On Appeal from the United States District Court for the Eastern District of Pennsylvania (D.C. Civ. No. 84-1714).
Before: HIGGINBOTHAM and STAPLETON, Circuit Judges, and TEITELBAUM, District Judge.*fn*
A. LEON HIGGINBOTHAM, JR., Circuit Judge.
This appeal arises from the second order of the district court denying appellant's application for attorney's fees under the Civil Rights Attorneys' Fees Award Act, 42 U.S.C. § 1988, after settlement on the merits of her claim of employment discrimination on the basis of race. For the reasons set forth below we will reverse and remand to the district court for proceedings consistent with this opinion.
Betty J. Ashley was employed by Atlantic Richfield Company ("Arco") from August 2, 1976 to March 2, 1983, at which time she was discharged from her position as the Senior Secretary for Arco. Following her discharge, appellant initiated an action pursuant to 42 U.S.C. § 1981 and Title VII of the Civil Rights Act of 1964 alleging that her termination was racially motivated. After a series of negotiations, the parties agreed to settle their dispute. Accordingly, the district court entered an order on September 24, 1984 that dismissed the action with prejudice, pursuant to agreement of counsel without costs except as provided by Local Rule 42(d).
Subsequently, counsel for Arco prepared a proposed general release and settlement agreement and submitted it to Ashley's attorney, Steven M. Kramer. Kramer refused to endorse the document, specifically objecting to language releasing Arco from liability for attorney's fees. Eventually, on October 24, 1984, a revised document was signed by the parties. The agreement provided that Arco make payment to Ashley in the sum of $7,500.00. In addition, Ashley received non-monetary relief consisting of Arco's agreement to seal Ashley's employment record for ten years and to inform prospective employers that she was "qualified" for the work she had performed. The revised settlement and release agreement was silent on the issue of attorney's fees.
Approximately one month after the settlement and release had been signed appellant's attorney filed an application for counsel fees and costs. The application was vehemently opposed by appellee principally on the ground that Arco considered their agreement to pay Ashley $7,500 a "nuisance settlement." As such, Arco argued that it was unwilling to pay any more and would rather proceed to trial than bear the costs of appellant's attorney's fees. Thereafter, the district court entered an order and opinion denying appellant's application on the ground that plaintiff was not the prevailing party because she had obtained only 23% of her potential back pay recovery and she had not 'essentially succeeded' on her claims for non-monetary relief. App. at A-215. Ashley responded with a timely motion for reconsideration in which she informed the court that, having discharged her statutory duty to mitigate damages by obtaining alternative employment, she had actually recovered over 50% of the potential back pay award. Ashley further contested the district court's finding that the non-monetary relief received was insubstantial and did not entitle her to an award of attorney's fees. In a brief memorandum opinion the district court again rejected Ashley's claims, restating its prior position with regard to Ashley's non-monetary claims, and holding that notwithstanding Ashley's asserted 50% back pay recovery, "she is still not the prevailing party" because Arco "considered the $7,500 a nuisance settlement since it would have at least cost that amount to defend the case." App. at A-228. Accordingly, the district court affirmed its prior judgment and entered a second order denying appellant's requested fees and costs. This appeal followed.
We consider three issues. First, whether the settlement between the parties was a "nuisance settlement" so that appellant did not prevail. Second, whether, assuming arguendo that appellant did prevail, she has waived her right to an award of attorney's fees. And, finally, whether the agreement signed by the plaintiff releasing defendant of all costs encompasses attorney's fees.
Pursuant to the Civil Rights Attorneys' Fees Awards Act of 1976 ("section 1988"),*fn1 a plaintiff who prevails in a civil rights action is "ordinarily [entitled to] recover an attorney's fee unless special circumstances would render such an award unjust." See Newman v. Piggie Park Enters, 390 U.S. 400, 402, 19 L. Ed. 2d 1263, 88 S. Ct. 964 (1968) (per curiam), quoted in S. Rep. No. 1011, 94th Cong., 2d Sess. 4, reprinted in 1976 U.S. Code Cong. & Ad. News 5908, 5912. "The standard used in this circuit for determining a plaintiff's prevailing party status is whether plaintiff achieved 'some of the benefit sought' by the party bringing the suit." NAACP v. Wilmington Medical Center, Inc., 689 F.2d 1161, 1167 (3d Cir. 1982), cert. denied, 460 U.S. 1052, 75 L. Ed. 2d 930, 103 S. Ct. 1499 (1983); see also Institutionalized Juveniles v. Secretary of Public Welfare, 758 F.2d 897, 910-12 (3d Cir. 1985) (reaffirming the Wilmington Medical Center standard in light of the United States Supreme Court's decision in Hensley v. Eckerhart, 461 U.S. 424, 76 L. Ed. 2d 40, 103 S. Ct. 1933 (1983)). Moreover, in order to be deemed a shaving prevailed, plaintiffs need not obtain relief "identical to the relief they specifically demanded, as long as the relief obtained is of the same general type." Institutionalized Juveniles, 758 F.2d at 912. Plaintiff need only demonstrate that she obtained some of the benefit sought and that the relief obtained was causally connected to the prosecution of the complaint. See Wilmington Medical Center, 689 F.2d at 1171. That a plaintiff's claim terminates in an out-of-court settlement or consent decree does not preclude prevailing party status. See Institutionalized Juveniles, 758 F.2d at 911-12 (citing Doe v. Busbee, 684 F.2d 1375 (11th Cir. 1982)). Thus, in applying the test we first "compare the relief sought with that actually obtained, . . . [and] the fact that relief was obtained by way of settlement is only a factor to be taken into account in deciding the second step required by the case law in this circuit; the causal connection between the relief obtained and the lawsuit."*fn2 Disabled In ...