County, 677 F. Supp. 933 (N.D. Ill. 1987) (Bua, J.) ("Shakman V"). In granting in part and denying in part, plaintiffs' motion for summary judgment, the court in Shakman V held that plaintiffs' fee award would be adjusted on two grounds. The court first held that an adjustment for delay in payment was appropriate to account for both inflation and the time value of money. Shakman, 677 F. Supp. at 942. Using the average annual yield on three-month Treasury bills, the court computed the accumulated present value of the historical fees due each of plaintiffs' attorneys as of November 30, 1987. Id. The court relied on the interest rate applicable to short term Treasury bills to calculate the present value of the fees owed plaintiffs' attorneys because it believed this rate "provided a reasonably accurate measure of inflation and the time value of money." Id. The court also awarded a fee enhancement equal to one-third of the lodestar to account for the extraordinary nature of the case and the special success plaintiffs achieved. Id. at 944-48.
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 Cir. 1989), the appropriate rate to be applied when compensating for delay is the prime rate:
For the future, we suggest that district judges use the prime rate for fixing prejudgment interest . . . . That is a readily ascertainable figure which provides a reasonable although rough estimate of the interest rate necessary to compensate plaintiffs not only for the loss of the use of their money but also for the risk of default.