OpenJurist

849 F2d 605 Lewis v. Jp Stevens & Co Jp Stevens & Co

849 F.2d 605

47 Empl. Prac. Dec. P 38,101

Sallie Pearl LEWIS; Mary Grace Foster, individually and on
behalf of all other persons similarly situated;
Ulysee Elmore, Plaintiffs-Appellants,
v.
J.P. STEVENS & CO., Defendant-Appellee.
J.P. STEVENS & CO., Defendant-Appellant,
v.
Sallie Pearl LEWIS; Mary Grace Foster, individually and on
behalf of all other persons similarly situated;
Ulysee Elmore, Plaintiffs-Appellees.

Nos. 86-2094, 86-2098.

United States Court of Appeals, Fourth Circuit.

Argued: Feb. 2, 1988.
Decided: June 9, 1988.

Unpublished Disposition
NOTICE: Fourth Circuit I.O.P. 36.6 states that citation of unpublished dispositions is disfavored except for establishing res judicata, estoppel, or the law of the case and requires service of copies of cited unpublished dispositions of the Fourth Circuit.

Richard Talbot Seymour (William L. Robinson; Lawyers' Committee for Civil Rights Under Law, on brief), for appellants.

Melvin Hutson (Alfred B. Robinson, Jr.; Thompson, Mann and Hutson, on brief), for appellee.

Before K.K. HALL, JAMES DICKSON PHILLIPS and MURNAGHAN, Circuit Judges.

PER CURIAM:

1

In this consolidated appeal and cross-appeal, Sallie Pearl Lewis, et al ("the employees"), the prevailing plaintiffs in a class action alleging racial discrimination in employment by their employer, J.P. Stevens Co., Inc. ("Stevens"), appeal the district court's order allowing only an 8% adjustment in their award of attorneys' fees as compensation for delay in receiving the fee. Stevens cross-appeals, contending that any adjustment for delay was improper and that the district court also erred in awarding an upward fee adjustment for loss of opportunity and the contingent nature of the litigation. We affirm in part, reverse in part, and remand.

I.

2

This case has had a long and convoluted history. It originated in 1972 as a class action brought by various black employees of Stevens' Abbeville, South Carolina, plant. The employees complained of racial discrimination in hiring, job assignments, promotions, recruiting, and layoffs all in violation of Title VII of the Civil Rights Act of 1964, 42 U.S.C. Secs. 2000e et seq. After bench trials on various issues in 1975, 1976, and 1977, the district court determined that Stevens had discriminated against black applicants for employment at the Abbeville facility between April, 1968, and November, 1971. Stevens subsequently provided a settlement fund of $250,000, which was apportioned among the members of the plaintiff class pursuant to a consent decree entered in November, 1982.

3

At this juncture, the parties entered into negotiations regarding the attorneys' fees to which the employees, as prevailing plaintiffs in a Title VII action, were entitled to receive. The employees had been represented by both local South Carolina attorneys and by Washington, D.C., counsel.1 Stevens was able to reach an agreement with South Carolina counsel and a settlement embodying that agreement was approved by the court on April 9, 1984.

4

Negotiations between Stevens and the employees' Washington counsel did not succeed in setting a final fee amount. The parties were, however, able to stipulate to the number of hours expended by attorneys, law clerks and paralegals, as well as the historic hourly rate of compensation for these individuals. The stipulation thereby produced a "lodestar" figure (the number of hours multiplied by the hourly rate) of $180,663.30. The parties were unable to agree to what adjustments, if any, should be made to the lodestar figure.

5

On March 27, 1986, the parties again brought their disagreements before the district court. Four issues remained unsettled: (1) whether the lodestar should be reduced, as urged by Stevens, to reflect the limited degree of success achieved by the plaintiffs; (2) whether the fee award based on historic rates should be adjusted upward because of the delay in receipt and the effect of inflation; (3) whether the employees' counsel should receive an adjustment to compensate for the risk of taking a contingent fee case; and finally, (4) whether the employees' counsel should receive an additional fee as compensation for loss of other opportunities while involved with this case.

6

On April 17, 1986, the district court filed an order concluding that: (1) the degree of success achieved by plaintiffs' counsel did not merit any adjustment in the fee award; (2) the plaintiffs' counsel was entitled to an upward adjustment as compensation for both loss of opportunity and for the risk of receiving no fee if plaintiffs did not prevail; and (3) plaintiffs' counsel should receive an 8% upward adjustment as compensation for the delay in payment. The final award as determined by the district court was as follows:

7

Lodestar amount              $180,663.30
Opportunity cost adjustment    20,000.00
Delay in payment adjustment    16,053.06
                             -----------
Total fee                    $216,716.36
Costs and expenses            $22,974.73
                             -----------
TOTAL FEE AND EXPENSES       $239,691.09
8

This appeal and cross-appeal followed.

II.

9

Both the employees and Stevens object to portions of the district court's order. The employees contend that the adjustment for delay was inadequate. Stevens contends that no delay adjustment should have been made or that in the alternative, the 8% enhancement was within the district court's discretion. Stevens also contends that the adjustment for contingency and loss of opportunity is contrary to the Supreme Court's decision in Pennsylvania v. Delaware Valley Citizens Council for Clean Air, --- U.S. ----, 107 S.Ct. 3078 (1987), and this Court's opinion in Spell v. McDaniel, 824 F.2d 1380 (4th Cir.1987). We address these contentions seriatim.

10

The statutory right of a prevailing plaintiff in a civil rights action to receive a reasonable attorney's fee was created to ensure "effective access to the judicial process." Hensley v. Eckerhart, 461 U.S. 424, 429 (1983) (quoting H.R.Rep. No. 94-1558, 94th Cong.2d Sess., 1 (1976)). Congress intended that a reasonable fee would "attract competent counsel" without producing "windfalls to attorneys." Blum v. Stenson, 465 U.S. 886 (1984). See also Daly v. Hill, 790 F.2d 1071, 1077 (4th Cir.1986).

11

The "critical inquiry" in fee setting requires a determination of a reasonable rate of compensation in accordance with the factors articulated in Johnson v. Georgia Highway Express, 488 F.2d 714 (5th Cir.1974)2 and a subsequent multiplication of that rate by the number of hours reasonably expended. This process produces the "lodestar" figure that is presumptively a reasonable fee without further adjustment. Blum, 465 U.S. at 897.

12

Adjustments in the lodestar are not, however, precluded in all instances. If the litigation presents a significant factual circumstance beyond the usual Johnson factors or involves a Johnson factor that is not generally "subsumed" in the usual fee calculation, Blum, 465 U.S. at 900, further enhancement may be appropriate. In the instant case, the plaintiffs sought and received a fee increase under both theories.

13

In allowing an 8% increase for plaintiffs' delay in receiving their fee, the district court dealt with a then unresolved point of law. The impact of delay was not considered in Johnson, and had not been authoritatively decided in this Circuit at the time the district court acted. Subsequently, however, this Court held that delay in payment "dilutes the eventual award and may convert an otherwise reasonable fee into an unreasonably low one." Daly, 790 F.2d at 1081, quoting Johnson v. University College of the University of Alabama, 706 F.2d 1205, 1210 (11th Cir.), cert. denied, 464 U.S. 994 (1983). To guard against such an unfortunate result, we required that the district court take into account inflation and foregone interest in a delayed fee by either increasing all hourly rates to reflect current market rates or by applying a percentage enhancement to the lodestar. The particular method of accounting for delay was left, however, to the discretion of the district court. Daly, 790 F.2d at 1081.

14

After Daly, there can be no question but that the district court's decision to increase the employees' fee award for delay was proper. Indeed, Daly virtually compels an enhancement in this instance.3 The employees argue, however, that Daly also requires an enhancement that fully and precisely accounts for inflation and lost interest. The employees contend, therefore, that the district court abused its discretion by rejecting the detailed calculations provided in their fee request4 and by granting only a minimal enhancement of 8%.

15

Although we agree with the employees that an enhancement of 8% of the lodestar or $16,053.06 did not sufficiently account for the lengthy delay in this case and must, therefore, be modified, we reject their suggestion that the district court was required to accept their method of fee calculation. Nothing in Daly requires that a delay adjustment account for inflation or interest with mathematical certainty. The purpose of the adjustment is to achieve a reasonable fee and reasonableness is a flexible concept. Even uncontested submissions by a prevailing party may be disregarded if the district court concludes that another method of enhancement will produce a fee that satisfies the objectives stated in Blum.

16

The district court elected to compensate plaintiffs by means of a flat percentage increase. We see no error in that method which we specifically endorsed in Daly. Unfortunately, the percentage, chosen without benefit of our reasoning in Daly, was clearly too low to provide an adequate enhancement for thirteen years of delay which extended through a period of high inflation.5 We perceive no need, however, to further prolong this case by remanding to the district court for a full redetermination. The record before us is fully developed, which now permits us to determine without additional proceedings a percentage enhancement that will bring the fee awarded to plaintiffs within the relatively broad range of reasonableness. Accordingly, we conclude that a 60% enhancement of the lodestar, thereby adding $108,397.98 to plaintiffs attorneys' fee will provide an adequate compensation for delay.

III.

17

Finally, we turn to the district court's $20,000 enhancement designated as an opportunity cost adjustment. Stevens argues that the increase was principally a compensation for the contingent nature of the litigation. Stevens contends that such an enhancement is proper only in exceptional cases and that the district court made no finding that this case fell within that category. In Stevens' view, the enhancement must either be reversed or the case remanded to allow the district court to assess the exceptional nature of this matter. We find merit in this position.

18

The district court's order appears to combine contingency with "opportunity costs or preclusion from other employment" in determining the appropriateness of a $20,000 fee increase. A close examination of the court's language, however, leaves little doubt that the enhancement was based almost exclusively upon counsel's risk of nonpayment if plaintiffs did not prevail. Although enhancements for contingency presented a somewhat unsettled issue at the time the district court's order was entered,6 the subsequent decisions of the Supreme Court in Delaware Valley, and this Court in Spell, have determined that an increase for contingency may be permitted in certain circumstances. Unfortunately for the plaintiffs in this case, we do not find the present litigation to be within the bounds of those circumstances.

19

As we have interpreted Delaware Valley, enhancements for contingency are appropriate only when the prevailing party can establish that, absent an adjustment, they "would have faced substantial difficulties in finding counsel in the local or other relevant market." Spell, 824 F.2d at 1404, quoting Delaware Valley, 107 S.Ct. at 3089-92. Furthermore, no enhancements are permitted for risks "peculiar" to the specific case since they are considered in setting the lodestar. Id.

20

We find nothing in the record before us to suggest that the plaintiffs would have experienced "substantial difficulties" in obtaining counsel unless contingency received extra compensation. The employees have suggested that statistics demonstrating a decline in the number of employment discrimination cases filed since 1976 indicates an unwillingness by counsel to accept these types of cases. The statistics, however, are fully amenable to other interpretations, including the possibility that instances of employment discrimination may be diminishing. In any event, the employees, who apparently had no difficulty obtaining counsel, could not by this material, carry their burden of justifying a departure from the presumptively correct fee. The enhancement for contingencies cannot, therefore, be sustained.

IV.

21

In sum, we conclude that the grant of attorneys' fees must be modified in the following fashion. The district court's enhancement for delay is affirmed in principle and increased from $16,053.06 to $108,397.98. The $20,000 enhancement for contingency is reversed, thereby producing a total adjustment to the lodestar of $88,397.98. The case is hereby remanded to the district court for the limited purpose of the entry of an order consistent with this opinion.

22

AFFIRMED in part; REVERSED in part; AND REMANDED.

1

The employees' principal Washington counsel is Richard T. Seymour. It appears that Seymour worked for the Washington Research Project, Inc. until 1973. From 1973 until 1977, he was a sole practitioner. From 1977 until the present, he has been employed by the Lawyers' Committee for Civil Rights Under Law, which assumed responsibility for this case

2

The Johnson factors are:

(1) The time and labor required.

(2) The novelty and difficulty of the questions.

(3) The skill requisite to perform the legal services properly.

(4) The preclusion of other employment by the attorney due to acceptance of the case.

(5) The customary fee.

(6) Whether the fee is fixed or contingent.

(7) Time limitations imposed by the client or the circumstances.

(8) The amount involved and results obtained.

(9) The experience, reputation, and ability of the attorneys.

(10) The undesirability of the case.

(11) The nature and length of the professional relationship with the client.

(12) Awards in similar cases.

3

Stevens' strained argument on appeal that fees are costs to which interest may not be applied, is, as the cross-appellant concedes, in clear conflict with Daly. We, therefore, reject this frivolous contention without further comment

4

The employees' submission to the district court purported to calculate the present value of counsel's past efforts and produced a proposed enhancement of approximately $160,000

5

By way of contrast, in Cooper v. Dyke, 814 F.2d 941 (4th Cir.1987), we approved a 10% enhancement even though the litigation therein had taken only two years

6

The issue was expressly reserved in Blum, 465 U.S. at 901 n. 17