Trout v. Secretary of Navy

United States Court of Appeals

FOR THE DISTRICT OF COLUMBIA CIRCUIT

Argued March 18, 2008 Decided September 2, 2008

No. 07-5053

YVONNE G. TROUT AND

CLARA A. PERLIGIERO,

APPELLANTS

v.

SECRETARY OF THE NAVY AND

COMMANDING OFFICER NAVAL COMMAND SYSTEMS SUPPORT

ACTIVITY,

APPELLEES

Appeal from the United States District Court

for the District of Columbia

(No. 73cv00055)

Bradley G. McDonald argued the cause for appellants.

With him on the brief was John F. Karl, Jr..

Daniel F. VanHorn, Assistant U.S. Attorney, argued the

cause for appellees. With him on the brief were Jeffrey A.

Taylor, U.S. Attorney, and R. Craig Lawrence, Assistant U.S.

Attorney.

Before: SENTELLE, Chief Judge, and GINSBURG and

BROWN, Circuit Judges.

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Opinion for the Court filed by Chief Judge SENTELLE.

SENTELLE, Chief Judge: In the latest saga of this apparently

never-ending battle between the parties over liability and

damages for violating Title VII of the Civil Rights Act, the

district court denied a motion of Appellants Trout, et al., (“the

Trout class”) seeking pre-November 21, 1991, interest on

backpay and attorneys’ fees awarded to them for being subject

to sex discrimination in employment during the 1970’s. The

Civil Rights Act of 1991, which included a provision for the

award of prejudgment interest, was enacted on November 21 of

that year. Although this court previously held that the interest

provision did not apply to conduct that preceded enactment of

the Civil Rights Act, Trout v. Secretary of the Navy, 317 F.3d

286 (D.C. Cir. 2003) (“Trout IV”), the Trout class claims that a

subsequent Supreme Court case, Republic of Austria v. Altmann,

541 U.S. 677 (2004), is an “intervening change in law” that

entitles them to interest on backpay and attorneys’ fees that

accrued before the change in law. The district court also granted

Appellee Navy’s motion for a refund of interim attorneys’ fees

and costs paid to the Trout class for litigating the interest issue.

Because Altmann is inapposite and because the interest issue is

distinct from the issue of sex discrimination, we affirm the

district court’s rulings on the motions.

Background

In 1973 Yvonne Trout and other female employees of the

Department of the Navy filed an employment discrimination

lawsuit against the Navy, alleging sex discrimination in

violation of Title VII of the Civil Rights Act of 1964 (“the 1964

Act”), 42 U.S.C. § 2000e et seq. After twenty years of litigation

the parties entered into a stipulation settling the case on its

merits, which was approved by the district court on November

22, 1993 (hereinafter “Consent Decree”). Pursuant to the

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Consent Decree and other stipulations and orders, the Navy paid

the Trout class backpay for the period 1970 to 1992, as well as

attorneys’ fees up until 1993 for litigating the sex discrimination

matter. The doctrine of sovereign immunity shields the

government from liability for such payments, except when

waived by statute. See Gomez-Perez v. Potter, 128 S.Ct. 1931,

1942 (2008). Subsections 2000e-5(g) and 2000e-5(k) of the

1964 Act waive the government’s immunity from liability for

backpay and attorneys’ fees, respectively, for violations of that

act. Because the 1964 Act did not allow for the payment of

interest on damages, and because any waiver of sovereign

immunity must be strictly construed in favor of the government,

see, e.g., Library of Congress v. Shaw, 478 U.S. 310, 318

(1986), and further because of the no-interest rule, i.e., “the

historical rule that interest is a separate element of damages and

may be recovered only against a party that has agreed to be

liable therefor,” Brown v. Sec’y of the Army, 78 F.3d 645, 651

(D.C. Cir. 1996), under the 1964 Act the Trout class was not

entitled to receive interest on the backpay and attorneys’ fee

awards. On November 21, 1991, however, Congress amended

Title VII. Civil Rights Act of 1991 (“the 1991 Act”), Pub. L.

No. 102-166, 105 Stat. 1071. Under section 114(2) of that act

the government is liable for “the same interest to compensate for

delay in payment [as is available] in cases involving nonpublic

parties.” 42 U.S.C. § 2000e-16(d). The Navy consequently

agreed to pay interest on its liability for backpay and attorneys’

fees incurred after November 21, 1991. The Navy argued,

however, that section 114(2), 42 U.S.C. § 2000e-16(d), was not

retroactive and therefore it was not liable for interest on backpay

and attorneys’ fee awards for periods prior to November 21,

1991. The Trout class argued otherwise and litigated the issue,

culminating in this court’s resolution of the matter in Trout IV.

In the meantime, pursuant to stipulations and orders in 1999 and

2001, the Navy paid the Trout class $106,375.45 in attorneys’

fees and expert fees for litigating the pre-November 21, 1991,

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interest issue.

In Trout IV we addressed the question of whether section

114(2), 42 U.S.C. § 2000e-16(d), has retroactive effect. In

determining that it did not, we relied on our decision in Brown,

78 F.3d 645, which also concerned the question of whether

section 114(2), 42 U.S.C. § 2000e-16(d), applies retroactively.

See Trout IV, 317 F.3d at 290-92. Brown in turn relied on the

Supreme Court’s decision in Landgraf v. USI Film Prods., 511

U.S. 244 (1994), in which the Court declined to give retroactive

effect to provisions of the 1991 Act that would attach new

monetary liability to conduct occurring before the statute’s

enactment. See Brown, 78 F.3d at 648-49. Guided by Brown

and Landgraf, we held that section 114(2), 42 U.S.C. § 2000e-

16(d), does not apply to conduct that occurred before November

21, 1991, and therefore the Navy was not liable for interest on

backpay and attorneys’ fees awarded for conduct before that

time. Trout IV, 317 F.3d at 292-93. We remanded the case to

the district court for a “final determination of costs and fees

owed to the Trout class.” Id. at 293.

On remand, the Navy filed a motion seeking a refund from

the Trout class for $106,375.45, plus interest, that was paid by

the Navy to the Trout class for attorneys’ fees for litigating the

prejudgment interest issue. The Trout class also filed a motion

seeking, despite this Court’s decision in Trout IV, an entry of

judgment for pre-November 21, 1991, interest on backpay and

attorneys’ fees. The Trout class claimed in the motion that the

Supreme Court’s decision in Altmann is an intervening and

controlling decision that entitles them to pre-November 21,

1991, interest. The district court granted the Navy’s motion and

ordered the Trout class to refund the Navy the $106,375.45 plus

interest awarded to the Trout class for litigating the interest

issue; the court denied the Trout class’s motion to award it pre-

November 21, 1991, interest in light of Altmann. Trout v.

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Winter, 464 F. Supp. 2d 25, 34 (D.D.C. 2006).

Discussion

The Trout class now appeals the district court’s rulings on

the motions, arguing, inter alia, that under Altmann it is entitled

to pre-November 21, 1991, interest on backpay and attorneys’

fees, and that as the “prevailing party” in the sex discrimination

litigation it is entitled to attorneys’ fees incurred in litigating the

interest issue.

Altmann

Despite this Court’s holding in Trout IV that section 114(2)

of the 1991 Act does not apply to conduct that preceded its

enactment, the Trout class argues that Altmann “constitutes an

intervening change in law that requires reversal” of Trout IV.

Altmann concerned a suit filed sometime after 1998 against the

state of Austria for conduct that occurred for the most part in

1948. 541 U.S. at 681-84. The Foreign Sovereign Immunities

Act of 1976 (“FSIA”), 28 U.S.C. § 1602 et seq., grants foreign

states immunity from suits in the United States subject to certain

exemptions. The question for the Court was whether the FSIA,

and therefore the exemptions thereunder, applied to claims

based on conduct that occurred before the FSIA’s enactment.

Altmann, 541 U.S. at 686-87. As discussed in more detail

below, the Court held that the FSIA does apply to pre-enactment

conduct. Id. at 697. Attempting to analogize its case to

Altmann, the Trout class argues that Altmann now controls

statutes that concern waivers of sovereign immunity, and

consequently under Altmann, section 114(2) of the 1991 Act, 42

U.S.C. § 2000e-16(d), applies to conduct that preceded its

enactment. The Trout class therefore claims that it is entitled to

interest on backpay and attorneys’ fees incurred prior to

November 21, 1991. We disagree.

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In Altmann the plaintiff sued Austria for expropriating,

before and after World War II, paintings owned by her family.

Austria asserted the defense of sovereign immunity. As noted

above, the question addressed by the Court was whether the

FSIA applied to conduct that occurred prior to the FSIA’s

enactment in 1976. Altmann, 541 U.S. at 686-87. In answering

this question the Court first looked to the default rule of no

retroactive effect of congressional enactments announced in

Landgraf, 511 U.S. at 263, 280. Altmann, 541 U.S. at 692-94.

The Court noted that under Landgraf there is a presumption

against retroactivity if Congress has not expressly stated that the

statute is to have retroactive effect and the statute affects rights,

liabilities, or duties with respect to past conduct. Id. at 693-94

(citing Landgraf, 511 U.S. at 676). On the other hand, the Court

noted that the application of a statute to future as well as

pending cases would be sanctioned if the statute merely confers

or ousts jurisdiction. Id. at 693. The Court noted that although

these principles seemed comprehensive, they did not provide a

clear answer in the case before it because the FSIA could not be

categorized as exclusively affecting either substantive rights or

procedural matters. Id. at 694. The Court then noted that the

purpose of the antiretroactivity presumption is “to avoid

unnecessary post hoc changes to legal rules on which parties

relied in shaping their primary conduct,” and that this had never

been the purpose of foreign sovereign immunity. Id. at 696.

Rather, stated the Court, foreign sovereign immunity aims to

protect foreign states “‘from the inconvenience of suit as a

gesture of comity.’” Id. (quoting Dole Food Co. v. Patrickson,

538 U.S. 468, 479 (2003)). The Court consequently looked to

the FSIA and the circumstances surrounding its enactment for

any suggestion that it should not apply to the 1948 conduct at

issue. Id. at 697. In holding that the FSIA applies “to all

pending cases regardless of when the underlying conduct

occurred,” the Court relied on “[t]he FSIA’s overall structure”

as well as “two of the Act’s principal purposes: clarifying the

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rules that judges should apply in resolving sovereign immunity

claims and eliminating political participation in the resolution of

such claims.” Id. at 698-99. Additionally, the Court looked to

Congress’s understanding of the FSIA as noted in its preamble,

which provides that “[c]laims of foreign states to immunity

should henceforth be decided by courts of the United States and

of the States . . . with the principles set forth in” the Act. Id. at

697 (quoting 28 U.S.C. § 1602) (emphasis omitted). The Court

noted that pursuant to this language “[i]mmunity ‘claims’–not

actions protected by immunity, but assertions of immunity to

suits arising from those actions–are the relevant conduct

regulated by the Act.” Id.

The Trout class argues that in applying the FSIA

retroactively Altmann held that the default rule against

retroactivity announced in Landgraf “does not apply to

statutory waivers of sovereign immunity.” In support of this

argument the Trout class contends that the Supreme Court in

Altmann adopted Justice Scalia’s concurring opinion in

Landgraf, see id. at 697-98; the class argues that consequently

whether a statutory waiver of sovereign immunity may be

applied retroactively should not be determined by the dates of

the discriminatory conduct proven during the liability phase, but

by the date of the assertion of a waiver of sovereign immunity.

In other words, according to the Trout class, the relevant

conduct for the purpose of retroactivity analysis in Altmann was

not the expropriation, which predated the FSIA, but rather

Austria’s invocation of sovereign immunity at the time of the

suit. Quoting from Altmann that “assertions of immunity to

suits . . . are the relevant conduct regulated by the [FSIA],” 541

U.S. at 697, the Trout class contends that the “same interest”

provision of section 114(2), 42 U.S.C. § 2000e-16(d), “logically

can apply only to cases in which judgment on the merits is

entered after enactment, because where there is no judgment,

there can be no judgment interest, and hence no assertion of a

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defense of sovereign immunity against the payment of

prejudgment interest.”

The Trout class concludes that consequently section 114(2),

42 U.S.C. § 2000e-16(d), “applies to all judgments entered after

the effective date of the Act,” and therefore it is entitled to

interest on backpay and attorneys’ fees incurred prior to

November 21, 1991.

In Trout IV we held that section 114(2), 42 U.S.C. § 2000e-

16(d), does not apply to conduct that preceded its enactment on

November 21, 1991. 317 F.3d at 292. In doing so we relied on

Brown which in turn relied on Landgraf and its default rule

against retroactivity. We find nothing in Altmann that alters the

rule under Landgraf. Altmann expresses no disagreement with

the decision in Landgraf. Instead, the Court in Altmann stated

that the retroactivity inquiry set forth in Landgraf “does not

provide a clear answer in this case” because “the FSIA defies

such categorization.” 541 U.S. at 694. Resolution of the

question before the Court turned on an analysis of the FSIA

itself. In holding that the FSIA applies “to all pending cases

regardless of when the underlying conduct occurred,” the Court

relied specifically on the history of foreign sovereign immunity,

Congress’s understanding of the FSIA as noted in its preamble,

“[t]he FSIA’s overall structure” as well as “two of the Act’s

principal purposes.” Id. at 696-99. It is clear, then, that the

Court’s decision in Altmann was specific to the statute in that

case. The Court itself reinforced this conclusion by stating that

its analysis encompassed a “sui generis context.” 541 U.S. at

696. And in Fernandez-Vargas v. Gonzalez, 548 U.S. 30

(2006), the Supreme Court noted that its “conclusion in

[Altmann], that Landgraf was to be avoided, turned on the

peculiarities of the Foreign Sovereign Immunities Act.” Id. at

38 n.6. Just as in Fernandez-Vargas, “[t]hose peculiarities are

absent here, and we thus advert to Landgraf, as we ordinarily

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do.” Id. In sum, Altmann has no effect upon the holding in

Landgraf and consequently this Court’s decision in Trout IV

stands.

Distinction of claims

Section 113 of the Civil Rights Act of 1991, 42 U.S.C. §

2000e-5(k), states: “In any action or proceeding under this

subchapter the court, in its discretion, may allow the prevailing

party . . . a reasonable attorney’s fee (including expert fees) as

part of the costs . . . .” There is no dispute that the Trout class

was the prevailing party on the primary issue of sex

discrimination and that it is entitled to an award of attorneys’

fees from the Navy for litigating that issue. The Trout class

contends, however, that even if it is determined that it is not

eligible for pre-November 21, 1991, interest on backpay and

attorneys’ fees, the district court nevertheless erred when it ruled

that the class was not entitled to recovery of the attorneys’ fees

incurred for litigating that issue. In Hensley v. Eckerhart, 461

U.S. 424 (1983), the Supreme Court addressed the question of

whether a plaintiff who has succeeded on a significant claim,

and therefore is entitled to attorneys’ fees for work done on that

claim, is also entitled to attorneys’ fees for work performed on

an unsuccessful claim. The Court, “recogniz[ing] that there is

no certain method of determining when claims are ‘related’ or

‘unrelated,’” 461 U.S. at 436 n.12, held that attorneys’ fees

should not be awarded for an unsuccessful claim when that

claim “is distinct in all respects from [the plaintiff’s] successful

claims.” Id. at 440 (emphasis added). The Navy argues that the

interest issue is distinct from the sex discrimination issue and

therefore no attorneys’ fees should be awarded for litigating that

issue.

The Trout class asserts that the issues are in fact not

distinct, claiming that, for purposes of collecting attorneys’ fees,

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it remains the “prevailing party” in the sex discrimination

litigation, and that its request for pre-November 21, 1991,

interest was part of that litigation because such interest was

intended to compensate the class for damages due to “the

Navy’s bad faith delays.” For authority the Trout class relies on

Cody v. Hillard, 304 F.3d 767, 773 (8th Cir. 2002), in which the

Eighth Circuit, in determining whether to award attorneys’ fees

to the plaintiffs for civil rights litigation, considered, inter alia,

the plaintiffs’ “considerable success in the litigation as a whole,”

and whether issues litigated later were “inextricably

intertwined” with the issues upon which the plaintiffs prevailed.

Id. at 773-74. Here, argues the Trout class, the 1993 Consent

Decree gave them “maximum success,” and furthermore the

interest issue is “‘inextricably intertwined’ with the awards of

backpay and attorneys’ fees because the class would have no

claim for interest if it were not the “prevailing party” in the

underlying sex discrimination litigation. Under this approach,

a claim for prejudgment interest would always be deemed

related to the merits claim. The Trout class further argues that

the Consent Decree contains express language reserving the pre-

November 21, 1991, interest issue, and that under a fair reading

of the Consent Decree it was required to litigate that interest

issue. Quoting from the Tenth Circuit’s decision in Johnson v.

City of Tulsa, 489 F.3d 1089 (10th Cir. 2007), that attorneys’

fees were to be awarded for “compensation for reasonable

efforts to preserve the fruits of the decree,” id. at 1111, the Trout

class argues that the Consent Decree expressly contemplated

that a post-judgment determination would be made as to whether

the class would receive pre-November 21,1991, interest, and

that in seeking that interest the class was trying to “preserve the

fruits” of the Consent Decree. Therefore the Trout class claims

that the interest issue was “part and parcel of the central issue in

the case,” i.e., the sex discrimination allegations.

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The Navy contends that the Trout class’s argument that it

should be awarded attorneys’ fees for litigating a post-decree

issue even though it lost that issue on appeal has no merit.

According to the Navy, fees for litigating post-decree issues

have only been awarded in two situations. The first situation is

when the consent decree expressly authorizes the court to award

such fees. Here, the Navy argues, the Consent Decree did not

obligate it to pay such fees regardless of the final outcome of the

issue, but merely reserved the Trout class’s right to seek such

fees. And the Navy further argues that any such fees already

paid were subject to explicit reservations of the right of the

Navy to seek recovery of those fees if it prevailed on the interest

issue. The second situation in which fees have been awarded for

litigating post-decree issues, according to the Navy, is when that

litigation was necessary to protect the relief granted for the

primary claims. But the litigation issue here, argues the Navy,

was not necessary to secure any particular relief granted by the

Consent Decree. Instead, the Navy contends, the litigation on

the interest issue was undertaken in an attempt to gain an

additional remedy for the Trout class. Consequently, contends

the Navy, the district court acted well within its discretion when

it determined that the interest issue was distinct from the sex

discrimination issue.

Relying on the factors set forth in Hensley, the district court

determined that the Trout class’s unsuccessful interest claim was

distinct from its successful sex discrimination claim, Trout, 464

F. Supp. 2d at 32, and we agree. The Trout class and the Navy

disagree as to our standard of review on the issue of the

distinctness of the sex discrimination claim and the interest

claim. The Trout class contends that this is a purely legal

question which we should review de novo, while the Navy

believes that we should review the district judge’s decision for

abuse of discretion, giving great deference to the district judge’s

superior knowledge of the case as a whole. On the present

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record we need not establish a precedent on that subject as the

same result prevails in any event. Even applying the de novo

standard, we agree with the Navy that the claims are distinct.

Litigation of the interest issue was not inextricably intertwined

with the sex discrimination litigation – it was not necessary to

obtain or protect any relief awarded, nor was it necessary to

preserve the integrity of the Consent Decree as a whole. The

district court therefore correctly determined that the issues were

distinct and denied an award of attorneys’ fees for litigation of

the interest issue.

Remaining issues

In its opinion the district court ruled “that in order to restore

the parties to the status quo,” 464 F. Supp. 2d at 34, the Navy

was entitled to interest on the refunded $106,375.45. The Trout

class argues that the district court erred by not considering the

“tax impact” of its refund order on the class’s counsel. As the

Navy points out, however, this argument was not raised during

the proceedings before the district court, and we therefore deem

it waived. We find no merit in the Trout class’s other claims

made in this appeal.

Conclusion

For the reasons stated above, we affirm the judgment of the

district court.