The opinion of the court was delivered by: Honorable Mikel H. Williams United States Magistrate Judge
MEMORANDUM DECISION AND ORDER
Pending before the Court is Plaintiffs' Motion for Attorneys' Fees and Costs (Dkt. 259). Having reviewed the Motion, Defendant's Response (Dkt. 262), and Plaintiffs' Reply (Dkt. 267) as well as the voluminous supporting documentation submitted by each party, the Court enters the following Order granting the Motion in part and denying in part.
The parties' supporting memorandums accompanying their Joint Motion for Preliminary Approval of Class Action Settlement (Dkt. 248) included a detailed recitation of the procedural history of this case. Mem. in Supp. of Joint Mot. at 3-10, Dkt. 248 at 11-18. Therefore, the Court will provide only a brief summary here to place its decision in context.
The genesis of this case pre-dates the filing of the Complaint in the District of Idaho. On December 22, 1998, Plaintiffs Robert Hash and Gerlene Hash had joined a proposed class action in the District of Kansas seeking to recover damages arising out of Union Pacific Railroad's ("Railroad") 1997 quitclaim conveyance to the Friends of the Weiser River Trails of an 83.1 mile railroad right-of-way extending from Weiser, Idaho, to New Meadows, Idaho, a portion of which ran through Plaintiffs' properties. The conveyance was made pursuant to an Interstate Commerce Commission Decision and Notice of Interim Trail Use ("NITU") which allowed the Railroad to negotiate a railbanking and interim trail use agreement in accordance with Section 8(d) of the National Trails System Act, 16 U.S.C. § 1247(d) ("Trails Act"). The District Court of Kansas entered an order transferring their claims to the District of Idaho on venue grounds.
On December 17, 1999, Plaintiffs Robert Hash, Gerlene Hash, William Don Lakey, and Nancy Hawkins ("Plaintiffs") filed an Amended Class Action Complaint in this Court alleging that the conveyance constituted a taking in violation of their Fifth Amendment rights. Am. Compl., (Dkt. 16). The Amended Complaint was filed pursuant to the Little Tucker Act. This statute provides that "district courts shall have original jurisdiction, concurrent with the United States Court of Federal Claims, of . . . [a]ny other civil action or claim against the United States, not exceeding $10,000 in amount, founded either upon the Constitution, or any Act of Congress . . . ." 28 U.S.C. § 1346(a)(2).
On July 7, 2000, the Court certified this case as a class action under Fed. R. Civ. P. 23. The class consisted of persons who had an interest in the railroad corridor land who were damaged by the taking in the amount of $10,000 or less or who waived claims exceeding $10,000.
Following certification and notice to class members, the parties categorized the various types of instruments of conveyance to the Railroad's predecessors dating back to the late 1800s. From approximately 2001 to 2008, this Court initially determined the nature of the interest acquired by the Railroad under the conveyance instruments in each of ten categories; the Federal Circuit Court of Appeals determined the Category 1 interests on appeal; and this Court determined the Category 2, 3, 5, 6, 8, and 10 interests on remand. Over the years, the Court ruled in favor of Plaintiffs on the question of liability in Categories 1, 2, 3, and 10 and in favor of Defendant in Categories 4, 5, 6, 7, 8, and 9. Plaintiffs did not appeal the Court's determination with regard to Categories 4, 7, and 9. The parties then entered into settlement negotiations with respect to Categories 1, 2, 3, 5, 6, 8, and 10.
The settlement process occurred over a period of three years and included assessing the fair market value of the taken parcels as of the date of the taking, December 28, 1995. The total market value for the parcels was determined to be $883,312. The parties thereafter negotiated a settlement agreement which the Class Representatives reviewed with Class Counsel and ultimately approved. Counsel for the United States then sought and received approval of the Stipulation and Settlement Agreement (Dkt. 248-1) from the Surface Transportation Board and the authorized representative of the Attorney General pursuant to 28 C.F.R. § 0.160(a)(2) (2008).
A fairness hearing on the Stipulation and Settlement Agreement was held on September 7, 2011, pursuant to Fed. R. Civ. P. 23(e). There was one objection which was timely resolved, and the Court approved the Stipulation and Settlement Agreement at the fairness hearing. Class Counsel now seeks to be reimbursed for attorneys' fees and costs pursuant to the applicable provisions of the Uniform Relocation Assistance and Real Property Acquisition Policies Act, 42 U.S.C. § 4654(c) ("URA"). Pls.' Mem. in Support of Mot. ("Pls.' Mem."),Dkt. 259-1.
In support of its claim, Plaintiffs emphasize that Trails Act cases involved an emerging area of law at the time this action was filed, that the few existing decisions regarding liability and class certification were mixed, that Class Counsel were among the few attorneys in the country handling these cases, and that they were apparently the only attorneys at the time bringing Little Tucker Act cases on behalf of landowners. Pls.' Mem. at 3. Defendant vigorously contested this action for a period of almost ten years on issues regarding class certification, class notification, property interests acquired by the railroad under the various forms of conveyance, Federal Circuit precedent, and the scope of liability and damages for the various categories. Id. at 3-4.
As modified by their Reply, Plaintiffs are seeking attorneys' fees of $2,367,581.13 and costs of $26,526.66 for a total of $2,394.107.79.*fn1
These fees cover approximately 7,300 hours expended over a period of almost thirteen years by three law firms: local counsel Walker Law Office ("WLO"), Ackerson Kauffman Fex, PC ("AKF"), and Zelle Hofmann Voelbel & Mason, LLP ("Zelle"). Class Counsel emphasize that they have received no compensation throughout this litigation and that they are limited under the URA to historical billing rates which effectively reduces their award by 25% when compared with the current rate. Id. at 4-5.
Despite the general policy known as the "American Rule" requiring each party to bear its own attorneys' fees, Congress has enacted several "fee shifting" statutes pursuant to which a district court may award attorney fees to the prevailing party. See Fox v. Vice, 131 S.Ct. 2205, 2213 (2011) (citing Alyeska Pipeline Service Co. v. Wilderness Society, 421 U.S. 240, 247 (1975)). The URA is one such fee shifting statute.
The URA provides in relevant part that in claims against the United States pursuant to the Little Tucker Act in which the Attorney General effects a settlement in a taking proceeding, "the court . . . shall determine and award or allow to . . . plaintiff, as part of such . . . settlement, such sum as will in the opinion of the court . . . reimburse such plaintiff for his reasonable costs, disbursements, and expenses, including reasonable attorney, appraisal, and engineering fees, actually incurred because of such proceeding."
42 U.S.C. § 4654(c) (emphasis added). Successful plaintiffs may only recover actual fees billed despite the fact that historical rates are lower than current rates. See Preseault v. United States, 52 Fed. Cl. 667, 677 (Fed. Cl. 2002) (noting that compensation for "delay" and "lost opportunity" is "tantamount" to interest which may not be recovered from the Government absent an express waiver of sovereign immunity from an award of interest).
The "case law construing what is a 'reasonable' fee applies uniformly" to all federal fee-shifting statutes. City of Burlington v. Dague, 505 U.S. 557, 562 (1992). In determining a reasonable attorneys' fee, the Court must begin with the "lodestar" figure which is "the number of hours reasonably expended on the litigation multiplied by a reasonable hourly rate." Hensley v. Eckerhart, 461 U.S. 424, 433 (1983). There is a "strong presumption" that the lodestar is the reasonable fee. Pennsylvania v. Delaware Valley Citizens' Council for Clean Air, 478 U.S. 546, 565 (1986).
The Court may only deviate from the lodestar figure in "rare" and "exceptional" cases and based only on factors other than those already taken into consideration in the lodestar calculation. Perdue v. Kenny A. ex rel. Winn, 130 S.Ct. 1662, 1673 (2010). Stated another way, factors such as the novelty and complexity of the issues, the special skill and experience of counsel, the quality of representation, the results obtained, and the contingent nature of the fee agreement are to be considered when determining the lodestar amount rather than when determining whether deviation from the lodestar amount is warranted. Bywaters v. United States, 670 F.3d 1221, 1227 (Fed. Cir. 2010) (citations omitted).
Although the lodestar approach is not "perfect," it has become "the guiding light" and "achieved dominance in the federal courts" since the Hensley decision. Perdue, 130 S.Ct. at 1672 (internal citations omitted). Further, the party seeking attorneys' fees must submit adequate evidence supporting the amount of hours worked and rates charged to enable the court to determine the amount of a reasonable fee. Hensley, 461 U.S. at 433.
"Something more that an attorney's own affidavit is required to establish the prevailing market rate for attorney's fees." Preseault, 52 Fed. Cl. at 678 (internal citations and quotations omitted). Although the URA "does not require 'an itemized statement from any attorney or expert witness . . . stating the actual time expended and the rate at which fees and other expenses were computed,'" plaintiffs must submit sufficient detail upon which the court can determine the reasonableness of the hours, fees, and expenses for each individual for whom they seek reimbursement. Id. at 679.
Defendant offers several objections to Plaintiffs' request for fees and costs. It contends that Ninth Circuit law rather than Federal Circuit law applies to the attorneys' fees determination; that Plaintiffs are entitled only to those attorneys' fees and costs incurred in connection with the claims on which they were successful; that the AKF and Zelle firms are not entitled to out-of-forum rates; and that there is significant duplication of effort among the three law firms, excessive hours spent on many tasks, work for non-party clients, and other items not reasonably charged to Defendant. Response at 1-2.
After adjusting downward based on its objections, Defendant contends that reasonable attorneys' fees and costs should total no more than $685,099. Id. at 2.
Plaintiffs have conceded some of the objections and reduced their claim as set forth in their Reply.*fn2 Reply at 19 and 24. However, there is still a wide disparity in positions. The Court will review each objection in turn being mindful of the fact that Hensley counsels that a "request for attorney fees should not result in a second major litigation." Hensley, 461 U.S. at 437. After resolving the general objections, the Court will address the reasonableness of the resulting hours and fees.
A. Applicable Circuit Law
Relying in part on a district court decision in a then recently concluded rails-to-trails takings case, Plaintiffs urge the application of Federal Circuit law to the fee request. See Pls.' Mem. at 6-7 (citing Bywaters v. United States, No. 6:99-CV-451, 2010 WL 3212124 (Fed. Cir. filed Oct. 4, 2010)) ("Bywaters I"). Defendant contends that Ninth Circuit law applies.
The District Court for the Eastern District of Texas in Bywaters I applied Federal Circuit law reasoning that "the URA provides the mechanism through which attorneys' fees and costs may be awarded for a takings claim, and because a determination of fees under the URA is essentially related to the Plaintiffs' taking claim, it follows that the Federal Circuit would apply its own law to issues of whether a URA fee award is proper." Bywaters, 2010 WL 3212124 at *2. The issue was on appeal at the time the parties submitted their briefs.
On March 1, 2012, the Federal Circuit agreed noting its exclusive jurisdiction of claims under the Tucker Act and the Little Tucker Act to which the URA applies, Congressional desire for nationwide uniformity with the application of similar standards of review and circuit precedents, and the circuit's consistent application of circuit law to claims for attorneys' fees under the attorneys' fees provision of the Patent Act which pertains to another area of substantive law within the Federal Circuit's exclusive jurisdiction. Bywaters v. United States, 670 F.3d 1221, 1227 (Fed. Cir. 2012) ("Bywaters II"). This decision marked the first time the Federal Circuit had interpreted the URA. Accordingly, it is now clear that Federal Circuit law applies.
In Bywaters I, with little discussion, the Eastern District of Texas, applying Federal Circuit law, allowed Washington, D.C. rates over local forum rates despite an objection by the defendant. Bywaters I, 2010 WL 3212124 at *2. However, the Federal Circuit concluded on appeal that generally the forum rate is applicable under fee-shifting statutes "absent some unusual justification for departing from it." Bywaters II, 670 F.3d at 1233. "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." Id. at 1234 and n.10 (citing McClain v. Lufkin Indus., Inc., 649 F.3d 374, 382 (5th Cir. 2011) and collecting cases). Virtually all circuits follow the general rule that forum rates apply absent unusual circumstances. Therefore, the Court may look to those circuits for guidance. See id.
The Federal Circuit disagreed with the district court that the exception to the forum rule was warranted. Id. at 1234. It did so because it found conclusory and insufficient "Bywater'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." Id. More specifically, the Federal Circuit noted that there was no evidence suggesting the unavailability of local attorneys competent to handle the rails-to-trails case and no indication that Bywaters conducted a reasonable search for same. Id.
Bywaters II based its decision that the evidence before it was insufficient by citing a Ninth Circuit case, Schwarz v. Sec'y of Health & Human Servs., 73 F.3d 895, 907 (9th Cir. 1995) (denying out-of-forum rates where the only evidence presented came from the plaintiff's own declaration that no forum attorneys were available to handle the case). Bywaters II, 670 F.3d at 1234. It contrasted Schwarz with McClain where there was "abundant and uncontradicted evidence" of the need to engage out-of-district counsel.
Id., n.10 (citing McClain, 649 F.3d at 382). In McClain, the records included "numerous affidavits from experienced Texas litigators and even the founder and past president of the Texas Employment Lawyers Association declaring, under oath, that no Texas attorneys were available to join Garrigan's team on this particular case." McClain, 649 F.3d at 378.
Although denying out-of-forum rates in Schwarz, the Ninth Circuit allowed them in Gates under the generally recognized exception where "local counsel was unavailable, either because they are unwilling or unable to perform because they lack the degree of experience, expertise, or specialization required to handle properly the case." Gates v. Deukmejian, 987 F.2d 1392, 1405 (9th Cir. 1992) (collecting cases from other circuits and allowing out-of-forum rates). See also Barjon v. Dalton, 132 F.3d 496, 500 (9th Cir. 1997) (recognized exception but denied out-of-forum rates because of insufficient evidence).
The Federal Circuit cited several other cases in addition to Schwarz and McClain, including Interfaith Community Organization v. Honeywell Intern., Inc., 426 F.3d 694 (3d Cir. 2005). There, the Third Circuit found that the fact that Washington, D.C. counsel had extensive experience litigating similar environmental suits did not lead to the conclusion that other counsel in northern New Jersey did not possess the requisite expertise and that affidavits from five northern New Jersey attorneys who turned down the case was not a sufficient sampling given the "hundreds" of firms in northern New Jersey engaged in the practice of environmental law. However, it did find that there was sufficient justification for the other prong of the exception -- that no local counsel was willing to represent the plaintiffs without an immediate advancement of costs that would likely reach $1,000,000. Id. at 707. See also Barjon, 132 F.3d at 501-02 (finding no requirement to prove both unwillingness and inability due to lack of experience, expertise, or specialization).
Here, the question becomes whether Plaintiffs have submitted sufficient evidence to justify the exception to the forum rule. Plaintiffs have submitted (1) the declaration of local counsel, Lary Walker, detailing his efforts to obtain Idaho counsel with the requisite knowledge or experience in right-of-way matters generally and rails-to trails takings actions specifically (Walker Decl., Dkt. 259-10) and (2) the declaration of Walter Bithell, a partner at Holland and Hart, a regional law firm with offices in 15 locations most of which are in western United States.*fn3 Bithell Decl., Dkt. 259-11. Mr. Bithell states that he was unaware, both at the time Lary Walker contacted him at the start of the case, and now, of an attorney in the District of Idaho with any expertise in right-of-way and Trails Act issues. Id. Plaintiffs also submitted the affidavit of Cecilia Fex stating that in 2002, there were only seventeen rails-to-trails takings cases filed nationwide and her firm was handling nine of those cases. Fex Decl. ¶ 12. Dkt. 259-3 and Pls.' Mem. at 16.
Although Plaintiffs have obviously submitted more evidence than the plaintiffs did in Bywaters I, they submitted less than the plaintiffs in many of the other cited cases. However, one factor exists here not present in other districts. The District of Idaho has a far smaller pool of attorneys from which to choose for specialized matters. At the time this case was filed in 1999, the entire Idaho State Bar consisted of approximately 2,600 active licensed attorneys.*fn4 Obviously, not all attorneys engage in a litigation practice. Of those that do, even fewer engage in a federal court practice. Unfortunately, the Court does not have District of Idaho statistics available indicating the number of attorneys admitted to the District of Idaho bar in 1999. In any event, members of the relatively small litigation bar are generally well-known to each other. Thus, the Court feels that it takes less of a showing on either prong of the exception than it would in larger jurisdictions to justify out-of-forum rates.
The Court finds that Plaintiffs have submitted sufficient support for their position that the relevant community for AKF is Washington, D. C. It further finds that the relevant community for Zelle is Minneapolis except, as discussed below, for hours spent researching Idaho law. The Court has obviously been involved in this case since 1999 and is quite familiar with the obscure issues surrounding this litigation. It is convinced that the action could not have been prosecuted successfully but for the specialized expertise of AKF and Zelle that was unavailable among Idaho attorneys.
Defendant next contends that Plaintiffs should not be reimbursed for two areas of work allegedly unrelated to the claims on which they were successful. First, they object to fees incurred in bringing a motion seeking a ruling pertaining to the $10,000 jurisdictional claim limit of the Little Tucker Act. Second, they object to fees incurred in connection with the deed categories on which they did not prevail.
As the Supreme Court recently stated:
[I]n the real world, litigation is more complex [than in the movies], involving multiple claims for relief that implicate a mix of legal theories and have different merits. Some claims succeed; others fail. Some charges are frivolous; others (even if not ultimately successful) have a reasonable basis. In short, litigation is messy, and courts must deal with this untidiness in awarding fees.
Given this reality, we have made clear that plaintiffs may receive fees . . . even if they are not victorious on every claim.
Fox v. Vice, 131 S.Ct. 2205, 2013-14 (2011) (citing Hensley, 461 U.S. at 435).
(1) Ruling Regarding $10,000 Jurisdictional Claim Limit
Defendant has determined that Plaintiffs expended 113.90 hours pursuing the jurisdictional claim limit issue for a total of $33,401 in fees. Response at 34-35. Because the Court denied Plaintiffs' motion, Defendant argues that amount should be disallowed. Id. at 35.
As stated above, under the Little Tucker Act, "[t]he district courts shall have original jurisdiction, concurrent with the United States Court of Federal Claims, of . . . [a]ny other civil action or claim against the United States, not exceeding $10,000 in amount, founded either upon the Constitution, or any Act of Congress . . . ." 28 U.S.C. § 1346(a)(2).
Plaintiffs sought a determination that a "claim" under the Tucker Act belongs with the individual asserting just compensation under the Fifth Amendment, not with a parcel of land. See Motion, Dkt. 51 and Order, Dkt. 58. Plaintiffs noted that no court had ever determined whether the claim belongs to the individual or to a parcel of land. They theorized that the Fifth Amendment protected people rather than parcels of land. Pls.' Mem. in Supp. of Mot. re Jurisdictional Limit at 5. Dkt. 52. This argument led to the conclusion that, e.g., Mr. and Mrs. Hash could each recover up to $10,000 under the Little Tucker Act. The Court determined otherwise. Order, Dkt. 58.
The Court finds that attorney fees attributable to the jurisdictional limit issue are allowable. There was an arguable basis for the motion given that the issue was not entirely clear. It needed to be resolved as a question of law before class notices could be mailed. It was not a claim in and of itself. Rather, it was ancillary to the claim of illegal taking.
(2) Determinations on Categories 4, 5, 6, 7, 8, and 9
Defendant contends that because title and liability issues were resolved in its favor on deed Categories 4, 5, 6, 7, 8, and 9, Plaintiffs were not prevailing parties on those categories and should not be awarded fees for work pertaining to those categories. Response at 35-56. With respect to Categories 4, 7, and 9, Plaintiffs agreed that the deeds conveyed fee simple title to the railroad, the Court entered judgment in favor of Defendant, and Plaintiffs did not appeal. Id. With respect to Categories 5, 6, and 8, the Court found both initially and on remand that the deeds conveyed fee simple title to the railroad. Id.
According to Defendant, the claims in the six "unsuccessful" categories comprise 31.3% of the total lands at issue. Therefore, relying on the directive in Hensley that hours spent on unsuccessful claims should be excluded when determining a reasonable fee, Defendant suggests reducing the claimed fees by 30% or $711,120 to account for the unsuccessful claims. Id. (citing Hensley, 461 U.S. at 440). Plaintiffs argue that Defendant ...