IN THE UNITED STATES COURT OF APPEALS FOR THE SIXTH CIRCUIT
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- Rudolph Harvey
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1 Case Nos / / / / / / / IN THE UNITED STATES COURT OF APPEALS FOR THE SIXTH CIRCUIT NORTHEAST OHIO COALITION FOR THE HOMELESS, et al. Plaintiffs-Appellees/Cross-Appellants v. JON HUSTED, et al., Defendants-Appellants/Cross-Appellees And SERVICE EMPLOYEES INTERNATIONAL UNION LOCAL 1, et al. Plaintiffs-Appellees/Cross-Appellants v. JON HUSTED, et al., Defendants-Appellants/Cross-Appellees On Appeal from the United States District Court for the Southern District of Ohio Case No. 2:12-cv FOURTH BRIEF OF PLAINTIFFS-APPELLEES/CROSS-APPELLANTS SEIU LOCAL 1199 (Plaintiff in NEOCH v. Husted), SEIU LOCAL 1, USW, UAW LOCAL 1005, UAW LOCAL 863, UFCW LOCAL 75, UFCW LOCAL 880, UFCW LOCAL 1059, ICWUC, AND OOC (All Plaintiffs in SEIU Local 1 v. Husted) MICHAEL J. HUNTER CATHRINE J. HARSHMAN Hunter, Carnahan, Shoub, Byard & Harshman 3360 Tremont Road, Suite 230 Columbus, Ohio (614) / (614) Fax mhunter@hcands.com Counsel for Plaintiffs- Appellees/Cross-Appellants SEIU Local 1199 (in NEOCH v. Husted) and All Plaintiff-Appellees/Cross- Appellants (in SEIU Local 1 v. Husted) STEPHEN P. BERZON STACEY LEYTON DANIELLE LEONARD Altshuler Berzon LLP 177 Post Street, Suite 300 San Francisco, CA (415) / (415) Fax sberzon@altber.com Counsel for Plaintiffs- Appellees/Cross-Appellants SEIU Local 1199 (in NEOCH v. Husted) and SEIU Local 1, USW, UAW Local 1005, UAW Local 863, UFCW Local 75, UFCW Local 880, UFCW Local 1059, and International Chemical Workers
2 DONITA JUDGE Advancement Project 1220 L Street, N.W., Suite 850 Washington, D.C (202) / Fax djudge@advancementproject.org Union, a Council of UFCW (in SEIU Local 1 v. Husted) Counsel for Plaintiff-Appellee/Cross- Appellant Ohio Organizing Collaborative (in SEIU Local 1 v. Husted)
3 TABLE OF CONTENTS TABLE OF AUTHORITIES... ii INTRODUCTION...1 ARGUMENT...3 I. Based on Subsequent Supreme Court Law the Court Should Abandon the 3% Rule...3 a. The 3% Rule Erects Precisely the Type of Artificial Barrier to Fees-On-Fees That the Supreme Court Rejected in Commissioner, INS v. Jean...3 b. The 3% Rule Is Insupportable As a Legal Matter and As a Matter of Policy...10 II. At the Very Least, this Case Meets the Unusual Circumstances Exception to the 3% Rule...13 CONCLUSION...18 CERTIFICATE OF COMPLIANCE...20 i
4 TABLE OF AUTHORITIES CASES Atl. Thermoplastics Co. v. Faytex Corp., 970 F.2d 834 (Fed. Cir. 1992)...4 Baker Botts L.L.P. v. ASARCO LLC, 135 S.Ct (2015)...12 Ballinger v. Prelesnik, 709 F.3d 558 (6th Cir. 2013)...4 Bond v. Stanton, 630 F.2d 1231 (7th Cir. 1980)...16 Brown v. Smith, 551 F.3d 424 (6th Cir. 2008)...4, 5 City of Brunswick v. United States, 661 F.Supp (1987) (S.D. Ga. 1987), rev d on other grounds, 849 F.2d 501 (11th Cir. 1988)...5 Collard v. Ky. Bd. of Nursing, 896 F.2d 179 (6th Cir. 1990)...3 Commissioner, INS v. Jean, 496 U.S. 154 (1990)...passim Communities for Equity v. Mich. High Sch. Athletic Ass n, No. 1:98-cv-479, 2008 WL (W.D. Mich. Mar. 31, 2008)...15 Cont l Web Press, Inc. v. NLRB, 767 F.2d 321 (7th Cir. 1985)...5 Cornella v. Schweiker, 741 F.2d 170 (8th Cir. 1984)...5 Coulter v. State of Tennessee, 805 F.2d 146 (6th Cir. 1986)...passim ii
5 County of Monroe, Fla. v. United States DOL, 690 F.2d 1359 (11th Cir. 1982)...4 Cruz v. Hauck, 762 F.2d 1230 (5th Cir. 1985)...11 Disabled Patriots of Am., Inc. v. Reserve Hotel, Ltd., 659 F.Supp.2d 877 (N.D. Ohio 2009)...13 Fair Housing Advocates Ass n, Inc. v. Terrace Plaza Apartments, No. 2:03-cv-563, 2007 WL (S.D. Ohio Feb. 6, 2007)...16 Glass v. Pfeffer, 849 F.2d 1261 (10th Cir. 1988)...11 Harrington v. Richter, 562 U.S. 86 (2011)...4, 5 Hutto v. Finney, 437 U.S. 678 (1978)...16 Jaguar Cars v. Cottrell, No , 1999 WL (E.D. Ky. Oct. 25, 1999)...17 Johnson v. State of Miss., 606 F.2d 635 (5th Cir. 1979)...11 Jones v. MacMillan Bloedel Containers, Inc., 685 F.2d 236 (8th Cir. 1982)...11 Lavin v. Husted, 764 F.3d 646 (6th Cir. 2014)...12 Lavin v. Husted, No Lavin v. Husted, No Lee v. Javitch, Block & Rathbone, LLP, 568 F.Supp.2d 870 (S.D. Ohio 2008), rev d on other grounds, 601 F.3d 654 (6th Cir. 2010)...15 iii
6 Lee v. Johnson, 799 F.2d 31 (3d Cir. 1986)...5 Lint v. Prelesnik, 542 Fed.Appx. 472 (6th Cir. 2013) (unpublished)...3 Lund v. Affleck, 587 F.2d 75 (1st Cir. 1978)...11 Missouri v. Jenkins by Agyei, 491 U.S. 274 (1989)...17 Nat l Wildlife Fed n v. FERC, 870 F.2d 542 (9th Cir. 1989)...5 NEOCH v. Secretary of Ohio, 695 F.3d 563 (6th Cir. 2012)...2, 9, 14, 16 In re Olson, 892 F.2d 1073 (D.C. Cir. 1990)...12 Powell v. C.I.R., 891 F.2d 1167 (5th Cir. 1990)...6 Primax Recoveries, Inc. v. Gunter, 433 F.3d 515 (6th Cir. 2006)...8, 9 Rawlings v. Heckler, 725 F.2d 1192 (9th Cir. 1984)...5 Robinson v. Howes, 663 F.3d 819 (6th Cir. 2011)...4 S.E. Legal Def. Group v. Adams, 657 F.2d 1118 (9th Cir. 1981)...11 Scott v. Stillman, 729 F.Supp. 39 (E.D. Va. 1989)...6 Smith v. Pyro Min. Co., 827 F.2d 1081 (6th Cir. 1987)...3 iv
7 Thompson v. Pharm. Corp. of Am., 334 F.3d 1242 (11th Cir. 2003)...11 Trichilo v. Sec y of Health & Human Servs., 823 F.2d 702 (2d Cir. 1987)...6, 7 Tucker v. Phyfer, 819 F.2d 1030 (11th Cir. 1987)...4 Weisenberger v. Huecker, 593 F.2d 49 (6th Cir. 1979)...11 Wilson v. Taylor, 658 F.2d 1021 (5th Cir. 1981)...4 STATUTES 26 U.S.C U.S.C. 593(f)(1) U.S.C. 2412(d)(1)(A) U.S.C passim v
8 INTRODUCTION With regard to Plaintiffs cross-appeal challenging the application of the 3% cap on fees-on-fees established in Coulter v. State of Tennessee, 805 F.2d 146 (6th Cir. 1986), Appellant-Defendants State of Ohio and Secretary of State Jon Husted ( Defendants ) offer little in defense of that rule other than to contend that the Court is bound to follow it. That is not true. Because no panel of this Court has ever considered whether the 3% rule is compatible with the Supreme Court s intervening decision in Commissioner, INS v. Jean, 496 U.S. 154 (1990), the Court is free to indeed, must determine whether the higher court s opinion requires a different outcome. In Jean, the Supreme Court rejected the very same type of artificial distinction between merits and fees work that the 3% rule establishes, and required the award of fully compensatory fees for all work including work ancillary to the primary merits case reasonably performed in civil rights cases. Defendants do not seriously dispute, and thereby acknowledge, that the rule is unnecessary and irrational. Specifically, they do not contest that a traditional lodestar calculation already ensures that fees-on-fees are not unreasonable, and that imposing an arbitrary 3% cap creates dangerous incentives for losing parties to abuse fees litigation and ultimately undermines congressional purposes by diluting fees awarded under civil rights statutes. See SEIU Plaintiffs Second Brief ( SEIU s 2d Br. ) at Defendants also have no response to the brief filed by 1
9 amici Kentucky Employment Lawyers Association, Michigan Employment Lawyers Association, Ohio Employment Lawyers Association, Tennessee Employment Lawyers Association, the Lawyers Committee for Civil Rights Under Law, the ACLU of Ohio, and the Ohio Chapter of the National Lawyers Guild, which demonstrates that the 3% rule has no connection to the four policy rationales that purportedly support it. Finally, with respect to whether unusual circumstances in this case warrant a departure from the 3% rule, the District Court s rejection of the overwhelming majority of the objections raised in Defendants scorched earth opposition to Plaintiffs fee application demonstrates that the excessive fees litigation spawned by Defendants was needless. See NEOCH v. Secretary of Ohio, 695 F.3d 563, 575 (6th Cir. 2012) (the 3% rule does not apply where the losing party engages in needless fees litigation). Particularly in light of the complexity and importance of these cases, as well as the efficiency with which they were litigated (which resulted in fewer merits hours and thus a lower cap on fees-on-fees under the 3% rule), it would be inequitable to apply the 3% rule and force Plaintiffs to defend their fee award for months or years without additional compensation. Therefore, should the Court decline to abandon the 3% rule altogether, the Court should nevertheless conclude that an exception to the rule is appropriate on the facts of this case. 2
10 ARGUMENT I. Based on Subsequent Supreme Court Law the Court Should Abandon the 3% Rule. a. The 3% Rule Erects Precisely the Type of Artificial Barrier to Fees-On-Fees That the Supreme Court Rejected in Commissioner, INS v. Jean. Defendants essentially concede that a panel of this Court may reconsider the decision of a prior panel when intervening Supreme Court authority calls that decision into question. See SEIU s 2d Br. at 68-69; Defendants Third Brief ( 3d Br. ) at 60; Collard v. Ky. Bd. of Nursing, 896 F.2d 179, 183 (6th Cir. 1990) (intervening Supreme Court case clarified the law); Lint v. Prelesnik, 542 Fed.Appx. 472, 481 (6th Cir. 2013) (unpublished) (intervening Supreme Court cases had called into question [prior case s] continued viability ); cf. Smith v. Pyro Min. Co., 827 F.2d 1081, 1088 n.7 (6th Cir. 1987) (Congress changed law; When intervening changes in the law have proved prior precedent to be incorrect, a subsequent panel is not bound to continue following the disapproved precedent. Such blind allegience is both unwise and unwarranted. ). Defendants also tacitly concede that no panel of this Court has examined whether Commissioner, INS v. Jean, 496 U.S. 154 (1990), which was decided four years after Coulter, calls for a re-examination of that decision s 3% rule. Instead, Defendants erroneously suggest that the Court s application of the 3% rule after Jean precludes this panel from considering, for the first time, the 3
11 soundness of the rule in light of the reasoning in Jean. Not so. In those rare circumstances where, as here, appellate panels have applied prior circuit law without acknowledging or considering the impact of intervening Supreme Court authority, later panels are free to analyze whether that higher authority requires a different result. See, e.g., Atl. Thermoplastics Co. v. Faytex Corp., 970 F.2d 834, 838 n.2 (Fed. Cir. 1992) ( A decision that fails to consider Supreme Court precedent does not control if the court determines that the prior panel would have reached a different conclusion if it had considered controlling precedent. ); Tucker v. Phyfer, 819 F.2d 1030, 1035 n.7 (11th Cir. 1987) (court may disregard prior circuit decision that was at odds with, and did not consider, previous Supreme Court cases); Wilson v. Taylor, 658 F.2d 1021, 1035 (5th Cir. 1981) (in the unusual and delicate situation where prior circuit case did not consider impact of intervening Supreme Court precedent, court must apply Supreme Court decision, not the later-issued circuit law); see also County of Monroe, Fla. v. United States DOL, 690 F.2d 1359, 1363 (11th Cir. 1982) (following Wilson v. Taylor). Thus, for example, in Ballinger v. Prelesnik, 709 F.3d 558, (6th Cir. 2013), this Court held that a rule for habeas review set forth in Brown v. Smith, 551 F.3d 424 (6th Cir. 2008), had been called into doubt by Harrington v. Richter, 562 U.S. 86 (2011). It did this notwithstanding that Robinson v. Howes, 663 F.3d 819, 4
12 823 n.2 (6th Cir. 2011) decided after Harrington apparently accepted the rule in Brown as good law. Jean involved a then-hotly debated issue regarding the proper construction of the Equal Access to Justice Act, 28 U.S.C. 2412(d) ( EAJA ) specifically, its requirement that attorneys fees may be awarded under that statute only where the government s position is not substantially justified. See 28 U.S.C. 2412(d)(1)(A). The question in Jean was whether this requirement should be evaluated independently with respect to merits issues and litigation over fees, such that a prevailing plaintiff would have to separately prove that the government s positions taken during fees litigation were not substantially justified in order to obtain fees-on-fees. Prior to Jean, circuit courts addressing the issue had almost uniformly adopted the rule that a party is not entitled to an award of fees on fees unless the Government s position in litigating the fee issues was not substantially justified. City of Brunswick v. United States, 661 F.Supp. 1431, 1446 (1987) (S.D. Ga. 1987) (emphasis in original), rev d on other grounds, 849 F.2d 501 (11th Cir. 1988). See, e.g., Lee v. Johnson, 799 F.2d 31, (3d Cir. 1986); Cont l Web Press, Inc. v. NLRB, 767 F.2d 321, 324 (7th Cir. 1985); Cornella v. Schweiker, 741 F.2d 170, 171 (8th Cir. 1984); Nat l Wildlife Fed n v. FERC, 870 F.2d 542, (9th Cir. 1989); Rawlings v. Heckler, 725 F.2d 1192, 1196 (9th Cir. 1984). Some courts 5
13 justified this position in part on policy grounds related to fees litigation, see Scott v. Stillman, 729 F.Supp. 39, 40 (E.D. Va. 1989) (failing to separately analyze the government s position during fee proceedings would chill the United States from opposing any EAJA award or contesting the amount requested ), just as the Coulter panel did when establishing the 3% rule. 1 1 In contrast, the pre-jean Circuit Court decisions that reached the same result subsequently adopted in Jean invoked the same concerns raised by Plaintiffs as to the 3% rule, including that erecting barriers between entitlement to merits fees, on the one hand, and fees-on-fees, on the other, threatens to dilute fee awards and thus undermine the policies Congress sought to further when enacting the fee-shifting statute. For example, the Second Circuit reasoned, [s]ince the purpose of the EAJA is to remove counsel fees as an impediment to challenging unreasonable and unjustified governmental actions, where a governmental action has been shown to be unjustified, there should be as little disincentive for plaintiffs to obtain attorney s fees as there is for them to challenge the action itself. Trichilo v. Sec y of Health & Human Servs., 823 F.2d 702, 707 (2d Cir. 1987) ( Trichilo I ) (emphasis added); Powell v. C.I.R., 891 F.2d 1167, 1170 (5th Cir. 1990) (arising under 26 U.S.C. 7430; The policy of the EAJA would be undermined if a plaintiff who prevailed on the merits against a government position that was not substantially justified could recover fees for the underlying litigation, but not for the expenses in litigating the fee issue. ). To treat fees-on-fees simply as a cost of doing business, would leave it in the power of the government, which had already been unjustified in its actions toward plaintiff, to so raise the cost of plaintiff s counsel s doing business simply by strenuous resistance to all fee applications as to discourage or economically prevent a plaintiff from litigating against the government in the first place. Trichilo I, 823 F.2d at 707; Powell, 891 F.2d at 1171 ( The governments [sic] proposed interpretation of the fee-shifting statutes imposes no cost on it upon continuing fee litigation, while the mere threat of prolonged, un-reimbursable proceedings could discourage EAJA and 7430 plaintiffs. ). The court in Trichilo I went on to note that generally applicable limitations on fee awards already protect against unreasonable fees-on-fees: Of course, the attorney s fees for litigating the fee application itself must themselves be reasonable. If counsel makes inflated or outrageous fee demands, the court 6
14 In Jean, the Supreme Court sided with the cases holding that no separate showing is required in order to obtain fees-on-fees. It held that fee-shifting statutes favor[] treating a case as an inclusive whole, rather than as atomized line-items. Jean, 496 U.S. at And in so holding, it specifically relied on the danger of undermining the congressional policies furthered by the fee-shifting statute by diluting the overall fee award. Id. at 162 ( [D]enying attorneys fees for time spent in obtaining them would dilute the value of a fees award by forcing attorneys into extensive, uncompensated litigation in order to gain any fees under 42 U.S.C ) (quoting Gagne v. Maher, 594 F.2d 336, 344 (2d Cir. 1979)) (internal quotation marks omitted); Jean, 496 U.S. at 164 ( If the Government could impose the cost of fee litigation on prevailing parties by asserting a substantially justified defense to fee applications, the financial deterrent that the EAJA aims to eliminate would be resurrected. ). In doing so, the Court relied on a series of prior Supreme Court decisions holding that fees should be recoverable in proceedings that were ancillary to the primary merits litigation in court, where such fees were necessarily incurred under the statutory scheme and failing to award them would undermine the congressional purposes of the fee-shifting scheme by increasing plaintiffs litigation costs. 496 U.S. at 162 (citing Sullivan v. Hudson, 490 U.S. 877, 888 (1989) (fees available could readily deny compensation for time spent in pressing them, since that time would not have been reasonably spent. Trichilo I, 832 F.2d at
15 under EAJA for related administrative proceedings where such proceedings are crucial to the vindication of rights under the statute); Penn. v. Delaware Valley Citizens Council for Clean Air, 478 U.S. 546, (1986) (fees recoverable under Clean Air Act for related work before administrative agency protecting consent decree); N.Y. Gaslight Club, Inc. v. Carey, 447 U.S. 54, 63 (1980) (federal court may award fees under Title VII for work in state judicial and administrative proceedings; a contrary rule would force the complainant to bear the costs of mandatory state and local proceedings and thereby would inhibit the enforcement of a meritorious discrimination claim )). There can thus be no dispute that the Supreme Court in Jean viewed awarding fully compensatory fees-on-fees as a similarly integral part of vindicating a party s statutory rights. Defendants contend that Jean addressed only a narrow proposition regarding fee awards under EAJA. 3d Br. at 60. But intervening Supreme Court law need not address the precise legal issue that the Court is being asked to revisit. Rather, it is sufficient that the Supreme Court case be closely enough related to call into question the continued viability of the Court s prior ruling. See, e.g., Primax Recoveries, Inc. v. Gunter, 433 F.3d 515 (6th Cir. 2006) (intervening Supreme 8
16 Court decisions involving Federal Rules of Bankruptcy and Criminal Procedure caused Court to revisit whether it lacked jurisdiction over ERISA claim). 2 Here, the 3% rule is the same type of barrier to the recovery of fees-on-fees that the Supreme Court disapproved of in Jean, and the reasoning of Jean applies here with equal force. What is more, in Jean there was at least a plausible statutory basis for requiring separate proof of the lack of substantial justification at the fees stage in order to recover fees-on-fees. No statutory argument exists under 42 U.S.C to support the 3% rule. 3 Jean s disapproval of creating 2 In Primax, the Court was asked to reconsider whether an ERISA claim brought for solely legal, as opposed to equitable, relief a form of relief clearly barred [under the particular provision of ERISA] falls outside the District Court s subject matter jurisdiction or simply fails to state a claim upon which relief can be granted. Id. at 516. On at least two prior occasions, the Court had held that courts lack jurisdiction over such claims. Id. at 517. But Primax noted that two intervening Supreme Court decisions ha[d] admonished courts to use the term jurisdiction with more precision. Id. at 518 (quoting Krontrick v. Ryan, 540 U.S. 443, 453 (2004)). Those cases were not patterned on facts identical with Primax, id. at 519, and dealt not with the form of relief sought under ERISA, but rather with the issue of how to characterize time requirements under the Federal Rules of Bankruptcy and Criminal Procedure. Id. at 518. Nevertheless, the Court drew from them the lesson that an ERISA action seeking relief that is unavailable under the statute is more akin to the failure to state a claim than asserting a claim as to which the court lacks jurisdiction. Id. at On that basis, the Court disregarded its prior decisions to the contrary. 3 Thus it is no surprise that this Circuit has always stood alone in imposing a cap on fees-on-fees under Section 1988, apart from the traditional showing of reasonableness. See NEOCH v. Secretary of State, 695 F.3d 563, 577 (6th Cir. 2012) (Moore, J., concurring) ( question[ing] the continued vitality of [Coulter s] three-percent rule and noting that [n]o other circuit has adopted a bright-line rule for calculating fees on fees. ). 9
17 additional restrictions on the recovery of fees-on-fees thus applies with all the more force in the context of Section For all of these reasons, Jean compels the conclusion that Coulter was wrongly decided, and that the 3% rule should be abandoned. b. The 3% Rule Is Insupportable As a Legal Matter and As a Matter of Policy. Defendants devote a scant two paragraphs to defending the 3% rule. See 3d Br. at 61. That defense amounts to little more than the general notion that fees-onfees should not be over-litigated. Plaintiffs have never disputed that. But, as Plaintiffs previously demonstrated, the 3% rule is an unlawful way to achieve that goal, as it establishes the wrong incentives, and undermines the important civil rights objectives Congress sought to further in enacting Section By failing to address those points, Defendants tacitly concede their validity. To recap briefly: 1. By limiting fees to those that are reasonable, the traditional lodestar method of calculating fees (and fees-on-fees) already ensures that fees-on-fees are not excessive and discourages over-litigation of fees issues. See SEIU s 2d Br. at 70. Cf. Jean, 496 U.S. at 163 ( Exorbitant, unfounded, or procedurally defective fee applications like any other improper position that may unreasonably protract proceedings are matters that the district court can recognize and discount. ). Because the court s approval of a lodestar is based on a determination of reasonableness, the artificial cap established by the 3% rule, which only comes into 10
18 play when the lodestar exceeds that amount, by its nature results in an unreasonable award. 2. Courts including the Supreme Court in Jean and this Court in Weisenberger v. Huecker, 593 F.2d 49, 54 (6th Cir. 1979) have repeatedly recognized that diluting the overall fee award by failing to provide fully compensatory fees-on-fees undermines the incentives Congress intended to establish by enacting a fee-shifting statute. See SEIU s 2d Br. at This case 4 In addition to the cases cited in the SEIU Plaintiffs prior brief, SEIU s 2d Br. at 61-62, see also Lund v. Affleck, 587 F.2d 75, 77 (1st Cir. 1978) ( It would be inconsistent with the purpose of the Fees Act to dilute a fees award by refusing to compensate the attorney for the time reasonably spent in establishing and negotiating his rightful claim to the fee. ); S.E. Legal Def. Group v. Adams, 657 F.2d 1118, 1126 (9th Cir. 1981) (same; quoting Lund); Jones v. MacMillan Bloedel Containers, Inc., 685 F.2d 236, 239 (8th Cir. 1982) (same; quoting Lund); Johnson v. State of Miss., 606 F.2d 635 (5th Cir. 1979) (quoting with approval the reasoning in Lund, 587 F.2d at 77; Prandini v. Nat l Tea Co., 585 F.2d 47, 53 (3d Cir. 1978); Weisenberger, 593 F.2d at 53-54; and Gagne, 594 F.2d at 344); Glass v. Pfeffer, 849 F.2d 1261, 1266 (10th Cir. 1988) ( [W]hen attorneys engage in scorched earth tactics to challenge a fee award, a refusal to permit recovery of additional fees for defending that award would allow counsel to dilute the value of the original award or force the recipient to abandon that award entirely. ); Cruz v. Hauck, 762 F.2d 1230, 1234 (5th Cir. 1985) ( The time spent [responding to a fee opposition] is compensable under To hold otherwise would dilute the fee award and be inconsistent with the purposes of ); Thompson v. Pharm. Corp. of Am., 334 F.3d 1242, 1245 (11th Cir. 2003) (denying compensation for fees-on-fees would diminish the proper net award of attorney s fees for the successful civil rights claim: an outcome that frustrates the intent of Congress ). Thus, while Defendants argue that in some cases the merits fees will provide sufficient incentives to plaintiffs attorneys, 3d Br. at 61, in others undercompensation of fees-on-fees will defeat the purposes of the Act. See Jean, 496 U.S. at
19 is a prime example, with Plaintiffs now being forced into substantial appellate litigation without compensation to defend the District Court s fees decision When Congress intends to limit fees-on-fees, it carefully drafts the fee-shifting statute to provide such limitations. See SEIU s 2d Br. at 71; see, e.g., Baker Botts L.L.P. v. ASARCO LLC, 135 S.Ct. 2158, 2165 (2015) (Congress prohibited fees-on-fees recovery by allowing fees only for actual, necessary services rendered to the administrator of a bankruptcy estate); In re Olson, 892 F.2d 1073, 1074 (D.C. Cir. 1990) ( [t]he provision during [the] investigation in [28 U.S.C.] 593(f)(1) indicates a congressional intent to limit the award ) (second alteration in original). Jean demonstrates that where Congress s intention to limit fees-on-fees is at best ambiguous, the fee-shifting statute should be construed to allow fully compensatory fees to avoid undermining congressional intent. Here, Defendants cannot point to any statutory language in Section 1988 that could be read to suggest Congress intended to limit fees-on-fees under that statute beyond what is reasonable ; applying the 3% rule would effectively amend Section 1988 to insert a limitation that Congress did not provide. 5 Lavin v. Husted, No , another pending case regarding the application of the 3% rule, is now on its second attorneys fees appeal. See Lavin v. Husted, No Although in the first appeal this Court held that the district court had wrongly reduced the fee award, Lavin v. Husted, 764 F.3d 646 (6th Cir. 2014), application of the 3% rule would mean that the plaintiffs will not be able to obtain fees for successfully appealing the district court s erroneous decision, or compensation for being forced to re-litigate their fee application on remand. 12
20 4. Finally, by incentivizing scorched earth tactics to reduce the prevailing plaintiffs fee award, Coulter s bright-line rule encourages losing defendants to push the fees litigation well beyond the 3% cap, diluting whatever fees are ultimately awarded and requiring plaintiffs counsel often to work for free in order to recoup them. See SEIU s 2d Br. at 72; see also Disabled Patriots of Am., Inc. v. Reserve Hotel, Ltd., 659 F.Supp.2d 877, 891 n.6 (N.D. Ohio 2009) (Coulter creates a disincentive for defendants to negotiate in good faith on fee questions because they know the additional costs associated with litigating the question are effectively capped ). Such tactics by losing defendants serve to chill skilled attorneys from bringing meritorious civil rights cases for fear of being unable to collect lodestar attorneys fees for their efforts. This directly contradicts the objectives Congress sought to achieve in enacting Section See legislative history cited in SEIU s 2d Br. at In addition to all of these reasons, the brief filed by amici which Defendants ignore entirely persuasively details how none of the rationales purportedly supporting the 3% rule withstand scrutiny. Amicus Br. at Because the 3% rule is inconsistent with Section 1988, it should be abandoned. II. At the Very Least, this Case Meets the Unusual Circumstances Exception to the 3% Rule. In the alternative, the Court should allow an exception to the 3% rule based on facts specific to this case. Defendants concede, as they must, that the 3% rule is 13
21 not a hard and fast commandment, and that exceptions should be made in unusual circumstances a phrase that the Court has not defined. See 3d Br. at Nor do Defendants dispute that cases have recognized numerous exceptions to the 3% rule, many of which are applicable here. See SEIU s Br. at Instead, Defendants rely primarily on the Court s general statement in NEOCH v. Secretary of Ohio, 695 F.3d 563, 575 (6th Cir. 2012), that protracted fee litigation is not itself an unusual circumstance warranting a departure from the 3% rule. (Quotation marks and citation omitted). But Defendants ignore this Court s admonition, in the same case, that the 3% rule should not be applied in the context of needless fee litigation, because granting fees would discourage the losing party from engaging in the kind of protracted fees for fees litigation that Coulter sought to limit. NEOCH, 695 F.3d at 575. (quotation marks and citation omitted). Here, Defendants have engaged in precisely the type of scorched-earth fees litigation that the 3% rule was (misguidedly) intended to prevent. Defendants filed voluminous fees briefing contesting nearly every aspect of plaintiffs application, and those efforts have been largely unsuccessful. See, e.g., SEIU-Doc.140(PageID#7465)/NEOCH- Doc.426(PageID#15227) at 8 ( there was no unnecessary duplication and that the time spent was reasonable ); id. at 25 (SEIU-PageID#7482/NEOCH- PageID#15244) ( Defendants analysis of the appropriate rates misses the mark in 14
22 several respects. ); id. at 26 (SEIU-PageID#7483/NEOCH- PageID#15245) ( Defendants are incorrect that Plaintiffs victory in this case was anything but a substantial victory in a hugely complex case involving unsettled areas of both constitutional and procedural law. ); id. at (SEIU-PageID# /NEOCH- PageID# ) (rejecting Defendants challenges to time spent in mediation; travel (which the District Court had already addressed in a prior fee award); allegedly doing clerical work; seeking a permanent injunction; seeking certification of a defendant class; moving to modify; and moving for contempt); see also Defendants Opening Brief at 11 (conceding that the district court granted Plaintiffs three fee motions with only slight modifications ). Plaintiffs should not be penalized for devoting the amount of time reasonably required to successfully fend off these baseless attacks. See Lee v. Javitch, Block & Rathbone, LLP, 568 F.Supp.2d 870, 884 (S.D. Ohio 2008), rev d on other grounds, 601 F.3d 654, 659 (6th Cir. 2010) (departure from 3% rule warranted given lengthy, broad-based attack on the request for statutory fees ); Communities for Equity v. Mich. High Sch. Athletic Ass n, No. 1:98-cv-479, 2008 WL , at *19 (W.D. Mich. Mar. 31, 2008) (awarding fees-on-fees three times Coulter s cap based on vigorous objections, employment of an expert, and obstructionist tactics, even though defendant successfully excluded hundreds of hours of attorney time and achieved an across-the-board reduction worth nearly 15
23 $500,000); Fair Housing Advocates Ass n, Inc. v. Terrace Plaza Apartments, No. 2:03-cv-563, 2007 WL , at *8 (S.D. Ohio Feb. 6, 2007) (departing from Coulter s cap where case had been particularly contentious, even though losing party achieved 30% reduction to attorney s rate and defeated request for multiplier). Moreover, in light of the time-consuming and needless litigation spawned by Defendants, NEOCH, 695 F.3d at 575, the District Court s finding that not all of Defendants arguments were frivolous did not preclude a departure from the 3% rule. Defendants numerous unmeritorious arguments required Plaintiffs to commit substantial time and resources to successfully oppose them. [B]ad faith is not required to award fees under Section Hutto v. Finney, 437 U.S. 678, 699, n.32 (1978). Refusing to award fully compensatory fees-on-fees simply because the losing parties arguments were non-frivolous effectively imports a bad faith standard into Section Bond v. Stanton, 630 F.2d 1231, 1236 (7th Cir. 1980) (rejecting thinly veiled attempt to smuggle an exemption for good faith back into fee determinations made under [Section 1988] ). Plaintiffs should also not be penalized for their efficient litigation of the two cases (see SEIU-Doc.140(PageID#7465)/NEOCH-Doc.426(PageID#15227) at 8 (finding that there was no unnecessary duplication and that the time spent was reasonable); id. at 6 (SEIU-PageID#7463/NEOCH-PageID#15225) (Plaintiffs 16
24 documentation contain[ed] sufficient detail and probative value to enable [the District Court] to determine that the hours recorded were actually and reasonably expended in this action, with certain exceptions not relevant here); id. at 26 (SEIU-PageID#7483/NEOCH-PageID#15245) (hours awarded were fair and reasonable )), and their willingness to generously write off merits work reasonably performed both of which resulted directly in a lower cap on fees-on-fees under the 3% rule. See SEIU s 2d Br. at 65, Had Plaintiffs not done so, they not only would have recovered higher merits fees, but a greater proportion of their reasonable work on the fees litigation. This makes no sense. Finally, application of the 3% rule simply fails to acknowledge the complexity and importance of these cases. Id. at 65. See Jaguar Cars v. Cottrell, No , 1999 WL , *1 (E.D. Ky. Oct. 25, 1999) (departing from Coulter s cap based on complexity of this matter ). Complex litigation such as this requires attracting the type of high-quality attorneys who could be retained by affluent plaintiffs. See Missouri v. Jenkins by Agyei, 491 U.S. 274, 286 (1989) 6 Defendants baldly assert that Plaintiffs efficient coordination of the two cases only increased merits hours, 3d Br. at 63, when in fact it served to reduce them. SEIU s 2d Br. at 65. Defendants also discount the fact that Plaintiffs wrote off 400 hours devoted to a claim on which they prevailed, arguing that prevailing parties must always write off unreasonable hours. 3d Br. at 63. Those hours were not unreasonable. Moreover, Defendants ignore the more significant point that application of the 3% rule in this case will lead prevailing parties in future cases to be far less generous in exercising billing judgment and writing off merits hours, since doing so effectively lowers their fees-on-fees recovery. 17
25 (quoting with approval City of Riverside v. Rivera, 477 U.S. 561, 591 (1986) (Rehnquist, J., dissenting)) ( reasonableness of fee must be determined in light of the fundamental principle that the award of a reasonable attorney s fee under 1988 means a fee that would have been deemed reasonable if billed to affluent plaintiffs by their own attorneys ). The failure to award fully compensable feeson-fees, requiring lawyers to accept a diluted fee, will create a disincentive for the most able attorneys to accept representation in difficult and complicated cases, the cases in which they are most needed. This is directly contrary to the congressional intent in enacting Section CONCLUSION For the reasons discussed, this Court should reverse application of the 3% cap for fees-on-fees, and remand for further proceedings consistent with its opinion. Dated: November 17, 2015 Respectfully submitted, /s/ Stephen P. Berzon By: Stephen P. Berzon for Plaintiff- Appellees/Cross-Appellants Stephen P. Berzon Stacey Leyton Danielle Leonard ALTSHULER BERZON LLP 177 Post Street, Suite 300 San Francisco, CA (415) / (415) Fax sberzon@altber.com 18
26 Counsel for Plaintiffs-Appellees/Cross- Appellants SEIU Local 1199 (in NEOCH v. Husted) and SEIU Local 1, USW, UAW Local 1005, UAW Local 863, UFCW Local 75, UFCW Local 880, UFCW Local 1059, and International Chemical Workers Union, a Council of United Food and Commercial Workers (in SEIU Local 1 v. Husted) Michael J. Hunter Cathrine J. Harshman HUNTER, CARNAHAN, SHOUB, BYARD & HARSHMAN 3360 Tremont Road, Suite 230 Columbus, Ohio (614) / (614) Fax mhunter@hcands.com Counsel for Plaintiffs-Appellees/Cross- Appellants SEIU Local 1199 (in NEOCH v. Husted) and All Plaintiff-Appellees/Cross- Appellants (in SEIU Local 1 v. Husted) Donita Judge ADVANCEMENT PROJECT 1220 L Street, N.W., Suite 850 Washington, D.C (202) / Fax djudge@advancementproject.org Counsel for Plaintiff-Appellee/Cross- Appellant Ohio Organizing Collaborative (in SEIU Local 1 v. Husted) 19
27 CERTIFICATE OF COMPLIANCE I hereby certify that this brief contains 4,701 words, as determined by the word processing program used to generate this document. This count includes headings, footnotes and quotations but does not include table of contents, table of citations, statement regarding oral argument, addendums or certifications of counsel. Fed. R. App. Pro. 32(a)(7). Dated: November 17, 2015 /s/ Stephen P. Berzon Attorney for Plaintiff-Appellees/ Cross-Appellants 20
28 CERTIFICATE OF SERVICE I hereby certify that on November 17, 2015, I electronically filed the foregoing with the Clerk of Court using the CM/ECF system which will send notification of such filing to the counsel of record in this matter. /s/ Stephen P. Berzon Stephen P. Berzon ALTSHULER BERZON LLP 177 Post Street, Suite 300 San Francisco, CA (415) / (415) Fax sberzon@altber.com Counsel for Plaintiffs-Appellees/Cross- Appellants SEIU Local 1199 (in NEOCH v. Husted) and SEIU Local 1, USW, UAW Local 1005, UAW Local 863, UFCW Local 75, UFCW Local 880, UFCW Local 1059, and International Chemical Workers Union, a Council of United Food and Commercial Workers (in SEIU Local 1 v. Husted)
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