the Fourth Circuit furnished additional guidelines on how to apply the Barber factors. The Court:

instructed district courts to first ascertain the nature and extent of the services supplied by the attorney from a statement showing the number of hours worked and an explanation of how these hours were spent. The court should next determine the customary hourly rate of compensation. These are essentially Johnson factors 1 and 5. The court should then multiply the number of hours reasonably expended by the customary hourly rate to determine an initial amount for the fee award. Finally, the court should adjust the fee on the basis of the other factors, briefly explaining how they affected the award. In Re First Colonial Corp. of America, 544 F.2d 1291, 1298-1300 (5th Cir. 1977). See also Copper Liquor, Inc. v. Adolph Coors Co., 624 F.2d 575, 581-84 (5th Cir. 1980).

658 F.2d at 249.⁶

The Anderson Court cautioned that the fee determination is not a mechanical exercise. The Court must consider, inter alia, what hours may reasonably be included, whether the involvement of more than one firm resulted in duplication of effort, and what different rates of compensation should apply to various services, "such as those performed by partners and associates. Moreover, in determining both time and rate, the judge must evaluate the quality as well as the quantity of the attorney's work." Id. at 249. The Court concluded by summarizing that, "the court should, however, begin with a figure based on the number of hours reasonably expended multiplied by a reasonable hourly rate and then explain any adjustment of these figures either up or down because of the other Johnson factors listed in Barber." Id. (...