Case: 10-40036 Document: 00511564343 Page: 1 Date Filed: 08/08/2011
IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT United States Court of Appeals
Fifth Circuit
FILED
August 8, 2011
No. 10-40036
Lyle W. Cayce
Clerk
SYLVESTER MCCLAIN, on his own behalf and on behalf of a class of similarly
situated persons; BUFORD THOMAS, on his own behalf and on behalf of a class
of similarly situated persons; PATRICK ROSS, on his own behalf and on behalf
of a class of similarly situated persons; MARY THOMAS, on her own behalf and
on behalf of a class of similarly situated persons; EDDIE K MASK, on his own
behalf and on behalf of a class of similarly situated persons; LEROY GARNER,
on his own behalf and on behalf of a class of similarly situated persons; SHERRY
CALLOWAY SWINT, on her own behalf and on behalf of a class of similarly
situated persons; WALTER BUTLER, on his own behalf and on behalf of a class
of similarly situated persons also known as "A"; FLORINE THOMPSON, on her
own behalf and on behalf of a class of similarly situated persons; CLARENCE
OWENS, on his own behalf and on behalf of a class of similarly situated persons
also known as "C"; CLIFFORD R DUIRDEN, on his own behalf and on behalf of
a class of similarly situated persons; EARL POTTS, on his own behalf and on
behalf of a class of similary situated persons; ROALD MARK, on his own behalf
and on behalf of a class of similary situated persons; PLAINTIFF CLASS; ALL
PLAINTIFFS,
Plaintiffs - Appellants Cross-Appellees
v.
LUFKIN INDUSTRIES INC.,
Defendant - Appellee Cross-Appellant
Appeals from the United States District Court
for the Eastern District of Texas
Before JONES, Chief Judge, and DENNIS and CLEMENT, Circuit Judges.
EDITH H. JONES, Chief Judge:
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After multiple appeals to this court1 and extensive trial and other
proceedings, plaintiffs’ Title VII class action for employment discrimination
against Lufkin Industries, Inc. culminated in a favorable multimillion dollar
judgment and injunctive relief. Before this court – in the final possible dispute
– are challenges by both parties to the district court’s attorneys’ fee award and
Lufkin’s complaint that back pay damages were erroneously authorized in an
earlier appeal. We affirm as to the back pay damages but vacate and remand as
to the attorney’s fees. In particular, given the unrebutted evidence in the record
that it was necessary for plaintiffs to retain counsel from outside the Eastern
District of Texas, the district court abused its discretion in failing to use the
rates counsel charged in their home district as the starting point in the lodestar
calculation.
I. BACKGROUND
In early 1995, Sylvester McClain, a black employee in Lufkin’s trailer
division, filed a complaint with the Equal Employment Opportunity Commission
(EEOC) over his manager’s alleged efforts to demote him. Another Lufkin
employee, Buford Thomas, filed an EEOC claim in February 1997, complaining
that he was denied promotional and training opportunities on account of his
race. The EEOC issued right-to-sue letters on both claims. In 1997, McClain
and Thomas filed a class action under Title VII challenging many of Lufkin’s
employment practices under disparate treatment and disparate impact theories.
The district court certified a class and narrowed the claims in ways not relevant
1
See McClain v. Lufkin Industries, Inc., 108 Fed. App’x. 176 (5th Cir. 2004)
(“McClain I”); McClain v. Lufkin Industries, Inc., 519 F.3d 264, (5th Cir. 2008) (“McClain II”);
McClain v. Lufkin Industries, Inc., 342 F. App’x. 974 (5th Cir. 2009) (“McClain III”).
2
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to the issues before this court. See McClain v. Lufkin Indus., Inc., 187 F.R.D.
267 (E.D. Tex. 1999).
From the start, Plaintiffs were represented by Timothy Garrigan, an
attorney based in the Eastern District of Texas with extensive experience in
employment law and civil rights. The court complimented his firm in the
certification order:
Counsel for the Plaintiffs are known to this court as trial lawyers
experienced in employment law, civil rights actions, and complex
litigation. Counsel have documented their qualifications through
documents submitted to the court recounting the breadth of their
experience in these areas of the law. Finally, class counsel have
pursued this suit and related issues with an unmistakable zeal.
Id. at 281-82. Garrigan headed a three-lawyer firm in Nacogdoches, Texas.
After obtaining class certification in 2000, Garrigan found that Lufkin was
unwilling to settle, and that his clients might face protracted litigation. Thus,
Garrigan felt it was imperative to associate with co-counsel in order to
successfully try this case. The case’s ultimate trajectory, which spanned a
decade and involved thousands of attorney hours, confirmed his initial
impression.
Garrigan consulted with many experienced employment lawyers in Texas
and found that “none of them was willing or able to commit the time and
resources necessary to associate as co-counsel and prosecute this class
action . . . .” The record includes numerous affidavits from experienced Texas
litigators and even the founder and past president of the Texas Employment
Lawyers Association declaring, under oath, that no Texas attorneys were
available to join Garrigan’s team on this particular case. It is clearly established
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that Garrigan diligently searched for, but could not find, any lawyers in Texas
who were willing and able to join him in litigating this class action.2
Significantly, Lufkin submitted nothing to refute or challenge this
evidence. Lufkin submitted the declarations of five Texas lawyers regarding
their hourly rates, but none of those declarants claimed that they, or anyone else
2
For instance, J. Derek Braziel, an experienced Texas litigator in labor and
employment law, explained: “I do not work on employment discrimination class action cases
for largely financial reasons, even though I am competent and have the resources to do so. . . .
Employment discrimination class actions usually take much longer to litigate than the average
employment discrimination or wage and hour case. Defendant companies often use their
substantial financial advantage to outstaff and outwork plaintiffs with limited personal
resources. . . . Employment discrimination class actions usually involve extensive expert
testimony and the commitment of financial resources that far exceeds other employment law
cases. . . . [There is] a significant risk that a fee will never be collected. Even in the best of
circumstances, payment for class counsel’s time and reimbursement of expenses is delayed for
several years. For these reasons neither I, nor my firm, represent plaintiffs in employment
discrimination class actions.”
Claude Welch, an attorney in Lufkin, Texas with experience in complex civil litigation,
declared: “There is a need for lawyers in the Eastern District of Texas who are capable of and
willing to represent clients in complex employment discrimination class action and other
complex civil rights cases. I do not generally undertake such cases because of their difficulty,
their complexity, and because the uncertainty of success has generally outweighed the
prospect of obtaining a contingent statutory fee.”
Steven B. Thorpe, an experienced litigator in Dallas, declared: “My practice focuses in
large part on employment civil rights cases in which I represent plaintiffs. . . . [T]he greatest
portion of my practice prior to approximately 1985 was in the representation of plaintiffs in
class action discrimination suits. At that time I and the firm with which I was associated
largely abandoned that area of practice because we found it to be financially infeasible. At this
time and for more than a decade I have done no class action employment litigation. . . . I do
not know of any other experienced plaintiffs’ class action employment lawyers in Texas who
were available, able and willing to commit the time and expenses necessary to the prosecution
of this case.”
Margaret A. Harris, the founder and past president of the Texas Employment Lawyers
Association, declared: “While there are certainly lawyers in this State with the requisite
knowledge to do the work that the lawyers from Goldstein Demchak provided, they do not to
the best of my knowledge have the resources to have provided those services. Similarly, while
there are law firms in this State who have the financial resources to have stepped in as Class
Co-Counsel, they do not to the best of my knowledge have the requisite knowledge of the law
to have done the work that the lawyers and other staff members from Goldstein Demchak
provided.”
4
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they knew, would have been willing and able to get involved in this case in 2000.
It is therefore uncontested that Garrigan was not able to obtain support from
Texas co-counsel.
Unable to find suitable co-counsel in Texas, Garrigan turned to the firm
now known as Goldstein, Demchak, Baller, Borgen & Dardarian (“Goldstein
Demchak”), based in Oakland, California. Goldstein Demchak, which has a
nationwide reputation as a plaintiffs’ employment class action firm, agreed to
associate with Garrigan and take part in this case.
Ultimately, the case went to a bench trial, and in January 2005, the
district court found that Lufkin had discriminated against black employees in
certain initial work assignments and in promotion decisions. The court ordered
back pay, attorneys’ fees, and injunctive relief. This court affirmed the disparate
impact promotion claims after concluding that Thomas had properly exhausted
his administrative remedies when he filed his 1997 EEOC complaint, McClain
II, 519 F.3d at 264, but we reversed the judgment as to the initial assignment
claims because plaintiffs had not exhausted their administrative remedies. This
court directed the district court to award back pay damages for the lost
promotions dating back to 1994. Id. at 281. We also vacated and remanded the
trial court’s injunctive order, which was too vague, and its attorneys’ fee award,
which was insufficiently explained. Id. at 283-84.
On remand, the new district judge, who stepped in to replace the deceased
trial judge, scrupulously followed the mandate of McClain II.3 Pertinent to this
appeal, he awarded $3.3 million in back pay to the class for discriminatorily lost
promotions dating back to 1994. He issued a twenty-four page ruling addressing
plaintiff counsel’s application to receive over $7.7 million in attorneys fees. (The
3
The court’s detailed injunction against Lufkin was not appealed.
5
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award exceeding $1 million for counsel’s costs and expenses has not been
appealed.) After sifting through voluminous billing records, the court ruled for
plaintiffs’ counsel on nearly all issues, and, in particular, declined to reduce their
fees beyond a self-adjustment offered by counsel for having pursued unsuccessful
Title VII claims. The court ordered a generous $400 hourly rate for Garrigan,
the lead attorney. It refused, however, to order payment to partners at
Goldstein Demchak at a $650 hourly rate, the prevailing rate in the San
Francisco Bay Area. The court’s discussion is concise:
2. Partners at the Goldstein Demchak Law Firm
Plaintiffs contend that the court should disregard the local rates for
the Goldstein Demchak Law Firm (“Demchak Firm”) and apply a
rate commensurate with attorneys from the northern California
area where the Demchak Firm is located because of its unique
experience dealing with employment discrimination class action
cases.
When the Demchak Firm entered the case in 2000, Mr. Garrigan
had already certified the case and Lufkin’s appeal had been rejected.
While it was still necessary to mediate the case, complete discovery,
and try the case, Mr. Garrigan participated to a greater extent than
any other attorney. He certified the class, was lead counsel
throughout the entirety of the case, and examined 11 out of 22
witnesses at trial. The Demchak Firm possessed experience settling
class action employment cases, but there is no evidence to suggest
that they were experienced at trying such cases.
Plaintiffs have firmly established that in calculating the fee for
Mr. Garrigan the appropriate community for rate comparison
purposes are [sic] those who participate in complex litigation in the
Eastern District of Texas. It would be difficult to justify assigning
a higher hourly rate to second-chair attorneys, no matter how
skilled in employment law. No unusual circumstances exist to
suggest that those in the Eastern District who have experience with
complex litigation were unavailable and could not have effectively
participated. The court is aware of many attorneys in the Eastern
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District experienced in employment law and complex litigation.
Two who would not be likely to have a conflict with Lufkin
Industries are Clyde Siebman and John Werner. Absent sufficient
evidence that experienced, qualified local counsel were unwilling to
participate, the court will not assume counsel from distant states
were necessary. Counsel at the Demchak Firm are located in
Oakland, California, but it was their choice to participate on this
case. Mr. Garrigan brought the suit, certified the class and carried
the yeoman’s burden at depositions and trial. Based on the
affidavits, Mr. Garrigan was the attorney with extensive experience
as first chair in actual trials. The Demchak Firm’s attorneys
undoubtedly provided valuable support but they cannot expect to
receive rates fifty percent higher than Mr. Garrigan’s, especially
when the court has approved the time they spent in traveling from
California.
Hourly rates should be computed according to the prevailing market
rates in the relevant legal market. [citation omitted] This court
will apply local rates for the Demchak firm. [citation omitted] . . .
However, the rates should not be less than $250/hr, as Defendant
contends. . . .
The court awarded $400 per hour to partners at Goldstein Demchak, with
comparably reduced awards for their associates and paralegals. The final total
fee award was approximately $4.7 million.
On appeal, the parties aggressively dispute: (1) the award of local district
rates to the Goldstein Demchak firm; (2) the court’s refusal to disallow more of
counsel’s hours allegedly incurred for unsuccessful claims; and (3) the
calculation of the back pay award. Jurisdiction here is founded on 28 U.S.C.
§ 1291.
II. ATTORNEYS’ FEE AWARD
The district court’s factual findings as to the hours reasonably expended
and the reasonable rates for attorneys’ fees are reviewed by this court for clear
error. La. Power & Light Co. v. Kellstrom, 50 F.3d 319, 324 (5th Cir. 1995).
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When the court applies to this “lodestar” the twelve Johnson adjustment
factors,4 its decision — absent an error of law — is reviewed for abuse of
discretion. Id. at 329.
A. Community versus out-of-district hourly rates
Asserting that California counsel were entitled to be reimbursed at
California rates rather than the rate awarded to counsel in the forum, plaintiffs
first contend that the district court erred because no other local counsel were
willing to assist Garrigan in this complex class action. They also contend that
a recent Supreme Court decision supports an award to plaintiffs’ counsel that
matches the rates allegedly paid by Lufkin to its Houston attorneys. See Perdue
v. Kenny A. ex rel. Winn, 130 S. Ct. 1662 (2010). Lufkin, for its part, seeks an
even larger reduction in the fee award for work performed by plaintiffs’ counsel
on unsuccessful claims in the litigation. We are constrained to vacate the fee
award and remand for re-calculation.
The precedents and purposes governing fee-shifting awards in civil rights
cases are well established. The awards facilitate plaintiffs’ access to the courts
to vindicate their rights by providing compensation sufficient to attract
competent counsel. Fee awards must, however, be reasonable. Hensley v.
Eckerhart, 461 U.S. 424, 433, 103 S. Ct. 1933, 1939 (1983). The linchpin of the
reasonable fee is the lodestar calculation, a product of the hours reasonably
expended by the law firms and the reasonable hourly rate for their services. Id.
Charges for excessive, duplicative, or inadequately documented work must be
excluded. Watkins v. Fordice, 7 F.3d 453, 457 (5th Cir. 1993).
Seminal to this case is the principle that “reasonable” hourly rates “are to
be calculated according to the prevailing market rates in the relevant
4
See Johnson v. Georgia Highway Express, Inc., 488 F.2d 714 (5th Cir. 1974).
8
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community.” Blum v. Stenson, 465 U.S. 886, 895, 104 S. Ct. 1541, 1547 (1984).
Further, Blum noted, “the burden is on the applicant to produce satisfactory
evidence . . . that the requested rates are in line with those prevailing in the
community for similar services by lawyers of reasonably comparable skill,
experience and reputation.” Id. at 896 n.11. In an unbroken and consistent line
of precedent, this court has interpreted rates “prevailing in the community” to
mean what it says. Thus, as early as 1974, this court required district courts to
consider the customary fee for similar work “in the community.” Johnson,
488 F.2d at 718; see also Van Ooteghem v. Gray, 774 F.2d 1332, 1338 (5th Cir.
1985) (Title VII guarantees “fair compensation” and not whatever “lions at the
bar” may command); Alberti v. Klevenhagen, 896 F.2d 927, 931 (5th Cir. 1990)
vacated in part on reh’g, 903 F.2d 352 (1990); Islamic Ctr of Miss., Inc. v. City of
Starkville, Miss., 876 F.2d 465, 469 (5th Cir. 1989); Watkins, 7 F.3d at 458-59;
Green v. Adm’rs of Tulane Educ. Fund, 284 F.3d 642, 662 (5th Cir. 2002); Tollett
v. City of Kemah, 285 F.3d 357, 368 (5th Cir. 2002); Scham v. District Courts
Trying Criminal Cases, 148 F.3d 554, 558 (5th Cir. 1998). Most telling, perhaps,
is this court’s decision in a landmark affirmative action case reducing the fee of
plaintiffs’ counsel, a former U.S. Assistant Attorney General and subsequent
U.S. Solicitor General, from the rates he charged in Washington, D.C., to the
prevailing rate in the forum, Austin, Texas. Hopwood v. State of Texas, 236 F.3d
256, 281 (5th Cir. 2000) (discussing Ted Olson’s billing rates).
A number of our sister circuits, however, have taken the position that out-
of-district counsel may be entitled to the rates they charge in their home
districts under certain limited circumstances. The Sixth Circuit has observed
that “[w]hen fees are sought for an out-of-town specialist, courts must determine
(1) whether hiring the out-of-town specialist was reasonable in the first instance,
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and (2) whether the rates sought by the out-of-town specialist are reasonable for
an attorney of his or her degree of skill, experience, and reputation.” Hadix v.
Johnson, 65 F.3d 532, 535 (6th Cir. 1995) (citing Chrapliwy v. Uniroyal, Inc.,
670 F.2d 760, 768-69 (7th Cir. 1982)). Other circuits have used a similar
approach. See Zolfo, Cooper & Co. v. Sunbeam-Oster Co., 50 F.3d 253, 259-60
(3d Cir. 1995); Casey v. City of Cabool, Mo., 12 F.3d 799, 805 (8th Cir. 1993);
Nat’l Wildlife Fed’n v. Hanson, 859 F.2d 313, 317 (4th Cir. 1988); Maceira v.
Pagan, 698 F.2d 38, 40 (1st Cir. 1983); Donnell v. United States, 682 F.2d 240,
252 (D.C. Cir. 1982).
But the two-prong Hadix test is applied cautiously: even courts that
concluded out-of-district counsel were necessary often affirmed reduced fees for
those attorneys. See Casey, 12 F.3d at 806 (approving a rate reduction for out-of-
district counsel from $195 per hour to $150 per hour); Zolfo, 50 F.3d at 259-61
(noting that under 11 U.S.C. § 330, the starting point for a fee calculation should
be the attorneys’ home district, but nevertheless affirming the district court’s use
of in-district rates as the starting point because it “achieved substantially the
same result”). Indeed, these circuits have stressed that appellate courts should
be particularly reluctant to find an abuse of discretion. See, e.g., Nat’l Wildlife,
859 F.2d at 317 (“The computation of attorneys fees is primarily the task of the
district court, and we are not entitled to disturb a district court's exercise of
discretion even though we might have exercised that discretion quite
differently.”); Zolfo, 50 F.3d at 261 (“The bankruptcy court cut Zolfo Cooper’s
total compensation request approximately twelve percent. When faced with a
reduction of ten percent in a similar case, we stated that ‘[n]o court, viewing a
record of this magnitude from the distance inherent in appellate review, could
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assess the reasonability of a reduction as slight as ten percent with flawless
precision.’” (citation omitted)).
To fulfill the purpose of Section 1988 fee awards, while accommodating
Blum’s and this court’s focus on local forum rates for attorney fees, we hold that
where, as here, abundant and uncontradicted evidence proved the necessity of
Garrigan’s turning to out-of-district counsel, the co-counsel’s “home” rates should
be considered as a starting point for calculating the lodestar amount. Because
local rates may well reflect a lower cost of living in the forum, which will also be
indicative of lower potential damage awards, the district court retains discretion
to adjust the lodestar and achieve an overall reasonable fee award.5
Here, the district court carefully reviewed the hours billed by all counsel
and assessed counsel’s rates. In doing so, it adjusted the local prevailing rate
upward to award the principal trial counsel, Mr. Garrigan, a local attorney, $400
per hour. The court, however, adjusted the claimed hourly rates of the Goldstein
Demchak attorneys downward from those prevailing in their hometown
California market ($650 per hour for partners and proportionately lower for
associates and paralegals) to those prevailing in the Eastern District of Texas.
The court reasoned that: (1) it had not been shown that attorneys from outside
the Eastern District of Texas were necessary to the representation of the
plaintiff class; (2) the Fifth Circuit requires compensation at locally prevalent
rates rather than the rates charged in one of the highest priced legal markets in
the United States; (3) the Goldstein Demchak attorneys performed second-chair
trial duties, which did not entitle them to be paid at rates fifty percent higher
than those of Garrigan.
5
Our decision in Hopwood, supra, is not inconsistent with this holding. Hopwood
affirmed the district court’s finding that higher-priced out-of-district counsel were not
essential to prosecuting the appeal for which compensation was sought.
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Unfortunately, the district court clearly erred in finding that local counsel
were readily available to assist Garrigan, and it legally erred in suggesting that
local community rates are always required when out-of-district counsel are
employed. These errors require us to reverse and remand the award to the
Goldstein Demchak lawyers for further consideration. Some further elaboration
is useful.
First, as was discussed above, the record is replete with affidavits from a
variety of expert employment lawyers who swore that no Texas attorneys were
willing and able to assist in such a large case that might drag on for years
without any guarantee of financial remuneration. Lufkin provided no rebuttal
evidence. The district court explained only that it was “aware” of many
attorneys in the Eastern District experienced in employment law and complex
litigation, and it named two attorneys, neither of whom is otherwise mentioned
in the evidence. Yet, “[t]he hourly fee awarded must be supported by the record;
the district court may not simply rely on its own experience in the relevant legal
market to set a reasonable hourly billing rate.” League of United Latin Am.
Citizens v. Roscoe I.S.D., 119 F.3d 1228, 1234 (5th Cir. 1997). The district court
clearly erred in finding contrary to the record that local attorneys were available
to assist in the representation.
Second, we here clarify our adherence to the common view of circuit courts
that in the unusual cases where out-of-district counsel are proven to be
necessary to secure adequate representation for a civil rights plaintiff, the rates
charged by that firm are the starting point for the lodestar calculation. See
generally Hadix, 65 F.3d at 535; Zolfo, Cooper & Co., 50 F.3d at 259-61; Casey,
12 F.3d at 805-06; Nat’l Wildlife Fed’n, 859 F.2d at 317; Maceira, 698 at 40. This
court’s focus on local community rates, like that of the Supreme Court in Blum,
sets a floor for compensation, to emphasize that civil rights litigation under a
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fee-shifting statute is not a pro bono enterprise. On the other hand, the statutes’
purposes are not fulfilled if counsel reap a windfall at the expense of a defendant
by overcharging for their services. See Riverside v. Rivera, 477 U.S. 561, 580
(1986) (“Congress intended that statutory fee awards be adequate to attract
competent counsel, but not produce windfalls to attorneys.” (internal quotations
and citations omitted)). Nor, as we have put it, are counsel necessarily entitled
to what “lions at the bar” command. See Van Ooteghem, 744 F.2d at 1338. The
trial court legally erred by using the Eastern District of Texas rates for
Goldstein Demchak as its starting point in this unusual situation.
As a consequence of these problems, the fee award to Goldstein Demchak
must be recalculated on remand. The firm’s California rates ought not be simply
inserted into the court’s previous calculations; that they are the new starting
point does not require them to be the end point of analysis. See cases cited
supra. It is apparent that the court carefully tailored the award, adjusting it,
inter alia, for the second chair role played by the firm, approving hourly rates
for travel time, removing a small amount of duplicative work and as will be
noted, discounting the hours spent on unsuccessful claims in the litigation. To
the extent the court deems appropriate, it may have to reconsider all aspects of
the fee award to achieve reasonable compensation in light of the results obtained
for the class members.
B. Comparability of plaintiffs’ and defense’s counsel fees
Although we have concluded already that remand is necessary, it is
appropriate to address and firmly reject plaintiffs’ other challenge to the fee
award, arising from the Supreme Court’s recent opinion in Perdue v. Kenny A.
ex rel. Winn, 130 S. Ct. 1662 (2010). In Perdue, the Court approved, only “in
extraordinary circumstances,” an increase in the attorneys’ fee lodestar “due to
superior performance and results.” Id. at 1669. Two Justices specially
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concurred in emphasis of the rarity of such cases. See id. at 1677 (Kennedy, J,
concurring); id. at 1677-78 (Thomas, J., concurring). True, Perdue notes in
passing that “the lodestar method produces an award that roughly approximates
the fee that the prevailing attorney would have received if he or she had been
representing a paying client who was billed by the hour in a comparable case.”
Id. at 1672 (emphasis in original). But Perdue never requires or even hints at
the plaintiffs’ proposition: that their hourly rates should approximate those
charged by the defense counsel.
The plaintiffs persuaded the district court to allow discovery of defense
counsel’s fees and to write on the question of parity between plaintiff and
defense counsel. No prior Fifth Circuit authority requires this comparison, nor
does common experience, because the tasks and roles of counsel on opposite sides
of a case vary fundamentally. If there were logical comparability, this court’s
decisions would have recognized it in the Johnson factors or in past lodestar
decisions. And if, perchance, defense counsel had charged less in the course of
this litigation, plaintiffs would have avoided any paean to comparability. See
Graves v. Barnes, 760 F.2d 200 (5th Cir. 1983). To top it off, opposing counsel’s
total charge for the litigation was $4,864,923.37 – only $124,728 more than the
court awarded to plaintiffs. That difference is just 2.63% of plaintiffs’ total fee
award (and 2.15% of plaintiffs’ total award including costs). One would suppose
a 2.63% disparity falls within a “rough approximation,”6 but this leads plaintiffs
6
At least one other court has referred to a 10 percent reduction in fee awards as
“slight.” See Zolfo, 50 F.3d at 261 (“The bankruptcy court cut Zolfo Cooper’s total
compensation request approximately twelve percent. When faced with a reduction of ten
percent in a similar case, we stated that ‘no court, viewing a record of this magnitude from the
distance inherent in appellate review, could assess the reasonability of a reduction as slight
as ten percent with flawless precision.’” (citation omitted)).
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down a new rabbit trail, and they begin to argue about the higher time-value of
money for fees paid during the litigation than at its conclusion.
We decline to layer needless complexity in an area in which current law
is practical and clear. On remand, the district court need not consider Perdue.
C. Fees for unsuccessful claims
On cross-appeal, Lufkin attacks the other half of the district court’s
lodestar calculation – the number of hours reasonably expended. Lufkin claims
that plaintiffs were awarded fees accrued in pursuing claims that were not
successful. While plaintiffs initially waged an across-the-board challenge to
Lufkin’s employment procedures, the disparate treatment claims were
dismissed,7 and they prevailed only on the disparate impact claim relating to
Lufkin’s promotion practices. Lufkin must show clear error in the district court’s
factual determinations.
Our decision to remand the case to the district court to recalculate the fee
award using Goldstein Demchak’s home-district rates as a starting point also
disposes of this issue. Calculating fee awards is a holistic endeavor. See
generally Hensley, 461 U.S. at 429-37 (explaining that the amount of fees “must
be determined on the facts of each case” and noting numerous competing
considerations that might be balanced in determining the proper “equitable
judgment”). Consequently, the district court may deem it necessary to
reconsider this element of the fee award.
III. BACK PAY CALCULATIONS
Lufkin argues on cross-appeal that the district court erred in its
calculation of back pay. Following the instructions of the McClain II panel, the
district court awarded plaintiffs $3.3 million in back pay damages and $2.2
7
See McClain II, 519 F.3d at 282-83.
15
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million in pre-judgment interest to reflect a total of 136 lost promotions. We
omit discussion of the finer details of the back pay award except to note that
damages commence on March 6, 1994, or 300 days before McClain filed his
EEOC claim. Title VII provides that, except for continuing violations like
harassment, damages may only be awarded for violations that occurred 300
days before an EEOC charge is filed. See 42 U.S.C. 2000e-5(e)(1).
Lufkin now contends that the district court should have awarded damages
commencing no earlier than April 2, 1996, or 300 days before Thomas filed his
EEOC claim. Lufkin reasons that because McClain II held that only Thomas’s
EEOC claim sufficiently exhausted administrative remedies, only that claim
may provide the benchmark for the 300-day calculation. Starting damages two
years later, Lufkin argues, produces two results: the $593,208 in damages
assessed for 1994-95 should be vacated; and the entire back pay award for the
post-1996 period should be vacated because there is no statistically significant
indication of racial discrimination using post-1996 data.
Lufkin does not appear to dispute that the district court correctly followed
the instructions of McClain II. Therefore, Lufkin’s attack on the district court’s
order is really an attack on the holding of McClain II. This court’s rule of
orderliness prevents one panel from overruling the decision of a prior panel.
Teague v. City of Flower Mound, 179 F.3d 377, 383 (5th Cir. 1999). In addition,
under the law-of-the-case doctrine, “an issue of law or fact decided on appeal
may not be reexamined either by the district court on remand or by the appellate
court on a subsequent appeal.” Fuhrman v. Dretke, 442 F.3d 893, 896 (5th Cir.
2006) (citations and quotations omitted). Nevertheless, Lufkin argues that we
may in effect overrule the previous panel because (1) an intervening 2010
Supreme Court opinion clarifies the 300-day time bar; (2) the law of the case
does not apply because the McClain II implicit decision on limitations was not
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squarely considered by the prior panel and was clearly wrong; and (3) McClain II
may be set aside in order to prevent manifest injustice. On this record, we must
reject these contentions.
First, the intervening Supreme Court decision on which Lufkin relies adds
nothing. In Lewis v. City of Chicago, 130 S. Ct. 2191 (2010), the Court rejected
class certification for a sub-class of plaintiffs who alleged injury prior to the
Title VII 300-day bar. Lewis neither forged new law nor elaborated on the
300-day period. Indeed, the 300-day statutory bar was clear well before Lewis.
See, e.g., United Air Lines, Inc. v. Evans, 431 U.S. 553, 558 (1977)
(“A discriminatory act which is not made the basis for a timely charge is the
legal equivalent of a discriminatory act which occurred before the statute was
passed . . . . [It] has no present legal consequences.”).
Second, Lufkin claims that McClain II overlooked the question of the
proper date on which to commence damages for the lost promotion claim, and
therefore, the law-of-the-case doctrine does not apply. McClain II noted,
however, that Lufkin did not contest Thomas’s 1997 EEOC claim at trial:
Although McClain’s EEOC complaint and the OFCCP investigation
failed to exhaust the employees’ class claims, Buford Thomas’s
EEOC complaint carries part of the requisite burden. . . . We
conclude, however, that exhaustion was sufficient. Significantly,
Lufkin did not contend otherwise in the trial court” (emphasis
added).
See 519 F.3d at 275. According to Lufkin, the McClain II panel erred by not
following the logic of its argument to the conclusion that any damages owed to
the class for lost promotions must therefore be limited to the 300-day period
preceding Thomas’s claim. That McClain II did not go this extra mile is clear.
That a proper application of the Title VII statute of limitations would have
required this result is also clear.
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The question before this court, then, is whether the law of the case
doctrine should not apply either because McClain II overlooked this point or
because manifest injustice ensues from a failure to vacate and remand the
damage award.
Lufkin, we believe, does not merit our exercise of discretion to “correct”
McClain II for two reasons. First, Lufkin waived its right to complain about the
correct application of the time bar. Lufkin acknowledges in this appeal that it
did not question at trial the sufficiency of Thomas’s EEOC claim to exhaust
administrative remedies for the class. Lufkin also admits that, as a
consequence, it made no argument in the trial court or to this court on appeal
concerning the proper time bar if Thomas’s exhausted claim became the linchpin
for the class’s claims. Yet Lufkin strenuously challenged, and we ultimately
upheld its challenge, of the sufficiency of McClain’s EEOC charge to exhaust
remedies for the class. Why Lufkin chose not to question, as a fallback, the
ramifications of Thomas’s EEOC claim is unstated. Lufkin added Thomas’s
EEOC charge to the trial court record. Lufkin now asserts that “no one” at the
trial court level sought relief on that charge. But it is part of the record and
Lufkin does not deny that it has operative effect. That this court overlooked how
the 300-day statute of limitation would apply to claims founded on Thomas’s
EEOC charge is in large measure a product of Lufkin’s oversight.
Second, despite the large sum of damages alleged to turn on this issue, we
do not find “manifest injustice” that necessitates “correction.” This case has been
in litigation nearly fifteen years and has spawned five appeals. Vacating the
damage award and remanding for further proceedings would be a costly and
complex undertaking. It is likely that whatever amount Lufkin successfully
shaved off the damage award would be offset by the attorneys’ fees plaintiffs
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would accrue on remand. Given this economic reality and the background
circumstances, justice is better served by finality.
We therefore affirm the district court’s back pay calculation.8
CONCLUSION
We maintain–indeed, this panel has no authority to abrogate–our
longstanding rule that attorneys for successful civil rights plaintiffs should
presumptively receive local forum prevailing rates. The case before us today,
however, is atypical because an avalanche of unrebutted evidence established
that (1) plaintiffs’ counsel required assistance in prosecuting the case and (2) no
lawyers within the district or state were available to assist on this particular
case. As a result, the trial court erred in failing to calculate the initial lodestar
using the rates Goldstein Demchak attorneys typically charge in their own home
district. The court, on remand, must reconsider the fee award using those rates
as a starting point. We intimate no view on the final fee award to be issued.
There is no reversible error, however, in the district court’s calculation of
back pay.
For the foregoing reasons, the judgment of the district court is
AFFIRMED IN PART, VACATED AND REMANDED IN PART.
8
Because we conclude that the district court did not err in its use of 1994 as a
backstop, we do not address Lufkin’s arguments as to plaintiffs’ inability to demonstrate a
statistically significant shortfall in promotions.
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No. 10-40036
EDITH H. JONES, Chief Judge, concurring:
Although it is unusual, I feel obliged to clarify a couple of points because
of Judge Dennis’s concurrence and to add one overarching comment.
Judge Dennis suggests that the majority opinion does not “categorically
prohibit” district courts from comparing the fees of defense counsel and
prevailing plaintiffs’ counsel when statutory fee shifting occurs. The language
may not be “categorical,” but it certainly disfavors inquiries on the precise
“comparability” of plaintiffs’ and defense counsel’s fees such as the plaintiffs
sought here. Because neither Judge Dennis nor the plaintiffs cite any authority
besides dicta in Perdue supporting the inapt comparison, and such comparisons
are bound to distract district courts from the basic question of the
reasonableness of the plaintiffs’ fees, questions of comparability “layer needless
complexity” in an area where the law is practical and clear.
Judge Dennis also suggests that the majority does not approve the trial
court’s characterization of the Goldstein Demchak firm’s services as those of
second-chair counsel. Of course we did. This opinion finds error in two of the
three relevant findings by the district court, but we do not criticize its third
finding, that “Goldstein Demchak attorneys performed second-chair trial
duties . . . .” Moreover, we note that because the district court “carefully tailored
the award, adjusting it, inter alia, for the second-chair role played by the firm,”
it may have to reconsider all aspects of the fee award. No clear error was shown
in this finding by the district court, which reviewed the previous proceedings
thoroughly. This finding by the district court is not reversed, and it may become
relevant on remand.
It cannot escape the reader’s attention that the Goldstein Demchak firm
has been authorized to receive several million dollars in fees, and a million
dollars in expenses, for prevailing in this protracted case. But to them, that’s
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not enough, and they seek an hourly increase that will add $3 million more to
their award. If that happens, the attorneys will have received nearly double the
dollar award of the plaintiffs. What has fee shifting come to? This is not an
appeal about incentivizing modestly compensated attorneys for pursuing noble
goals: the $400 hourly rate awarded to Mr. Garrigan is hardly a day laborer’s
fee. This appeal is designed simply to enrich, not to enhance or encourage. The
Supreme Court holds that fee-shifting cannot bring a windfall to attorneys. See
Rivera, supra. On remand, the district court should exercise its discretion
within the parameters we have set out to prevent a windfall recovery. See
Hensley, supra.
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DENNIS, Circuit Judge, concurring in the judgment.
I agree with much of the majority opinion — particularly its adoption of
the generally accepted rule that “[w]hen fees are sought for an out-of-town
specialist [attorney], courts must determine (1) whether hiring the out-of-
town specialist was reasonable in the first instance, and (2) whether the rates
sought by the out-of-town specialist are reasonable for an attorney of his or
her degree of skill, experience, and reputation.” Hadix v. Johnson, 65 F.3d
532, 535 (6th Cir. 2005).1 I further agree that the application of this rule to
the facts of this case requires us to vacate the district court’s award of
attorneys’ fees to Goldstein Demchak and remand for reconsideration using
the firm’s usual rates as the basis for calculating the lodestar figure. I also
agree with the majority’s decision to affirm the district court’s calculation of
back pay.
Insofar as the majority opinion states that the Supreme Court’s recent
opinion in Perdue v. Kenny A. ex rel. Winn, 130 S. Ct. 1662 (2010), does not
require parity between the hourly rates or total fees of the prevailing party’s
counsel and the other side’s counsel, I agree with that conclusion. However,
the Perdue Court’s comment that “the lodestar method produces an award
that roughly approximates the fee that the prevailing attorney would have
received if he or she had been representing a paying client who was billed by
the hour in a comparable case,” id. at 1672, does indicate to me that the
1
This approach has been followed, with minor variations, by at least nine circuits. See,
e.g., Simmons v. N.Y. City Transit Auth., 575 F.3d 170, 175-76 (2d Cir. 2009); Mathur v. Bd.
of Trustees of S. Ill. Univ., 317 F.3d 738, 744 (7th Cir. 2003); Zolfo, Cooper & Co. v. Sunbeam-
Oster Co., 50 F.3d 253, 259 (3d Cir. 1995); Casey v. City of Cabool, Mo., 12 F.3d 799, 805 (8th
Cir. 1993); Gates v. Deukmejian, 987 F.2d 1392, 1405-06 (9th Cir. 1992); Nat’l Wildlife Fed’n
v. Hanson, 859 F.2d 313, 317 (4th Cir. 1988); Maceira v. Pagan, 698 F.2d 38, 40 (1st Cir. 1983);
Donnell v. United States, 682 F.2d 240, 252 (D.C. Cir. 1982).
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hourly rates or total fees charged by defense counsel are relevant to the
question of what is a reasonable hourly rate or total fee for a prevailing
plaintiff’s counsel. As the Seventh Circuit has put it, “when the defendant
has hired expensive, out of town counsel, the plaintiffs seem justified in
saying that the nature of the case required the skills of out of town
specialists.” Chrapliwy v. Uniroyal, Inc., 670 F.2d 760, 768 n.18 (7th Cir.
1982). In at least some cases, the “hourly rates charged by the defendant’s
attorneys provide a helpful guide in determining whether similarly high rates
and hours requested by the plaintiffs were reasonable.” Id. I do not read the
majority opinion as categorically prohibiting district courts from ever
considering the rates charged by the opposing party’s counsel when
determining fee awards under fee-shifting statutes. In any event,
consideration of defense counsel’s fees appears to be unnecessary in the
present case, given that “an avalanche of unrebutted evidence” (in the
majority’s words) already establishes that Goldstein Demchak’s usual rates
are the proper basis for the lodestar calculation.
The majority opinion does not address the question of whether the
district court committed clear error by characterizing the Goldstein Demchak
attorneys as playing a mere “second-chair” role.2 It is unclear whether the
characterization of an attorney as “second-chair” is at all relevant to the
proper calculation of the fee award.3 But even if it is, the undisputed
2
Normally there would be good reason to defer to the trial judge’s characterization of
an attorney’s role in a case. However, in this case, the judge who determined the award of
attorneys’ fees was not the same judge who presided over the trial.
3
If anything, it may be relevant to “whether hiring the out-of-town specialist was
reasonable in the first instance,” Hadix, 65 F.3d at 535. But that question is no longer at issue
in this case, since the majority opinion rightly concludes that the evidence in the record
overwhelmingly shows that hiring Goldstein Demchak was reasonable.
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evidence in the record clearly establishes that the firm did not play a “second-
chair” role in litigating this case. Attorneys and staff from Goldstein
Demchak worked more than four times as many billable hours on this case as
did Garrigan and his one paralegal. At trial, Goldstein Demchak attorneys
examined 11 out of 22 witnesses, including both sides’ expert witnesses. And
Garrigan sought the firm’s help in the first place because of its superior
reputation and expertise in the field of employment discrimination class
action litigation. These facts are inconsistent with a mere “second-chair” role.
Therefore, on remand, the district court should not rely on the erroneous
“second-chair” label as grounds for reducing the fee award to Goldstein
Demchak.
With these observations, I concur in the result reached by the majority:
affirming the district court’s calculation of back pay, vacating the fee award to
Goldstein Demchak, and remanding for reconsideration of the fee award.
24