Bywaters v. United States , 670 F.3d 1221 ( 2012 )

United States Court of Appeals
for the Federal Circuit
__________________________
ASHBURN BYWATERS, CARL LANCASTER,
BETTY L. HOHENBERGER, ORMAN RODERICK,
JUNE RODERICK, AND NAN O. BEELER,
Plaintiffs-Appellants,
v.
UNITED STATES,
Defendant-Appellee.
__________________________
2011-1032
__________________________
Appeal from the United States District Court for the
Eastern District of Texas in case no. 99-CV-0451, Judge
Leonard Davis.
___________________________
Decided: March 1, 2012
___________________________
KATHLEEN C. KAUFFMAN, Ackerson Kauffman Fex,
PC, of Washington, DC, argued for plaintiffs-appellants.
On the brief was CECILIA FEX.
ELLEN J. DURKEE, Attorney, Appellate Section, Envi-
ronment & Natural Resources Division, United States
Department of Justice, of Washington, DC, argued for
defendant-appellee. With her on the brief was IGNACIA S.
MORENO, Assistant Attorney General.
BYWATERS v. US 2
__________________________
Before RADER, Chief Judge, PLAGER and DYK, Circuit
Judges.
Opinion for the court filed by Circuit Judge DYK. Dissent-
ing opinion filed by Circuit Judge PLAGER.
DYK, Circuit Judge.
This case presents the question of when a district
court may reduce the “lodestar” calculation of reasonable
attorneys’ fees to account for the “amount involved and
results obtained” or other factors. Although the district
court here did an exemplary job, we conclude that two
errors require a remand. First, while the district court
may reduce the lodestar figure to account for the “amount
involved and results obtained” and other factors in rare
and exceptional circumstances, we conclude that the
district court erred here by taking these factors into
account after calculating the lodestar figure, rather than
as a part of the lodestar calculation itself. We also hold
that the district court should have used forum rates in
determining the reasonable hourly rate for the lodestar
calculation. Accordingly, we vacate and remand for
further proceedings consistent with this opinion.
BACKGROUND
The United States has waived its sovereign immunity
with respect to constitutional claims, including govern-
ment takings claims arising under the Fifth Amendment.
See 28 U.S.C. §§ 1346(a)(2), 1491(a)(1). The United States
Court of Federal Claims has exclusive jurisdiction over
such claims where the amount in controversy is greater
than $10,000, § 1491(a)(1) (the “Tucker Act”), but shares
jurisdiction with the district courts where the amount in
controversy does not exceed $10,000, § 1346(a)(2) (the
3 BYWATERS v. US
“Little Tucker Act”). In actions brought under the Tucker
Act or the Little Tucker Act in which a plaintiff is
awarded compensation for the taking of property, the
Uniform Relocation Assistance and Real Property Acqui-
sition Policies Act of 1970 (“URA”) provides for the recov-
ery of “such sum as will in the opinion of the court or the
Attorney General reimburse such plaintiff for his reason-
able costs, disbursements, and expenses, including rea-
sonable attorney . . . fees, actually incurred because of
such proceeding.” 42 U.S.C. § 4654(c).1
This case involves takings compensation claims
brought by appellants against the United States. On May
23, 2000, following the transfer of their compensation
claims to the United States District Court for the Eastern
District of Texas, Plaintiff-Appellant Ashburn Bywaters
and other named plaintiffs (collectively, “appellants”),
represented by counsel based in Washington, DC, filed an
amended class action complaint on behalf of themselves
and all others similarly situated, alleging that they were
the owners of interests in land constituting part of a
railroad corridor (the “Chaparral rail corridor”) that had
been converted for trail use by the Interstate Commerce
Commission pursuant to the National Trails System Act
1 42 U.S.C. § 4654(c) provides, in its entirety: “The
court rendering a judgment for the plaintiff in a proceed-
ing brought under section 1346(a)(2) or 1491 of Title 28,
awarding compensation for the taking of property by a
Federal agency, or the Attorney General effecting a set-
tlement of any such proceeding, shall determine and
award or allow to such plaintiff, as a part of such judg-
ment or settlement, such sum as will in the opinion of the
court or the Attorney General reimburse such plaintiff for
his reasonable costs, disbursements, and expenses, in-
cluding reasonable attorney, appraisal, and engineering
fees, actually incurred because of such proceeding.”
BYWATERS v. US 4
(“Trails Act”), 16 U.S.C. § 1247(d). 2 The Trails Act is
designed to preserve railroad rights-of-way by converting
them into recreational trails. Actions by the government
pursuant to the Trails Act can result in takings liability
where the railroad acquired an easement from the prop-
erty owner, the railroad’s use of the property ceased, and
the government’s action under the Trails Act prevented
reversion of the property to the original owner. See
Preseault v. United States, 100 F.3d 1525, 1550-52 (Fed.
Cir. 1996) (en banc); see also Caldwell v. United States,
391 F.3d 1226, 1228 (Fed. Cir. 2004).
On August 25, 2000, the district court certified a class
consisting of all persons who owned an interest in land
constituting the Chaparral rail corridor extending from
Farmersville, Texas, to Paris, Texas, that was converted
to trail use pursuant to the Trails Act, and whose claims
did not exceed $10,000 per claim. On April 17, 2003, the
government stipulated to takings liability with respect to
those claims for segments of the Chaparral rail corridor in
which the railroad acquired only an easement. 3 From
2 16 U.S.C. § 1247(d) provides, in relevant part:
“Consistent with the purposes of [the Railroad Revitaliza-
tion and Regulatory Reform Act of 1976], and in further-
ance of the national policy to preserve established
railroad rights-of-way for future reactivation of rail ser-
vice, to protect rail transportation corridors, and to en-
courage energy efficient transportation use, in the case of
interim use of any established railroad rights-of-way . . . ,
such interim use shall not be treated, for purposes of any
law or rule of law, as an abandonment of the use of such
rights-of-way for railroad purposes.”
3 The agreement between the parties recognized
that there was no takings liability where the original
owner had conveyed the property to the railroad in fee
simple. See Preseault, 100 F.3d at 1533.
5 BYWATERS v. US
2003 to 2009, the parties cooperated to determine the
amount of just compensation to be paid to the members of
the class.
On July 31, 2009, the parties proposed a settlement
agreement that resolved all issues in the case, except for
the amount of attorneys’ fees and costs to be awarded
under the URA. The district court approved the proposed
settlement after finding that the proposed settlement
would secure 100% of the just compensation due to class
members with eligible claims, subject to the $10,000
jurisdictional cap of the Little Tucker Act. Under the
settlement, appellants’ total recovery was $1,241,385.36,
including pre-judgment interest.
Following settlement, appellants filed a claim for at-
torneys’ fees under the URA, requesting attorneys’ fees in
the amount of $832,674.99, which included 2,119.69 hours
of work from August 1999, when the case was transferred
to the Eastern District of Texas, to December 2009.
Appellants also urged the district court to determine the
appropriate amount of attorneys’ fees by applying market
rates for the District of Columbia, where appellants’
counsel practiced, rather than rates charged by attorneys
in the forum where the case was brought (the Eastern
District of Texas). In response, the government argued
for application of the forum rule. The government also
argued for the reduction of the fees claimed based on
various grounds, including that the hours claimed were
unreasonable in light of the government’s stipulation to
liability early in the case, and the fact that a fee agree-
ment between appellants and their counsel provided for
the award of attorneys’ fees calculated at the greater of
counsel’s regular hourly rate or one third of appellants’
total recovery.
BYWATERS v. US 6
The district court, applying Federal Circuit law, de-
termined the amount of attorneys’ fees to be awarded
under the “lodestar” approach, i.e., by multiplying the
number of hours reasonably expended by a reasonable
hourly rate. In determining the lodestar figure, the
district court first considered the hours requested by
appellants and the government’s objections and deter-
mined that only 18.2 hours spent drafting and filing an
amicus brief were unreasonable. Accordingly, the court
reduced the amount of hours requested by appellants by
18.2 hours. The court next determined that the relevant
market for determining the reasonable hourly rate was
the District of Columbia and applied the Updated Laffey
Matrix 4 to determine the reasonable hourly rates for
complex litigation. Accordingly, the district court deter-
mined that “multiplying the number of hours reasonably
expended by the reasonable hourly rate using the Up-
dated Laffey Matrix” yielded a lodestar figure of
$826,044.19. Bywaters v. United States, No. 6:99-CV-451,
2010 WL 3212124, at *4 (E.D. Tex. Aug. 12, 2010) (here-
inafter “Attorneys’ Fees Order”).
However, calculation of the lodestar figure did not end
the district court’s inquiry. The district court found that
4 The “Updated Laffey Matrix” is a billing survey of
District of Columbia market rates. The survey was
conducted in 1988-1989 and has been recalculated in
subsequent years using a methodology advocated by
economist Dr. Michael Kavanaugh. The Updated Laffey
Matrix has been used by the United States District Court
for the District of Columbia to determine the amount of a
reasonable attorney fee on several occasions. See, e.g.,
Salazar v. District of Columbia, 123 F. Supp. 2d 8, 15
(D.D.C. 2000) (“[T]he Court concludes that the updated
Laffey matrix more accurately reflects the prevailing rates
for legal services in the D.C. community.”).
7 BYWATERS v. US
the factor of “amount involved and results obtained” was
not adequately taken into account in determining a
reasonable fee. The district court reasoned that the
lodestar figure would yield an award of attorneys’ fees
that was 66.5% of the total relief awarded to appellants,
which was “extremely high considering the amount at
stake in this case and the actual results obtained.” Id.The district court observed that “[o]verlooking the large
disparity between Plaintiffs’ award and the lodestar
figure would only encourage protracted litigation.” Id.The court also concluded that the work performed by
appellants’ counsel was “administrative in nature and did
not require a high level of legal skill.” Id. Finally, the
court noted that the lodestar figure exceeded the amount
calculated under the contingent-fee option in the fee
agreement between appellants and their counsel, which
provided that appellants’ counsel would be compensated
at either “the value of [their] professional services at
[their] regular hourly rate or by multiplying by one third
the amount recovered for the plaintiff class as damages,
whichever is greater.” Id. The court reduced the calcu-
lated lodestar figure by 50%, awarding attorneys’ fees in
the amount of $413,022.10.
Appellants timely appealed the district court’s award
of attorneys’ fees. We have jurisdiction pursuant to 28
U.S.C. § 1295(a)(2).
DISCUSSION
Generally, our legal system adheres to the “American
Rule” under which “each party in a lawsuit ordinarily
shall bear its own attorney’s fees.” Hensley v. Eckerhart,
461 U.S. 424, 429 (1983). However, in certain categories
of cases Congress has carved out exceptions to the Ameri-
can Rule and allowed for recovery of attorneys’ fees. See
Pennsylvania v. Del. Valley Citizens’ Council for Clean
BYWATERS v. US 8
Air, 478 U.S. 546, 561-62 (1986). The fee-shifting provi-
sions of the URA are one such example. See 42 U.S.C.
§ 4654. We have not yet had an occasion to interpret the
fee-shifting provisions of the URA.
I
As a threshold matter we must first determine
whether, in calculating the amount of reasonable attor-
neys’ fees under the URA, we should apply our law or the
law of the regional circuit—here, the Fifth Circuit. Not-
withstanding this court’s exclusive jurisdiction over
Tucker Act and Little Tucker Act appeals, see 28 U.S.C.
§ 1295(a)(2), the government contends that we should
apply Fifth Circuit law in reviewing the district court’s
grant of attorneys’ fees under the URA. Specifically, the
government argues that the district court’s award of
attorneys’ fees is “entirely dependent on Fed. R. Civ. P.
23” and thus implicates procedural issues, rather than the
merits of a takings claim under the Tucker Act. Appel-
lee’s Br. 41. The district court’s award of attorneys’ fees
in this case was quite clearly based upon the mandatory
fee-shifting provision of the URA. Compare Fed. R. Civ.
P. 23(h) (“[T]he court may award reasonable attorney's
fees . . . .” (emphasis added)), with 42 U.S.C. § 4654(c)
(“The court . . . shall determine and award . . . reasonable
attorney . . . fees . . . .” (emphasis added)). The award of
fees thus depends on construction of the URA and not
Rule 23.
Additionally, the government argues that because we
do not have exclusive jurisdiction over all claims arising
under the URA generally, Federal Circuit law should not
apply. The URA provides for the award of “reasonable”
attorneys’ fees in two separate circumstances. First,
attorneys’ fees may be awarded where the government
initiates a condemnation proceeding that results in either
9 BYWATERS v. US
a final judgment that the government may not acquire the
property by condemnation or abandonment of the proceed-
ing by the government. § 4654(a). Such cases are liti-
gated in the district courts and appealed to the regional
circuits. See, e.g., United States v. 122.00 Acres of Land,
856 F.2d 56, 58-59 (8th Cir. 1988) (reviewing a district
court’s award of fees pursuant to section 4654(a)). Sec-
ond, attorneys’ fees may also be awarded where, as in this
case, a property owner brings an inverse condemnation
action under the Tucker Act or the Little Tucker Act
alleging a government taking under the Fifth Amendment
and that action results in an award of compensation for
the taking. § 4654(c). We have exclusive appellate juris-
diction in such cases. See 28 U.S.C. § 1295(a)(2). We are
concerned here only with the second provision, section
4654(c).
While we do not have exclusive jurisdiction in all
cases arising under section 4654 of the URA, the fee-
shifting provision at issue here—section 4654(c)—is
applicable only to government takings claims brought
under the Tucker Act or the Little Tucker Act, cases that
are within our exclusive jurisdiction. In Heisig v. United
States, 719 F.2d 1153 (Fed. Cir. 1983), we held that
district courts adjudicating claims under the Little Tucker
Act should apply the law of the Federal Circuit, rather
than regional circuit law. We noted that “[l]ogic, as well
as the express congressional desire for uniformity, dictate
that similar standards of review and the precedents of
this circuit should obtain in a proceeding in a district
court that is substantially identical, except for jurisdic-
tional amount, to one in the Claims Court.” Id. at 1156;
see also United States v. Hohri, 482 U.S. 64, 71 (1987) (“A
motivating concern of Congress in creating the Federal
Circuit was the special need for nationwide uniformity in
certain areas of the law.” (internal quotation marks
BYWATERS v. US 10
omitted)). Furthermore, we have consistently applied our
law to claims for attorneys’ fees under section 285 of the
Patent Act because section 285 relates to an area of
substantive law within our exclusive jurisdiction. See,
e.g., Q-Pharma, Inc. v. Andrew Jergens Co., 360 F.3d
1295, 1299 (Fed. Cir. 2004); see also 35 U.S.C. § 285.
Here too attorneys’ fees were awarded pursuant to a
statutory fee-shifting provision that relates only to cases
brought pursuant to the Tucker Act and the Little Tucker
Act, an area within our exclusive jurisdiction. In light of
“the evident congressional desire for uniform adjudication
of Little Tucker Act claims” and Tucker Act claims, Hohri,
482 U.S. at 73, we hold that our law, rather than the law
of the regional circuit, should apply to an award of attor-
neys’ fees under section 4654(c).
II
While we have not yet interpreted section 4654(c), the
Supreme Court has advised that all federal fee-shifting
statutes calling for an award of “reasonable” attorneys’ fee
should be construed “uniformly.” City of Burlington v.
Dague, 505 U.S. 557, 562 (1992); see also Indep. Fed’n of
Flight Attendants v. Zipes, 491 U.S. 754, 758 n.2 (1989)
(“We have stated in the past that fee-shifting statutes’
similar language is ‘a strong indication’ that they are to
be interpreted alike.” (quoting Northcross v. Memphis Bd.
of Educ., 412 U.S. 427, 428 (1973))); Hubbard v. United
States, 480 F.3d 1327, 1333 (Fed. Cir. 2007). Nothing in
the language or legislative history of the URA suggests
that it should receive a different construction than other
fee-shifting statutes.
Generally, in determining the amount of reasonable
attorneys’ fees to award under federal fee-shifting stat-
utes, the district court is afforded considerable discretion.
See Hensley, 461 U.S. at 437; see also 42 U.S.C. § 4654(c)
11 BYWATERS v. US
(providing for an award of attorney fees that will “in the
opinion of the court” reimburse plaintiffs for reasonable
expenses actually incurred (emphasis added)). This
deference results from “the district court’s superior un-
derstanding of the litigation and the desirability of avoid-
ing frequent appellate review of what essentially are
factual matters.” Hensley, 461 U.S. at 437. In this case,
the district court carefully and thoughtfully considered
the submissions of the parties, including over forty pages
of billing records submitted by appellants in support of
their fee application. In calculating the lodestar figure
and subsequently reducing that figure, the district court
candidly acknowledged the reasons for its decision. It
may well be that the amount awarded by the district
court will turn out to be the correct amount. While we
think the district court’s approach was largely correct, we
think a remand is nonetheless required because the
district court’s analysis was incorrect in two respects.
First, the district court should have considered the
“amount involved and results obtained” as well as the
administrative nature of the work and the fee agreement
in determining the lodestar figure, rather than applying
these factors after calculation of the lodestar figure.
Second, the district court was required to apply the forum
rule in determining the reasonable hourly rate for the
relevant market.
III
We first consider the district court’s adjustment to the
lodestar figure. In determining the amount of reasonable
attorneys’ fees under federal fee-shifting statutes, the
Supreme Court has consistently upheld the lodestar
calculation as the “guiding light of [its] fee-shifting juris-
prudence.” Perdue v. Kenny A. ex rel. Winn, 130 S. Ct.
1662, 1672 (2010) (quoting Gisbrecht v. Barnhart, 535
U.S. 789, 801 (2002)). Although there is a “strong pre-
BYWATERS v. US 12
sumption” that the lodestar figure represents a “reason-
able” attorney fee, Dague, 505 U.S. at 562, the Supreme
Court has recognized a district court’s discretion to adjust
the lodestar figure “upward or downward” based upon
other considerations, Del. Valley, 478 U.S. at 564 (quoting
Hensley, 461 U.S. at 434). However, adjustments to the
lodestar figure “are proper only in certain ‘rare’ and
‘exceptional’ cases, supported by both ‘specific evidence’ on
the record and detailed findings by the lower courts.” Id.
at 565; see also Perdue, 130 S. Ct. at 1673 (reaffirming
that enhancements to the lodestar figure may be awarded
in only “rare” and “exceptional” circumstances). Adjust-
ments are warranted only where the lodestar figure fails
to take into account a relevant consideration. As the
Supreme Court recently stated, “an enhancement may not
be awarded based on a factor that is subsumed in the
lodestar calculation.” Perdue, 130 S. Ct. at 1673 (citations
omitted). The question is whether the “amount involved
and results obtained” in this case warranted an adjust-
ment.
We note initially that the Supreme Court has not al-
ways been clear about what is encompassed within the
category of “amount involved and results obtained”—that
is, whether it refers to the absolute level of success or the
proportionate level of success (percentage of recovery on
the initial claim). In truth, even though this case involves
an adjustment for the absolute level of success, it seems to
make little difference in the mandated approach. As the
Supreme Court standards have evolved, neither an ad-
justment for the absolute or proportionate level of success
is appropriate absent unusual circumstances. The
“amount involved and results obtained” factor was first
identified as relevant to the attorney fee inquiry as one of
twelve factors—the so-called “Johnson factors”—
considered by the Fifth Circuit in Johnson v. Georgia
13 BYWATERS v. US
Highway Express, Inc., 488 F.2d 714 (5th Cir.1974). 5 In
1983, citing Johnson, the Court initially opined in Hensley
that the district court could, in its discretion, adjust the
lodestar figure “upward or downward” to account for the
“crucial” factor of the “results obtained.” 461 U.S. at 434.
Specifically, the Court noted that in considering this
factor, the district court should “focus on the significance
of the overall relief obtained by the plaintiff in relation to
the hours reasonably expended on the litigation,” but that
there was “no precise rule or formula” for taking this
factor into consideration. Id. at 435-36.
In the years since Hensley, the Supreme Court’s view
on the degree of discretion afforded district courts in
adjusting the lodestar figure has undergone change, thus
cabining the district court’s ability to adjust the lodestar
figure to only “rare” and “exceptional” cases. See Perdue,
130 S. Ct. at 1673. Later cases have made clear that
while the “amount involved and results obtained” remains
a factor to be considered in determining a reasonable
attorney fee, it cannot be a basis for reducing the lodestar
figure where it could have been taken into account in
calculating the lodestar figure in the first instance. In
Blum v. Stenson, 465 U.S. 886 (1984), decided just one
5 The twelve Johnson factors are: (1) the time and
labor required; (2) the novelty and difficulty of the ques-
tions; (3) the skill requisite to perform the legal service
properly; (4) the preclusion of other employment by the
attorney due to acceptance of the case; (5) the customary
fee; (6) whether the fee is fixed or contingent; (7) time
limitations imposed by the client or the circumstances; (8)
the amount involved and the results obtained; (9) the
experience, reputation, and ability of the attorneys; (10)
the “undesirability” of the case; (11) the nature and length
of the professional relationship with the client; and (12)
awards in similar cases. Johnson, 488 F.2d at 717-19.
BYWATERS v. US 14
year after Hensley, the Court clarified that while “there
may be circumstances in which the basic standard of
reasonable rates multiplied by reasonably expended hours
results in a fee that is either unreasonably low or unrea-
sonably high,” the lodestar figure is “presumed” to be
reasonable. Id. at 897. The Court also cautioned against
“double counting” factors such as the “amount involved
and results obtained” by adjusting the lodestar figure
where those factors are fully reflected in the reasonable
hourly rate of the attorneys and the reasonable number of
hours expended. Id. at 899-900; see also Dague, 505 U.S.
at 562-63. In particular, the Court noted that “[b]ecause
acknowledgment of the ‘results obtained’ generally will be
subsumed within other factors used to calculate a reason-
able fee, it normally should not provide an independent
basis for increasing the fee award.” Blum, 465 U.S. at
900; see also City of Riverside v. Rivera, 477 U.S. 561, 568-
69 (1986) (plurality opinion) (recognizing that while the
“amount involved and results obtained” may be consid-
ered in determining a reasonable attorney fee, a district
court is not free to mechanically adjust the lodestar figure
downward based on this factor).
Most recently, the Court considered the principles
governing the district court’s authority to adjust the
lodestar figure in Perdue, 130 S. Ct. 1662. In Perdue, the
Court once again endorsed the lodestar method, noting
that it is “readily administrable; and unlike the Johnson
approach, the lodestar calculation is ‘objective,’ and thus
cabins the discretion of trial judges, permits meaningful
judicial review, and produces reasonably predictable
results.” Id. at 1672 (internal citations omitted). Quoting
Blum with approval, the Court also held that as a rule,
the lodestar figure should only be adjusted in “rare” and
“exceptional” cases and may not be adjusted “based on a
factor that is subsumed in the lodestar calculation.” Id. at
15 BYWATERS v. US
1673. A district court seeking to adjust the lodestar
figure must justify its deviation with “specific evidence”
demonstrating that the factors considered are not ade-
quately subsumed within the lodestar calculation. See
Blum, 465 U.S. at 898-900; see also Perdue, 130 S. Ct. at
1676 (“It is essential that the judge provide a reasonably
specific explanation for all aspects of a fee determination,
including any award of an enhancement.”); Del. Valley,
478 U.S. at 565 (noting that modifications of the lodestar
figure should be supported by “detailed findings” by the
lower court). In Perdue, the Court held that the upward
adjustment for “results obtained” was not permissible.
130 S. Ct. at 1676. We see no basis for distinguishing
between an upward adjustment and a downward adjust-
ment for “results obtained.” Neither is permissible absent
unusual circumstances.
Applying the standards set forth in Hensley and later
cases, we find that this case does not present the sort of
“rare” and “exceptional” circumstance where the factor of
“amount involved and results obtained” should be consid-
ered as a basis for departure from the lodestar figure.
The mere fact that the recovery is small in amount is not
a circumstance justifying a reduced fee award. See Millea
v. Metro-North R.R. Co., 658 F.3d 154, 168 (2d Cir. 2011).
The district court’s conclusory statement that the
“‘amount involved and results obtained’ factor [was] not
adequately taken into account” in determining a reason-
able fee, Attorneys’ Fees Order, 2010 WL 3212124, at *4, is
also not sufficient, standing alone, to support a departure
from the lodestar figure. While it is legitimate to consider
the “amount involved and results obtained” in determin-
ing a reasonable attorney fee award, the district court
should have considered this factor when determining the
reasonable number of hours expended and the reasonable
hourly rates of the attorneys. It is axiomatic that attor-
BYWATERS v. US 16
neys almost inevitably consider the amount involved in a
particular case when determining a reasonable number of
hours to expend on any given issue or when allocating
personnel resources based upon the expertise or experi-
ence required. Where only a small amount is at stake, it
certainly would not be reasonable to expend countless
hours on such a small claim or to commit the most experi-
enced or valued attorney in the firm to work on the case.
Thus where the amount involved is small, reductions in
the reasonable number of hours expended or the reason-
able hourly rate can easily be made to reflect this fact. It
is for this reason that the Supreme Court has held that
the “results obtained” factor is generally subsumed within
the lodestar calculation and thus normally should not
provide an independent basis for a departure from the
lodestar figure. Blum, 465 U.S. at 900; see also Perdue,
130 S. Ct. at 1674.
Just as the “amount involved and results obtained”
can readily be incorporated into the lodestar figure, so too
can the administrative nature of the work and the low
level of skill involved, which the district court identified
as alternative bases for reducing the lodestar figure. 6 The
district court’s findings with respect to these factors can
be fairly reflected by reducing the number of hours rea-
sonably expended and the appropriate hourly rates of the
attorneys. See Del. Valley, 478 U.S. at 566 (“Because
considerations concerning the quality of a prevailing
6 We reject appellants’ contention that the work
was not significantly “administrative” in nature. The
district court could properly consider the fact that 917.85
hours of the total 2,119.69 hours requested by appellants
accrued after the government’s stipulation to takings
liability in determining the reasonableness of the number
of hours requested and the appropriate hourly rates of the
attorneys.
17 BYWATERS v. US
party’s counsel’s representation normally are reflected in
the reasonable hourly rate, the overall quality of perform-
ance ordinarily should not be used to adjust the lodestar .
. . .”); Blum, 465 U.S. at 898-99 (“The novelty and com-
plexity of the issues presumably were fully reflected in
the number of billable hours recorded by counsel and thus
do not warrant an . . . adjustment. . . . Neither complexity
nor novelty of the issues, therefore, is an appropriate
factor in determining whether to increase the basic fee
award.”).
Finally, the fee agreement between appellants and
their counsel in this case is not a proper basis for reducing
the lodestar figure, though it may be taken into account in
the lodestar calculation. Unlike many contingent-fee
agreements, the agreement here provides for appellants’
counsel to seek attorneys’ fees calculated as the greater of
either “the value of [their] professional services at [their]
regular hourly rates or by multiplying by one third the
amount recovered for the plaintiff class as damages.” J.A.
602. Thus, the fee agreement did not cap attorneys’ fees
as a percentage of the recovery, and cannot be used to
limit the recovery of attorneys’ fees after determining the
lodestar figure. 7 We nonetheless think that the agree-
ment may be considered in calculating the lodestar figure.
7 In Blanchard v. Bergeron, 489 U.S. 87 (1989), the
Supreme Court construed the language of the fee-shifting
provision of the Civil Rights Act, 42 U.S.C. § 1988, which
provides for recovery of “a reasonable attorney’s fee” to
the prevailing party. The Court held that although the
existence of a contingent-fee agreement could “aid in
determining reasonableness,” such an agreement does not
impose an “automatic ceiling” on an award of attorneys’
fees. Id. at 93. The Court specifically reasoned that
“[s]hould a fee agreement provide less than a reasonable
fee calculated [using the lodestar method], the defendant
should nevertheless be required to pay the higher
BYWATERS v. US 18
In conclusion, the district court should have consid-
ered the “amount involved and results obtained,” as well
as the administrative nature of the work and the fee
agreement, in determining the reasonable number of
hours expended or the reasonable hourly rate. A remand
is therefore necessary. On remand, the district court must
determine the amount of attorneys’ fees, taking into
account the “amount involved and results obtained,” the
administrative nature of the work and the low level of
skill involved, and the fee agreement in calculating the
lodestar figure rather than by reducing the lodestar figure
itself. 8
amount.” Id. However, in Marre v. United States, 38 F.3d
823 (5th Cir. 1994), the Fifth Circuit construed 26 U.S.C.
§ 7430, which provides for the recovery of “reasonable fees
paid or incurred for the services of attorneys” to the
prevailing party in a tax dispute against the United
States. Distinguishing Blanchard based on the differing
statutory language, the Fifth Circuit held that section
7430’s requirement that the fees be “incurred” meant that
an award of attorneys’ fees was limited to that provided
for in a contingent-fee agreement. Marre, 38 F.3d at 829.
We need not decide in this case whether a contingent-fee
agreement providing for fees based on a percentage of the
appellants’ recovery would impose a limit on recovery of
attorneys’ fees under the URA, which similarly requires
that the attorneys’ fees be “actually incurred.” 42 U.S.C.
§ 4654(c).
8 To be clear, the remand is not designed to give the
district court a second chance to adjust the lodestar
amount, but rather to give the district court the opportu-
nity to recalculate the lodestar amount itself to take into
account the factors that the district court mistakenly used
to support the reduction of the lodestar amount.
19 BYWATERS v. US
IV
The second issue in this case is whether the district
court properly applied hourly rates representative of
those charged in the District of Columbia, where appel-
lants’ counsel’s office was located, rather than applying
hourly rates in the forum where the case was brought, the
Eastern District of Texas. The Supreme Court has indi-
cated that the reasonable hourly rates to be applied in
determining the lodestar figure are the “prevailing mar-
ket rates in the relevant community.” Blum, 465 U.S. at
895. However, the Supreme Court has been silent on how
to determine the “relevant community” under the URA or
any other fee-shifting statute. The district court found
that the “relevant community” in this case was the Dis-
trict of Columbia. We disagree.
As we have recognized, “the courts of appeals have
uniformly concluded that, in general, forum rates should
be used to calculate attorneys' fee awards under other fee-
shifting statutes.” Avera v. Sec’y of Health & Human
Servs., 515 F.3d 1343, 1348 (Fed. Cir. 2008). 9 In Avera,
we considered whether, in awarding attorneys’ fees under
the National Vaccine Injury Compensation Program, 42
U.S.C. § 300aa–10 to –34 (2000), the relevant community
should be based upon “the prevailing market rate of the
forum court . . . or the prevailing market rate of the
geographic location where the attorney is based.” Id. We
9 See also Alan Hirsch & Diane Sheehey, Awarding
Attorneys’ Fees and Managing Fee Litigation 24 (Fed.
Judicial Ctr. ed., 2d ed. 2005), available at
http://www.fjc.gov/public/pdf.nsf/lookup/attfees2.pdf/$file/
attfees2.pdf (“Most courts consider the forum community
the proper yardstick, so an award for out-of-town counsel
will not be based on the rates in their usual place of
work.”).
BYWATERS v. US 20
held that “to determine an award of attorneys’ fees, a
court in general should use the forum rate in the lodestar
calculation.” Id. at 1349. However, we recognized a
narrow exception to the “forum rule” where “the bulk of
the work is done outside of the [forum] in a legal market
where the prevailing attorneys’ rates are substantially
lower.” Id.
Contrary to appellants’ contention, nothing in Avera
suggests that the forum rate should be disregarded when
plaintiffs elect to retain counsel who are located outside
the forum in a jurisdiction that charges higher rates than
the forum rates. In that situation, the forum rate applies
absent some unusual justification for departing from it.
While we have not yet squarely addressed the issue, we
recognize that several circuits have acknowledged an
exception to the forum rule where local counsel is either
unwilling or unable to take the case. 10 We agree that
10 See, e.g., McClain v. Lufkin Indus., Inc., 649 F.3d
374, 382 (5th Cir. 2011) (“[W]e hold that where . . . abun-
dant and uncontradicted evidence proved the necessity of
[] turning to out-of-district counsel, the co-counsel's ‘home’
rates should be considered as a starting point for calculat-
ing the lodestar amount.”); Interfaith Cmty. Org. v. Hon-
eywell Int’l, Inc., 426 F.3d 694, 705-07 (3d Cir. 2005)
(recognizing two exceptions to the forum rule where (1)
local counsel do not possess the “special expertise” neces-
sary to handle the case; and (2) local counsel is unwilling
to take the case); Rum Creek Coal Sales, Inc. v. Caperton,
31 F.3d 169, 179 (4th Cir. 1994) (allowing for award of
out-of-district rates where “‘the complexity and special-
ized nature of a case may mean that no attorney, with the
required skills, is available locally,’ and the party choos-
ing the attorney from elsewhere acted reasonably in
making the choice”); Gates v. Deukmejian, 987 F.2d 1392,
1405 (9th Cir. 1992) (holding that the district court did
not abuse its discretion by applying exception to the
forum rule where local counsel were unavailable); Polk v.
N.Y. State Dep’t of Corr. Servs., 722 F.2d 23, 25 (2d Cir.
21 BYWATERS v. US
such an exception is appropriate, but we also agree that it
is applicable only in unusual situations. Such exceptions
are permissible only where supported by specific evidence
that no local attorneys possess the “special expertise”
necessary to take the case or that no local attorneys were
willing to take the case. See McClain, 649 F.3d at 382(application of out-of-district rates appropriate only where
supported by “abundant and uncontradicted evidence”
that out-of-district counsel were necessary); Interfaith
Cmty., 426 F.3d at 705-06; Barjon v. Dalton, 132 F.3d 496,
501-02 (9th Cir. 1997); see also Arbor Hill Concerned
1983) (noting an exception to the forum rule “upon a
showing that the special expertise of counsel from a
distant district is required”); Maceira v. Pagan, 698 F.2d
38, 40 (1st Cir. 1983) (“If a local attorney could perform
the service, a well-informed private client, paying his own
fees, would probably hire local counsel at the local, aver-
age rate. . . . But, if the client needs to go to a different
city to find that specialist, he will expect to pay the rate
prevailing in that city. In such a case, there is no basis for
concluding that the specialist’s ordinary rate is unrea-
sonably high.”); Chrapliwy v. Uniroyal, Inc., 670 F.2d 760,
768 (7th Cir. 1982) (“If a high priced, out of town attorney
renders services which local attorneys could do as well,
and there is no other reason to have them performed by
the former, then the judge, in his discretion, might allow
only an hourly rate which local attorneys would have
charged for the same service. On the other hand, there
are undoubtedly services which a local attorney may not
be willing or able to perform. The complexity and special-
ized nature of a case may mean that no attorney, with the
required skills, is available locally.”); Avalon Cinema
Corp. v. Thompson, 689 F.2d 137, 140-41 (8th Cir. 1982)
(“If a plaintiff can show he has been unable through
diligent, good faith efforts to retain local counsel, attor-
ney's fees . . . are not limited to the prevailing rate in the
district where the case is tried.” (internal quotation marks
omitted)).
BYWATERS v. US 22
Citizens Neighborhood Ass’n v. Cnty. of Albany, 522 F.3d
182, 191 (2d Cir. 2008) (holding that the presumption that
the forum rule should be applied may be rebutted “only in
the unusual case”).
In this case, the only evidence to suggest that an ex-
ception to the forum rule was applicable is Bywaters’s
declaration indicating that the local attorney that he had
originally hired to represent him was unable to help him
in a “complex, specialized area of law” and that the only
attorney he could find to represent him “in the whole
country” was his current District of Columbia-based
counsel. J.A. 539-40. We find Bywaters’s conclusory
declaration to be insufficient. See Schwarz v. Sec’y of
Health & Human Servs., 73 F.3d 895, 907 (9th Cir. 1995)
(holding that exception to forum rule was inapplicable
where the plaintiff’s own declaration, the only evidence in
support of an exception, showed only that she had diffi-
culty obtaining local counsel). 11 There is no evidence to
suggest that no local attorneys were competent to handle
Bywaters’s case. Nor is there any indication that By-
waters conducted a reasonable search for local counsel to
handle his case. While appellants were free to engage
out-of-district counsel to represent them, the government
should not be required to subsidize their decision to do so
under these circumstances. See 10 James Wm. Moore et
al., Moore’s Federal Practice § 54.190[2][b][i][E] (3d ed.
1997 & Supp. 2011). Thus, we hold that an exception to
11 Compare Schwarz, 73 F.3d at 907, with McClain,
649 F.3d at 383 (applying exception where the “the record
[was] replete with affidavits from a variety of expert
employment lawyers who swore that no Texas attorneys
were willing and able to assist in such a large case”).
23 BYWATERS v. US
the forum rule was not warranted in this case. 12 On
remand, the district court should apply the forum rule to
determine the reasonable hourly rate, bearing in mind
appellants’ burden “to produce satisfactory evidence . . .
that the requested rates are in line with those prevailing”
in the forum “for similar services by lawyers of reasonably
comparable skill, experience and reputation.” Blum, 465
U.S. at 896 n.11.
CONCLUSION
For the foregoing reasons, the district court’s award of
attorneys’ fees is vacated and the matter is remanded for
further proceedings consistent with this opinion.
VACATED and REMANDED.
12 Contrary to the dissent, the district court’s choice
of Washington, DC as the relevant community did not
represent fact-finding, but a misunderstanding of this
court’s law. See Attorneys’ Fees Order, 2010 WL 3212124,
at *3 (“Although [the forum rule] may be the law in the
Fifth Circuit, Federal Circuit law is not so restrictive.”).
The plaintiffs of course have the absolute right to choose
their own counsel; what they do not have is the right to
recover Washington, DC rates where competent local
counsel are available.
United States Court of Appeals
for the Federal Circuit
__________________________
ASHBURN BYWATERS, CARL LANCASTER,
BETTY L. HOHENBERGER, ORMAN RODERICK,
JUNE RODERICK, AND NAN O. BEELER,
Plaintiffs-Appellants,
v.
UNITED STATES,
Defendant-Appellee.
__________________________
2011-1032
__________________________
Appeal from the United States District Court for the
Eastern District of Texas in case no. 99-CV-0451, Judge
Leonard C. Davis.
__________________________
PLAGER, Circuit Judge, dissenting.
The majority opinion focuses on two issues in this ap-
peal 1 —first, whether the trial court correctly determined
the amount of attorney fees to which the plaintiffs are
entitled; and second, a subset of that question, was the
trial court correct in using as the relevant market for
pricing attorney services the District of Columbia, rather
than Texas. On the first issue, I agree with the majority
1 The preliminary question addressed by the major-
ity--whose law to apply to the case—seems indisputable; I
concur in their conclusion.
BYWATERS v. US 2
that the trial judge erred in his final calculation of the
amount of reimbursable attorney fees; where we differ is
on what to do about it. On the second issue, I disagree
with the majority’s overriding of the trial court’s factual
determination that the relevant market for these particu-
lar attorney services is the home base of these particular
attorneys.
With regard to the first issue—whether the trial court
correctly determined the amount of reimbursable attorney
fees under this fee-shifting statute—the majority ac-
knowledges the generally fine job the trial court did in
sorting through the evidence, with which I agree; the
majority recites the applicable law; and the majority
concludes that the trial court did err in its final figure. To
that point we are in agreement. How that error should be
corrected, however, is a matter of dispute between us.
Simply stated, the trial court correctly invoked the
controlling lodestar formula; made the required detailed
findings regarding the number of hours reasonably ex-
pended by the plaintiffs’ attorneys; multiplied that by the
reasonable hourly rate using the “Updated Laffey Matrix”
applicable to District of Columbia attorney services; and
came up with a lodestar figure.
The record is undisputed that the trial court deter-
mined that the hours claimed (and awarded with small
adjustment) were reasonable; the court specifically so
found. The trial court properly multiplied those hours by
the reasonable rates it had determined, and then arrived
at what on the record is a reasonable and correct lodestar
award.
Had the trial court stopped there, it would have been
fine. Inexplicably, at least to me, the trial court then
reduced the lodestar award by 50%. Other than noting
that the fee seemed to be “extremely high” in contrast to
3 BYWATERS v. US
the overall award on the merits, the only substantive
basis for such a reduction the trial court mentioned was
the existence of a fee agreement between the plaintiffs
and their attorneys that included a contingent fee option.
Otherwise there is nothing to suggest or support the
reduction in the award.
I agree with my colleagues that “the fee agreement
between appellants and their counsel in this case is not a
proper basis for reducing the lodestar . . . .” Maj. op. at
17. The fee agreement expressly stated that the attor-
neys’ fee could be based on either regular billing hours or
a contingent fee, whichever was greater. We need not
spend undue time reciting the obscure law on contingent
fee considerations to simply acknowledge that under such
an agreement, the possibility of a contingent fee does not
serve as the benchmark for the fee award.
The Supreme Court in Perdue stated that any depar-
ture from the lodestar by the trial court must evidence “a
method [for a different calculation] that is reasonable,
objective, and capable of being reviewed on appeal . . . .”
Purdue v. Kenny A. ex rel. Winn, 130 S. Ct. 1662, 1674
(2010). Once the contingent fee is removed from the
calculation, there is nothing in the trial court’s opinion
that meets any of those criteria. More importantly, on the
record in this case I see no reasoned basis for departing
from the lodestar. The attorneys won virtually everything
they set out to win. This is the kind of case that fee
shifting is intended to encourage—many plaintiffs with
small individual claims but a common transgression by
the Government. Congress has made clear that the
award is to be of the “reasonable attorney . . . fees, actu-
ally incurred . . . .” 42 U.S.C. § 4654(c). That the award is
substantial when compared to the total recovery is nei-
ther surprising nor unusual. See Reply Br. 11. Once the
hours expended and fees earned were found reasonable,
BYWATERS v. US 4
the trial court’s work in this phase of the litigation was
concluded. By summarily halving the award, the trial
court misunderstood its job under the statute, and by
acting contrary to law exceeded its authority.
The Supreme Court has wisely said, “[a] request for
attorney’s fees should not result in a second major litiga-
tion. Nor should it lead to years of protracted appellate
review.” Perdue at 1684 (Kennedy, J., dissenting) (citing
Hensley v. Eckerhart, 461 U.S. 424, 437 (1983)). I would
simply reverse and reinstate the lodestar award, and not
put the trial court to the task of further hearings and this
court to the inevitable further appeals.
Regrettably, the majority proposes instead to remand
the issue to the trial court to again undertake a calcula-
tion of the lodestar, this time however to consider the
“amount involved and results obtained” as part of the
initial lodestar calculation, rather than as an after-
thought. But that won’t work either. As the majority
itself acknowledges, the Supreme Court has made it
abundantly clear that the lodestar controls absent “rare
and exceptional circumstances.” Maj. op. at 2. There is
nothing rare or exceptional about these circumstances,
beyond the trial court’s unfortunate abuse of its discretion
in arbitrarily reducing the lodestar award which it had
determined to be reasonable. On remand, the same
lodestar figure, absent the halving, is the only outcome
the record could support. To remand is just to make work
for the trial court, which it does not need, and to provide
an opportunity for another appeal here, likely of little if
any value to any one. Accordingly, from the decision to
remand for no good purpose I respectfully dissent.
With regard to the second issue--was the trial court
correct in using as the relevant market for pricing these
attorney services the District of Columbia, rather than
5 BYWATERS v. US
Texas--I agree with my colleagues that “in determining
the amount of reasonable attorneys’ fees to award under
federal fee-shifting statutes, the district court is afforded
considerable discretion.” Maj. op. at 10. We defer to the
trial court in so far as possible, and particularly in its fact
finding, given that the trial court is closest to the parties
and to the ebb and flow of the litigation, and given the
legal standard on appeal: we must find an abuse of
discretion to overturn the trial court’s determinations.
At the trial, the plaintiffs explained fully about their
search for the best counsel for this type of specialized
takings litigation. There is no showing that their choice
of this particular counsel, located in Washington D.C.,
was motivated by anything other than a desire to get the
best qualified representation. Under the circumstances,
particularly when much of the legal work was office work
done at the attorneys’ home offices, the simple economic
notion of opportunity-cost would justify using the attor-
neys’ hometown rates. The trial court made that deter-
mination, and found such rates to be reasonable under
the fee-shifting statute. When parties seek justice in the
courts, especially when the Government is the defendant,
neither we nor the Government should be in a position to
challenge a plaintiff’s reasoned choice of private counsel.
In holding to the contrary, the majority fails to grant
the trial court the discretion in fact-finding that the law
provides, and, from the rarified heights of an appellate
court and a distance of a thousand miles, denies these
plaintiffs the right to seek out and employ the best law-
yers they could find to handle a complex class-action
litigation that has now been in dispute for over ten years.
The majority explains this by saying that this is not fact-
finding but a misunderstanding of law, and adding, “[t]he
plaintiffs of course have the absolute right to choose their
own counsel; what they do not have is the right to recover
BYWATERS v. US 6
Washington, D.C. rates where competent local counsel are
available.” Maj. op. at 23, n. 12. One might have thought
that the trial judge was in the best position to ascertain
whether there were local lawyers available with equiva-
lent competencies to the plaintiffs’ chosen lawyers in this
particular field of litigation; ruling that all lawyers are
fungible as a matter of law is for me carrying egalitarian-
ism a bit too far.
Contrary to my colleagues’ position, I would affirm the
trial court’s decision that the basis for determining a
reasonable fee for the services rendered should be the fees
charged in the hometown of the plaintiffs’ chosen attor-
neys (Washington, D.C.) and not what some lawyers
might charge for services rendered at the forum (in this
case Texas). From the majority’s contrary holding, I must
respectfully dissent.