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CUSTOM v. QUERN

January 7, 1980

EARNEST CUSTOM AND CHICAGO WELFARE RIGHTS ORGANIZATION, ON BEHALF OF THEMSELVES AND ALL OTHERS SIMILARLY SITUATED, PLAINTIFFS,
v.
ARTHUR QUERN, IN HIS OFFICIAL CAPACITY AS THE DIRECTOR OF THE ILLINOIS DEPARTMENT OF PUBLIC AID, ET AL., DEFENDANTS.



The opinion of the court was delivered by: Marshall, District Judge.

MEMORANDUM DECISION

In this class action brought under 42 U.S.C. § 1983, plaintiffs challenged the defendants' method of processing applications under the Illinois General Assistance Program. Plaintiffs, who are Chicago resident applicants for benefits under the program, alleged that defendant Illinois Department of Public Aid (IDPA) imposed unreasonable delays in processing applications, contrary to plaintiffs' Fourteenth Amendment due process and equal protection rights. After extensive pre-trial discovery and motion practice, the parties entered into a consent declaratory judgment, pursuant to which the defendants have agreed to process and dispose of all general assistance applications within forty-five days of application, and in cases in which the applicants are entitled to benefits, to distribute the benefits to the applicants within that same forty-five day period. Thereafter plaintiffs submitted a motion for attorney's fees pursuant to the Civil Rights Attorney's Fees Awards Act of 1976, 42 U.S.C. § 1988. This motion has been extensively briefed and is now ready for decision.

The parties' original briefs were filed prior to the Supreme Court's decision in Hutto v. Finney, 437 U.S. 678, 98 S.Ct. 2565, 57 L.Ed.2d 522 (1978), and a crucial argument in defendants' opposition was based on the Eleventh Amendment. When Finney firmly established that the Eleventh Amendment is not a bar to assessing attorney's fees against a state or one of its agencies, the defendants here took another tack in opposition to plaintiffs' motion. Defendants first contend that plaintiffs did not substantially prevail. Alternatively they argue that even if attorney's fees are awarded, the plaintiffs' attorneys, who are employed by the Legal Assistance Foundation (LAF), a public interest legal aid organization, are not entitled to the same fees as a privately employed attorney. Finally, defendants challenge some of the hours charged by plaintiff's attorneys as duplicative.

In a hearing relating to attorney's fees held on September 15, 1978, we orally ruled that plaintiffs have substantially prevailed and are thus entitled to fees under § 1988, and that plaintiffs' attorneys are entitled to fees for all of the hours charged. We tentatively ruled, however, that when a plaintiff is represented by a public interest legal services agency, the defendant is obliged only to recompense the provider of the legal services for the cost of providing the services. We indicated that this cost was to be calculated by dividing the total budget of LAF by the product of the number of attorneys multiplied by a reasonable number of hours per year.*fn1 Although we announced that we would calculate fees in this manner, the only order entered on September 15, 1978 was one directing LAF to submit data relating to its budget.

Upon further reflection we have reconsidered our position on the issue of the proper hourly attorney's fee for legal aid organizations. We see no need, however, to reconsider or discuss any of the other issues defendants have raised in their response to plaintiff's motion. Accordingly, our oral ruling of September 15, 1978 that plaintiffs substantially prevailed and that all of the 308 hours charged by plaintiffs' attorneys are reasonable will stand. We now turn to the question of the proper hourly rate for those hours.

Defendants do not contend that public interest legal aid attorneys are not entitled to any fees. Rather, they contend that a fee commensurate with the customary fees earned by private counsel would provide a windfall to plaintiffs' attorneys here, given the lower salaries said to be paid to LAF attorneys and LAF's nonprofit status. Moreover, defendants argue that a lesser rate will not have a detrimental effect on the attorney's fee statute's purpose of encouraging enforcement of the civil rights acts. Thus defendants urge that legal aid attorneys should receive an hourly attorney's fee measured by their salaries. Alternatively, they contend that the Criminal Justice Act's fee scale for appointed attorneys, which allows for $20 per hour for out of court time and $30 per hour for in court time, is a fair measure here. See 18 U.S.C. § 3006A(d)(1). Finally defendants argue that the amount of fees should be moderated because the funds will come from the state treasury.

Plaintiffs contend that the legislative history to § 1988 indicates that no distinction should be made between private attorneys and attorneys employed by public interest legal aid organizations. Moreover, plaintiffs attack the basis for such a distinction, arguing that it would frustrate the purpose of the Act by unduly restricting the services afforded to civil rights plaintiffs.

At the outset we emphasize that the only dispute remaining is the amount of fees, because defendants do not contend that legal aid attorneys for a prevailing party are not entitled to any fees. Most courts applying statutory grants of fees have held that legal aid organizations are entitled to fees. See, e.g. Hairston v. R & R Apartments, 510 F.2d 1090, 1093 (7th Cir. 1975); EEOC v. Enterprise Assoc. Steamfitters Local No. 638 of U.A., 542 F.2d 579 (2d Cir. 1976), cert. denied, 430 U.S. 911, 97 S.Ct. 1186, 51 L.Ed.2d 588 (1977). The legislative history to § 1988 also indicates that such organizations are entitled to fees.*fn2 See also, Note, Awards of Attorney's Fees to Legal Aid Offices, 87 Harv.L.Rev. 411 (1973). We must also emphasize that § 1988, which states only that "the court, in its discretion, may allow the prevailing party . . ., a reasonable attorney's fee as part of the costs," does not indicate how to determine what amount is reasonable. The statute leaves that determination to our discretion. But because a prevailing party should ordinarily receive fees unless "special circumstances would render an award unjust," Newman v. Piggie Park Enterprises, Inc., 390 U.S. 400, 402, 88 S.Ct. 964, 966, 19 L.Ed.2d 1263 (1968),*fn3 an award of fees that is so low as to frustrate the purpose of the act would constitute an abuse of this discretion. See Berger, Court Awarded Attorney's Fees: What Is "Reasonable"?, 126 U.Pa.L.Rev. 281, 306 (1977).

Defendants' argument that LAF is entitled to fees at a reduced rate is premised on the fact that LAF may not and, accordingly, does not attempt to earn a profit. But this premise does not recognize that a court assessing attorney's fees may approach the determination of amount from two possible perspectives. From one perspective, which defendants presume that we should use, a court decides what fee is necessary to adequately compensate the attorney for his or her time. Adequate compensation would include a reasonable profit. There is another approach, however, pursuant to which a court attempts to calculate the "value" of the attorney's services. Value of service is not rigidly tied to profits but is figured with an eye toward what the services are worth to the client and what prices those services would bring in the marketplace. Although these two approaches are different, a court will come to the same result regardless of the approach it uses, so long as the fee award is based on the hourly rate of the plaintiff's attorney. The hourly rate, established by market forces, will reflect both the value of service and a profit.*fn4

When, however, the fee is to go to a nonprofit legal services organization, no hourly rate guides our path, and the profit motive is by definition absent, or at least reduced to the extent of an award of fees above the organization's cost of doing business. But the value of the services is not equivalently diminished. Thus to determine what hourly rate is appropriate here, we must first inquire whether Congress intended an award of fees to reflect both the value of the services and a reasonable profit. Then, after determining whether the value of LAF's services is equivalent to that of a private practitioner, we will consider whether the absence of a profit motive justifies a reduction of fees to LAF.

The statute's purpose is clear from its legislative history. Because civil rights laws depend heavily on private enforcement, "fee awards have proved an essential remedy if citizens are to have a meaningful opportunity to vindicate the important Congressional policies which these laws contain." S.Rep.No. 94-1011, 1976 U.S.Code Cong. & Admin.News at 5910. Thus the attorney's fee statute was designed "to promote the enforcement of the Federal civil rights acts, as Congress intended, and to achieve uniformity in those statutes and justice for all citizens." H.R.Rep.No. 94-1558, 94th Cong., 2d Sess. 1, 19 (1976). See also Remarks of Senator Tunney, 122 Cong.Rec. 33313 (Sept. 29, 1976); Remarks of Congresswoman Holtzman, 122 Cong.Rec. 35127 (Oct. 1, 1976) ("The act will help to assure that all Americans can have access to the courts to obtain the protections against discrimination contained in our laws and the Constitution."). Congress intended to facilitate the effective implementation of civil rights laws by all citizens, and to prevent those laws from becoming "mere hollow pronouncements which the average citizen cannot enforce." S.Rep.No. 94-1011, 1976 U.S.Code Cong. & Admin.News at p. 5913. In addition, Congress recognized the potential complexity of civil rights cases. The legislative history states that

  It is intended that the amount of fees awarded
  under S. 2278 [42 U.S.C. § 1988] be governed by the
  same standards which prevail in other types of
  equally complex federal litigation, such as
  antitrust cases and not be reduced because the
  rights involved may be nonpecuniary in nature.

Id.


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