Nazareth Gates v. John Collier, Superintendent of the Mississippi State Penitentiary

JAMES C. HILL, Circuit Judge,

dissenting in part:

There is no doubt that the equitable considerations weigh overwhelmingly in favor of the plaintiffs and their attorneys. The obstinance of the defendants has resulted in the two awards, one 7 years old, remaining unpaid to date. The bulk of the fees awarded reflect rates for attorneys’ services prevailing in 1973. Inflation has diminished drastically the value of the awards. If the judgment had been paid promptly, the attorneys would have had the use of the money since 1973 and presumably could have earned a significant amount of interest on the money since that time. The same holds true for the substantial out-of-pocket costs which have been incurred since the start of this litigation more than 9 years ago. Defendants, on the other hand, get a windfall. They have been unrestricted in their use of the money. Even assuming earnings of only 5% per annum, they could have by now recovered a substantial portion of the amount they ultimately will have to pay. Their obstinance has indeed been profitable.

I wholeheartedly join with the majority in the feeling that the law ought to permit these plaintiffs to recover interest on the attorneys’ fees awarded so long ago and since stubbornly withheld from them by these defendants. Nevertheless, I must dissent from the holding that attorneys’ fees, although a part of costs, bear interest. The decision of a panel of this Court in Carpa, Inc. v. Ward Foods, Inc., 567 F.2d 1316 (5th Cir. 1978) is, in my view, dispositive of the issue. As such, the majority’s holding flies in the face of the doctrine of stare decisis, represented here by the rule that one panel of this Court must abide the decision of a prior panel. This abrupt departure comes at a most inappropriate time in our history.

Although I am of the opinion that Carpa prevents the awarding of interest on out-of-pocket expenses, I must dissent from the majority’s holding disallowing interest on those costs. The majority’s partial recognition of Carpa to deny interest on money actually paid out long ago cannot be made *1281 to dove tail with its having kicked off the Carpa traces as to attorneys’ fees.

I. Attorneys’ Fees

Although several courts have either expressly or impliedly approved the general proposition that interest on fee awards is permissible, see City of Detroit v. Grinnell Corp., 575 F.2d 1009, 1010 (2d Cir. 1978); Perkins v. Standard Oil, 487 F.2d 672 (9th Cir. 1973); Holly v. Chasen, No. 75-2116 (D.D.C. Feb. 2, 1979); McPherson v. School District # 186, 465 F.Supp. 749, 765 (D.Ill.1978); Cleverly v. Western Electric Co., 450 F.Supp. 507, 512 (W.D.Mo.1978), aff’d, 594 F.2d 638 (8th Cir. 1979), a panel of this Court recently came to the contrary conclusion. Carpa was a treble-damage action brought under the antitrust laws. The plaintiffs were awarded attorneys’ fees plus 6% interest. The court framed the issue before it as follows: “whether the district court may award interest on attorneys’ fees when the fees are treated as costs.” 567 F.2d at 1321 . In reversing the award of interest, the panel relied heavily on the fact that the statutory provision authorizing fee awards, 15 U.S.C.A. § 15 , categorizes fees as part of costs. 1 Id. at 1322 . No authority for awarding interest on costs was found, 2 there was nothing in the language of the statute to indicate that interest on costs was recoverable, and the legislative history of the statute was silent on the question. Id.

The statute under consideration in this case, the Civil Rights Attorneys’ Fees Awards Act, also treats attorneys’ fees as part of costs: “[T]he court, in its discretion, may allow the prevailing party ... a reasonable attorney’s fee as part of the costs.” 42 U.S.C.A. § 1988 . As in Carpa, the legislative history of the Act is silent on the question of interest, and there is nothing in the language of the statute to indicate that Congress intended that attorneys’ fees bear interest. 3

The majority criticizes this reading and application of Carpa as “[relying] exclusively on the definition of attorneys’ fees as part of costs.” At 1273, supra. In the majority’s view, Carpa only disposed of the interest issue in the context of the antitrust fee award provision. Having so freed itself of the obligation to apply Carpa to this case, the majority proceeds to analyze the Act’s fee provision to determine whether the relevant policy considerations militate in favor of allowing interest to be awarded. In this vein, three significant characteristics of civil rights cases are noted. First, civil rights claimants often do not have the money to hire an attorney. Second, unlike the antitrust laws, the civil rights statutes do not provide for treble damage awards from which a plaintiff might draw on to help compensate his attorney. Third, since the relief in civil rights cases frequently is injunctive only, normally there is no fund from which to supplement court-awarded fees. With these observations I have no argument. It is clear that these factors led Congress to the conclusion that a fee award provision was necessary to ensure that private citizens be able to obtain counsel to assist them in seeking redress for violations of their civil rights. Unfortunately, the question before this panel is not whether attorneys’ fees should be awarded; rather, the question is whether the fees that were awarded should bear interest. I have little doubt that Congress would have authorized interest had they thought of it. But, as the majority concedes, Congress never considered the issue. Since Congress did not manifest an intent one way or the other, the issue is one for the judiciary to decide.

*1282 As in any other case where we are not compelled to a result by the action or inaction of Congress, our first duty is to determine whether we are writing on a clean slate. My disagreement with the majority stems from my belief that we are not writing on a clean slate. While I agree that the result reached by the majority is a desirable one, I do not feel that we are free to reach it.

I begin with the proposition that attorneys’ fees, although different than other costs, are nevertheless a part of the costs of a lawsuit. A reading of the majority opinions in Hutto v. Finney, 437 U.S. 678, 695-98 , 98 S.Ct. 2565, 2576-77 , 57 L.Ed.2d 522 (1978) and Alyeska Pipeline Co. v. Wilderness Society, 421 U.S. 240, 247-57 , 95 S.Ct. 1612, 1616-21 , 44 L.Ed.2d 141 (1975), leaves one with the unmistakable impression that attorneys’ fees are, and have long been considered, a part of litigation costs. Thus, the majority’s belief that Congress categorized fees as part of costs to ensure that the states would not be insulated by the Eleventh Amendment is irrelevant. Whether Congress was or was not correct in the belief that the terminology used would be dispositive of the Eleventh Amendment question does alter the fact that attorneys’ fees are part of costs.

The next question — whether costs bear interest — was, as I have already stated, the question before the Carpa panel. The basis of that panel’s holding is clear from its citation of Duffer v. American Home Assurance Co., 512 F.2d 793 (5th Cir. 1973). Duffer was a diversity case in which the plaintiff was awarded attorneys’ fees under the authority of a Texas insurance statute. The statute stated that “attorney’s fee shall be taxed as a part of the costs in the case.” Id. at 800 . The district court included the fee award in the damage judgment and assessed interest on the whole amount. This Court held that the fees should have been taxed separately and no interest awarded thereon. It is clear that the decision was based on the fact that attorneys’ fees are part of costs and, as such, do not bear interest. At least that is the way the Carpa panel read Duffer:

[I]t is somewhat instructive to note that faced with a statutory language similar to 15 U.S.C. § 15 , and without any controlling precedent to bind it, the court held that attorneys' fees are an item of costs and as such do not bear interest.

567 F.2d at 1322 (emphasis added).

In my view, the four opinions discussed above preclude this three-judge panel from deciding the desirability of allowing interest on attorneys’ fees awarded under the Act.

II. Out-of-Pocket Costs

The question whether interest should be awarded on out-of-pocket costs is disposed of by the majority all too easily. The footnote accompanying the one-sentence textural discussion of out-of-pocket expenses explains that “firmly established in our jurisprudence” is the principle that such costs do not bear interest. At 1279, supra. The three cases cited by the majority —Carpa, Duffer , and Jesko v. American-First Title & Trust Co., 603 F.2d 815 , 820 n. 11 (10th Cir. 1979)—simply do not support that statement. There is nothing in any of those opinions to the effect that some costs are interest bearing while others are not.

Judge Brown’s eloquent presentation of the Act’s legislative history demonstrates that Congress perceived a great need to authorize awards of attorneys’ fees. Contrary to the apparent assumption of the majority, I do not believe that anything in the legislative history discloses that Congress was only luke warm in its decision that a prevailing plaintiff also should be awarded his out-of-pocket costs. There is nothing to suggest that Congress considered attorneys’ fees more important or less important than other litigation expenses.

In my view, there is more reason to allow interest on out-of-pocket expenses than on attorneys’ fees. The label “out-of-pocket” is most revealing. Such costs include filing fees, court reporter fees and the like. Unlike attorneys’ fees, these are bills that had to be paid years ago to keep the lawsuit alive. Were I not of the opinion that Carpa prevents us from allowing interest on any *1283 part of costs, I would not hesitate to hold that these plaintiffs should have interest on their out-of-pocket.costs.

III. Stare Decisis

The respective positions of the three judges on this panel can be stated as follows:

The Majority

“I cannot bear to be told when an argument has been addressed to me by which I am not convinced, that there is a case decided which I am bound to follow.” In re Holmes, 60 C.D. 269 (1890).

The Dissent

“My duty is, as a Judge, to be governed by fixed rules and former precedents.” Brownlow v. Egerton, 23 L.J.Rep. part 5, ch. 364 (1854).

The Panel

“I have often thought since that there is sound sense in what was once said by the late Lord C. J. Eyre, that the sooner a bad precedent was gotten rid of, the better.” King v. Stone, 1 East 648 n. (a) (1801).

Were I writing on a clean slate, I would be hard pressed to hold that costs do not bear interest. Outside this Circuit, there is no authority supporting such a holding. As noted above, most federal courts have found no barrier to awarding interest on costs. Nonetheless, in our Circuit one panel cannot overrule a prior panel decision, and the question before this panel is controlled by Carpa. See United States v. Lewis, 475 F.2d 571, 574 (5th Cir. 1973). 4

The majority’s departure from the doctrine of stare decisis presents a grave threat to the orderly administration of justice in this Circuit at a time in history when adherence is of particular and vital importance. This court has been restructured in a fashion unprecedented in the history of the judiciary. With the implementation of the Omnibus Judgeship Bill of 1978, Pub.L. 95-486, 92 Stat. 1629 (1978), this Court is now made up of twenty-six active judges and ten senior judges, most of whom sit regularly on our panels. Whether or not such a body can fairly and efficiently articulate, in one voice, the law affecting nearly 50 million people remains to be seen. I submit that our success may in large part depend on our adherence to the doctrine of stare decisis. If we give only lip service to the rule that one panel is bound by prior panel decisions, we run the risk of transforming what has heretofore been an orderly institution into an inconsistent, unpredictable body, made up of three-judge panels that resemble waterbugs chasing each other around and around the surface of a summer pond.

The issue of interest on costs should be presented to the entire Court on a proposal that it be considered en banc. Should a majority of the Court conclude that Carpa was an unwise decision, these long persevering plaintiffs can receive a full loaf instead of the half loaf given them by the majority. More importantly, it would give the full Court the opportunity to establish a general rule for the scores of federal statutes that authorize awards of attorneys’ fees and out-of-pocket expenses. If we approach this problem on a case-by-ease basis, we can expect to be deluged with litigation over the more than 75 statutes listed in footnote 14 of the majority opinion. Cf. Arkansas v. Sanders, 442 U.S. 753 , 99 S.Ct. 2586, 2595 , 61 L.Ed.2d 235 (1979) (Blackmun, J., dissenting).

If it be the will of the Court, the correct rule can be announced en banc. Of course, if a majority of the Court does not wish the *1284 Carpa rule reconsidered, then it should not be, for it is the Court’s decision to make. It would be a gross departure from good judicial practice for a three-judge panel to alter an established rule merely because its members fear that the full court would not agree with its views.

. 15 U.S.C.A. § 15 provides for the recovery of “the cost of suit, including a reasonable attorney’s fee.”

. The one case which had been decided prior to Carpa, Perkins v. Standard Oil, 487 F.2d 672 (9th Cir. 1973), was rejected by the panel because it was “based on an erroneous view of the law.” Carpa, Inc. v. Ward Foods, Inc., 567 F.2d 1316, 1322 (5th Cir. 1978).

. One district court case in which interest was allowed on an award of fees is cited in the Senate Report accompanying the Act. S.Rep. No.94-1011, 94th Cong., 2d Sess. 6 (1976). That case, however, was cited only as an example of the proper way of calculating the amount of the award. Id. (citing Davis v. County of Los Angeles, 8 E.P.D. ¶ 944 (C.D.Cal.1974)).

. Defendants argue that even if we are not bound by Carpa we are still precluded, by Rainey v. Jackson State College, 591 F.2d 1002 (5th Cir. 1979), from affirming the award of interest. The cited decision was an order of a panel of this Court denying a motion for post-judgment interest on an award of attorneys’ fees. Because the order was not accompanied by a written opinion, it is not clear that Rainey alone would preclude us from affirming the award of interest. Even if the panel in Rainey did base its decision on Carpa, an en banc decision declaring that costs bear interest would eliminate any precedential value that Rainey now carries.