The opinion of the court was delivered by: Tucker, J.
Presently before the Court are Plaintiffs' Petition for Attorneys' Fees, Costs, and Expenses Pursuant to 42 U.S.C. § 1988 (Doc. 173); Defendant District Council 33's Response and Affidavit in opposition thereto (Docs. 177-178); and Plaintiffs' Reply (Doc. 180). For the reasons set forth below, this Court will grant in part and deny in part Plaintiffs' Petition.
This action arises from Defendants' alleged enforcement of compulsory unionism through numerous collective bargaining agreements that require a "fair share fee" from Plaintiffs and other non-union employees of the City of Philadelphia. Plaintiffs Sharon R. Mitchell, et al., on behalf of themselves and a class of 3,774 non-union employees of the City of Philadelphia ("Plaintiffs"), filed this civil rights action under 42 U.S.C. § 1983, seeking declaratory and injunctive relief, equitable restitution, and attorneys' fees and costs from Defendants, City of Philadelphia and certain municipal officials ("the City"), and District Council 33, AFSCME International, and AFL-CIO ("the Union") (collectively, "Defendants").*fn1
In 1989, the City and District Council 33 agreed to deduct fair share fees from the members of the bargaining unit who decided not to join the union. The collective bargaining agreements between the City and the Union provided for mandatory uniform deductions from the wages of non-union employees. Under those agreements, all nonmembers employed by the City in the District Council 33 bargaining unit pay a uniform agency fee, regardless of the local affiliate that receives a portion of the fees collected. Also, the City is indemnified for any losses it may suffer from the improper deduction of fair share fees. The Union issued notices to Plaintiffs on an annual basis, from 1990 through December 1997, regarding the fair share fees payable by Plaintiffs. From January 1999 through September 20, 2000, Plaintiffs were not provided with annual notices; however, fees were still deducted from their wages.
In their Complaint, Plaintiffs challenged Defendants' practice of collecting fair share fees, alleging: (1) Defendants failed to comply with the constitutional requirements for the collection of agency fees under Chicago Teachers Local No. 1 v. Hudson, 475 U.S. 292, 306-10 (1986),*fn2 and (2) Defendants collected fair share fees in excess of the amounts permitted by the First and Fourteenth Amendments to the United States Constitution because portions of the total fee were used for union activities which cannot be constitutionally financed from compulsory fees of nonmembers. (Compl. 2-3.)
On September 20, 2000 and January 5, 2001, the Union distributed notices to Plaintiffs, representing an aggregate of the expenses for all the locals, and delineated chargeable and nonchargeable costs. Thereafter, two issues were before the Court: (1) whether Defendants were liable for failing to comply with Hudson for deductions occurring from January 1999 through September 20, 2000; and (2) whether Defendants' post-suit notices were constitutionally adequate. Cross-motions for summary judgment were filed in June and July 2001. (Docs. 37 & 44.) The Court heard argument on the motions on September 5, 2001, and the Court issued an order on January 18, 2002 denying the motions upon a finding that there were disputed facts. (Doc. 48.)
After a status conference, Plaintiffs filed a second amended Complaint. (Doc. 49.) Thereafter, Plaintiffs filed a renewed summary judgment motion (Doc. 52), and Defendants filed a cross-motion (Doc. 54). Upon consideration of those motions, the Court issued two orders on September 30, 2004 (Docs. 59 & 62), granting in part Plaintiffs' motion and holding that "DC 33 failed to comply with the constitutional requirements of Hudson when it failed to provide advance notice to Plaintiffs before deducting agency fees from Plaintiffs' wages" (Docs. 59 & 62). However, the Court found the Union's post-suit notices to be constitutionally adequate. (Doc. 62.) The Court also found that the indemnification clauses were not void as against public policy. (Doc. 62.) Turning to the appropriate relief for the constitutional violations, the Court held that damages were "not readily ascertainable from the pleadings and the record," and therefore "stay[ed] the issue of damages until hearing on the appropriate remedy." (Doc. 59.)
After briefing (Doc. 63 & 64) and hearing, the Court ruled that Plaintiffs are entitled to an award of nominal damages (in the amount of $3,774), but declined to award full restitution (Doc. 66). Instead, the Court permitted discovery and scheduled trial on a "refund of the non-chargeable portion of the fair share fee." (Doc. 66.)
Trial commenced on April 17, 2006, and the Court considered the portion of agency fees collected, absent any notice or procedures, that could legitimately be retained by the Union and properly classified as "chargeable" expenditures for its costs of collective bargaining, contract administration, and grievance adjustment. At the close of Plaintiffs' case, the Union moved for a directed verdict, and that motion was granted. (Doc. 91.)
Plaintiffs sought reconsideration, a new trial, and/or relief from judgment. (Doc. 92.) The Court granted their motion in part (Doc. 98), determining that an issue remained as to whether Defendants' deductions were properly charged to Plaintiffs. With respect to the advance notice claim, the Court concluded that Plaintiffs failed to establish with specificity that they suffered actual damages, or that they are entitled to damages other than the nominal damages awarded by the Court as a result of Defendants' failure to comply with the advance notice requirements under Hudson. (Doc. 98.) Therefore, trial was set to resume regarding the issue of chargeability only.
After trial, on September 18, 2008, the Court entered a Memorandum and Order (Doc. 156), stating as follows:
1. Expenses disallowed as chargeable
a. District Council 33 organizing expenses FY 1996;
b. District Council 33 newsletter printing and mailing expenses in excess of expenses incurred to print copies available to nonmembers in union offices in FY 1996 and FY 1997;
c. Expenses taken for seminar at George Meany Center for union organizing in FY 1996.
2. All other expenses, including personnel expenses taken as chargeable are permitted.
Plaintiffs appealed, but the United States Court of Appeals for the Third Circuit affirmed. (Doc. 170.) Presently, Plaintiffs request an award of reasonable attorneys' fees, costs, and expenses.
The fee-shifting statute upon which Plaintiffs' petition is premised provides that in any action brought to enforce certain statutory provisions, including Section 1983, courts may "allow the prevailing party, other than the United States, a reasonable attorney's fee as part of the costs...." 42 U.S.C. § 1988(b). At issue, here, is whether Plaintiffs are entitled to attorneys' fees, costs, and expenses in the range of $418,131.41 to $464,136.41, pursuant to 42 U.S.C. § 1988. That inquiry requires the Court to consider the following two issues: (1) whether Plaintiffs are prevailing parties; and (2) whether the fees requested by Plaintiffs are reasonable.
I. Plaintiffs are Prevailing Parties Because They Succeeded on a Significant Issue in the Litigation and Their Success Materially Altered the Relationship Between the Parties
Plaintiffs are prevailing parties if they succeed on any significant issue in litigation which achieves some of the benefit sought in bringing suit. Hensley v. Eckerhart, 461 U.S. 424, 433 (1983); Holmes v. Millcreek Twp. Sch. Dist., 205 F.3d 583, 593 (3d Cir. 2000). Since the prevailing party inquiry requires only that the suit obtain some of the benefit sought, the plaintiff's failure to obtain the specific relief prayed for in the complaint does not necessarily preclude prevailing party status. See Truesdell v. Phila. Hous. Auth., 290 F.3d 159, 165 (3d Cir. 2002); Ashley v. Atl. Richfield Co., 794 F.2d 128, 135-138 (3d Cir. 1986) (holding that agreement to seal employment record was sufficient to make plaintiff prevailing party although plaintiff sought expungement of record). A litigant's prevailing party status "does not turn on the magnitude of the relief obtained." Farrar v. Hobby, 506 U.S. 103, 114 (1992). Rather, "a plaintiff 'prevails' when actual relief on the merits of his claim materially alters the legal relationship between the parties by modifying the defendant's behavior in a way that directly benefits the plaintiff." Id. at 111-12. Even a nominal damage recovery is sufficient to make the plaintiff a prevailing party because it alters the relationship between the parties by forcing the defendant to pay an amount of money that otherwise would not be paid. Id.
Plaintiffs maintain that they are prevailing parties because they won partial summary judgment entering declaratory relief and nominal damages. (Pls.' Pet. 6, citing Docs. 59 & 62.) They also argue that they won some of the restitutionary damages sought at trial. (Pls.' Pet. 6, citing Doc. 156.) During oral argument, held February 2, 2010, the Union conceded that Plaintiffs qualify for prevailing party status. Such a position is reasonable given that Plaintiffs succeeded in their claim that the Union violated the constitutional precepts of Hudson when it failed to provide advance notice to them before deducting agency fees from their wages. Plaintiffs' success on the notice issue materially altered the legal relationship between the parties by forcing Defendants to pay an amount of money to Plaintiffs that they otherwise would not have paid. Therefore, the Court agrees that Plaintiffs are prevailing parties.
However, establishing a litigant's prevailing party status is only the first step in the attorney fee inquiry. Once that threshold has been crossed, the litigant must demonstrate that it should recover fees under the relevant fee-shifting statute and prove the amount of the fee. See Hensley, 461 U.S. at 433; see generally 10 James Wm. Moore et al., Moore's Federal Practice ¶ 54.171 (3d ed. 2009). Therefore, this Court will proceed to determine Plaintiffs' entitlement to attorneys' fees and the reasonableness of the fees requested.
II. Despite the Nominal Relief Obtained, Plaintiffs are Entitled to Some Attorneys' Fees Based on the Significance of the Legal Issue Prevailed On and the Public Purpose Served
Although a nominal damages recovery does not necessarily disqualify a plaintiff from prevailing party status, such a plaintiff usually is denied fees. See Farrar, 506 U.S. at 115. In Farrar, the Court held that even a plaintiff who formally prevails under Section 1988 may not be entitled to attorneys' fees. Id. Since degree of success is the most critical factor in setting a fee award, "[w]hen a plaintiff recovers only nominal damages because of his failure to prove an essential element of his claim for monetary relief, the only reasonable fee is usually no fee at all." Id. (internal citation omitted).
For guidance in determining whether to award fees to a civil rights plaintiff who recovers nominal damages, courts have turned to the three-part analysis set forth by Justice O'Connor in her special concurrence in Farrar. See, e.g., Hawa Abdi Jama v. Esmor Corr. Servs., 577 F.3d 169, 176 (3d Cir. 2009); Petrunich v. Sun Bldg. Sys., 625 F. Supp. 2d 199, 206 (M.D. Pa. 2008). In Farrar, the plaintiff filed a civil rights action seeking $17 million in damages and prevailed on certain claims, but was awarded only nominal damages of one dollar. 506 U.S. at 108. Although Justice O'Connor agreed that the plaintiff was not entitled to attorneys' fees, she acknowledged that "[t]he difference between the amount recovered and the damages sought is not the only consideration," when determining the degree of success achieved. Id. at 121 (O'Connor, J., concurring). She recognized that "an award of nominal damages can represent a victory in the sense of vindicating rights even though no actual damages are proved." Id. Accordingly, Justice O'Connor urged consideration of the following three factors in evaluating success: (1) the extent of relief recovered in relation to the damages sought; (2) the significance of the legal issue on which the plaintiff prevailed; and (3) the public purpose served by the litigation. Id. at 121-22.
Here, the Union focuses on Plaintiffs' limited degree of monetary success to the exclusion of the other "relevant indicia of success" cited by Justice O'Connor. From the Union's standpoint, "the entire thrust" of Plaintiffs' suit was "to obtain restitution of all fees paid during the two years in question, not some meager portion" (Def.'s Resp. 15); yet, despite that goal, Plaintiffs obtained less than 1% of the relief sought (Def.'s Resp. 1). Specifically, the Union argues that Plaintiffs did not prevail on the following major issues: (1) whether the consolidated local expenses portion of the notices was "substantively adequate;" (2) whether total restitution was appropriate; and (3) whether the Union's agreement to indemnify the City was constitutional. (Def.'s Resp. 3, 13.) In addition, the Union emphasizes that in the first phase of the litigation, the Court awarded only $1 in nominal damages to each fee-payer (totaling $3,774). (Def.'s Resp. 14.) Moreover, after a subsequent damages hearing, the Union's request for a directed verdict was granted, and the Court granted reconsideration and a new trial to address Plaintiffs' chargeability claim, "which resulted in a finding of liability with regard to three of the thousands of expenses calculated by the Union in preparing its chargeability calculations." (Def.'s Resp. 14.) Although Plaintiffs sought to recover $1,942,232.22 (the total fees collected from Plaintiffs between January 1, 1999 and September 20, 2000), the Court held that they were entitled to recover only their actual damages (calculated by the Union to be $13,836.27). (Def.'s Resp. 14.) Thus, the Union argues that Plaintiffs' monetary recovery amounts to only 0.9067% of the total amount sought in the litigation. (Def.'s Resp. 15.)
In response, Plaintiffs declare that the value of this case is not measured in dollars alone. (Pls.' Reply 3.) They underscore that this is not a case where Plaintiffs sought a large payday and received only a pittance (Pls.' Reply 7); rather, Plaintiffs obtained a declaration that the Union's collections for nearly two years were illegal under Hudson (Docs. 59 & 62), and received a refund of fees overcharged by the Union for the period of noncompliance (Doc. 39). According to Plaintiffs, the permanent injunctive relief sought apparently was denied not because Plaintiffs failed to demonstrate a violation of their rights, but because, as a result of this suit, the Union altered its notices and procedures to comply with controlling legal standards. (Pls.' Reply 8.) Plaintiffs further maintain that a reduction of the fee award based on partial success ignores the Hensley Court's admonition that when plaintiffs prevail on the central issue in the suit, their counsel should recover a fully compensatory fee. (Pls.' Reply 4.) Plaintiffs claim that they prevailed on the following central issues in this case: (1) whether Defendants collected fees in violation of Hudson's procedural requirements; and (2) whether the fees collected were appropriately limited to constitutional purposes.*fn3 (Pls.' Reply 5.)
This Court acknowledges that Plaintiffs obtained nominal relief in relation to the damages sought, yet other relevant indicia of success suggest that the victory is not so de minimis as to render unjust the award of attorneys' fees to Plaintiffs. In Farrar, the Court held that the litigation "accomplished little beyond giving petitioners 'the moral satisfaction of knowing that a federal court concluded that [their] rights had been violated' in some unspecified way." 506 U.S. at 114. By contrast, in the instant matter, Plaintiffs garnered more than the moral achievement of a declaration from the Court that the Union's collections for nearly two years were illegal under Hudson. Notably, Plaintiffs achieved their goal of forcing the Union to alter its notices and procedures in compliance with Hudson. As the Seventh Circuit noted in an analogous case, "[t]he mere fact that this goal was achieved through the Union's pre-judgment decision to amend its practices is unimportant," because "the Union would not have acted absent the ...