Here’s today’s second decision about attorneys fees and costs, this time in an inverse condemnation claim out of the Federal Circuit, Bywaters v. United States, No. 2011-1032 (Mar. 1, 2012).
In a class action rails-to-trails takings case under the Little Tucker Act (less than $10,000 per claim, district court venue), the trial court awarded the property owners attorneys fees and costs under the Uniform Relocation Assistance and Real Property Acquisition Policies Act. The government had stipulated to liability and the parties worked together to determine compensation for class members. Eventually, the district court approved a settlement for the entire class of approximately $1.25 million, interest included. The property owners then filed a claim seeking $832,000 in fees for 2,000+ hours of work. The market rate they sought was for attorneys in the District of Columbia (where their office is located), and not the Eastern District of Texas (the lawsuit’s venue).
In response, the government argued for application of the forum rule. The government also argued for the reduction of the fees claimed based on various grounds, including that the hours claimed were unreasonable in light of the government’s stipulation to liability early in the case, and the fact that a fee agreement between appellants and their counsel provided for the award of attorneys’ fees calculated at the greater of counsel’s regular hourly rate or one third of appellants’ total recovery.
Slip op. at 5. The district court used the “lodestar” method (reasonable rate x reasonable time), and used reasonable hourly rates from D.C., and awarded the property owners $826,000. Because that figure represented 2/3 of the recovery and was “extremely high considering the amount at stake in this case and the actual results obtained,” slip op. at 7, the court cut the award in half.
The Federal Circuit first rejected the government’s argument that Fifth Circuit law controlled, not Federal Circuit precedent. The court noted that it has exclusive appellate jurisdiction over the Little Tucker Act claims regardless of trial venue, even though it shares jurisdiction with the regional circuits on URA issues. Because this case was a takings case under the Little Tucker Act, Federal Circuit law controlled even though the case was litigated in the Eastern District of Texas.
The court then held that the district court miscalculated the attorneys fees because it used a two-step process (calculate the lodestar, then reduce it because it was a small case) when it should have considered the “amount involved and the results obtained” and the nature of the work in its calculation of the lodestar figure itself, not as a post-lodestar whack:
In conclusion the district court should have consid-ered the “amount involved and results obtained,” as well as the administrative nature of the work and the fee agreement, in determining the reasonable number of hours expended or the reasonable hourly rate.
Slip op. at 18.
The court also held that the district court should have applied the “forum rate” (Eastern District of Texas) rather than the D.C. rate, because Texas is the “relevant community” for calculating the lodestar.
Contrary to appellants’ contention, nothing in Avera suggests that the forum rate should be disregarded when plaintiffs elect to retain counsel who are located outside the forum in a jurisdiction that charges higher rates than the forum rates.
Slip op. at 20. The court refused to apply the specialized counsel exception (the party cannot find a local attorney to help her), because “[t]here is no evidence to suggest that no local attorneys were competent to handle Bywaters’s case. Nor is there any indication that Bywaters conducted a resonable search for local countl to handle his case.” Id. at 22.
The court vacated the award, and remanded the case for another go at the calculation.
Judge Plager dissented. He agreed with the substantive rulings that the district judge miscalculated the amount when he halved the lodestar figure, but believed that remand was pointless, since “[o]n remand, the same lodestar figure, absent the halving, is the only outcome the record could support.” Dissent at 4. Judge Plager also would have held that using D.C. counsel rates was acceptable because “the plaintiffs explained fully about their search for the best counsel for this type of specialized takings litigation.” Id. at 5. He would have concluded that it was within the district court’s discretion to apply D.C. rates.
For those of you fortunate to be in the position of determining attorneys fees, check this case out.
Bywaters v. United States, No.11-1032 (Fed. Cir. Mar. 1, 2012)