The opinion of the court was delivered by: ANN CLAIRE WILLIAMS
This matter is before the court on plaintiffs' motion to reconsider Judge Bua's December 16, 1987 ruling on the proper calculation of a delay adjustment for the award of attorney's fees in this case. For the reasons stated below, the Motion to Modify the Delay Adjustment is granted. The appropriate interest rate for the delay adjustment sought here is the prime rate. This rate will be applied for all fees awarded in this case.
This case has a long history in this court. Plaintiffs Michael L. Shakman ("Shakman") and Paul M. Lurie et al. brought this class action in 1969 against defendants Democratic Organization of Cook County et al. challenging the patronage practices of the regular Democratic and Republican Party organizations in most of the Northern District of Illinois.
Judge Marovitz's dismissal of the case later that year for lack of standing was reversed in Shakman v. Democratic Org. of Cook County, 435 F.2d 267 (7th Cir. 1970) ("Shakman I"). Following that reversal, plaintiffs entered into a consent decree with many of the Democratic and Republican defendants. In 1979, the court found that all defendants engaged in a conspiracy to deprive plaintiffs of their constitutional and civil rights to a free political and electoral process. Shakman v. Democratic Org. of Cook County, 481 F. Supp. 1315, 1342 (N.D. Ill. 1979) (Bua, J.) ("Shakman II"). Then, in 1987, the Seventh Circuit reversed the political hiring portion of the district court's decision, holding that plaintiff's asserted injuries lacked sufficient proximity to defendants' conduct to afford standing. Shakman v. Democratic Org. of Cook County, 829 F.2d 1387, 1396-99 (7th Cir. 1987) ("Shakman III").
Several years after the court's ruling in Shakman II, plaintiffs filed a petition seeking an award of attorney's fees and costs pursuant to 42 U.S.C. § 1988 for work performed from 1969 through October 1984. In Shakman v. Democratic Org. of Cook County, 634 F. Supp. 895, 905 (N.D. Ill. 1986) (Bua, J.) ("Shakman IV"), the court granted partial summary judgment in favor of the plaintiffs. After carefully reviewing the nature and quantity of the work performed by plaintiffs' attorneys, the court arrived at a base amount or "lodestar" of $ 883,504.75 for the fee award, but specifically reserved ruling on what multiplier, if any, should be applied to this figure to account for inter alia the delay in payment of plaintiffs' attorneys' fees. Id.
Soon after the court issued its opinion in Shakman V, the parties filed competing motions for reconsideration of the court's decision. The parties subsequently filed numerous additional motions relating to the court's award of attorney's fees in this case. Because the parties had agreed to stay further litigation of these issues in abeyance pending extensive settlement negotiations, many of these motions were still pending several years after they were first filed.
As a result of these motions, and in light of the simple fact that numerous issues relating to the award of attorneys' fees still needed to be resolved, Judge Bua did not enter final judgment on plaintiffs' fee petition.
Over the last several years, the parties have resolved several of the outstanding fee petition disputes through settlement agreements with the City and the Park District. Still other issues were resolved by this court. On March 1, 1993, this court ruled on Defendant's Renewal of Motion for Reconsideration and Plaintiffs' Motion for Reconsideration of the Denial of a Risk Multiplier. The court also ruled on Plaintiffs' Motion to Modify Attorneys' Fees and Plaintiffs' Second Motion for Partial Summary Judgment. One motion - Plaintiff's Motion to Modify the Delay Adjustment - remains.
As a threshold matter, the court observes that it has the authority to reconsider Judge Bua's December 17, 1987 ruling. Defendants argue that reconsideration is inappropriate here because under Fed. R. Civ. P. 59 (e), a motion to alter or amend a judgment must be made within ten days of entry of the judgment, and under Fed. R. Civ. P. 60 (b), relief from judgment is considered an extraordinary remedy and is granted only in the most exceptional of circumstances. (Def. Response at 2-3, citing CKS Engineers, Inc. v. White Mountain Gypsum Co., 726 F.2d 1202, 1205 (7th Cir. 1984). While the court agrees with defendants that courts generally have limited discretion to revisit final judgments once entered, in the instant case no judgment has been entered.
Thus, the strictures imposed by Fed. R. Civ. P. 59(e) and 60 (b) simply do not apply.
Nevertheless, the doctrine of law of the case cautions that the court should exercise its discretion to reconsider its prior rulings sparingly.
"The law of the case doctrine 'is a rule of practice, based on sound policy that, when an issue is once litigated and decided, that should be the end of the matter." Evans v. City of Chicago, 873 F.2d 1007, 1014 (7th Cir. 1989) (quoting Barrett v. Baylor, 457 F.2d 119, 123 (7th Cir. 1972). Generally, courts should reconsider prior decisions only in exceptional cases, such as where additional evidence has come to light, or the controlling law has changed, or where the prior decision was "clearly erroneous, and would work a substantial injustice." Barrington Press, Inc. v. Morey, 816 F.2d 341, 342-43 n.2 (7th Cir. 1987). Because the controlling law governing the proper interest rate to be applied for delay adjustments has changed since Judge Bua's ruling in December 1987, the court grants plaintiffs' motion to reconsider and modifies Judge Bua's ruling accordingly. See generally Lenard v. Argento, 808 F.2d 1242, 1246 (7th Cir. 1987) (change of law governing allocation of attorneys' fees justified court's decision not to apply the doctrine of law of the case).
In awarding plaintiffs an upward adjustment to the lodestar for the delay in payment, Judge Bua recognized the importance of compensating plaintiffs' counsel for inflation and the time value of money. Shakman, 677 F. Supp. at 940. However, at the time Judge Bua issued his ruling, case law governing the appropriate interest rate to be applied in these cases was sparse. The leading Seventh Circuit case, Ohio-Sealy Mattress Mfg. Co. v. Sealy, Inc., 776 F.2d 646 (7th Cir. 1985), provided only limited guidance. In Ohio-Sealy, the court held that fee awards should be increased to compensate for inflation. Id. at 662. Although it specifically disapproved of the simple multiplier chosen by the district court as not sufficiently precise, the court left the selection of an alternative approach to the lower court's discretion. Id. at 664.
Given this broad discretion and the relative dearth of relevant case law, Judge Bua rejected plaintiffs' suggested use of the prime rate,
and instead relied on the lower interest rate provided by short term Treasury bills in calculating the appropriate delay enhancement. Plaintiffs had argued that the prime rate was appropriate because it best approximated the cost that plaintiffs' attorneys would have incurred if forced to borrow the fees defendant owed them. Shakman V, at 941. According to the court, plaintiffs' cost of borrowing approach was unworkable because it would "lead to substantial and arbitrary differences in amounts received by attorneys based on the credit worthiness of their firm."
Id. Noting that a delay adjustment based on short term Treasury bill interest rates was consistent with the calculation of post-judgment interest under 28 U.S.C. § 1961, the court held that such an approach provided a reasonably accurate measure of inflation and the time value of money.
In the several years following Judge Bua's ruling, numerous courts, in particular the Seventh Circuit, have refined their views on the best approach for accounting for inflation and the time value of money when compensating claimants for delay in the receipt of payment. As the court explained in Gorenstein Enterprises, Inc. v. Quality Care - USA, Inc., 874 F.2d 431 (7th ...