ON APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF PENNSYLVANIA, (D.C. Civil No. 75-3156)
Before: GIBBONS, BECKER, and STAPLETON, Circuit Judges
This appeal involves a dispute over attorneys' fees that arose after an employment discrimination class action was settled. The settlement did not deal with the attorneys' fees issue, and following a hearing on the plaintiffs' fee petition the district court ordered the defendant to pay $475,938.18 in attorneys' fees and costs. Defendant appealed and plaintiffs cross-appealed. We will vacate the fees and costs awards and remand for further consideration.
The underlying action asserted claims under section 16 of the Civil Rights Act of 1870 (codified as amended at 42 U.S.C. § 1981 (1982)), and was originally filed by the Black Grievance Committee (BGC) and seven individual employees in November of 1975. In 1976 the complaint was amended to add claims under Title VII of the Civil Rights Act of 1964, 42 U.S.C. §§ 2000e to 2000e-17 (1982). Subsequently, in 1978, a company-wide class of employees was certified, and after various pretrial conferences and extended periods of discovery, trial was finally set for July of 1983. BGC's basic theory for its claims was that the defendant, Philadelphia Electric Company (PECO) had engaged in company-wide racial discrimination in hiring, assigning, testing, promoting, and terminating black employees. Just prior to the commencement of trial, however, the parties agreed to settle the suit. Notice of settlement was given to the class and, after the court approved the settlement in the form of a consent decree, the decree was signed on January 3, 1985.
The consent decree reserved the issue of reasonable attorneys' fees and, after BGC and PECO were unable to settle the fee issue, BGC filed a fee petition. This petition sought a lodestar of $537,499.00, increased by a multiplier of 2.75 to 3.0 and costs totaling $20,024.07. PECO responded by conceding that BGC was the "prevailing party," but it challenged certain hours and the hourly fees used to calculate the lodestar. On August 13, 1985 the district court ordered PECO to pay plaintiffs' counsel attorneys' fees of $424,535.25. This award consisted of a lodestar of $283,023.50 adjusted by a 25% delay enhancer, a 50% contingency enhancer, and a 25% result-obtained reducer. The district court also awarded plaintiffs' attorneys $7,672.50 for the time spent in preparing the fee petition and $43,730.43 in costs.
The Civil Rights Attorneys' Fees Awards Act of 1976 and the attorney's fee provision contained in Title VII of the Civil Rights Act of 1964 provide that in federal civil rights actions "the court, in its discretion, may allow the prevailing party . . . a reasonable attorney's fee as part of the costs." 42 U.S.C. § 1988 (1982); 42 U.S.C. § 2000e-5(k) (1982).*fn1 A reasonable attorneys' fee is "one that is 'adequate to attract competent counsel, but . . . [that does] not produce windfalls to attorneys.'" Blum v. Stenson, 465 U.S. 886, 897, 79 L. Ed. 2d 891, 104 S. Ct. 1541 (1984) (quoting S. Rep. No. 94-1011, 94th Cong., 2d Sess. 6, reprinted in 1976 U.S. Code Cong. & Ad. News 5907, 5913). The basic fee, therefore, is usually "calculated by multiplying the number of hours reasonably expended on the litigation times a reasonable hourly rate." Blum, 465 U.S. at 888; Hensley v. Eckerhart, 461 U.S. 424, 433, 76 L. Ed. 2d 40, 103 S. Ct. 1933 (1983). Because each litigation involves unique factors, however, the basic fee (known as the lodestar) may be adjusted upward or downward based on such factors as the result obtained. See Hensley, 461 U.S. at 434; see also City of Riverside v. Rivera, 477 U.S. 561, 106 S. Ct. 2686, 2691, 91 L. Ed. 2d 466 (1986) (plurality opinion).
While both the Supreme Court and this court have pointed to various factors and attempted to explain how a fee should be calculated, the determination is primarily a matter committed to the discretion of the district court. See Blum, 465 U.S. at 896-97; Hensley, 461 U.S. at 436-37; Institutionalized Juveniles v. Secretary of Public Welfare, 758 F.2d 897, 919, 921-22 (3d Cir. 1985). As this court has explained,
an award of reasonable attorneys' fees if within the district court's discretion. . . . Thus our standard of review is a narrow one. We can find an abuse of discretion if no reasonable [person] would adopt the district court's view. . . . We may also find an abuse of discretion when the trial court uses improper standards or procedures in determining fees, or if it does not properly identify the criteria used for such determination. Factual findings, of course, are subject to the clearly erroneous standard of review.
Silberman v. Bogle, 683 F.2d 62, 64-65 (3d Cir. 1982) (citations omitted).
Between them PECO and BGC raise ten challenges to the district court's attorneys' fees and cost awards. Two challenges raised by BGC relate to the calculation of the lodestar, an additional challenge by BGC plus four challenges raised by PECO relate to the adjustments that were made to the lodestar, while the remaining three challenges (one raised by BGC and two raised by PECO) concern the award for costs and the award for the expense incurred in preparing the fee petition. Because various calculations affect other calculations we will first review the challenges to the lodestar calculation, we will then consider the challenges to the adjustment of the lodestar, and finally we will review the costs and fee petition awards.
1. The Billing Rate for BGC's Attorney
In their cross-appeal, the attorneys for BGC challenge the district court's reduction of some of their hourly rates. Attorneys Herbert Newberg, Alice Ballard, and Earl Trent each set forth their historic hourly rate in affidavits attached to the fee petition.*fn2 PECO did not challenge, and the district court did not reduce Newberg's rate for the period from September of 1975 to December of 1981 or Ballard's rate for the period from January of 1979 to October of 1980. However, for the period thereafter PECO asserted that Newberg's rate should have been limited to $175 per hour and that Ballard's rate should have been limited to $90 per hour. In addition PECO contended that the market rate for an attorney of Trent's experience was at best $90 per hour
PECO based its contention concerning the reduction in the rates for Newberg and Ballard on the fact that the $175 and $90 rates were the rates that had been awarded to Newberg and Ballard in prior civil rights fee disputes. See Institutionalized Juveniles v. Secretary of Public Welfare, 568 F. Supp. 1020, 1034 (E.D. Pa. 1983), aff'd in part and vacated in part, 758 F.2d 897 (3d Cir. 1985) (dealing with Newberg); Kuhn v. Philadelphia Electric Co., Civil Action No. 77-1107 (E.D. Pa. Jan. 20, 1982) (fee order) (dealing with both Newberg and Ballard). Relying on these prior cases, the district court found that those fee awards established Newberg's and Ballard's marketplace billing rates for the period of time discussed in those decisions (through 1982 for Ballard and through 1983 for Newberg). Thus the court reduced Newberg's hourly rate for the period of January 1982 to December of 1983 from $200 to $175. Similarly, the court reduced Ballard's hourly rate for the period from October of 1980 to December of 1982 from $115 to $90. Having reduced Newberg's and Ballard's rate from 1980 through 1983, the district court went on to find that there was "insufficient evidence" to support the post-1982 and post-1983 rates claimed by Ballard and Newberg. The court, therefore, reduced both Newberg's and Ballard's claimed billing rates to rates it felt were "fair and reasonable." With regard to Trent, the court found that he was less experienced than Alice Ballard, and consequently the court concluded that $90 per hour was a reasonable rate for all the hours Trent had worked.
The reasonable value of an attorney's time is the price that time normally commands in the marketplace, which is generally reflected in the attorney's normal billing rate. See In re Fine Paper Antitrust Litigation, 751 F.2d 562, 590-91 (3d Cir. 1984); Lindy Brothers Builders, Inc. v. American Radiator & Standard Sanitary Corp., 487 F.2d 161, 167 (3d Cir. 1973) (Lindy I). The question of an attorney's marketplace billing rate, therefore, is a factual question which is subject to a clearly erroneous standard of review. See In re Fine Paper, 751 F.2d at 591.
The hourly billing rate used in calculating the fees in Institutionalized Juveniles and Kuhn establish a factual basis for Newberg's and Ballard's marketplace rates. Accordingly, the district court's reduction of Newberg's rates between 1981 and 1983 and the reduction of Ballard's rates between 1980 and 1982 are not clearly erroneous. However there is no factual support in the record for the reductions after 1982 and 1983. PECO contended that the rates used in Institutionalized Juveniles and Kuhn represented the maximum rate because inflation slowed in 1984 and 1985. The district court did not accept PECO's argument, but it also did not accept the uncontradicted rates set forth in Newberg's and Ballard's affidavits. Instead, it appears the court felt that because it had reduced the rates for 1980-82 and 1981-83, it should also reduce the claimed rates for 1984-85. The rate reductions for 1984-85 have no support in the record. The historic billing rates set forth in their uncontested affidavits establish marketplace rate. Thus, except for the periods discussed in Institutionalized Juveniles and Kuhn the district court should have accepted the rates in Newberg's and Ballard's affidavits. Moreover, there was no factual basis for reducing the rates set forth in Trent's affidavit. Attorneys are not fungible. Trent's experience relative to Ballard's experience was not determinative of his billing rate; rather the question is what rate Trent commanded in the marketplace. Ballard's affidavit asserts that the rates she charged for her services in relevant periods are consistent with rates charged by comparable practitioners in the Philadelphia legal community for work of similar nature. The rates sought by Trent are for the most part lower. PECO filed no affidavit and offered no testimony contesting the accuracy of Ballard's statement with respect to charges by comparable practitioners. Thus the uncontradicted affidavits were never put in issue, and the district court was not on this record free to disregard them.
Because the district court erred in reducing undisputed hourly rates we will reverse and direct the district court to recalculate the lodestar using the rates set forth in the uncontested affidavits. ...