ON APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE WESTERN DISTRICT OF PENNSYLVANIA (D.C. Civil Action No. 76-344).
Seitz, Chief Judge, and Rosenn and Garth, Circuit Judges. Rosenn, Garth, Circuit Judges, concurring.
SEITZ, Chief Judge, delivered the judgment of the Court.
Plaintiffs, husband and wife,*fn1 appeal from an order of the district court awarding them attorney's fees after they obtained a jury verdict against one of two defendants, Mrs. Repko, in their action under the Civil Rights Act of 1866, 42 U.S.C. § 1982 (1970). The other defendant below, John S. Repko, appeals*fn2 the denial of his application for an attorney's fee as a prevailing party.
Plaintiffs, black citizens, instituted this action for damages against the defendants, white citizens, alleging that the defendants refused to rent them an apartment owned by Mrs. Repko because they were black. Plaintiffs asserted two claims against each of the two defendants: one claim alleging discrimination in violation of 42 U.S.C. § 1982 (1970), and the other claim alleging a conspiracy in violation of 42 U.S.C. § 1985 (1970). At the close of plaintiffs' evidence the district court directed a verdict in favor of both defendants on plaintiffs' § 1985 conspiracy claim. It also directed a verdict for defendant, John Repko, on the § 1982 claim. The court allowed the § 1982 claim against defendant, Mrs. Repko, to go to the jury, and the jury found for plaintiffs on that claim. The jury awarded plaintiffs compensatory damages against defendant, Mrs. Repko, in the amount of $1,250, but awarded no punitive damages. No appeal was taken on the liability determinations. We therefore are concerned solely with the court's rulings on the applications for attorney's fees.
At the time he was retained, plaintiffs' counsel agreed with his clients that his fee would be limited to any amount awarded by the court. Plaintiffs' counsel applied for a fee of $3,850 based on 55 hours of legal service at $70 per hour.*fn3 The number of hours spent and the hourly rate appear to have been found reasonable by the district court and are not challenged, as such, on appeal.
The district court awarded the fee in accordance with the Civil Rights Attorney's Fees Awards Act of 1976. That Act reads, in pertinent part:
In any action or proceeding to enforce a provision of [42 U.S.C. § 1982] . . . the court, in its discretion, may allow the prevailing party, other than the United States, a reasonable attorney's fee as part of the costs.
Pub. L. 94-559, § 2, Oct. 19, 1976, 90 Stat. 2641.*fn4
In determining plaintiffs' legal fee under the Awards Act the district court purported to follow the principles announced in Lindy Brothers Builders, Inc. of Philadelphia v. American Radiator & Standard Sanitary Corp., 540 F.2d 102 (3rd Cir. 1976) (in banc) (Lindy II), and Merola v. Atlantic Richfield Co., 515 F.2d 165 (3rd Cir. 1975) (Merola II). The court decided that the amount of the so-called lodestar (hours of service times hourly rate), "should be proportionate to the extent the plaintiffs prevailed in the suit." Hughes v. Repko, 429 F. Supp. 928, 932 (W.D. Pa. 1977). It found that defendants prevailed on over two-thirds of the legal issues involved and proceeded to reduce the lodestar by about two-thirds to a net of $1,275.
The court also considered other factors which it felt should affect the lodestar, i.e., the quality of counsel's work and the contingency of success. It found the quality of the work to have been "good" but the case a "simple" one. It decided that the "contingency factor" was largely absent because plaintiffs' counsel showed his confidence of success by not entering into a contingent fee contract with his clients. Finally, the district court felt that plaintiffs' ability to pay their counsel was a factor to be considered in reducing the lodestar. The court so held because Congress had mandated recognition of that factor under the Fair Housing Act of 1968, 42 U.S.C. § 3601 et seq. (1970),*fn5 an act the court said provided a remedy similar to that accorded by § 1982.
Based on its consideration of the foregoing factors, the district court concluded that the reduced lodestar should be reduced further. It awarded plaintiffs' counsel a fee of $700.
Since plaintiffs attack the legal bases for the district court's determination, we are called upon to determine the legal correctness of the district court's rulings. This is so even though we review under an abuse of discretion standard.
We agree with the district court that the "lodestar" approach of Lindy II is a proper first step in calculating reasonable attorney's fees under the Act. Since plaintiffs here seek only the amount of the lodestar as a reasonable fee, we begin by analyzing the proper method by which to calculate the lodestar in such circumstances.
The first important question presented is what services are to be recognized in calculating the lodestar to be used in ...