Petersen, Deborah v. Gibson, Byron ( 2004 )

In the
United States Court of Appeals
For the Seventh Circuit
____________
Nos. 02-4271 & 02-4355
DEBORAH PETERSEN,
Plaintiff-Appellee, Cross-Appellant,
v.
BYRON GIBSON, Officer,
Defendant-Appellant, Cross-Appellee.
____________
Appeals from the United States District Court
for the Northern District of Illinois, Eastern Division.
No. 97 C 4123—James B. Zagel, Judge.
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ARGUED NOVEMBER 4, 2003—DECIDED JUNE 16, 2004
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Before EASTERBROOK, ROVNER, and EVANS, Circuit
Judges.
ROVNER, Circuit Judge. It is rare that a trip to the hair
salon leads to a date in federal appellate court, but that was
the unfortunate sequel to Deborah Petersen’s hair appoint-
ment at the Mario Tricoci Salon in Bloomingdale’s Stratford
Square Mall on June 13, 1995. Ms. Petersen, a regular
customer of the salon, had an appointment to get her hair
colored. All did not go as planned, however, and after three
hours and two attempts to correct a botched coloring job,
2 Nos. 02-4271 & 02-4355
Petersen was left under a hair dryer while her stylist went
to lunch. When the treatment began to burn her scalp and
her stylist was nowhere to be found, Petersen—foils still in
her hair—left the salon without paying.
The salon employees then contacted the Bloomingdale
police, who dispatched Officer Gibson to the scene. He con-
tacted Petersen and she returned to the store. Hours of
discussions ensued, in which Petersen offered to pay part of
the bill and the salon refused to accept less than full
payment, and culminated in Gibson arresting Petersen and
detaining her at the police station for two hours. The salon
pursued her prosecution for seven months, at which time
the state nolle prosequied her case. Petersen then sued
Gibson, the salon, its employees and others. Her claims in-
cluded false arrest and wrongful detention claims against
Gibson under 42 U.S.C. § 1983, a conspiracy claim against
all defendants; and malicious prosecution, battery and
negligence claims against defendant Mario Tricoci Salon-
Bloomingdale and some of its employees.
Following unsuccessful settlement efforts, the case pro-
ceeded to trial. The jury was instructed, if it found liability,
to award compensatory damages in an amount that would
compensate for all of the plaintiff’s damages caused by the
defendant. It was further instructed, however, that it could
award nominal damages if it found liability but no damages
as a result. The jury found that Gibson violated Petersen’s
constitutional rights by wrongly arresting and detaining
her, that the salon was liable for malicious prosecution, and
that there was no conspiracy. The jury returned a verdict of
$40,000.00 in compensatory damages and $10,000.00 in
punitive damages against the salon, and a $1.00 nominal
damage award against Gibson. Petersen then moved for a
new trial on the damages with respect to Gibson, arguing
that the court erred in giving the nominal damages instruc-
tion. In granting the motion, the court first stated that it
provided the instruction because it believed that a reason-
Nos. 02-4271 & 02-4355 3
able jury could have found that Gibson was not the proxi-
mate cause of the substantial part of plaintiff’s damages.
Dist. ct. order 1/10/02. The court further noted that there
was evidence that the length of the detention was attribut-
able to the salon defendants rather than Gibson. Id. In fact,
the court declared that if the jury had returned a $1 verdict
in the absence of the nominal damages instruction, the
court would have let it stand. Id. Nevertheless, because
there was “evidence of actual, provable injury that a
reasonable jury could have attributed to Gibson,” the court
held that the better approach would have been to instruct
the jury to assess damages in whatever amount it believed
would compensate plaintiff for her injury. Id.
Faced with a new trial on the damages relating to Gibson,
the parties reached a settlement in which Gibson paid
$10,000.00. Petersen then sought attorney’s fees against
Gibson under 42 U.S.C. § 1988. In determining that fees
were proper, the district court considered the tangible
benefit of the $10,000 settlement, the success of the claims
against the salon, and the public benefit of the action in
addressing “the rarely considered but socially important
sphere of the use of police power to resolve the complaints
of merchants and service providers against their own
customers.” Dist. ct. order 12/05/02. The court then awarded
$288,087.25 in fees and $20,840.03 in costs, for a total
award of $308,927.28.
The only issue on appeal concerns the propriety of that
award of attorney’s fees and costs. Gibson contends that
Petersen was not a prevailing party and is therefore not
entitled to fees and costs, that any victory is merely tech-
nical or de minimis and hence an award is inappropriate,
and that the amount of fees and costs is excessive even if an
award was proper. Petersen has cross-appealed contending
that the district court erred in reducing the hourly rate
charged by her attorneys.
4 Nos. 02-4271 & 02-4355
The pivotal issue in resolving this appeal is whether
Petersen is a prevailing party under § 1988. The term “pre-
vailing party” has a narrow legal definition that may seem
counter-intuitive to one who believes the party who “suc-
ceeds” is necessarily one who “prevails.” As courts have
made clear, “a plaintiff must obtain formal judicial relief,
and not merely ‘success,’ in order to be deemed a prevailing
. . . party . . . .” Crabill v. Trans Union, 259 F.3d 662, 667
(7th Cir. 2001); see also Hewitt v. Helms, 482 U.S. 755, 762
(1987).
The Supreme Court has held that a prevailing party
is one who has been awarded some relief by a court, as
through an enforceable judgment on the merits or a court-
ordered consent decree. Buckhannon Bd. & Care Home, Inc.
v. West Virginia Dept. of Health & Human Res., 532 U.S.
598, 603-04 (2001); Texas State Teachers Assoc. v. Garland
Ind. School Dist., 489 U.S. 782, 792 (1989) (at a minimum
plaintiff must receive some relief on his claim before he can
be said to prevail); Oil, Chemical, and Atomic Workers Intl.
Union, AFL-CIO v. Dept. of Energy, 288 F.3d 452, 457 (D.C.
Cir. 2002) (to be eligible for attorney’s fees, FOIA plaintiffs
must have been awarded some relief by a court). The relief
requirement emphasizes the practical impact of the lawsuit,
and the Supreme Court has repeatedly held that the relief
must be real in order to qualify for fees. Farrar v. Hobby,
506 U.S. 103, 110-12 (1992); Buckhannon, 532 U.S. at 641
n.13 (Ginsburg, J., dissenting) and cases cited therein. For
instance, in Rhodes v. Stewart, 488 U.S. 1, 4 (1988), the
Court held that a plaintiff who obtains a declaratory
judgment but obtains no real relief whatsoever is not a
prevailing party. See also Hewitt, 482 U.S. at 761 (judicial
statement that plaintiff’s rights were violated does not
affect the relationship between the plaintiff and the
defendant; to be a prevailing party, plaintiff must gain
relief of substance). Furthermore, the Supreme Court has
emphasized that the relief is actual when it changes the
legal relationship between the parties. That is because
Nos. 02-4271 & 02-4355 5
[i]n all civil litigation, the judicial decree is not the end
but the means. At the end of the rainbow lies not a
judgment, but some action (or cessation of action) by
the defendant that the judgment produces—the pay-
ment of damages, or some specific performance, or the
termination of some conduct. Redress is sought through
the court, but from the defendant.
[emphasis in original] Hewitt, 482 U.S. at 761. The mere
moral satisfaction of being wronged is insufficient to trigger
prevailing party status. Id. at 762; Cady v. City of Chicago,
43 F.3d 326, 330 (7th Cir. 1994) (holding that unless
plaintiff “can point to a direct benefit or redressed grievance
other than the ‘psychic satisfaction’ of ending ‘invidious
discrimination,’ he does not emerge as a prevailing party”);
see also Richardson v. Continental Grain Co., 336 F.3d
1103, 1106 (9th Cir. 2003) (although plaintiff succeeded on
a legal issue, attorney’s fees unavailable because no actual
relief obtained, “only the possibility of future relief”).
Therefore, in determining whether Petersen has pre-
vailed, we must examine the practical impact of the judg-
ment. The only judgment here is the one entered after the
trial. That judgment originally awarded Petersen nominal
damages, which would have been sufficient under Farrar to
obtain prevailing party status, but not necessarily to obtain
fees. 506 U.S. at 115 (holding that nominal damages are
sufficient to confer prevailing party status but noting that
“[w]hen a plaintiff recovers only nominal damages because
of failure to prove an essential element of his claim for
monetary relief . . . the only reasonable fee is usually no fee
at all.”). That damage award, however, was vacated on
Petersen’s motion, and the settlement followed. Therefore,
the only judgment in this case is a determination that
Petersen’s rights were violated. As the Supreme Court
noted in Buckhannon, however, attorney’s fees are not
available where plaintiff has “acquired a judicial pronounce-
ment that the defendant has violated the Constitution
6 Nos. 02-4271 & 02-4355
unaccompanied by ‘judicial relief.’ ” [emphasis in original]
532 U.S. at 606; Thomas v. National Science Foundation,
330 F.3d 486, 488 (D.C. Cir. 2003) (quoting Buckhannon
and holding that attorney’s fees are unavailable where the
court order declared that the disputed assessment was an
unconstitutional tax, but the plaintiffs did not obtain any
concrete relief). It is the settlement, not the judgment of the
court, that obtained the practical relief sought by Petersen,
and therefore the judgment cannot provide a basis for
prevailing party status. See Rhodes, 488 U.S. at 4 (a
judgment will constitute relief for purposes of § 1988 only
if it affects the behavior of the defendant toward the
plaintiff).
The next question, then, is whether Petersen is a pre-
vailing party not because of the judgment, but because she
obtained a settlement which indeed gave her practical re-
lief. Approximately six months before this settlement was
negotiated, the Supreme Court answered that question in
Buckhannon. Prior to Buckhannon, most circuit courts held
that a party prevailed if their lawsuit was a “catalyst” for
obtaining the desired relief, as when the lawsuit brought
about a voluntary change in the defendant’s conduct in a
settlement. Buckhannon, however, rejected that theory, and
held that in order to prevail for purposes of attorney’s fees
the party must obtain a “judicially-sanctioned change in the
legal relationship of the parties. . . . A defendant’s voluntary
change in conduct, although perhaps accomplishing what
the plaintiff sought to achieve by the lawsuit, lacks the
necessary judicial imprimatur on the change.” 532 U.S. at
605. The Court distinguished private settlements from
consent decrees, stating that the former “do not entail the
judicial approval and oversight involved in consent decrees”
and noting that federal courts will often lack jurisdiction to
enforce a private settlement unless the terms of the agree-
ment are incorporated into the order of dismissal. Id. at 604
n.7. One factor in the Court’s decision is that a fee request
Nos. 02-4271 & 02-4355 7
should not spawn a second round of major litigation. Id. at
609-10. Under the catalyst theory, however, that was often
the result, because courts had to analyze the defendant’s
subjective motivations to determine whether the change in
conduct was attributable to the merits of the case rather
than to another cause or to the desire to avoid the expense
of litigation. Id.
Since Buckhannon, many circuits have attempted to
delineate the circumstances in which a settlement has a
sufficient judicial imprimatur to entitle the plaintiff to fees.
Many, including this court, have held that a settlement
short of a consent decree may qualify if, for instance, the
terms of the settlement were incorporated into the dis-
missal order and the order was signed by the court rather
than the parties, or the order provided that the court would
retain jurisdiction to enforce the terms of the settlement.
See T.D. v. LaGrange School Dist. No. 102, 349 F.3d 469,
478-79 (7th Cir. 2003); Smalbein v. City of Daytona Beach,
353 F.3d 901, 905 (11th Cir. 2003) and cases cited therein;
Roberson v. Guiliani, 346 F.3d 75, 82-83 (2d Cir. 2003).
Correspondingly, we have recognized that mere judicial
involvement in the settlement is not enough; “[t]here must
be some official judicial approval of the settlement and
some continuing judicial oversight.” T.D., 349 F.3d at 479.
We need not concern ourselves here with the precise
boundaries between a settlement that meets the prevailing
party definition and one that falls short, however, because
the settlement in this case clearly falls on the short side.
There is in fact no order that we can find in the record, and
none provided by the parties, concerning the settlement at
all, and thus no judicial imprimatur whatsoever under
Buckhannon. See Doe v. Boston Public Schools, 358 F.3d 20,
24 (1st Cir. 2004) (noting the Supreme Court’s “unambigu-
ous rejection of private settlement as sufficient grounds for
‘prevailing party’ status”). Because Petersen received no
relief from the judgment of the court, and because the
8 Nos. 02-4271 & 02-4355
settlement was not a “judicially sanctioned” change in the
legal relationship of the parties, Petersen was not a prevail-
ing party under § 1988, and is not entitled to attorney’s
fees. It follows, of course, that Petersen cannot succeed on
her cross-appeal challenging the district court’s reduction
in the hourly rate for her attorneys.
We note that this case is a difficult one because of the
timing—given that the award of nominal damages would
have rendered her a prevailing party—but timing is often
the difference between prevailing party status and no fees
at all especially in the post-Buckhannon era. In fact, this
case reflects the difficulties that Buckhannon sought to
avoid. Although nominal damages would have qualified
Petersen as a prevailing party, it also would have made an
award of fees unlikely because the success was so minimal.
The district court and Petersen rely on the $10,000 set-
tlement, not the prior nominal damage award, to justify the
substantial fees here. But although Petersen would charac-
terize the settlement as a reflection of the damages actually
sustained, Gibson argues that it was a nuisance settlement
to avoid the expense of a second trial on damages. The jury
findings do not resolve the issue because the jury found
liability but also awarded only nominal damages which,
under the jury instructions, it was only to do if it first found
no actual damages. If a jury in a second damage trial was
to make findings consistent with the first jury, then
Petersen’s damage award would be zero. In any case, this
is precisely the sort of secondary dispute that the Supreme
Court wished to avoid, and that is rendered irrelevant
under the Court’s rejection of the catalyst theory and its
requirement of a judicial imprimatur on a settlement in
order for it to be a basis for prevailing party status.
One claim yet remains—that of costs. Gibson challenges
the award of $20,840.03 in costs to Petersen, claiming that
costs should not have been awarded at all, or at least not in
that amount. Although Gibson, here as in the district court,
Nos. 02-4271 & 02-4355 9
challenges categories of costs separately, the district court
did not address the costs individually and mentions costs
only in its conclusion, awarding them in the amount of
$20,840.03. That makes review of that discretionary award
problematic. Moreover, we have determined in this appeal
that Petersen is not a prevailing party for purposes of
attorney’s fees under § 1988. Because costs are available to
“prevailing” parties, the district court must consider
whether that term has a different meaning in the context of
costs as opposed to attorney’s fees. The Supreme Court
suggested as much in Buckhannon, and in other contexts
has recognized that the analysis of costs may differ from
that of fees. Buckhannon, 532 U.S. at 606 n.8; see also
Maher v. Gagne, 448 U.S. 122, 130-31 & n.14 (1980) (dis-
cussing impact of Eleventh Amendment on fee awards, and
noting that the Court has never viewed the Eleventh
Amendment as barring award of costs),and Mother and
Father v. Cassidy, 338 F.3d 704, 710 (7th Cir. 2003) (discus-
sing strong presumption that prevailing party will recover
costs, and noting that attorney’s fees decisions are not ne-
cessarily analogous because there is no parallel presump-
tion). The parties, however, do not distinguish between
costs and fees in their briefing of whether Petersen is a
prevailing party, with Gibson merely arguing that the
award of costs is inappropriate if Petersen is not a prevail-
ing party for fees purposes. The issue would benefit from
briefing by the parties in the district court, and if the court
determines on remand that costs should still be awarded,
then the court should address the specific objections raised
by Gibson as to each category of costs so as to facilitate
effective review by this court in the case of a subsequent
appeal.
The decision of the district court awarding $288,087.25 in
attorney’s fees is REVERSED, the award of $20,840.03 in
costs is VACATED, and the case REMANDED for further
proceedings consistent with this opinion.
10 Nos. 02-4271 & 02-4355
A true Copy:
Teste:
________________________________
Clerk of the United States Court of
Appeals for the Seventh Circuit
USCA-02-C-0072—6-16-04