Petition — Jones v. Amalgamated Warbasse Houses, Inc.

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83-1336

No. 83-

In THE

Supreme Court of the Anited States

Octoser Term, 1983

As.

Mary Jongs, et al.,

Petitioners,

AMALGAMaTED Warpasse Hovses, Inc., et al.,

Respondents.

PETITION FOR WRIT OF CERTIORARI TO THE

UNITED STATES COURT OF APPEALS

FOR THE SECOND CIRCUIT

Ricuargp F. Betitman*

Lewis M. Sree.

Steel & Bellman, P.C.

351 Broadway

New York, N.Y. 10013

LawRENCE GRosBERG

Fair Housing Clinic

Columbia University Law School

435 West 116th Street

New York, N.Y. 10027

Karen FREEMAN

470 Lenox Avenue

New York, N.Y. 10037

Attorneys for Petitioners

° Counsel of Record

newal, Richard Berman, respondents.

Questions Presented

l. In a civil rights class action,

may a district court arbitrarily reduce the

amount of attorneys’ fees to be awarded

that has been agreed upon by the parties,

which the record establishes is clearly

reasonable, which has been negotiated at

arms’ length, where there has been no

collusion, and where there has been no

injury to the interests of the class?

2. May a district court award fees

in civil rights cases which are substan-

tially below the levels awarded in other

types of litigation (the issue sub judice

in Blum v. Stenson, No. 81-1374)?

PARTIES

Mary Jones, Beverly Harris, Ernest

Simmons, Mildred Malloy, petitioners.

Amalgamated Warbasse Houses, Inc., New York

State Division of Housing and Community Re~

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TABLE OF CONTENTS

Questions Presented ...nccecsecceevess

CITATIONS TO OPINIONS BELOW ..ccccces

JURISDICTION eeeneeeeeeeneeeneeeeeeeneeee

STATUTE AND RULE INVOLVED .cccccceses

STATEMENT OF THE CASE eee eeeeeeeeeeee

1. Proceedings Below e*eeseeeeeeneene

2. Statement Of FPactS .ccccesesecs

REASONS POR GRANTING THE WRIT ...e+e>%

Ze Introduction eeenreeeeeneeeeee

II. The Decision of the Court

Below Is Inconsistent With

Prior Decisions of This

Court eeeeeeeeeeseeeeeeeeeee

III. The Decision Below Conflicts

with The Congressional Pur-

pose in Passing The Civil

Rights Fees Provisions .....

CONCLUSION eeneeeeeeevreeeeeeeeeeeeeeeee

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TABLE OF AUTHORITIES

Cases:

Blum v. Stenson, &.Ct. No.

81-1374 *rvseeeeenreneenseeeeeneeeneenerte

Hensley v. Eckerhart, U.S. , 76

L.Ed.2d 40 (1983) eoeeeeeeeeeneeee

New York State Ass'n for Retarded

Children, Inc. v. Carey, 711

F.2d 1136 (2nd Cir. 1983) ....-.

Tasby v. Wright, 550 F. Supp. 282

(N.D. Tex. 1982) e*eeneeveeaeeeeeeeeee

Other Authorities

18 U.8.C. s 3006A eeeeeeeeeeeeeeeeeee

28 U.S.C. § 1254(1) eeeeeeeeeeeeeeeee

26 U.S.C. § 2412(d) eeeeeeeeeeeeeeees

42 U.&S.C. sy 1988 eeeeeeen eee eee eee een

Page 4

14,20

Equal Access to Justice ACt weceseses

H. Rep. 94-1558, 94th Cong., 2d

Sess. (1976) eeeeeeeeeeeeeeeeeee

H. Rep. 94-1011, 94th Cong.,

2d Sess. (1976) eeeeeeeeeeeeeeee

Be H. Rep. No. 96-1418, 96th Cong., 2d.

: Sess. (1980) eeeeeseeeeeeeeeeeeeneee

: Rule 23(e), P.R. Civ. Proc. eeeeeeevee

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No. 83-

IN THE

SUPREME COURT OF THE UNITED STATES

October Term, 1983

MARY JONES, et al.,

Petitioners,

AMALGAMATED WARBASSE HOUSES, INC., et al.,

Respondents.

PETITION FOR WRIT OF CERTIORARI

TO THE UNITED STATES COURT OF

APPEALS FOR THE SECOND CIRCUIT

Petitioners Mary Jones, et al., pray

that a writ of certiorari issue to review .

the judgment of the United States Court of sd

Appeals for the Second Circuit entered on ;

November 14, 1983, affirming the decision 3

of the District Court for the Eastern | “i

4 -eangpaigues of Hew York relating to an = a

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CITATIONS TO OPINIONS BELOW

The opinion of the Court of Appeals is

reported at 721 F.2d 881, and is set forth

in the Appendix at pages la-18a.” The

Memorandum opinion of the District Court is

reported at 97 F.R.D. 355 and is set out

in the Appendix at pages 19a-46a. The

supplemental memorandum opinion and order

of the District Court is reported at 97

F.R.D. 362 and is set out in the Appendix

at pages 47a-61a. Also set out in the

Appendix at p. 62a is the report of the

Magistrate recommending approval of the

settlement agreed upon by the parties.

JURISDICTION

The judgment of the Court of Appeals

atfirming the decision oft the wListrict

Court was entered on November 14, 1983.

Jurisdiction of this Court is invoked

pursuant to 28 U.S.C. § 1254(1). j

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STATUTE AND RULE INVOLVED

This case involves 42 U.S.C. § 1988

which provides, in pertinent part:

In any action or proceeding to

enforce a provision of sections 1981,

1982, 1983, 1985, and 1986 of this

title [42 U.S.C.] * * * the court, in

its discretion, may allow the pre-

vailing party, other than the United

States, a reasonable attorney's fees

as part of the the costs. (R.S. 722

(1866) as amended, 90 Stat. 2641

(1976.)

This case also involves Rule 23(e),

F.R. Civ. Proc., which provides:

(e) Dismissal or Compromise . A

class action sha not smissed or

compromised without the approval of

the court, and notice of the proposed

dismissal or compromise shall be given

to all members of the class in such

manner as the court directs.

(As amended Feb. 28, 1966, eff. July

<a 1, 1966.)

4 ‘

E STATEMENT OF THE CASE a

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De 1. Proceed low ; : ee:

2 The present action was brought in 1980)

es: by low-income black citizens agai

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Amalgamated Warbasse Houses, Inc. and

the New York State Division of Housing and

Community Renewal. The complaint charged

that the defendants had practiced racial

discrimination with respect to the selec-

tion of tenants in State-supported housing.

A settlement was reached on August 9, 1982,

under the supervision of a United States

Magistrate. The Magistrate recommended

approval of the entire settlement, includ-

ing the agreement as to attorneys’ fees.

(Appendix, p. 62a.)

Following notice to class members and

the public, the district court issued its

memorandum and order approving the settle-

ment with regard to the merits in virtually

all respects. However, the court rejected

the parties’ agreement with regard to

attorneys’ fees. The parties had nego-

tiated and agreed to fees in the amount of

$41,750, which resulted in hourly rates

- § =

for experienced counsel of $129 per hour.

The district court reduced the amount to

$25,600 by setting an across-the-board

rate of $75 per hour for each of the three

attorneys representing plaintiffs. (Ap-

pendix, 36a-43a.)

The plaintiffs moved to amend the

court's order to restore the fees to the

level agreed to by the parties. On

February 18, 1983, the district court

issued a supplemental memorandum and order

denying the motion, but revising the

distribution of the $25,600 awarded by a

readjustment of the hourly rates to be

given the three attorneys. Lead counsel

was awarded $77 per hour and the other two

attorneys awarded $70 and $60 per hour.

(App. pp. 47a-59a.) On appeal this order

was upheld by the Second Circuit, despite

the state defendant's position that the

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settlement should have been approved.

2. Statement of Pacts

When the district court approved the

settlement reached by the rarties on the

merits it found that it was fair and

equitable and properly protected the rights

of all class members. (App. 26a-36a.) The

relief required the establishment of a

special waiting list for minority citizens

1/ In its Brief, the state asserted:

Because all aspects of the settlement

had been extensively reviewed and

fully supported by the parties and the

Attorney General of the State of New

York, on behalf of the Commissioner,

had evaluated and agreed to the

reasonableness of the attorney's fee

payable out of State funds, the

District Court's rejection of the fee

settlement came as a surprise. The

parties had negotiated a fair and

reasonable fee settlement, under. the

specific circumstances of the case,

which was within the range of. -

able fee awards in the Circu

State Appellee's Brief, p. 6.

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“9

seeking units at the housing development,

the elimination of the practice of giving

priority to children of the existing

tenants (a practice which necessarily

excluded minoxcity applicants), and the

affirmative seeking of minority applicants

for available housing.

It is clear from the record that an

agreement on the merits was reached before

any discussion of fees took place. Indeed,

counsel for the plaintiffs were adamant

that this procedure be followed so that

there could be no question of any conflict

between the interests of the class and that

of counsel. The district court referred

the case to a Magistrate to aid in settle-

ment proceedings, and the Magistrate raised

the question of fees after settlement on the

merits had been reached, so that a complete

package could be presented to the district _ “a

court. Thereafter, fee negotiations were

conducted in the Magistrate's presence, and

he recommended the approval of the entire

settlement.

The district court found that the

negotiations were at arms-length, were

non-collusive, and that in no way were the

interests of the class jeopardized by the

agreement reached on fees. At the begin-

ning of the fee negotiations plaintiff's

counsel had sought hourly rates substan-

tially higher than those ultimately agreed

upon, and requested an adjustment to the

lodestar to reflect the complexity of the

case and the quality of representation.

Defendant's counsel, on the other hand,

opposed a multiplier and sought lower

hourly rates. After considerable bargain- .

ing plaintiff‘s counsel agreed to a cutoff

date for fees, dropped the request for a

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— a

multiplier, and the parties agreed on

the total fee.

At the request of the district court

counsel for plaintiffs filed an affidavit

to support the negotiated fee. The

submissions showed that each of plaintiffs'

counsel were experienced in handling civil

rights and class action litigation and

had specific expertise in the field of

. 2/

housing discrimination.

2/ Lead counsel Richard F. Bellman has

A practiced civil rights law since his

admission to the Bar in 1963. From 1964 to

1967, he worked for the United States

Commission on Civil Rights. From 1967 to

1968, he served as associate counsel for

the NAACP. From 1969 to 1972, he was

general counsel for the National Committee

Against Discrimination in Housing. Prom

1972 to 1974, he was general counsel for

Metropolitan Action Institute. Thereafter,

Mr. Bellman became a partner in a private

firm which specializes in employment and

housing discrimination litigation (Joint

Appendix on Appeal 84a). Mr. Bellman's

affidavit listed the numerous housing

discrimination cases he has handled.

Lawrence M. Grosberg became a member 2

of the Bar in 1969. In the first five s

- 10 -

Pinally, it is clear that this case

raised novel and complex legal issues. The

essence of the challenge to the children's

2/ = continued

years of his practice, he was an associate

in a New York law firm. Prom 1974 to 1979,

he was managing attorney at Mobilization

for Youth Legal Services. Since June 1979,

he has served as director of the Columbia

Law School Pair Housing Clinic and is a

lecturer in law at the Law School. In

conjunction with his teaching responsibili-

ties, Mr. Grosberg specialized in housing

Giscrimination litigation and acted as

counsel to complainants or plaintiffs in

mogwe than 30 housing discrimination cases

(J.8. 94a-96a).

Karen Freeman serves as general counsel

for the Open Housing Center of New York,

the organization which was the catalyst for

the filing of this action and which plays a

vital role in the implementation of the

consent order. Ms. Freeman has been a

member of the Bar for over eight years.

She served as counsel to the Mayor's Office

for Community Development in Boston,

Massachusetts from 1974 through 1976. From

March 1978 through April 1979, she was

general counsel for the New York City

Commission on Human Rights. Her role as

general counsel for the Open Housing Center

began in April 1979. In her capacities

with the Center and the City Ricetastie on

Human Rights, Ms. Freeman has had extensive

involvement in housing discrimination and j

fair housing litigation (J.A. 9la-93a). — :

list was that because the Wabasse develop-

ment was predominantly white, a children's

list would be predominantly white, thereby

perpetuating the segregated nature of the

development. Thus, it was argued that the

list would have a racially discriminatory

impact in violation of the federal Fair

Housing Law. There was absolutely no case

law involving challenges to preferential

treatment for children at predominantly

white housing projects. This case was

apparently the first to present such an

issue.

3/ Counsel argued in the motion for a

preliminary injunction that the children's

list should be viewed as a form of “grand-

fathering" analagous to actions in southern

states involving discrimination in voting

rights and jury selection. Plaintiffs

also drew a parallel to court decisions

regarding nepotism in building trade

unions. Thus, in addition to precedents

under the Fair Housing Act, decisions

involving the Thirteenth and Fourteenth

Amendments and Title VII of the Civil

- 12 -

The second aspect of the case raised

equally difficult factual and legal issues.

Plaintiffs argued that notwithstanding

the fact that Warbasse was seeking to open

its waiting list to outsiders, the method

of publication of this action had a dis-

criminatory effect on minority citizens.

Plaintiffs asserted that Warbasse had an

affirmative obligation to publish the fact

of the opening of its outsiders’ waiting

list in the minority presses of New York

City and that this duty flowed from

the fact that the racial composition of the

complex was overwhelmingly white.. Again,

there was no legal precedent on point

to buttress this challenge.

3/ continued

Rights Act of 1964 were analyzed. See

plaintiffs' memorandum in support of

motion for preliminary injunction, dated

w« VF

REASONS POR GRANTING THE WRIT

Introduction

This case presents important issues in

the growing body of law relating to attor-

neys’ fees. Simply stated, the first

issue posed is whether settlement and

conciliation of attorneys' fees disputes

will be encouraged, or whether they will

result in protracted and major litigation

and appeals. The question is not whether a

district court may or, indeed should,

review a settlement of attorneys’ fees

under the duty to supervise the settlement

of the class action imposed by Rule 23(e)

of the Federal Rules of Civil Procedure.

Rather, it is whether once the court has

determined that there has been arms’

length, good faith, and non-collusive

bargaining, and that the rights and

interests of the class members have been

«14 <-

fully protected, it can substitute its

judgment for that of the parties as to the

appropriate hourly rate and amount. The

second issue, which is essentially the same

as the one presently before the Court in

Blum v. Stenson, No. 81-1374 is whether the

standard for awards in civil rights

cases is to be different, and less favor-

able, than that governing in other federal

litigation.

Petitioners urge that the courts below

applied an erroneous standard in reviewing

the fee agreement in this case and in

civil rights cases generally. If allowed

to stand the inevitable result of the

decisions will be to encourage and, indeed,

almost to require plaintiffs to engage in

far more lengthy and complex proceedings

when attorneys’ fees are at issue. The

consequence will be a greatly increased —

“burden on the federal courts in resolving

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attorneys’ fees disputes as well as higher

fees being paid by defendants because of

the greater amount of time necessary to

litigate fee matters. Further, the

virtually open-ended and uncontrolled

discretion given to district courts to

reduce fees can only discourage attorneys

from taking on civil rights cases.

II.

The Decision of the Court Below Is

Inconsistent with Prior Decisions of

This Court

The decision of the court below is

fundamentally inconsistent with the deci-

sion of this Court in Hensley v. Eckerhart,

___U.S. __, 76 L.Bd4.24 40 (1983). In

Hensley both the majority (76 L.Ed. 2d at

53) and concurring (76 L.Ed. 2d at 64-65)

Opinions make clear that counsel fee

matters should be dealt with in an expedi-

tious fashion and that their voluntary

«16 -

resolution is to be encouraged. The

decisions of the courts below conflict with

this basic principle.

Here, there is no question but that

the parties negotiated fees fairly, without

collusion, and at arms’ length. They

reached a result that was both reasonable

and agreeable to all, Moreover, the record

fully supports the hourly rates and the

total amount awarded as reflective of the

market value of the services of the attor-

neys involved, the novelty of the issues in

the case, and the excellent results ob-

tained. Nevertheless, the trial court

rejected the settlement by essentially

substituting its judgment for that of the

parties as to what a reasonable fee should

be. Thus, in its initial decision, the

district court imposed an across-the-board

$75 per hour rate with no adequate explana-

tion of how it arrived at that rate. The

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rate evidently was taken from the Equal

Access to Justice Act (28 U.S.C. § 2412(d)

(2) (a) which Congress specifically stated

should not govern civil rights cases. 3/

The decisions below would necessarily

require plaintiffs to approach fee applica-

tions in a way that would result in the

prolongation of attorneys’ fees matters

4/ App. p- 53a. See also, New York State

Ass'n for Retarded Childr Inc. v. Carey,

711 F.2d 1136 (2nd Cir. isesy.

S/ Section 206 of the Act (Pub.L. 96-481)

provides that nothing in § 2412(d), includ-

ing the limitation in fees to $75 per hour,

"alters, modifies, repeals, invalidates, or

supersedes any other provision of Federal

law... ." The House Report specifically

states that the $75 rate “is not intended

to affect or limit the computation of

reasonable attorney fees under any other

provision of law authorizing an award of

fees for litigation under a particular

statute, such as the Civil Rights Acts,

designed to promote private enforcement of

that Act." H.R. Rep. No. 96-1418, 96th

Cong., 2d Ses., 1980 U.S. Code

Cong. & Ad. News " + The district

court here also referred to the Criminal

Justice Act, ls U.S.C. § 006A (1982),

which also has no relevance be os ved

rights acts cases.

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- 18 -

and, in many cases, their unnecessary

litigation. Thus, even in cases where the

parties are agreed on a fee, plaintiffs, in

order to protect their interest in ensuring

that the settlement will be approved, would

have to submit to the district court a

detailed statement of the hours, the tasks

spent, the expertise of the attorneys, and

data as to prevailing market rates. In

short, they would have to make precisely

the same showing that they would have to in

a litigated fee dispute to challenge the

disallowance of fees as being unreasonable

or arbitrary.

The decision of the courts below would

also undercut a standard practice in fee

cases where only the reasonableness of

the hours is at issue, i.e., stipulating as

to reasonable hourly rates (see, e.g-,

Tasby v. Weight, 550 FP. Supp. 282 (N.D.

Tex. 1982)), since the district court could

7 yf

- 19 «

look beyond such a stipulation and substi-

tute its judgment for that of the parties.

Finally, not only would the decision below

result in unnecessary litigation in the

district courts but, it would also result

in additional appeals in those cases where

the trial court haa reduced fees below the

amount agreed to without a sufficient

basis in the record for its action.”

4, Petitioners are not suggesting that a

istrict court, particularly in a class

action, has no role except to rubber stamp

an attorneys’ fee settlement. Under Rule

23(e) the Court has the obligation to

review any settlement of a class action and

ensure that the interests of the absent

class members have been adequately con-

sidered and protected. In the present case

the fee negotiations were monitored by a

Magistrate (who recommended approval of the

amount), were not collusive, and the inter-

ests of the class members were in no

way adversely affected. Under these

circumstances a district court, should

approve the fees in the amount agreed on by

the parties.

Pes

a”

- 20 -

III.

The Decision Below Conflicts with

The Congressional Purpose in

Passing The Civil Rights Fees

Provisions

Although the court below gave lip

service to the principle that fees in

civil rights cases should be awarded at

the same levels as those in other types of

litigation, the actual decision approving

the reduction of the fee substantially

conflicts with it. Thus, this case present

issues closely similar to those now before

the Court in Blum v. Stenson, No. 81-1374.

In Blum, as here, the under lying issue

is whether fees are to be awarded in civil

rights cases at the market rate that

an attorney may command in similar types

of litigation, or whether lower fees should

be the norm. In both instances the

problem is the same; if, in civil rights,

cases fees are awarded at below market

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rates then there will be a natural disin-

centive for attorneys to take them on.

The clear Congressional purpose,

however, was to encourage the private bar

(and public interest organizations), to

take on the enforcement of the civil rights

statutes by providing for fees at levels

commensurate with those which an attor-

ney might command in the market place.

Here, on the other hand, the courts

below reduced agreed-upon fees by applica-

tion of a number of principles inconsistent

V/ Thus, Congress recognized that the

civil rights laws depend heavily upon

private enforcement" (S. Rep. 94-1011, 94th

Cong. 2d Sess. (1976), p. 2), and that the

unavailability of fees was resulting in

“private lawyers .. . refusing to take

certain types of civil rights cases”

because they “could not afford to do so."

(H. Rep. 94-1558, 94th Cong., 2d Sess.

(1976), pp. 2-3.) Therefore, the amount of

fees awarded is to “be governed by the same

standards which pt in other types of

equally complex Federal litigation, such as

anti-trust cases... ." 8. Rep. at e. 6

> a

with Congress’ intent. These included the

notion that fees in civil rights cases

should be “moderate”, presumably in com-

parison with fees in other types of cases.

Further, when fees are awarded against a

public defendant they should be lowered

even, as here, when the public defendant

haa agreed to the anctnte.~” Finally,

the “perception of the public", however it

was to be determined, should be taken into

account.

None of these principles have any ©

support in the statutory language or the

legislative history of the fees Act. Not

only is it clear that Congress intended

fees in civil rights cases to be the same

8/ As noted above, (see n. 1, supra) the

state defendant took the position in the

court of appeals that the district court

should be required to approve the settle-

ment as agreed upon by the parties. ;

= 23 -

as in other types of litigation, o/ ut

one of its main concerns was that when a

public defendant was sued public moneys,

without limit, were used to defend illegal

or unconstitutional acts. Thus, a central

purpose was to ensure that prevailing

plaintiffs in such cases recover full fees

from public funds. 10/

9/ See n. 7, supra.

10 See H. Rep. No. 94-1558, p.- Ze ee

also, Awarding

Bubec - on Courts, Civ Lib

ministratio of Justice of t

enaiipiatas There was

the Prince Edward County [school

desegregation] case, which was one

of the serious instances of con-

temptuous violation of law... =.

We find in that case, which

has gone on for nearly 15 years,

there was only one phase during

the entire case during which the

plaintiffs’ lawyers were awarded

fees paid and that amounted

to $19,000.

- 24<

Finally, “the perception of the

public” has been expressed by the elected

representatives of the public who sit in

Congress. It was simply impermissible for

the court below to substitute its judgment

for that of the House and Senate as to

what should be the governing principles for

fee awards in civil rights cases.

10/ continued

During that same period, the

school board lawyers, the county

lawyers and the State's law-

yers were getting their fees paid

in full at all times ... . [BJjut

for the same period in which

the plaintiffs’ lawyers were

awarded $19,000, the defendants

paid their lawyers $150,000 for

the service of having enabled them

to go into contempt

of court.

ct of Legal i. on the Adec °

Repr nte son. Hearings Before the Sut

COMM. on lon of Citizen Inter-

of the Comm. on the Judiciary, Un: ¢

Stat senate, rd Cong., ist Sess. at

_ *

reversed.

= 35 -

Conclusion

For the foregoing reasons the petition

for a writ of certiorari should be granted

and the decision of the court below

Respectfully submitted,

RICHARD F. BELLMAN*

LEWIS M. STEEL

Steel & Bellman, P.C.

351 Broadway

New York, N.Y. 10013

LAWRENCE GROSBERG

Fair Housing Clinic

Columbia University Law School

435 West 116th Street

New York, N.Y. 10027

470 Lenox Avenue

New York, N.Y. 10037

Attorneys for Petitioners rt

* Counsel of Record

APPENDIX

- la -

DECISION OF THE COURT OF APPEALS

Nov. 14, 1983

UNITED STATES COURT OF APPEALS

FOR THE SECOND CIRCUIT

No. 14 - August Term, 1983

Argued September 15, 1983

Decided November 14, 1983

Docket No. 63-7181

seacesuseseeees

MARY JONES, et al.,

Plaintiffs-Appellants,

AMALGAMATED WARBASSE HOUSES, INC., et al.,

Defendants~Appellees.

BEFORE:

PEINBERG, Chief Judge,

LUMBARD and NEWMAN, Circuit Judges.

- 2a -

FEINBERG, Chief Judge:

This case requires us to decide the

extent of a district court's discretion to

modify an agreement as to attorneys’ fees,

otherwise awardable under 42 U.S.C. § 1988,

which has been submitted to the court

pursuant to Fed. R. Civ. P. 23(e) for

approval as part of a proposed settlement

of a class action civil rights suit.

Plaintiffs Mary Jones and other class

representatives appeal from a judgment of

the United States District Court for the

Eastern District of New York, Thomas C.

Platt, J., approving in all respects a

negotiated settlement of their. housing

discrimination suit against defendants

Amalgamated Warbasse Houses, Inc. (War-

basse) and the New York State Division of

Housing and Community Renewal and its

Commissioner (collectively referred to as

the State Division), except for the amount

- 3a -

of attorneys’ fees, which the court reduced

from a total of $41,350 to $25,600. A

provision for reimbursement of $400 in

costs was left undisturbed. For reasons

given below, we affirm the judgment of the

district court.

In their complaint, plaintiffs alleged

systematic exclusion of Black and Hispanic

persons from a 2,585-unit publicly subsi-

dized housing development in violation

of the Thirteenth and Fourteenth Amendments

to the United States Constitution; Title

VIII of the Civil Rights Act of 1968, 42

U.S.C. § 3601 et seq.; 42 U.S.C. §§ 1981-

| 1983; and the New York Human Rights Law,

: N.Y. Exec. Law § 296(2-a) (McKinney 1982).

The housing complex is operated by defen-

dant Warbasse, a limited profit mutual

i housing company supervised by defendant A

| -—s State Division. Plaintiffs requested, and =

- Me ee ae = *F

- 4a-

the settlement order granted, certification

pursuant to Fed, R. Civ. P. 23(b)(2) as

representatives of the class of all Black

and Hispanic (Caribbean and Central Ameri-

can) persons who have sought or may seek to

live in the Warbasse complex. Plaintiffs

sought preliminary and permanent injunctive

relief, actual and exemplary damages for

the named plaintiffs, and other relief.

Defendants moved to dismiss the complaint,

and the district court reserved decision on

the preliminary relief sought and the

motions to dismiss pending the outcome of

settlement negotiations.

The case was referred to Magistrate A.

Simon Chrein, who assisted in the later

stages of the negotiations on the substan-

tive claims and in the entire negotiations

concerning attorneys’ fees. The parties

agreed to, and submitted to the court for

approval, a proposed order that provided

, re a ae

Pe a A eee

- 5a -

significant relief to the class in the form

of revised procedures for filling vacan-

cies, including the establishment of a

minority waiting list and the elimination

of a special waiting list for children of

existing tenants. The district court found

that these procedures will virtually insure

that nearly a tenth of the units will be

filled by class members. The proposed

orders also incorporated the defendants'

agreement to pay attorneys’ fees of $41,350

and costs of $400.

After notice of the proposed settle-

ment was published in the minority press

and mailed to all applicants on the exist~-

ing waiting lists, written comments were

received and a hearing was held. There-

after, in a memorandum and order dated

November 15, 1982, the court approved the

‘proposed settlement and order. The Court

found that there was no evidence to suggest

2 =

- 6a -

collusion among the opposing attorneys in

formulating the settlement, that the

attorneys had sufficient experience in

class action litigation to arrive at a

fair and reasonable compromise, that the

Gecisions of the attorneys were informed,

that no class members had objected, and

that the interests of the class members

were served. With respect to the attor-

neys' fees provided for in the settlement,

however, the court expressed concern that

the proposed fees “seemed out of line with

other matters which it has been called upon

to review.” Citing Selzer v. Fleisher, 629

F.2d 809 (2d Cir. 1980), rev'g Selzer v.

Berkowitz, 477 F. Supp. 686 (E.D.N.Y.

1979), cert. denied, 451 U.S. 970 (1981),

and other authority, the court reduced

the fees from approximately $129 per hour

to approximately *75 per hour, and the

total fee requested of $41,350 plus $400 in

° Ja -

costs. to $25,600 plus $400 in costs.

Adopting the same proportion used in the

negotiated settlement, the court allocated

$15,880 of this total to be paid by defen-

dant Warbasse and the remaining $10,120 by

defendant State Division.

Thereafter, plaintiffs’ attorneys

moved to amend the November 15 order by

restoring the fees to the negotiated level.

In a supplemental memorandum and order of

February 18, 1983, the court considered and

rejected a number of arguments by plain-

tiffs’ counsel in support of the higher

fees and provided a more extended explana-

tion for the figure it had set and now

declined to increase. In particular, the

court explained that in fact it had fol-

lowed the two-step "lodestar" approach

called for by City of Detroit v. Grinnell

Corporation, 495 F.2d 448, 470-71 (2d Cir.

1974)(Grinnell I) and City of Detroit v.

- 8a -

Grinnell Corporation, 560 F.2d 1093, 1098-

99 (2d Cir. 1977)(Grinnell II). The court

also refined the $75 per hour average

on which the figure was based to provide

$77 per hour to the lead attorney, Richard

F. Bellman of Steel & Bellman, P.C., and

$70 per hour and $60 per hour, respec-

tively, to the other two attorneys in the

case, Lawrence Grosberg of the Columbia

university Fair Housing Clinic and Karen

Freeman of the Open Housing Center of New

York.

II.

Both plaintiffs and the State Division

argue that the district court abused its

Giscretion in setting aside the agreement

as to attorneys’ fees. They acknowledge

the role of the court in guarding against

collusion, inexperienced counsel, inade-

quate information, adverse class impact and

windfall. Plaintiffs maintain, however,

- 9a -

that once they have determined that a

proposed settlement is not tainted in any

of these respects, the judge is not free to

set aside a fee agreement negotiated by the

parties at arms’ length that falls within a

range of fairness and reasonableness.

Plaintiffs also point to the judicial

policy favoring out-of-court settlement and

argue that a presumption in favor of a

negotiated fee agreement attaches when

there is no finding of irregularity, lest

the incentive to settle be undermined. The

State Division offers similar reasoning,

maintaining that a settlement of fees, like

a settlement on the merits, imposes some

limits on the reviewing court's discreticn.

It further argues that a fee agreement

negotiated by a responsible public offi-

cial, such as the State Attorney General,

who is charged with protecting the inter-

* ests of state residents and taxpayers,

- 10a -

should not lightly be rejected. Defendant

Warbasse argues that the court has a duty

to make an independent evaluation of the

reasonableness of the attorneys’ fees

regardless of the parties’ agreement and

that the court did not abuse its discretion

in reducing the fees to the amount it found

reasonable.

We reject the argument that the

district judge, in light of his findings,

could not reduce the fee award. It must be

emphasized that a district court has broad

discretion to determine the amount of a fee

award to be made pursuant to 42 U.S.C

§ 1988. hensley v. Eckerhart, 103 S.Ct.

1933, 1941-42 (1983); Gagne v. Maher, 594

P.2d 336, 344 (2d Cir. 1979), aff'd, 448

U.S. 122 (1980). The presence of an arms’

length negotiated agreement among the

parties weighs strongly in favor of ap-

proval, but such an agreement is not

~—

> : oe ; ¥ i ee Sa ye A

ws Po A ee tee 12 aye eee eM ee ee

|} ae

DT iT ae, he

- lla -

binding on the court. Piambino v. Bailey,

610 F.2d 1306, 1328 (5th Cir.), cert.

denied, 448 U.S. 1011 (1980); Foster v.

Boise-Cascade, Inc., 577 F.2d 335 (5th Cir.

1978)(per curiam), aff'g 420 F. Supp.

674 (S.D. Tex. 1976); Levin v. Mississippi

River Corp., 377 F. Supp. 926, 930-31

(S.D.N.Y.)(Weinfeld, J.), aff'd, 508 F.2d

836 (2d Cir. 1974), cert. denied, 429 U.S.

833 (1976). A district court's discretion

is not limited to situations in which it

finds windfall, adverse class impact, or

other irregularity in a fee agreement.

Despite the absence of such factors, if the

court Siete good reason to do so, it

may reject an agreement as to attorneys’

fees just as it may reject an agreement as

to the substantive claims. The court's

perspective and obligations are different

from those of the parties. Malchman v.

Davis, 706 F.2d 426, 435-36 (2d Cir. 1983);

- 12a -

Grinnell I, 495 F.2d at 469-70; Alpine

Pharmacy, Inc. v. Chas. Pfizer & Co.,

481 F.2d 1045, 1049-51 (2d Cir.), cert.

denied, 414 U.S. 1092 (1973). The judge's

duty to safeguard the public interest is

especially important when no class members

are likely to object and the aggregate

impact of a settlement is greater than the

impact on any one defendant. Thus, this

court has indicated that fee awards under

§ 1988 should be moderate, see Grinnell I,

495 F.2d at 469-70, and additionally that a

court has an Obligation under Fed. R. Civ.

P. 23(e) in any class action to make sure

that a class is taken care of fairly,

especially in a settlement where no

one is likely to complain.

On the other hand, the court must

| consider competing policies as well. There

2 is the congressional policy favoring fee

awards in order to enforce the civil rights 3

- 13a -

laws by private litigation... See McCann v.

Coughlin, 698 F.2d 112, 128 (2d Cir. 1983);

Mid-Hudson Legal Services, Inc. v. G & U,

Inc., 578 F.2d 34, 36-37 (2d Cir. 1978).

Fee shifting is still not that common and a

statute specifically authorizing it should

not be construed in a niggardly manner.

Moreover, there is the important policy of

encouraging settlements. See Hensley v.

Eckerhart, 103 S.Ct. at 1941. The settle-

ment process is undermined if the court

attaches little weight to the fact that the

parties have reached an agreed figure

reflecting, as in this case, compromise on

both sides. In exercising its discretion,

the district court must reconcile these

policies on the facts of each case. In

deciding whether to accept fee settlements,

the court should treat them essentially as

it treats settlements on the merits,

according them a presumption of regularity

- Iié4a -

once it finds no impropriety, but aware

that the presumption can be overcome for

good reason, including the impact on the

Class, the public perception of the appro-

priateness of the fees, and the range of

awards allowed in similar cases. Once a

court has decided that a fee settlement

shoulad not be accepted, we think it need

not limit itself to the alternative of

outright rejection, but may exercise its

discretion to determine a reasonable fee.

The court has a special responsibility to

supervise the matter of attorneys’ fees in

Class actions and in any litigation involv-

ing a fee-shifting statute like section

1988. Even in a case such as this, where

any decrease in the amount of the fees will

not inure to the benefit of the plaintiff

class, which received only injunctive

relief, the court's downward revision of a

fee settlement unacceptable to the court

- 15a -

will promote confidence in the integrity of

the judicial process and is a proper

exercise of authority over officers of the

court in litigation pending before the

court.

In the instant case, the district

court carefully considered the many factors

relevant to a decision whether to accept or

reject a fee settlement and set out its

reasons for rejecting the fees agreed upon

and for makince 1 reduction. See Johnson v.

Georgia-Highway Express, Inc., 488 F.2d

714, 717-19 (5th Cir. 1974, cited with

approval in Hensley v. Eckerhart, 103 &.Ct.

1937-38. We note that the court also

mentioned the participation of a govern-

mental agency in the negotiations and its

endorsement of the results as "a factor

weighing heavily in favor of settlement

approval." We believe that the court did

consider as significant the fact of settle-

- 16a -

ment of the fee dispute as well as of the

underlying dispute. While not all of us

would have reduced the fee award when, as

here, a federal magistrate assisted in the

negotiations and the State Attorney General

joined in the negotiations and the agree-

ment, we all agree that on this record we

cannot say that the court abused its

discretion in doing so.

III.

Plaintiffs’ remaining arguments

reguire little discussion. Plaintiffs

argue that the court erroneously reduced

the fee award in part because public funds

were involved. We have no reason to doubt

the judge's explanation in his supplemental

memorandum and order that this fact caused

him to scrutinize the fee arrangement with

more care, but was not a reason for the

reduction. Plaintiffs also contend that

the court did not follow the two-step

* tla «

"lodestar" approach mandated by Grinnell I,

495 P.2d at 470-71, and Grinnell II,

560 F.2d 1098-99. While it is true that

rates awarded to civil rights counsel

should ordinarily be on par with market

rates for private attorneys engaged in

other complex federal litigation, S. Rep.

No. 1011, 94th Cong., 2d Sess. 6 (1976),

reprinted in 1976 U.S Code Cong. & Ad.

News, 5908, 5913; New York State Associa~

tion for Retarded Children, Inc. v. Carey,

No. 82-7531, slip op. at 4563, 4587 (2d

Cir. June 15, 1983), and it is preferable

for the district court to make express

findings as to what those rates are, we

believe the court satisfied this require-

ment by looking to the hourly rates awarded

in comparable recent cases. We do not need

to reach the arguments concerning the

adeguacy of counsel's time records because,

despite passing reference to this issue in

- 18a -

a footnote of its supplemental memorandum

and order, the court did not rely on

inadequacy of time records in reaching its

decision. It is worth noting, however,

that the burden is on counsel in the

first instance to submit detailed contem-

poraneous time records. New York State

Association for Retarded Children, Inc. v.

Carey at 4582-84; Hensley v. Eckerhart, 103

S.Ct. at 1943 (Burger, C.J., concurring);

McCann v. Coughlin, 698 F.2d at 131.

The judgment of the district court is

afftirwed.

- 19a -

MEMORANDUM AND ORDER

OF DISTRICT COURT, Nov. 15, 1982

Itt ttt

CV 80-344

MEMORANDUM & ORDER

UNITED STATES DISTRICT COURT

EASTERN DISTRICT OF NEW YORK

MARY JONES, BEVERLY HARRIS, ERNEST

SIMMONS, MILDRED MALLOY, Individually

and on Behalf of All Others Similarly

Situated,

Plaintiffs,

- against -

AMALGAMATED WARBASSE HOUSES, INC.,

NEW YORK STATE DIVISION OF HOUSING

AND COMMUNITY RENEWAL,

Defendants.

ee eeeseceeeceseeseeeseseesseesasees

PLATT, D.J.

The parties to this would-be class

‘ action seek approval of an Order and

Judgment of Consent (settlement agreement)

submitted pursuant tc Fed. R. Civ. P.

- 20a -

23(e). No class members objected to the

proposed settlement at a hearing on October

15, 1982, and none submitted opposition in

writing. For this reason and those that

follow, the agreement will be approved.

I. Introduction

Plaintiffs allege that Amalgamated

Warbasse Houses, Inc. (Warbasse), a

limited-profit mutual housing company

located near the Coney Island section

of Brooklyn, and the New York State Divi-

sion of Housing and Community Renewal

(Division) systematically prevented Black

and Hispanic citizens from obtaining

apartments at the 2,585-unit Warbasse

complex, thereby violating the Thirteenth

and FPourteenth Amendments to the United

States Constitution, Title VIII of the

Civil Rights Act of 1968 (42 U.S.C. § 3601

et seg. (1977)), 42 U.S.C. §$§ 1981-1983

(1981), and the New York Human Rights Law

t }

tA.

- 2la -

(N.Y. Exec. Law § 296(2-a)(McKinney 1982).

This action was commenced on December

16, 1980. Shortly thereafter, both defen-

dants moved to dismiss, while the plain-

tiffs sought injunctive relief. However,

decision was reserved pending the outcome

of settlement talks initiated, or at least

encouraged, by Division Commissioner

Richard Berman, a co-defendant. Magistrate

A. Simon Chrein subsequently assisted

in the negotiations, and on August 9, 19862

the parties submitted the proposed settle-

ment agreement. This Court thereupon

ordered that notice of the settlement be

published in the minority press and mailed

to each of the approximately 1,570 apart-

ment applicants on the Warbasse waiting

list. Comments were to be submitted by

October 8, 1982. The hour-long hearing

took place a week later.

“\

- 22a -

Il. The Settlement Agreement

As an initial matter, plaintiffs are

to be certified pursuant to Red. R. Civ. P.

23(b) (2) as representatives of the class

of all Hispanic (Caribbean and Central

American) and Black persons who have sought

to may seek to live in the Warbasse com-

plex.” Order and Judgment of Consent,

| 2,7

Second, to compensate for past under-

representation of class members at War-

basse, defendants will establish a minority

list and fill 215 apartments from it.

Applications will be solicited through

notice in the general and minority media.

The list is to be divided by apartment size

into three groups: 121 one-bedroom units,

67 two-bedroom units, and 27 three-bedroom

units. According to preference, individ-

uals will be placed in one of these groups,

in the order in which their applications 4

- 23a -

are receivea./ Then they will be "“shuf-

fled" into the existing (outsiders') list

of non-Warbasse residents waiting for

units, in the following ratios: one

minority applicant to five outsiders for

one-bedroom units; two minority applicants

to seven outsiders for two-bedroom units;

and one minority applicant to three out-

siders for three-bedroom units. {| 6(c)

(ii), 11. In each case, the minority

applicant or applicants will be selected

before the individuals on the outsiders’

List=’ WF #11, 12. #=j%When the 215th unit

is filled, the minority list will cease to

exist.

Third, Warbasse residents will con-

tinue to receive priority in seeking

transfers to other units within the com-

plex. 14 9.

Pourth, the “children's” list is to be

closed, and those currently on it will

- 24a -

be "shuffled" into the outsiders’ list,

five outsiders to every chila.—” q 10.

Heretofore, the former has placed the sons

and daughters of Warbasse residents in a

preferred position.

Fifth, the outsiders’ list -- for

which income is the only admission cri-

terion -- will be maintained, although

applicant solicitation is to be extended to

the minority press. 4% 24. Class members

both on and off the minority list may apply

for admission to the outsiders’ list on

equal terms with all others. However, no

one will be permitted to remain on both

lists. 7 25. Moreover, each minority

group member beyond 100 on the outsiders’

list will reduce by one the total number

that Warbasse must accept from the minority

list. 4 25.

Pinally, defendants have agreed to pay

plaintiffs’ attorneys’ fees and costs

- 25a -

totaling $41,750. q 27. This will be

reduced to $26,000, a matter discussed

in Part IV.

III. Discussion

To win court approval, a class action

settlement generally “must be fair and

reasonable and in the best interests of all

those who will be affected by it." 7A C.

Wright & A. Miller, Federal Practice and

Ptocedure § 1797, at 229 (1972) [herein-

after cited as Wright & Miller]. See

Weinberger v. Kendrick, No. 81-7317, slip

op. at 3944-45 (2d Cir. July 14, 1982)

(Friendly, J.), aff'g 91 P.LR.D. 494 (S.D._

N.Y. 1981); Tornabene v. General Develop-

ment Corp., 88 P.R.D. 53, 61 (B.D.N.Y.

1980), aff'd mem., No. 80-9044 (2d Cir.

March 3, 1981), modified (July 31, 1961); .

est Virgi v. Char Pfizer ‘ee

s 314 P. Supp. y 710, 740 (S.D.N.Y. 1970),

aff'd, 440 P.2d 1079 (24 Cir.), cert. —

wees ts ee BF tae C3

ere

ree

> I. ‘

OTGF aa ; : nk et <A fee oo tae oe J

¥ : es ‘2, * — : ~ .

Tan en sues. AA ‘ cee ee AS > ae x we i iS +35 tnd De MRE ee os ‘ > v4

Hi 4 rays Be rte ey mate La og rab » he Fe aye hey I 4

om > eat sc es Said sam

oy. a

ortte Se

_ larly true in Pair Housing Act cases,

- 26a -

denied, 404 U.S. 871, 92 S.Ct. 81, 30

L.Ed.2d 115 (1971). While the settlement

proponents bear the burden of demonstrating

fairness, 7A Wright & Miller § 1797, at 229

"(vjoluntary out of court settlement of

disputes is ‘highly favored in the law,'"

Wellman v. Dickinson, 497 F. Supp. 824,

v. Loflin, 440 P.2d 1213, 1215 (5th Cir.),

cert. denied, 404 U.S. 851, 92 S.Ct. 87, 30

L.Ed.2d 90 (1971)), aff'd, 682 F.2d 355 (2d

Cir. 1982); Ne v. Stein, 464 F.2a 689

(24 Cir.), cert. denied, 409 U.S. 1039, 93

S.Ct. 521, 34 L.Ed.2a 488 (1972); see

supra, and “approval of class action

settlements will be generally left to the

sound discretion of the trial judge.”

Wellman v. Dickinson, 497 F. Supp. 824 at

830 (citations omitted). This is particu- —

- bi ov tm A roe TeV vie

* Sn Bele ee ~ | = i igs ha ae hy, .

1 > =e 2 Wea al ‘ ses ey es 1? Se

7 ra rains, re Ag paee Tht ~

. princi ; a

: ; “ae as _ —_ her .

¢ =

4 nike

a 2

‘

- - {

- 27/a =

the alternative to voluntary agreement -- a

court-ordered injunction -- may inhibit

cooperation and voluntary compliance.

Williamsburg Pair Housing Committee v. New

York City Housing Authority, 450 F. Supp.

602, 606 (S.L.N.Y. 1978). See Alexander v.

Gardner-Denver Co., 415 U.S. 36, 44, 94

S.Ct. 1011, 1017-18, 39 L.Ed.2d 147 (1974)

(Title VII). Moreover, a proposed settle-

ment “carries ... its own presumption of

regularity and is subject to approval by

the trial court after hearing proferred

‘ objections." Metropolitan Housing Develop-

ment Corp. v. Village of Arlington Heights,

616 F.2d 1006, 1013 (7th Cir. 1980) (consent

decree in discriminatory zoning case).

Thus, the court will not substitute

Re: its judgment for that of counsel who, after

the type of arm's-length bargaining that a

took place in this case, “have made @ F

determination that the settlement repre-

- 28a -

sents a fair and real appraisal of their

clients’ chances of ultimate success."

Siegel v. Realty Equities Corp. of New York

{1973 Transfer Binder] Fed. Sec. L. Rep.

(CCH) @ 94,102, at 94,446 (S.D.N.Y. 1973).

See Weinberger v. Kendrick, supra, slip op.

at 3946 (examination by court of settle-

ment's substantive terms necessarily must

be limited). |

Nevertheless, when reviewing a class

action settlement the District Court also

is "“‘a fiduciary who must serve as a

guardian of the rights of the absent class

members.'" City of Detroit v. Grinnell

Corp., 560 F.2d 1093 (2d Cir. 1977)(quoting

Gruinin v. International House of Pancakes,

513 P.2d 114, 123 (8th Cir. 1975), cert.

Genied, 423 U.S. 864, 96 &.Ct. 124, 46

L.8€.24 93 (1975)). In fulfilling its

role, the court looks to the following

factors: (1) the presence of collusion in

- 29a -

reaching the settlement; (2) counsel's

experience in handling similar cases; (3)

the extent of discovery and its impact on

counsel's ability to make an informed

decision as to the merits of the case and

the fairness of the settlement; and (4) the

objections of class members. George v.

Parry, 77 F.R..D. 421 (S.D.N.Y¥.) (civil

rights action), aff'd mem., 578 F.2d 1367

(2a Cir.), cert. denied, 439 U.S. 947, 99

S.Ct. 340, 58 L.Fd.2d 338 (1978); Bacote v.

Long Island Savings Bank, No. 78 Civ. 1285,

at 1 (E.D.N.Y. Sept. 1, 1982); Connolly v.

New York City Transit Authority, No. 74

Civ. 1085, at 4 (EB.D.N.¥ Jan. 26, 1982);

ornabene v v oe

Supra; Duban v. Diversified Mortgage

Investors, 87 F.R.D.. 33, 38-41 (8.D.N.Y.

1980); Munsey Trust v. Sycor, Inc., 457 P.

Supp. 924, 926 (S.D.N.¥, 1978); Peder y.

Harrington, 58 F.R.D, 171 (8.0.N.¥. 1972).

- 30a -

These factors need not be exhaustively

analyzed in this case, for it is amply

clear that the settlement survives scrutiny.

First of all, not one grain of evi-

dence suggests that opposing counsel col-

luded in drawing up the 19-page settlement

agreement. In the absence of such evidence

-- at least where the proposed agreement on

its fact suggests that a bona fide com-

promise has been crafted -- the settlement

is presumed to be regular. Metropolitan

Housing Development Corp. v. Village of

Arlington Heights, 616 F.2d at 1013-15.

Here, many signs of compromise exist. Not

only Gid the named plaintiffs initially

seek damages in addition to injunctive

relief, but the relief requested for

the entire, open-ended class could have

been equally open-ended (at least in

Guration), and it could have involved far

more than 215 units (6 percent of the

- 3la-

total) at Warbasse. Moreover, class

members will not be given full priority

over others on the outsiders’ list.

Rather, as described above, they will be

"shuffled" into the pack, in adjustable

ratios now ranging from one:three to

one:five. Current residents, virtually all

of whom could never become members of the

minority class, will continue to receive

full priority with regard to internal

transfers.

At the same time, plaintiffs have

obtained significant relief -- the virtual

guarantee that nearly a tenth of the units

at the Warbasse complex will be occupied by

members of minority groups. Merely by way

of observation, we note..that these 215

minority units may provide the "“critital

mass" needed to create and maintain a more

heterogenous community at Warbasse.

Second, we find that counsel have had

- 32a -

sufticient experience in class action

litigation to arrive at a fair and reason-

able compromise. The lead attorney for the

class was ably assisted by lawyers from the

Fair Housing Clinic at Columbia University

and the Open Housing Center. On the other

side, attorneys representing Warbasse

received assistance from the New York State

Division of Housing and Community Renewal.

That a government agency participated in

successful compromise negotiations and

endorsed their results is a factor weigh-

ing heavily in favor of settlement approval

-- at least where, as here, the agency is

"committed to the protection of the public

interest.” Wellman v. Dickinson, 497 F.

Supp. 824 at 830 (SEC participation).

Third, it is clear from the affidavits

accompanying the several motions that the

attorneys have made an informed decision as

to the merits and the fairness of the

- 33a -

compromise. Although little formal dis-

covery has occurred, the parties freely

exchanged data during settlement talks.-/

In view of the way this speeds the negotia-

tion process, informal “discovery” is to be

encouraged. Settlement is particularly

appropriate where these preliminary in-

guiries indicate that the litigation will

be long and complex, and the outcome far

from certain. Beecher v. Able, 72 F.R.D.

518, 520 (S.D.N.Y¥. 1976)(Motley, J.),

mod., 441 F. Supp. 426 (S.D.N.¥. 1977),

aft'd, 575 F.2d 1010 (2d Cir. 1978); West

Virginia v. Charles Pfizer & Co., Inc.,

Supra.

The final and “crucial” factor in

evaluating the fairness of the settlement

agreement is whether the interests of the

class members have been taken into account.

7A Wright & Miller q¢ 1797, at 182 (Supp.

1982). To ascertain this, the court should

- 34a -

consider how knowledgeable plaintiffs'

attorneys were, and whether opponents

presented persuasive argument sagainst the

settlement. We concluded above that

plaintiffs’ attorneys are well-informed.

Moreover, not a single class member submit-

ted a written statement prior to or ap-

peared at the hearing on October 15, 1982.

This leads to only one, obvious concusion:

that the class supports the settlement.

Although one oral and five written

objections were submitted by non-class

10/

members, the ocurt has serious doubts

as to whether it must consider these

comments, see Kusner v. First Pennsylvania

Corp., 74 F.R.D. 606, 611 (E.D. Pa. 1977)

(settling aqefendant's shareholder not

permitted to intervene and object), aff'd

mem., 577 F.2d 726 (3d Cir. 1978), particu-

larly where, as where, State law grants

Warbasse the power to sue and be sued, N.Y.

P. wna

vo a

- 35a -

Priv. Hous. Fin. Law § 17(1)(3) (McKinney

1976). These individuals may continue to

pursue whatever rights they may have to

force Warbasse to redress allegedly im-

proper actions taken in settling this

lawsuit. Moreover, even assuming that the

objections must be considered, we find that

they do not alter the outcome. First of

all, the six opponents comprise only a tiny

fraction (0.38 percent, to be precise) of

those currently on the outsiders’ list, and

surely a tinier one when compared to the

numer of persons presently in the certified

class. Second, most of these comments make

one point: that each individual earned his

place on the waiting list and that settle-

ment approval will interfere impermissibly

with this “entitlement.” The short, and

sole, answer is that no such entitlement

exists. Outsiders are not being forced to

_ i ae a

te eee Ces 5

Oo ks LS bE tae. OS”

- 36a -

forfeit their status as members of the

list; rather, they merely may have to wait

somewhat longer for an apartment. This

potential delay is not legally significant

and therefore does not provide a basis for

disapproving the settlement. See, e.g-,

Franks v. Bowman Transportation Co., 424

U.S. 747, 775-78, 96 S.Ct. 1251, 1269-71,

47 L.Ed.2d 444 (1976) (union seniority

system). Put another way, although

opponents complain that the glass is now

half empty, it is really half full: The

settlement might have eliminated the

outsiders’ list entirely, and in the

process return each person on it to parity

with all new applicants.

IV. Attorneys’ Fees

Plaintiffs‘ attorneys have requested

attorneys’ fees of $41,350 and costs of

$400, or a total of $41,750 for their

- 37a -

services in this matter. Lead counsel,

Richard S. Belman, Esq. in an affidavit

sworn to October 18, 1982, has stated that

he spent 241 hours, that Lawrence Grosberg,

Esq., Of the Pair Housing Clinic at Columbia

University, spent 60 hours and that Karen

Freeman, Esq., of the Open Housing Center,

spent 20 hours working on this case. He

sets the value of their services at ap-

proximately $129 per hour. By his own

admission, however, Mr. Belman states that

"A substantial portion of my work related

to [the] negotiations” which led ultimately

to the proposed consent now before this

Court. Mr. Belman does state that the

fees themselves were the subject of nego-

tiations between the parties and that they

were ultimately agreed to by counsel for

the defendants herein. In this case, if

the defendants were private parties

dealing with private funds this Court might

~~ or we

- 38a -

be tempted to assume “reasonableness” and

to accept the results of these negotiations

in the absence of any indication of collu-

sion. However, here both defendants, for

the most part at least, are dealing with

taxpayers’ funds. Under these circum-

stances, this Court feels constrained to

scrutinize the attorneys’ request with more

care.

As an initial matter, once a court has

determined that attorneys’ fees are to be

awarded, the amount of the award is within

the discretion of the court. Grunin v.

International House of Pancakes, 513 F.2d

114 (8th Cir.), cert. denied, 423 U.S. 844,

96 S.Ct. 124, 46 L.Ed.2d 93 (1975); 3B J.

Moore & J. Kennedy, Moore’s Pederal Prac-

This discretion, however, is not un-

bounded. Factors that a trial judge should

consider in computing a fee award include’

the following:

(1)

(2)

(3)

(4)

(5)

(6)

(7)

(8)

(9)

(10)

(11)

~ 39a -

The time and labor required.

The novelty and difficulty of

the questions.

The skill requisite to perform

the legal service properly.

The preclusion of other em-

ployment by the attorney due to

acceptance of the case.

The customary fee.

Whether the fee is fixed or con-

tingent.

Time limitations imposed by the

client or the circumstances.

The amount involved and the

results obtained.

The experience, ik aaied and

ability of the attorneys.

The “undesirability" of the case.

The nature and length of the pro-

fessional relationship with the

client. . rs Se,

Awards in similar cases. .

- 40a -

N.Y. 1979). After taking into account each

of these factors, we are convinced that a

fee reduction is in order. It should be

stressed that

= ”

{e]ven where there has been no objec-

tion to the size of the attorney's fee

requested, it is the responsibility of

the court to see to it that the size

of the award is reasonable.

3B J. Moore & J. Kennedy, Moore's Federal

Practice 4 23.91, at 23-568 (2d ed. 1982).

See 42 U.S.C. § 1988 (1981) (court may

award “reasonable” attorney's fee to

prevailing party in civil rights action).

This court is particularly concerned

that the requested fees seem out of line

with other matters which it has been

called upon to review. Por example, in

Selzer v. Fleisher, 629 F.2d 809 (2a Cir.

1980), xev'e Selzer v. Berkowitz, 477 F.

Supp. 686 (E.D.N.¥. 1979), cert. denied,

451 0.8. 970 (1981), also a civil rights

case, the plaintiff was represented by the 7

F ot >

ae ia 3 #4, aay ae

> on = al a YS ta A

¢ ;

. Bt

e nahay ¥

- 4la -

firm of Donovan Leisure Newton & Irvine,

30 Rockefeller Plaza, New York, and Walter

L. Stratton, Esq., one of the senior trial

partners in that firm (also a very experi-

enced trial lawyer) who tried the case,

valued his and his partners’ time at $125

per hour and the time of his associates

and others at substantially less per

hour.-/ By way of contrast to the case at

bar, both sides in that case took extensive

depositions, conducted protracted and

complicated pretrial discovery and briefed

and argued numerous complex legal went

before, during and after the eight-week

jury trial, which resulted in a substantial

verdict for the plaintiff. When this Court

in that case approved the indicated attor-

neys’ fees of $125 per hour and less, the.

Court of Appeals for this Circuit implied

that these fees were excessive in the

following Lcnmbase:

~- 42a -

Appellants challenge as excessive

the trial court's award of attorneys

fees in the amount of $433,458.78. In

the event that the trial court

is again called upon to fix attorneys

fees, we are confident it will

note, as this Court has recently

suggested in Seigal v. Merrick,

619 P.2d 160, 164, Nos. 79-7420,

79-7444 (2d Cir. 1980), that any

award must be proportionate to the

result achieved.

629 F.2d at 814 (footnote omitted). See

also Tornabene v. General Development

Corporation, supra (court reduced fees and

costs to 36 percent of figure agreed to by

Gefendants). The work involved in this

case does not begin to measure up to the

complexity and difficulty of the work in

that case. Moreover, the results achieved §

| in that case were on a comparative basis |

substantially greater than the results

achieved here. Under these circumstances,

a. a

: this Court feels it is compelled to reduce es

a the hourly rate rquested by the plaintiffs KX

bs from approximately $129 per hour to ap- ie.

proximately $75 per hour, yielding the.

a a hte

: . ;

; ¥ - , -

an ” pe .

S + & 2 re

- 43a -

plaintiffs’ attorneys a gross fee of

$24,000 plus $400 in costs. In order to

make an allowance for any additional work

that may be necessary in connection with

the implementation of the order herein, the

Court will round the gross fee to $25,600

plus $400 in costs, or a total of $26,000.

Based upon the proportion heretofore

adopted between the defendants, the amount

of the $26,000 allocable to the defendant

Warbasse will be $15,880 and the amount

allocable thereof to the Division will be

$10,120.

SO ORDERED.

UNITED STATES DISTRICT JUDGE

" :

~ 44a -

As a Mitchell-Lama project (see N.Y.

Priv. Hous. Fin. Law § 10 et seq.

(McKinney 1976)), Warbasse is super-

vised by the New York State Division

of Housing and Community Renewal (the

Division).

According to data developed by the

Division, 99 percent of the residents

of Warbasse were White and 1 percent

were members of minority groups as of

July 10, 1980. Affidavit of Edmund

Davis, exhibit 1.

Hereinafter, references to the pro-

posed settlement will be by paragraph

number only.

The four named plaintiffs have 30 days

from the entry of the Order and

Judgment on Consent to request place-

ment at the top of the minority list.

4 6(f£). Wo objections to this provi-

sion have been filed, and even if they

had been, disapproval would not be

warranted since the advantage is not

excessive. Luevano v » 93

P.R.D. 68, 8 D.D.C. ;

v. Long I Vv S k, gas +

Vv. . at -D.N.Y. Sept. 1,

1982). Moreover, minorities presently

on the outsiders’ list may request

placement on the minority list in

their existing order, although in back

of the named plaintiffs who exercise

their option. 4 6(f).

“

- 45a -

The settlement provides for subsequent

adjustment of these ratios to ensure

that all the units in each category

are filled at approximately the same

time. 4 23.

Subject to Division approval, the

agreement permits Warbasse to place up

to 100 additional names on “reserve

status." 4% 6(c)(iv), 7. Conversely,

if too few minority group members

apply for housing, the agreement

obligates Warbasse to solicit appli-

cants on up to three additional

occasions. 148.

Until now, one name has been taken

from the children's list for every

five names taken from the outsiders’

list. Thus, those presently on the

children's list will lose nothing

vis-a-vis outsiders.

See supra note 2,

Plaintiffs’ interrogatories to War-

basse and to the Division went un-

answered, Neither side took deposi-

tions. However, plaintiffs apparently

sought to demonstrate po pear aphepe tf

impact, an approach that might wel

find most useful the type of data

amply provided by way of affidavit and

appendix thereto.

Pive currently are on the outsiders’

or the children's list, while the

sixth wrote on behalf of a parent on

ea a = |

\ 2 >

- 46a -

continued

the outsiders’ list. We emphasize

that everyone on an existing waiting

list received mailed notification of

the proposed settlement, comment

deadline, and hearing date.

In that case, plaintiffs’ counsel

spent 5,481.25 hours of attorney time

plus 2,118.25 hours of para~attorney

(i.@., summer associates, student

interns, and paralegals) time. As we

pointed out in our opinion, the

average legal and para-legal time

charge there was $60.00 an hour. 477

FPF. Supp. at 690-91 & n.3.

- 47a -

SUPPLEMENTAL MEMORANDUM AND ORDER

OF DISTRICT COURT, Feb. 18, 1983

CV 80-3444

SUPPLEMENTAL MEMORANDUM & ORDER

UNITED STATES DISTRICT COURT

EASTERN DISTRICT OF NEW YORK

MARY JONES, BEVERLY HARRIS, ERNEST

SIMMONS, MILDRED MALLOY, Individually

and on Behalf of All Others Similarly

Situated,

Plaintiffs,

- against -

AMALGAMATED WARBASSE HOUSES, INC.,

NEW YORK STATE DIVISION OF HOUSING

AND COMMUNITY RENEWAL,

Defendants. :

SS SSS SSSSSSSSESSSSSTSES SSS SBS SSSSsSS

_~—s PLATT, D.J. ‘

At issue is the fee award ordered in

the settlement of a housing discrimination .

class action. Defendants Amalgamated :

Warbassée Houses, Inc. (Warbasse) and the 4

* *

wk»

. *

- 48a -

New York State Division of Housing and

Community Renewal (Division), in settling

the case, agreed to a total of $41,350 in

fees. In a Memorandum & Order dated

November 15, 1982 (the November 15 Order),

the Court approved all aspects of the

settlement except for the fee agreement.

On that score, we reduced the total figure

to $25,600, which -- after including $400

in costs not affected by the reduction --

was allocated as follows: $15,880 to be

paid by Warbasse and $10,120 by the Divi-

sion. Looked at another way, the fee as

reduced will provide compensation at the

rate of $75 an hour (not including $1,600

for additional work to be performed); the

pre-reduction rate was approximately $129

an hour.

Pursuant to Fed. R. Civ. P. 59(e),

plaintiffs’ attorneys seek to amend the

November 15 Order by restoring the award to >

- 49a -

its negotiated level. The fee reduction is

attacked on numerous grounds. The more

significant among these are that (1) in

recent settlements of a like nature, courts

have authorized awards equal to or exceed-

ing the negotiated amount; (2) significant

time was devoted to drafting pleadings,

pre-trial motion practice, and discovery

-~ in short, to matters some would argue

are more complex than settlement negotia-

tions; (3) settlement of this particular

Class action was as difficult as more

highly remunerated settlements because it

involved intricate and novel issues; (4)

‘ all three attorneys, and especially lead

‘ counsel Richard F. Bellman, possess great

: expertise and experience in fair housing

3 and class action litigation; and (5)

contrary to this Court's asserted conclu-

sion, the portion of the award paid by

Warbasse will not directly or indirectly

7 role i> a

- 50a -

affect State taxpapers.

After considering these points, the

subsidiary matters, we conclude that the

fee reduction was appropriate and hence

decline to amend the November 15 Order.

It is important initially to note

that, while Courts have only limited

discretion to deny fees to settling plain-

tiffs, their discretion in determining the

amount of the award is quite broad. Grunin

v. International House of Pancakes, 513

F.2d 114 (8th Cir.), cert. denied, 423 U.S.

844, 96 S.Ct. 124, 46 L.Bd.2€ 93 (1975).

We certainly are not bound by the nego-

tiated settlement, Levin v. Mississippi

River Corp., 377 F. Supp. 926, 931 (8.D.

N.Y. 1974), and to the extent our discre-

tion is limited, it is limited by the

obligation to ensure that the fee award is

reasonable -- indeed moderate. Selzer

v.|Pleisher, 629 F.2d 809, 814 (24 Cir.

- 5la-

1980); City of Detroit v. Grinnell Corp.,

495 P.2d 448, 470 (2d Cir. 1947). 42

U.S.C. § 1988 (1981).

Considering the objections in order,

it is not true, in the first place, that in

all recent settlements of civil rights

cases courts have awarded fees at a higher

rate. While some have, e.g., Bradford v.

Blum, 507 F. Supp. 526 (S.D.N.¥ 1981)($125

an hour for experienced private counsel),

others have not, e.g., Cleary v. Blum, 507

PF. Supp. 514 (S.D.N.¥. 1981)($75 an hour

for experienced private counsel). As the

Second Circuit recently had occasion to

point out, a fee award need not be set at

"the rate which a lawyer charges his other

clients." McCann v. Coughlin, Nos. 82-

2213, 82-2220, slip op. at 1153 (24a

Cir. Jan. 6, 1983). The award here is well

within the range of reasonableness.

This is particularly true given the fact

- 52a -

that lead counsel Bellman, who has prac-

ticed law for about 20 years, with 15

years' experience in civil rights litiga-

tion, billed only 241 of the 321 hours

plaintiffs’ counsel had logged by the

time the settlement agreement was com-

pleted. The remainder was billed by less

experienced counsel, Lawrence M. Grosberg

(13 years of practice, eight in the civil

rights area), and Karen Freeman (about |

eight years of practice, six in civil

rights). The $25,600 award represents a

$75-an-hour rate of compensation. This is

a fair average, considering both the facts

: that lead counsel billed only three-

quarters of the total number of hours a

logged, and that the $75 across-the-board

# figure includes all work, from the most

F routine to the most challenging. In a

SR addition, the fee here is in line with the 4

e¢ Py : oy

~~ $60 an hour fee award granted by this Court

Ma ;

: ; ~ Pea

ar ) » a

J C28, } cr : to AOS

4 +s “a 4 i y - rs ew

* ero , » _? 7 . re a ¥ he SN

: an * 2-4 + a ey we. bs 4 ek .

tir,

~- 53a -

in Selzer v. Berkowitz, 477 F. Supp. 686,

690-91 (E.D.N.Y. 1979), and discussed in

the November 15 order.~ Moreover, we

note that two analogous attorney fee

statutes, although not controlling here,

support the conclusion that a $75-an-hour

average is adequate, to say the least. The

first, the Equal Access to Justice Act,

Pub. L. 96-481, Tit. II, § 203 (to be

codified at 28 U.S.C. § 504) and § 204 (to

be codified at 28 U.S.C. § 2412), imposes

a fee ceiling of $75 an hour against

federal defendants, absent a showing of

special dh veuniedante The second, the

Criminal Justice Act, 18 U.S.C. § 3006A

(1962), limits compensation to $30 an

hour for in-court time, and $20 an hour for

reasonable out-of-court time, for attorneys

appointee to the constitutionally vital

Sathana Sper pee is

ee: P

’

a \

eer

A eh) ee He ht a

~ 54a -

son's liberty usually is at stake. 18

U.S.C. § 3006A(4) (1).

Plaintiffs also assert that the awara

was established without first designating

a “lodestar” figure -- the fee that attor-

neys of similar experience would receive

for like work -- and then adjusting the

total to take into account such factors as

the risk and complexity of the litigation.

See Cohen v. West Haven Board of Police

Commissioners, 638 F.2d 496, 505 (2d Cir.

1980). However, the November 15 Order show

the result of applying the two-step

4/ 7

Cohen analysis; and although counsel

has now supplied the Court with additional

detail, it does not change the result. Te

be. tenn pepenerete total -- ‘taking

~- 55a -

Bellman, who spent 241 hours on this case,

is to be compensated at the rate of $77 an

hour, for a sub-total (see infra) of

$18,557; Mr. Grosberg, who spent 60.5

hours, at $70 an hour, for a total of ;

$4,235; and Ms. Freeman, who spent 20.5

hours, at $60 an hour, for a total of :

$1,230. Adding the total for each attorney :

in turn yields $24,022 which, rounded to ;

$24,000 is $1,600 less than the $25,600

award. Counsel has advised the Court

that further work will be necessary to

0 implement the order. The additional

: $1,600 will be allocated to Mr. Bellman as _ “

payment for this work. At his $77 rate, a

q this provides for 20.8 extra bourse” a

After considering adjustment of each

"lodestar," we conclude that they should

_ Femain as they are in view of (1) the

B comparat ively small risk: shea

<r er ca

a “~ foray

uty,

5 ie

~- 56a -

uncomplicated nature of the litigation; and

(3) the fact that the settlement represents

a compromise -- plaintiffs did not “win.”

See Selzer v. Fleisher, 629 F.2d at 814

("any award must be proportionate to

the result achieved").

Plaintiffs‘ second essential objection

-- that, contrary to the asserted implica-

tion of the November 15 Order, significant

time was devoted to matters putatively more

complex than settlement negotiations -- is

Z an extension of the first. Mr. Bellman has

submitted an affidavit stating that only

114 of his 241 hours were devoted to the

settlement process. The remainder was spent

in initial work with the plaintiffs (pre-

paring, filing, and amending the complaint)

430.5 hours); pretrial interrogatories

(19.67 hours); motion for preliminary ze

injunction (43,32 hours); and. opposing had

’

motions to dismiss (33.75, copie cera

“3 4

are, : a

. i - A *

- 57a -

we did not mean to (and believe we did not)

imply that negotiation is less difficult

than other preliminary litigation matters.

Rather, in addition to counsel's experi-

ence, the key factor in determining

the rate of compensation was that this

lawsuit was settled before it became

necessary to take extensive depositions,

brief numerous legal points, or prepare for

the -- most importantly -- conduct a

protracted jury.trial. Compare Selzer v.

Berkowitz, supra. |

Plaintiffs’ third and fourth objec-

tions are, we believe, adequately answered

by the above discussion. The abstract

complexity of the issue is less ‘important

than the type of work performed, and the

reeeit achieved. These ‘tasters bare,

- Pe

- 58a -

sation accurately reflects those qualifica-

tions.

Pinally, plaintiffs argue that War-

basse's share of the settlement does not

involve taxpayers’ funis, and that, even if

it did, the Court would not be justified in

taking that ‘factor into account (as it is

alleged to have done) in setting attorneys’

' fees. While we question the assertion that

the Warbasse portion has no impact on

taxpayers’ funds (and note that the Divi-

sion's portion certainly does), the matter

need not be decided for we merely stated in

the November 15 Order that the involvement

of public money merely prompted the Court

"to scrutinize the ekbornens" aequsht with

more care." However, the request was

reduced not because of the public fends

involved but because of the weap ss

cnc in mre rath anes a ie

Bo lige y Fi

, «4

é ee f

oe %

i we

‘fog rs o

ae eo i 8S oils

- 59a -

In summary, plaintiffs have not

convinced this Court that its initial

determination was wrong. Therefore,

the motion to amend the November 15

Order will be denied.

SO ORDERED:

=. ”

ae ae.

- 60a -

As we pointed out on p. 14 of that

Order, Walter L. Stratton, lead

counsel in that case, valued his time

at $125 an hour. However, Mr. Strat-

ton then had about 27 years of liti-

gation experience, far more than

any of plaintiffs’ counsel here.

In addition, the cost of overhead at

his law firm, Donovan Leisure Newton &

Irvine, most likely was considerably

greater than the total cost to

all three attorneys in this case.

Moreover, on appeal the Second Circuit

suggested that the award was exces-

sive. Selzer v. fpsisher 629 F.2d

609, 614 Cir. + cert. denied,

451 U.S. 970 (1981).

These include cost-of-living in-

creases, and the limited availability

of qualified attorneys.

In addition, the Act sets maximum

fees, e » $1,000 per attorney for

felony trials.

November 15, 1982 Memorandum &

r at 14-15 & n.1}.

It should be kept in mind that we have

made a rather generous estimate of

additional time which Mr. Bellman ~~

be required to work on this matter, to

wit: some 20 additional hours at $77

per hour. If little or no such

additional work is required, Mr.

Bellman's hourly Soe 38 matter

will average about an pr nh

nx ion

- 6la -

Mr. Grosberg's affidavit reveals that

he spent the bulk of his time involved

in initial legal research, client

interviews, discovery and factual

investigation. Ms. Freeman divided

her time roughly between court appear-

ances, meetings and settlement discus-

sions, according to her affidavit. We

also note the possibility that some

duplication of effort may occur when

more than one attorney works on a

case. To show that this did not

happen, the three plaintiffs’ counsel

could have submitted more detailed

time records. They did not, and the

burden squarely rested on their

shoulders to have done so. BeCann

Coughlin, Nos. 82-2213, 82-2220, slip

-; E at 1154-55 (2d Cir. Jan. 6,

1983).

7, _—_—. »

, we

- 62a -

Magistrate's Report, August 12, 1982

UNITED STATES GOVERNMENT

MEMORANODOUMS

August 12, 1982

A. Simon Chrein

United States Magistrate

Jones v. Amalgamated Warbasse Houses

Civil Action No. CV 80 344

Honorable Thomas C. Platt

United States District Judge

After several meetings with the

parties, agreement has been reached dispos-

ing of this litigation. I enclose, with my

recommendation that the Court grant its

re? a stipulation of settlement in

this case.

‘

This is a copy of a public record, reproduced as it was published. It is not legal advice, and it may not be the version a court would rely on. Check the official source before you cite it.