Opinion
CIVIL ACTION No. 98-1352a-CM
March 3, 2003.
MEMORANDUM AND ORDER
Pending before the court is the parties' Joint Motion to Reactivate Plaintiffs' Petition for Reimbursement of Fees and Costs Under 42 U.S.C. § 4654(c), the Uniform Relocation Assistance and Real Property Acquisition Policies Act (URA) (Doc. 161), and Stipulation and Joint Motion for Entry of Judgment (Doc. 160). As set forth below, the parties' Joint Motion to Reactivate Plaintiffs' Petition for Reimbursement of Fees and Costs is granted and the parties' Joint Motion for Entry of Judgment is granted. Plaintiffs' Petition for Reimbursement of Fees and Costs is taken under advisement. Plaintiffs are ordered to submit a revised statement of fees and costs in accordance with this opinion on or before Monday, March 10, 2003. Defendant is ordered to file any response by Wednesday, March 19, 2003.
I. Background
In this action, plaintiffs seek reimbursement of the attorneys' fees and costs associated with an action plaintiffs filed against the United States. In that action, plaintiffs alleged that the federal government's issuance of certain Trail Use Orders pursuant to the National Trails System Act, 16 U.S.C. § 1241 et seq., constituted a taking of their property, violating their Fifth Amendment rights. On September 25, 2002, this court issued a Memorandum and Order (Doc. 159) (hereinafter "the September 25 order") dismissing without prejudice plaintiffs' Petition for Reimbursement of Fees and Costs, finding that the motion was not ripe for review. In the September 25 order, the court set forth additional relevant factual and procedural history of this action, which the court hereby incorporates by reference. In that order, the court found plaintiffs' petition was not ripe for review, because the URA authorizes the court to award attorneys' fees only after the court has issued a judgment for the plaintiff. The court also found the motion was not ripe for review because the parties had not filed a notice of settlement with the court.
Following the September 25 order, the parties filed a Stipulation and Joint Motion for Entry of Judgment which included a request that the court enter a judgment for the plaintiffs as to the underlying action pursuant to a settlement agreement reached by the parties. In addition, the parties request the court to reactivate the plaintiffs' Petition for Reimbursement, and to award attorneys' fees accordingly.
Stipulation and Joint Motion for Entry of Judgment
In their Stipulation and Joint Motion for Entry of Judgment, the parties request the court to enter judgment in favor of the plaintiffs and against the United States in the amount of Ten Thousand and xx/100 Dollars ($10,000.00). The parties also inform the court that they agree that the land at issue in the case, located in McPherson County, Kansas, is an easement for interim use as described in the National Trails System Act, and request the court to enter a statement to that effect as part of its order. Further, the parties request the court to order defendant to record the order in the local land records in McPherson County, Kansas, so that it may be recorded in the chain of title for plaintiffs Cheryl and Galen Swisher.
In accordance with the stipulation entered into by the parties, the court hereby orders the Clerk of the Court to enter judgment in favor of plaintiffs and against the United States in the amount of Ten Thousand and xx/100 Dollars ($10,000.00). The court orders an additional award of attorneys' fees as set forth later in this opinion.
Also pursuant to the parties' stipulation, the court incorporates the following language into this order: The parties agree that the historic railroad easement through the Southeast quarter of Section 20, Township 18, Range 3 West in McPherson County, Kansas, more specifically a strip of land sixty-six feet in width, being thirty-three feet on each side of the center of the main track of the railroad, as originally obtained by the Kansas Southwestern Railway Company through condemnation in 1879 is now, and has been since September 28, 1995, an easement for interim use as described in the National Trails System Act ("the Act"), 16 U.S.C. § 1241 et seq., and in particular 16 U.S.C. § 1247(d), subject to restoration and/or reconstruction of the railroad right-of-way for the purpose of future reactivation of rail service as provided for in the Act, unless abandoned or extinguished under applicable law.
Further, the court orders defendant to record this order in the local land records of McPherson County, Kansas, so that the order may be recorded in the chain of title for Cheryl and Galen Swisher, and any other relevant index.
Petition for Reimbursement of Fees and Costs
Background
Plaintiffs filed their Petition for Reimbursement of Fees and Costs on January 29, 2002. (Doc. 151). The parties' pleadings indicate that, to date, plaintiffs have paid their counsel $1,200 in attorneys' fees and expenses. Plaintiffs request $317,082.00 in attorneys' fees and $12,000 in costs. (Pls.' Reply at 26). Plaintiffs request this award pursuant to the URA, which provides, in relevant part:
The court rendering a judgment for the plaintiff in a proceeding brought under [ 28 U.S.C. § 1346(a)(2), 1491] awarding compensation for the taking of property by a Federal agency . . . shall determine and award or allow to such plaintiff, as a part of such judgment or settlement, such sum as will in the opinion of the court . . . reimburse such plaintiff for his reasonable costs, disbursements, and expenses, including reasonable attorney . . . fees, actually incurred because of such proceeding.42 U.S.C. § 4654(c) (emphasis added). Defendant claims plaintiffs are not entitled to recover any attorneys' fees beyond the $1,200 they have already paid their counsel. Defendant argues that plaintiffs did not actually incur any attorneys' fees for which the URA authorizes reimbursement because of this proceeding, beyond the $1,200 plaintiffs have paid. Specifically, defendant argues that the contingency agreement executed between plaintiffs and their counsel did not obligate plaintiffs to pay their counsel any attorneys' fees or any percentage of their just compensation award.
The contingency agreement between plaintiffs and their counsel provides, in relevant part:
Our firm and Kansas co-counsel will advance all costs necessary to pursue the Tucker Act action. Although we may look to other sources to cover some of the costs, we will not require a contribution from class representatives such as yourself.
The Tucker Act provides that should the plaintiffs prevail they will
receive, in addition to compensation for damages from the taking of their property, the costs of the proceeding, including attorneys' fees, subject to the approval of the court. Thus, our expenses in this matter and our services on your behalf will be without cost to you. By accepting this agreement, you authorize us to seek court approval for such attorneys' fees to be calculated either on the value of our professional services at our regular hourly rates or by multiplying by one third the amount recovered for the plaintiff class as damages, whichever is greater.
(App. to Pls.' Br., Ex. 3).
The court examines two issues before it: (1) whether plaintiffs may recover attorneys' fees and costs beyond the amount they have paid their counsel, and (2) if plaintiffs are entitled to such a recovery, the amount of an award that would be reasonable under the URA.
B. Analysis
1. Availability of Fees Beyond $1,200
The court has closely examined the relevant law construing the attorneys' fee provision of the URA, and notes that the law of the Federal Circuit and the Court of Federal Claims carries particular persuasive weight in this case. The United States Court of Appeals for the Federal Circuit, rather than the United States Court of Appeals for the Tenth Circuit, would maintain exclusive appellate jurisdiction over this action. 28 U.S.C. § 1295(a)(2). The Court of Federal Claims retains concurrent and original jurisdiction over claims brought for monetary damages under the Tucker Act, 28 U.S.C. § 1346(a)(2), 1491.
Plaintiffs, as the fee applicant, carry the burden of establishing that they are entitled to an award of attorneys' fees and must document the appropriate hours expended and hourly rates. Hensley v. Eckerhart, 461 U.S. 424, 437 (1983).
In Preseault v. United States, another Tucker Act rails-to-trails conversion case, the Court of Federal Claims rejected the defendant's argument that the URA's "actually incurred" language authorizes reimbursement only of fees that a plaintiff has paid or is obligated to pay his attorney. 52 Fed. Cl. 667, 677 (Fed.Cl. 2002). The court held that if a plaintiff has agreed that a third party such as a nonprofit legal services organization would receive any fees collected in the litigation, the third party may recover those fees under the URA. Id.
Although the Preseault court did not examine a fee agreement like the one in the case at bar, in which the plaintiffs agreed that plaintiffs' counsel, rather than a third party, would receive an award of attorneys' fees, this court believes that Preseault provides substantial guidance. In its analysis of cases regarding the URA and other fee-shifting statutes, the Preseault court noted that "Federal Circuit precedent establishes that attorneys' fees are `incurred' under other fee-shifting statutes when a litigant is represented by a legal services organization or counsel appearing pro bono. . . . `to be "incurred" within the meaning of a fee shifting statute, there must be an express or implied agreement that the fee award will be paid over to the legal representative.'" Id. at 673 (citing Ed A. Wilson v. United States, 126 F.3d 1406, 1409 (Fed. Cir. 1997); Phillips v. GSA, 924 F.2d 1577, 1583 (Fed. Cir. 1991)). The court further declared that "[w]hen an agreement exists to support the conditional obligation, a plaintiff is not viewed as simply having been given legal aid; instead, this condition is the cost to the plaintiff of obtaining those services." Id.
The court finds that plaintiffs undertook exactly this type of obligation in this case when, in exchange for receiving legal services at no cost to them, they authorized their attorneys to seek a recovery of attorneys' fees for their claim. Accordingly, the court finds that plaintiffs may recover attorneys' fees beyond the $1,200 they have paid their attorneys. Having found that the court may award additional attorneys' fees, the court turns to the issue of determining the amount of fees the court may award plaintiffs pursuant to their fee agreement with their attorneys.
Reasonableness
As noted above, the URA authorizes awards of reasonable attorneys' fees and costs. 42 U.S.C. § 4654(c). In determining a reasonable fee, "the most useful starting point . . . is the number of hours reasonably expended on the litigation multiplied by a reasonable hourly rate." Hensley, 461 U.S. at 432. From this initial calculation, the court "should exclude . . . hours that were not `reasonably expended.'" Id. The court approaches the issue of reasonableness by first considering whether it is appropriate to exclude certain items from the billing records submitted by plaintiffs that defendant argues are not reasonable expenses. Second, the court examines defendant's argument that the court must reduce the overall amount of the fees claimed by plaintiffs due to factors such as locality and quarter-hour billing practices. Third, the court considers the contention of defendant that the court must reduce the amount of any attorneys' fee award so that it reflects a degree of proportionality with the amount of plaintiffs' recovery.
a. Fees for Cases Transferred to Other Courts, For Failed Motion for Class Certification, and For Failed Attempt to Add Additional $10,000 Claim on Behalf of Galen Swisher
On July 26, 1999, this court severed the claims of the original plaintiffs who resided outside Kansas, and transferred the severed complaints to other federal district courts. On September 24, 1999, this court denied plaintiffs' motion for class certification. On September 28, 2000, the court denied plaintiffs' motion to add an additional claim for $10,000 on behalf of Galen Swisher, holding that the claim exceeded the court's jurisdictional limit. Defendant argues that attorneys' fees and costs associated with the above actions are not recoverable.
Importantly, the URA limits awards of attorneys' fees in Tucker Act claims to those fees which are incurred "because of" that claim. 42 U.S.C. § 4654(c). "Where [a] plaintiff has failed to prevail on a claim that is distinct in all respects from his successful claims, the hours spent on the unsuccessful claim should be excluded in considering the amount of a reasonable fee." Hensley v. Eckerhart, 461 U.S. 424, 441 (1983). Under the URA, a "plaintiff should not recover for time spent litigating issues as to which it did not prevail." Fla. Rock Indus. v. United States, 9 Cl. Ct. 285, 288 (1985).
In their reply, plaintiffs state that they withdraw their request for fees incurred in connection with their pursuit of class action certification of this case. Specifically, plaintiffs state that they are withdrawing their claims for fees that the government had designated as class certification-related. (Reply at 25 n. 15). In addition, they refer the court to the attachments of exhibits grouped as Exhibit 2 and labeled as "Invoices for Fees and Expenses to 1/25/2001, Less Class Action-Related Work." In their reply, plaintiffs modified the billing records submitted by The Ackerson Group as part of Exhibit 2 of their petition for costs, and attached the modified records as Exhibit 3 to plaintiffs' reply. The court thus relies on the set of documents contained in Exhibit 2 of plaintiffs' petition, rather than Exhibit 1, in determining fees, with the following modification. The court substitutes the documents submitted as Exhibit 3 to plaintiffs' reply for the documents submitted by The Ackerson Group as part of Exhibit 2 of plaintiffs' petition.
The court finds that plaintiffs may not receive an award of attorneys' fees for work expended in pursuit of the cases which were severed from the Swishers' action or for any other cases outside the jurisdiction of this court. In addition, the court finds it may not award attorneys' fees associated with the failed motion for class certification and other class-action related expenses. Finally, the court finds plaintiffs may not receive attorneys' fees associated with the failed attempt to add the $10,000 claim on behalf of Galen Swisher.
Policy-Related Expenses
Defendant, however, argues that a large percentage of the billing entries set forth in Exhibit 2 actually concern class-related issues. Specifically, defendant argues that items billed for policy work including testimony before Congress are not recoverable. Further, defendant argues that expenses for alternative litigation for cases outside the District of Kansas are not recoverable. In addition, defendant states that plaintiffs should not recover fees for time entries that are not sufficiently specific.
In their reply, plaintiffs state that they withdraw each item defendant characterized as policy related. The court finds that plaintiffs may not recover attorneys' fees for policy-related work, because plaintiffs have not shown how that work may have contributed to their recovery in this case. Accord Outdoor Sys., Inc. v. City of Merriam, No. Civ. A. 98-2397-KHV, 2000 WL 575023, at *3 (D.Kan. Feb. 25, 2000).
c. Expenses Associated with Recovery of Attorneys' Fees
Defendant argues plaintiffs should not receive attorneys' fees expended as "fees for fee" involved in the efforts of plaintiffs to recover attorneys' fees in this case. However, the court is persuaded by authority cited by plaintiffs supporting the proposition that, under the URA, attorneys' fees may be awarded for reasonable efforts to obtain attorneys' fees. E.g., Fla. Rock Indus. v. United States, 23 Cl. Ct. 653, 656 (1991).
Entries that are not Sufficiently Specific
In addition, defendant states that plaintiffs should not recover fees for time entries that are not sufficiently specific. As the court has already noted, plaintiffs bear the burden of submitting "evidence supporting the hours worked and the rates claimed." Hensley, 461 U.S. at 434. The court may reduce the award where the documentation of hours is inadequate. Accordingly, the court finds that plaintiffs may not recover attorneys' fees for any entries which are not sufficiently specific to give the court a basis to determine whether they should be included in a reasonable award.
For example, time entries stating "TEXT MISSING" are not sufficiently specific.
Fees Associated with Opposing Rails-to-Trails, Inc.'s Motion to Intervene
Defendant claims plaintiffs should be prohibited from recovering attorneys' fees and expenses associated with plaintiffs' opposition to Rails-to-Trails, Inc.'s motion to intervene. The court agrees that an award of attorneys' fees for work performed by plaintiffs' attorneys related to plaintiffs' dispute with a private party is not reasonable. See, e.g., Natural Res. Defense Council v. Adm'r, EPA, 595 F. Supp. 65, 70 n. 1 (D.D.C. 1984) (holding that award of attorneys' fees against the government is inappropriate for fees incurred while opposing a motion by a private party to intervene).
Designation of Fees in Compliance with the Court's Findings
As noted above, it is plaintiffs' burden to supply the court with adequate documentation so that the court may determine reasonable attorneys' fees and costs. In their current form, the billing records attached to plaintiffs' petition for costs and to plaintiffs' reply provide an insufficient basis for the court to award fees in a manner consistent with the above rulings. Furthermore, plaintiffs failed to document how they have calculated the $317,082.00 in attorneys' fees and $12,000 in costs that they seek in their reply.
The documentation plaintiffs have submitted to the court provides an inadequate basis for the court to determine a proper award of attorneys' fees. The court orders plaintiffs to provide a new list of all fees and costs generated in this matter, from all law firms involved, that complies with the rulings set forth above. Plaintiffs must designate each item previously submitted that is stricken from the new list and provide the reason why it is stricken. The system adopted by defendant in its response and plaintiff in its reply of designating symbols for the reason why an item is stricken would be helpful to the court and should serve as a model for plaintiffs in submitting their new exhibit. Further, plaintiffs are directed to provide the court with a table indicating the amounts of fees removed and the total amount of attorneys' fees and costs the plaintiffs continue to seek, broken down with regard to each law firm and designating separately the amount of fees and the amount of costs, taking into account the rulings in this order.
Plaintiffs are ordered to provide a copy of their revised documentation to the court and to defendant on or before Monday, March 10, 2003. Defendant may file a response to plaintiffs' revised documentation by Wednesday, March 19, 2003.
After receiving the revised documentation from the plaintiffs and defendant's response, the court will proceed to analyze the additional arguments briefed by the parties, including (1) whether plaintiffs should receive all expenses claimed for the time prior to the filing of the first Swisher-specific complaint in November 1999, (2) whether an adjustment for geographic differences in fees is appropriate, (3) whether an adjustment reflecting quarter-hour billing practices is appropriate, and (4) what apportionment of plaintiffs' cost is appropriate. The court will then make an appropriate award of attorneys' fees and costs.
IV. Order
IT IS THEREFORE ORDERED that the parties' Joint Motion to Reactivate Plaintiffs' Petition for Reimbursement of Fees and Costs Under 42 U.S.C. § 4654(c), the Uniform Relocation Assistance and Real Property Acquisition Policies Act (URA) (Doc. 161) is granted, to the extent that the Petition for Reimbursement has been placed on the court's active docket.
IT IS FURTHER ORDERED that the parties' Joint Motion for Entry of Judgment is granted.
IT IS FURTHER ORDERED that plaintiffs' Petition for Reimbursement of Fees and Costs is taken under advisement. Plaintiffs are ordered to provide proper documentation as set forth in pages 10 and 11 of this order on or before March 10, 2003. Defendant must respond on or before March 19, 2003.