Appeal from the United States District Court for the Central District of Illinois. No. 78-C-3067 -- J. Waldo Ackerman, Judge.
Pell, Robert A. Sprecher,*fn* and Cudahy, Circuit Judges.
The defendants-appellants challenge a district court order awarding $18,439.50 in attorney's fees to the plaintiffs pursuant to 42 U.S.C. § 1988 (1976). The fee award pertains to Crosby's class-action suit, brought pursuant to 42 U.S.C. § 1983 (1976) challenging certain federal and Illinois regulations concerning the Work Incentive (WIN) program established pursuant to Title IV of the Social Security Act.*fn1 That suit, which named both federal and state officials as defendants, resulted in issuance of a nation-wide permanent injunction against enforcement of the challenged regulations. The district judge found that no fees could be taxed against the federal defendants because of sovereign immunity, 28 U.S.C. § 2412 (1976); Adams v. Carlson, 521 F.2d 168, 169-71 (7th Cir. 1975).
The arguments raised by the state defendants in this appeal are: (1) that Crosby is not a "prevailing party" within the meaning of 42 U.S.C. § 1988 (1976); (2) that, in any event, Crosby did not prevail against the state defendants; (3) that "special circumstances" make a fee award against the state defendants unjust; and (4) that if the state defendants are liable for any fees, the award should be reduced to reflect their limited role in enforcing the regulations.
The federal WIN program was designed to structure state plans for aid to families with dependent children along lines envisioned by the Congress to be most beneficial to the needy and supportive of family stability. The program requires all able-bodied adults seeking aid to "register for manpower services, training and employment as provided by regulations of the [United States] Secretary of Labor. . . ." 42 U.S.C. § 602(a) (19) (A) (1976). Section 602(a) (19) (F), as originally enacted, further provided that " if and for so long as [an individual] has been found by the Secretary of Labor . . . to have refused without good cause to participate under a work incentive program . . . such individual's needs shall not be taken into account. . . ." 42 U.S.C. § 602(a) (19) (F) (1976) (amended 1980) (emphasis added).*fn2 The federal regulations challenged in Crosby's suit provided that any individual found to have refused to participate in the work requirements without good cause was to be denied benefits for a fixed period of ninety days. See 29 C.F.R. §§ 56.20, 56.51, and 56.77 (1978); 45 C.F.R. §§ 224.50, 224.51, and 225.77 (1978). The state regulations, promulgated and enforced by the state defendants, similarly provided for a fixed-period sanction.
Lennie Crosby, an Illinois resident, was a recipient of federal funds through the Aid to Families with Dependent Children (AFDC) Program administered by the Illinois Department of Public Aid. She registered, as she was required to do by 42 U.S.C. § 602(a) (19) (A) (1976), for manpower services under the WIN program in June, 1977.
Subsequently, Crosby was found to have refused without good cause to participate in the work program. She was notified that she would be deregistered from eligibility for AFDC funds for ninety days. Crosby then brought an action in the district court on behalf of herself and two classes of persons in forty-seven states. She claimed that the fixed-period sanctions prescribed by federal and state regulations were inconsistent with 42 U.S.C. § 602(a) (19) (F) (1976) (amended 1980) which provided for deregistration "for so long as" an individual refuses to participate without good cause in the work program.
On July 10, 1980, Judge Ackerman granted the plaintiffs' motion for summary judgment, finding the fixed-period sanctions invalid because they were in conflict with the express language of the statute. The district judge also found that the federal defendants were collaterally estopped from litigating the validity of the regulations because of a previous holding of invalidity in McLean v. Mathews, 458 F. Supp. 285, 288 (S.D.N.Y. 1977). Judge Ackerman granted declaratory and injunctive relief against the state and federal defendants.
The appellees subsequently petitioned for attorney's fees pursuant to 42 U.S.C. § 1988 (1976). On December 5, 1980, the court granted the petition in part. On March 6, 1981, the court vacated its December 5th order. The following June 10th, after the appellants conducted discovery and were accorded a hearing, Judge Ackerman reentered the order of December 5, 1980 in modified form. He allowed the appellees' supplemental petition for attorney's fees. The appellees requested a total of $30,527.80 in fees and the court awarded a total amount of $18,439.50.
An award of attorney's fees can be ordered pursuant to section 1988 only if the court finds that the plaintiff was a "prevailing party." 42 U.S.C. § 1988 (1976); Maine v. Thiboutot, 448 U.S. 1, 9, 65 L. Ed. 2d 555, 100 S. Ct. 2502 (1980). A two-part test is applied to determine whether one has prevailed. First, the plaintiff's lawsuit must be "causally linked to the achievement of the relief obtained." Harrington v. DeVito, 656 F.2d 264, 266 (7th Cir. 1981). Second, the defendant must not have acted gratuitously in response to a frivolous or legally insignificant claim. Id. The appellants' argument against the appropriateness of a fee award in this case does not focus primarily on application of this test; rather, the state defendants rely on the Congressional purpose underlying section 1988.
A. Did the Plaintiffs Prevail Within the Meaning of Section 1988 ?
The legislative history of section 1988 states that the purpose of the fee provision is to give private citizens "a meaningful opportunity to vindicate the important Congressional policies which [civil rights laws] contain." S. Rep. No. 1011, 94th Cong., 2d Sess. 2 (1976), reprinted in  U.S. Code Cong. & Ad. News 5908, 5910. The appellants pose two arguments relating to this language: (1) that the appellees did not vindicate a Congressional policy, and (2) at most, the policy vindicated by the plaintiffs was not one of high priority.
The appellants rely heavily on the fact that Congress has amended section 602(a) (19) (F) so as to permit deregistration of an individual who refuses without good cause to participate in a WIN program "for such period as is prescribed under joint regulations of the Secretary and the Secretary of Labor." Act of June 9, 1980, Pub. L. No. 96-265, 401, 94 Stat. 461 (1980) (codified at 42 U.S.C.A. § 602(a) (19) (F) (Cum. Supp. 1981)). The fixed-period sanction found invalid in this suit would therefore be permissible under the amended statutory language. The state defendants argue that this amendment merely clarified the original intent of Congress in enacting 42 U.S.C. § 602(a) (19) (F) (1976) (amended 1980). If Congress meant to permit such sanctions, the appellees cannot be said to have "vindicate[d] . . . important Congressional policies," S. Rep. ...