Appeals from the United States District Court for the Northern District of Illinois, Eastern Division. No. 97 CV 5271--Wayne Andersen, Judge.
Before Flaum, Chief Judge, and Bauer and Evans, Circuit Judges.
Flaum, Chief Judge. The appellees ("plaintiffs") filed suit against the appellant ("TTX") alleging employment discrimination. After contentious litigation, the plaintiffs accepted separate Rule 68 offers of judgment to settle their claims against TTX. The parties, however, were unable to resolve the amount of attorneys' fees and costs to be awarded to plaintiffs' counsel. The district court, after conducting several days of hearings, awarded the plaintiffs over $1.1 million in attorneys' fees and costs. Pursuant to a second fee petition, the plaintiffs were awarded an additional sum of $70,005.50 in fees and costs. TTX has filed the instant appeal contesting the propriety of the district court's award. For the reasons stated below, we affirm in part and vacate and remand in part the decisions of the district court.
In late 1997, three African-American females filed suit against TTX Corporation alleging race and sex discrimination, retaliation and intentional infliction of emotional distress.*fn1 The gravamen of the plaintiffs' complaint was that TTX employed discriminatory practices in the training and promotions of employees. On December 2, 1997, the plaintiffs filed an amended complaint joining eight additional African-American females to their action, bringing the total number of plaintiffs to eleven. As in the initial complaint, the claims concerned race and sex discrimination, retaliation, and the intentional infliction of emotional distress.
The majority of discovery in this matter was conducted between January and September of 1998. In October, TTX filed a motion for summary judgment against one of the plaintiffs, Yvette Ruth. This motion was granted in part and denied in part by the district court. In June of 1999, TTX filed summary judgment motions against the remaining ten plaintiffs. The district court never issued a ruling with respect to those motions.
In August of 1999, the plaintiffs submitted a settlement demand to TTX. The plaintiffs demanded a lump-sum payment of $4.7 million. The plaintiffs did not disclose how this amount would be divided and did not specify whether the settlement demand included attorneys' fees. TTX rejected this overture and countered with settlement offers for each of the individual plaintiffs. In addition, TTX provided that attorneys' fees paid pursuant to any settlement could not exceed $200,000. The plaintiffs rejected TTX's counteroffer and the case was scheduled for trial on May 21, 2000.
Approximately three months prior to the commencement of the trial, the plaintiffs made several different settlement demands to TTX. First, on February 3, 2000, the plaintiffs demanded a $1.75 million lump-sum settlement payment, as well as other non-monetary provisions (e.g., the bridging of pensions and the extension of COBRA benefits for certain plaintiffs). The plaintiffs did not specify whether the February 3rd offer included the payment of attorneys' fees. TTX rejected the plaintiffs' demand and responded with a counteroffer that stipulated, inter alia, that attorneys' fees paid pursuant to any settlement should be capped at $400,000.
On February 9, 2000, the plaintiffs rejected TTX's counteroffer and responded with another settlement demand. In the February 9th demand, the plaintiffs requested a lump-sum payment of $1.4 million, the bridging of pension benefits and the extension of COBRA benefits for certain plaintiffs. The plaintiffs refused, however, to cap the attorneys' fees payable under any settlement. TTX again rejected the plaintiffs' demand.
On February 18, 2000, the plaintiffs once more presented TTX with a settlement demand. In this offer, the plaintiffs lowered their lump-sum settlement figure to $1.25 million, with similar pension bridging and extension of COBRA benefits for certain plaintiffs. The plaintiffs also sought $1.4 million in attorneys' fees and $81,000 in costs. TTX rejected the plaintiffs' last offer and instead, on March 2, 2000, presented separate Rule 68 offers of judgment to each of the eleven plaintiffs.*fn2 The offers of judgment ranged from $20,000 to $160,000 in value, with the lump-sum amount coming to $610,000, including pension bridges and extensions of COBRA benefits. The plaintiffs accepted their respective offers of judgment. While their acceptance of TTX's offers of judgment terminated the plaintiffs' claims, the issue of attorneys' fees and costs remained unresolved.
Shortly after the acceptance of the various offers of judgment, the plaintiffs presented their petition for attorneys' fees and costs to the district court. In their petition, the plaintiffs requested over $1.3 million in fees and over $54,000 in costs. The district court scheduled and then conducted four days of hearings pursuant to the plaintiffs' petition.
At the conclusion of these hearings, the district court made several determinations. First, the district court concluded that, although some of the plaintiffs had settled for less money than had been offered initially by TTX, all of the plaintiffs were substantially compensated and that the settlements they received were not for "nuisance value." After making this conclusion, the district court determined the hours reasonably expended by the plaintiffs' attorneys on the litigation and then multiplied that figure by a reasonable hourly rate.*fn3 In addition, the district court undertook an extensive examination of the costs incurred by the plaintiffs. After conducting these inquiries, thedistrict court concluded that plaintiffs were entitled to receive $1,096,412.60 in attorneys' fees and $51,357.66 in costs and expenses.
Subsequent to the district court's decision, the plaintiffs filed an additional petition to recoup the attorneys' fees and costs that were generated in preparation for the hearings on the first petition. The district court entered judgment against TTX in the amount of $70,005.50.
TTX now appeals the awards of fees and costs granted by the district court. According to TTX, the district court com mitted legal error in awarding the plaintiffs the above-mentioned fees and costs and that the district court abused its discretion in determining the hourly rates to be paid to certain plaintiffs' counsel. The plaintiffs have ...