Appeal from the United States District Court for the Northern District of Illinois, Eastern Division. No. 80 C 4714 -- Susan Getzendanner, Judge.
Before BAUER, Chief Judge, CUMMINGS and POSNER, Circuit Judges.
CUMMINGS, Circuit Judge. The Spanish Action Committee of Chicago ("SACC") is a Humboldt Park Puerto Rican group organized to address community problems such as housing, education, police brutality, and community unrest. In 1966 the Intelligence Division Security Section of the Chicago Police Department undertook a secret operation to infiltrate and disrupt the activities of SACC. Upon uncovering evidence of this operation many years later, SACC and two individual plaintiffs brought suit under 42 U.S.C. § 1983 in 1980 against the City of Chicago and three police officers employed in the Security Section.*fn1 The suit charged the defendants with violating the plaintiffs' First Amendment right to associate freely and Fourteenth Amendment right to due process of law by carrying out a secret operation to destroy SACC, its leaders, and its community influence. The district court directed verdicts in favor of the defendants with respect to the individual plaintiffs' claims based on the failure of these plaintiffs to testify at trial. At the conclusion of the trial in 1984, the jury found that all four of the defendants had violated SACC's First Amendment rights but granted the three individual defendants qualified immunity. The jury awarded $60,000 in compensatory damages but no punitive damages, finding that none of the individual defendants possessed the state of mind necessary for such an award. The district court thus entered judgment in the amount of $60,000 against the City, the only non-immune defendant. This judgment was affirmed on appeal. Spanish Action Committee of Chicago v. City of Chicago, 766 F.2d 315 (7th Cir. 1985).
This action is now before us on appeal of the district court's award of costs and attorney's fees to plaintiff SACC pursuant to 42 U.S.C. § 1988. SACC originally sought $228,093.75 in attorney's fees (1,013.75 hours at an hourly rate of $150, adjusted upward by a multiplier of 1.5), $3,915.00 in paralegal's fees (87 hours at an hourly rate of $30, adjusted upward by a multiplier of 1.5), and $4,803.89 in expenses and costs. The district court reduced the amount of attorney's fees awarded to $46,312.50. In light of the limited, although significant, relief obtained in comparison to the scope of the litigation as a whole, and after eliminating hours it deemed to be unreasonable, unnecessary, or duplicative, the district court concluded that the plaintiff was entitled to compensation for only 308.75 hours. It further concluded that an upward multiplier adjustment was not justified since the $150 hourly market rate adequately reflected the risk involved in civil rights cases of similar complexity. The court made no express allowance for paralegal fees, stating instead that the paralegal fee request was part of the overall figure used to compute the attorney's fee award and that the plaintiff was adequately compensated for the entire litigation. Finally, the court disallowed various items of costs and expenses and awarded the plaintiff $1,102.86 in costs and $352.08 in out-of-pocket expenses.
Having had a $60,000 judgment entered in its favor, the plaintiff is certainly entitled to an award of attorney's fees as a prevailing party under § 1988. The dispute in this case centers on the appropriate amount of that award. The plaintiff contends that the district court improperly reduced the amount of attorney's fees requested to reflect what it considered to be the plaintiff's limited success. Because the $60,000 damages award constituted substantial compensation for the injury alleged, according to the plaintiff, the district court erred in reducing the fee award merely because the plaintiff did not prevail on each contention it raised.
In Hensley v. Eckerhart, 461 U.S. 424, 76 L. Ed. 2d 40, 103 S. Ct. 1933, the Supreme Court set out guidelines for calculating the proper amount of an attorney's fee award in cases where the plaintiff only partially prevails on his claims. The Court divided these partial recovery cases into two categories. The first category involves cases where the plaintiff presents distinctly different claims for relief that are based on different facts and legal theories. A plaintiff may not recover attorney's fees for time expended on an unsuccessful claim if that claim is "distinct in all respects from his successful claims." Id. at 440. Unrelated claims must be treated "as if they had been raised in separate lawsuits." Id. at 435; see Lenard v. Argento, 808 F.2d 1242 (7th Cir. 1987). The instant case does not fall within this first category. The district court found that the plaintiff sought relief based on a single course of wrongful conduct and that the unsuccessful claims were thus related to the successful claims.
The second category of partial recovery cases, into which this action does fall, includes those cases in which the plaintiff's claims for relief involve a common core of facts or are based on related legal theories. Because the majority of counsel's time will be devoted to the litigation as a whole, as opposed to any one specific claim, this type of lawsuit cannot be viewed as a series of discrete claims. As a result, time spent on related claims that ultimately prove unsuccessful should not be automatically excluded from the attorney's fee calculation. Instead, the focus in arriving at the appropriate fee award should be on "the significance of the overall relief obtained by the plaintiff in relation to the hours reasonably expended on the litigation." Hensley, 461 U.S. at 435. Where the plaintiff has achieved "excellent results" and obtained "substantial relief," his attorney should recover a fully compensatory fee normally encompassing all hours reasonably expended on the litigation. In these circumstances, the Court noted, "the fee award should not be reduced simply because the plaintiff failed to prevail on every contention raised in the lawsuit." Id. This Court recently elaborated on this notion in Lenard v. Argento, 808 F.2d 1242, slip op. at 4 (7th Cir. 1987):
For tactical reasons and out of caution lawyers often try to state their client's claim in a number of different ways, some of which may fall by the wayside as the litigation proceeds. The lawyer has no right to advance a theory that is completely groundless or has no factual basis, but if he presents a congeries of theories each legally and factually plausible, he is not to be penalized just because some, or even all but one, are rejected, provided that the one or ones that succeed give him all that he reasonably could have asked for.
Where the plaintiff fails to obtain all that he reasonably could have asked for and achieves only partial or limited success, the lodestar amount -- the product of the number of attorney's hours reasonably expended on the litigation as a whole times a reasonably hourly rate -- is likely to be excessive. The Supreme Court therefore provided: "A reduced fee award is appropriate if the relief, however significant, is limited in comparison to the scope of the litigation as a whole." Hensley, 461 U.S. at 440. The Court, however, articulated no precise rule or formula to be followed in making such a reduction, instead choosing to leave this determination to the discretion of the district court in view of its greater familiarity with the litigation. Id. at 436-437. The Court did indicate that in reducing a fee award to reflect the plaintiff's limited success, a district court may attempt to identify specific hours that should be eliminated, or it may simply reduce the award across the board to account for the limited success. Id.
The plaintiff believes that it obtained "substantial relief" and that the district court was therefore precluded under Hensley from reducing its attorney's fee merely because it did not prevail on every claim that it raised. The district court found, and the defendant City of Chicago agrees, that despite winning a relatively large damages award, the plaintiff's success was only limited in comparison to the scope of the litigation as a whole and a substantial reduction in the number of plaintiff's attorney's hours was therefore warranted.
A Court of Appeals will not disturb an award of attorney's fees unless the district court committed an error of law in the computation or abused its discretion in calculating the amount. Tomazzoli v. Sheedy, 804 F.2d 93, 97 (7th Cir. 1986) (per curiam); Lynch v. City of Milwaukee, 747 F.2d 423, 426 (7th Cir. 1984). In Tomazzoli, this Court observed that there is no one correct formula for determining a fee award and characterized the district court's calculation as "anything but an arithmetical exercise." 804 F.2d at 97 (quoting Evans v. Jeff D., 475 U.S. 717, 106 S. Ct. 1531, 1542 n.26, 89 L. Ed. 2d 747 ). Nonetheless, the Supreme Court has emphasized that the district court must provide "a concise but clear explanation of its reasons for the fee award." Hensley, 461 U.S. at 437. Where the district court decides to adjust the amount requested because of the limited nature of the relief obtained by the plaintiff, it must "make clear that it has considered the relationship between the amount of the fee awarded and the result obtained." Id.; see Tomazzoli, 804 F.2d at 97; Henry v. Webermeier, 738 F.2d 188, 193 (7th Cir. 1984) (when district judge wants to grant less than the hourly rate or the number of hours requested, he must give reasons justifying the particular cut he wants to impose). On the basis of this explanation, the Court of Appeals can then determine whether the district court considered and assessed all of the relevant information. Tomazzoli, 804 F.2d at 97.
The district court's opinion here provides a lengthy and detailed explanation for its decision to reduce substantially the number of hours for which the plaintiff requested compensation in light of the extent of the plaintiff's overall success. One of the most important factors motivating the district court was the plaintiff's failure to recover punitive damages against the three individual defendants because the jury found that they were entitled to immunity. "It was on this issue [of immunity] that the plaintiff lost its case against the officers and lost its opportunity to recover punitive damages. Since this is what the litigation was about, the plaintiff not only failed to prevail, it was the substantial loser." (Spanish Action Committee of Chicago v. City of Chicago, No. 80 C 4714, Mem. Op. at 9 (N.D. Ill. Feb. 14, 1985) (herinafter Mem. Op.)). The claims against the individual defendants were an important part of the litigation because the plaintiff was barred from recovering punitive damages against the City of Chicago. See City of Newport v. Fact Concerts, Inc., 453 U.S. 247, 69 L. Ed. 2d 616, 101 S. Ct. 2748 (municipality cannot be held liable for punitive damages under 42 U.S.C. § 1983).
The plaintiff now argues that the punitive damages claims were only incidental and that the focus throughout the litigation was on recovering compensatory damages. Other evidence belies this contention. The complaint originally sought $70,000 in compensatory damages and $5,000,000 in punitive damages. While the plaintiff is correct in arguing that these amounts are irrelevant in determining whether the amount ultimately recovered constituted substantial compensation for the injury it suffered, they are instructive in demonstrating the significance of the punitive damages claims against the individual officers in relation to the litigation as a whole. Furthermore, the plaintiff refused a settlement offer in which the City agreed to pay the full amount of compensatory damages sought by SACC, demanding instead that any offer include some amount for punitive ...