APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF WESTERN PENNSYLVANIA (D.C. Civil No. 78-1359)
Before Adams, Hunter and Higginbotham, Circuit Judges.
1. In this appeal, plaintiffs ask this court to reverse the trial court's denial of their motion for attorneys' fees. Plaintiffs sought attorneys' fees under the Civil Rights Attorneys' Fees Awards Act of 1976, 42 U.S.C. § 1988 (1976), as prevailing parties in an action under the 1871 Civil Rights Act, 42 U.S.C. § 1983 (1976). The district court denied their motion, finding that the defendant housing authority was an agent of the federal government, immune under 28 U.S.C. § 2412 (1976), from the operation of section 1988. Additionally, the district court found that if it had erred as to the Housing Authority's status, it would nonetheless decline to exercise its discretion in favor of an award of fees for the plaintiffs. We disagree with both findings by the district court. The defendant is not immune under section 2412 from an award of attorneys' fees. Therefore, the district court should have awarded attorneys' fees against defendant unless it found "special circumstances" making the award of attorneys' fees in this case unjust.*fn1 Since the district court did not make such a finding, we vacate the lower court's judgment and remand with instructions that it exercise its discretion in accordance with the standard set forth in this opinion.
2. In November, 1978, appellants filed an action in the Western District of Pennsylvania alleging that the defendant Housing Authority terminated their leases and instituted state eviction proceedings without providing sufficient notice as mandated by 42 U.S.C. § 1437d (Supp. II, 1978), the regulations promulgated thereunder at 24 C.F.R. 866 (1978), and the policy set forth in the Public Housing Occupancy Handbook, 7465.1 Rev. Plaintiffs further alleged that the Housing Authority's practices violated their fourteenth amendment due process rights. The district court issued a preliminary injunction in favor of plaintiffs on December 15, 1978, enjoining the eviction action and setting the matter for hearing. After a hearing, the district court entered an order in favor of plaintiffs holding that the Housing Authority's policies violated federal regulations and state law. The defendants were enjoined from bringing eviction actions until they complied with federal regulations. The court also directed the Housing Authority to institute a system of notices in compliance with the applicable regulations. Staten v. Housing Authority of the City of Pittsburgh, 469 F. Supp. 1013 (W.D.Pa.1979). Appellees have not challenged this decision.
3. On August 22, 1979, plaintiffs' counsel filed a motion for costs and attorneys' fees pursuant to Rule 54(d) of the Federal Rules of Civil Procedure and 42 U.S.C. § 1988. Opposing the motion, the Authority contended and the district court concluded that the Housing Authority was an "agent" of the United States and thereby entitled to immunity from the Civil Rights Attorneys' Fees Award Act of 1976, by reason of 28 U.S.C. § 2412. The district court denied appellant's motion for fees.
4. The Housing Authority of the City of Pittsburgh, is a public corporation created under the Pennsylvania Housing Authorities Law, 1937, May 28, P.L. 955 §§ 1-24, 35 Pa.Cons.Stat.Ann. §§ 1541-64 (Purdon 1980), and in accordance with the United States Housing Act of 1937, 84 Stat. 1779, 42 U.S.C. §§ 1437-40 (Supp. II, 1978) with the powers, among others, to sue and be sued, and to build or acquire housing projects and lease the dwellings therein. The Housing Authority receives funding for its projects from several sources. Under 35 Pa.Cons.Stat.Ann. §§ 1557-58 (Purdon 1977) the Housing Authority has the power to issue bonds to raise revenue for its projects. In addition, the Housing Authority has extensive financial ties with the federal government, receiving annual grants if it complies with federal regulations. 42 U.S.C. § 1440(c), (d), (e) (1976); 35 Pa.Cons.Stat.Ann. § 1562 (Purdon 1977). The state government serves as yet another source of income for Housing Authority projects. 35 Pa.Cons.Ann. § 1562.1 (Purdon 1977).
5. The daily operation and implementation of Housing Authority policies is supervised by defendant, Daniel A. Pietragallo, Executive Director of the Housing Authority. A city-appointed Board of Directors is responsible for the formulation of Authority policy. 35 Pa.Cons.Stat.Ann. § 1545 (Purdon 1977). In formulating those policies, the Board is guided, in part, by federally established standards. 42 U.S.C. § 1437d(c); Public Housing Occupancy Handbook §§ 4-16 (1978).
6. Appellee asserts that the economic and legal relationship between the defendant Housing Authority and the federal government makes an award of attorneys' fees against the Housing Authority tantamount to an award of fees against an "agency" of the United States. We disagree.
7. Appellant sought attorneys' fees under the Civil Rights Attorney's Fees Awards Act of 1976, 42 U.S.C. § 1988 (1976) (hereinafter "Fees Act").*fn2 Intended as an incentive for the private enforcement of civil rights,*fn3 section 1988 serves as a general avenue for the award of attorneys' fees following a section 1983 action. Maher v. Gagne, 448 U.S. 122, 100 S. Ct. 2570, 65 L. Ed. 2d 653 (1980); Maine v. Thiboutot, 448 U.S. 1, 100 S. Ct. 2502, 65 L. Ed. 2d 555 (1980); Ross v. Horn, 598 F.2d 1312 (3d Cir. 1979), cert. denied, 448 U.S. 906, 100 S. Ct. 3048, 65 L. Ed. 2d 1136 (1980); Skehan v. Bd. of Trustees, 590 F.2d 470 (3d Cir. 1978), cert. denied, 444 U.S. 832, 100 S. Ct. 61, 62 L. Ed. 2d 41 (1979).
8. The road to collecting attorneys' fees under section 1988 is not, however, clear of obstacles. This court has held that the Fees Act is not a waiver of the sovereign immunity of the United States and, therefore, does not permit an award of counsel fees against the United States. Shannon v. United States Department of Housing and Urban Development, 577 F.2d 854, 855-56 (3d Cir. 1978), cert. denied, 439 U.S. 1002, 99 S. Ct. 611, 58 L. Ed. 2d 677 (1978). Fee awards against the ...