Petition for Writ of Certiorari — Philadelphia Electric Co. v. Black Grievance Committee

Supreme Court brief1987

Ask Donna

What actually matters in this document.

Text

pease -~

86 «9 05 VY) Supreme Court, U.S,

—— F I a E D,

No. !

Pak. ' DEC 2 1986

| JOSEPH F. SPANIOL, JR.

IN THE ~ CLERK

SUPREME COURT OF THE UNITED STATES

October Term, 1986

PHILADELPHIA ELECTRIC COMPANY,

Petitioner

Vv.

BLACK GRIEVANCE COMMITTEE, ULYSSES MILES,

ALFRED MURRAY, HENRI P. FREELAND, ROBERT PAR-

RISH, JOANNE BOND, GEORGE WRIGHT, WILLIAM

HAND, CALVIN BROWN, on behalf of themselves and all

others similarly situated, WILLIE ROBINSON, WILLIE

BLACKSHEAR, ALFRED L. TRAPPANESE, SR., ANDREW

GAVIN and PHILIP CARANCI, Intervenor-Plaintiffs.

| Respondents

PETITION FOR A WRIT OF CERTIORARI

TO THE UNITED STATES COURT OF

APPEALS FOR THE THIRD CIRCUIT

Robert W. Maris

John F. Smith, Il

Hope A. Comisky

DILWORTH PAXSON KALISH &

KAUFFMAN

2600 The Fidelity Building

Philadelphia, Pennsylvania 19109-1094

215/875-7000

Attorneys for Petitioner

PACKARD PRESS | LEGAL DIVISION, 10th & SPRING GARDEN STREETS, PHILA., PA. 19123 (215) 236-2000

QUESTIONS PRESENTED

After a settlement of this company-wide, across-the-

board Title VII and §1981 class action by all of the

Company’s black employees, the district court awarded

attorneys’ fees, determining a “lodestar” which it then

enhanced by a 50% increase for “contingency” and de-

creased by only 25%, although it found plaintiffs’ suc-

cess was 75% less than its claim. The court of appeals,

although vacating the district court’s over-all fee order

because of other issues not presented here, expressly af-

firmed and precluded the district court from reconsider-

ing its contingency enhancer and its failure to match the

lack-of-success reducer to the full percentage of lack of

success. Therefore, the questions presented here are:

1. Can a “contingency” enhancer to a lodestar

lawfully be basea on a record which contains only

rhetorical assertions of difficulty unsupported by any

evidence?

2. Can a “contingency” enhancer to a lodestar

lawfully be awarded in a case which is in no way

exceptional?

3. When a district court finds as a fact that

plaintiffs have prevailed over all on only 25% of their

claim, can the court then lawfully add an additional

50%, rendering its multiplier under Hensley v.

Eckerhart a full 75% of the lodestar?

Questions Pronpebed 2 oo oi5ck sca i

Pe gk | RE i ene on ep iii

Opies GW ch eS 1

SOIR. cs sis s Sci cs eee eee para 2

Relevant Statutory Provisions ................... 2

Statement OF ti Cae ca ee 3

Reasons for Granting the Writ............... rene:

I. The Decision Below Affirming a Contingency

Enhancer Conflicts with this Court’s Decision

in Blum v. Goomei.. . ow. oe. 5

II. The Court of Appeals Applied the Third Circuit

Standard for a Contingency Enhancer which

is Presently Pending on Certiorari for Review

by this Court in Pennsylvania v. Delaware Val-

ley Citizens Council for Clean Air........... 7

Ill. The Decision Below Confiicts With the Con-

gressional Allowance of Attorneys’ Fees Only

to “Prevailing Parties” as Construed by This

Court in Hensley v. Eckerhart.............. 7

Comchamion iba cas cu uh pe eee 10

Certificate of Service .......2.<4.si9 te ee 1]

yi 0) Se MP A-1

TABLE OF CITATIONS

Cases: Page

Blum v. Stenson, 464 U.S. 886............. 5.6, 7,3

Griggs v. Duke Power Co., 401 U.S. 424 (1971)... 6

Hensley v. Eckerhart, 461 U.S. 424......... 3, 4, 8,9

Pennsylvania v. Delaware Valley Citizens Council

for Clean Air, October Term 1985, No. 85-5 .. 4, 7

United States v. Detroit Edison Co., 365 F. Supp. 87

oe Es: a a eae ara are 6

United States v. Georgia Power Co., 474 F.2d 916

ri ta hww sd ees ch 4 a Oe ena 6

United States v. Philadelphia Electric Company,

Docket No. 72-1483 (E.D. Pa.) ...........\.. 6

United States v. Virginia Electric & Power Co., 372

P. eam. 1064(E.D. Va. 1971) ........-.5.5. 6

Statutes:

Se ear rer Tere eee ere 2

Section 1988 of Title 42, U.S. Code.............. 2

42 U.S.C. §1981 and 42 U.S.C. §2000e-5(e)(3)... 3

en sg a4 kk sae Mawes ene 8

Other Authorities:

Anderson, Negro Employment in Public Utilities

gO So | rare e aa 6

IN THE

SUPREME COURT OF THE UNITED STATES

October Term, 1986

PHILADELPHIA ELECTRIC COMPANY,

Petitioner

v.-

BLACK GRIEVANCE COMMITTEE, ULYSSES MILES,

ALFRED MURRAY, HENRI P. FREELAND, ROBERT PAR-

RISH, JOANNE BOND, GEORGE WRIGHT, WILLIAM

HAND, CALVIN BROWN, on behalf of themselves and all

others similarly situated, WILLIE ROBINSON, WILLIE

BLACKSHEAR, ALFRED L. TRAPPANESE, SR., ANDREW

GAVIN and PHILIP CARANCI, Intervenor-Plaintiffs.

Respondents

PETITION FOR A WRIT OF CERTIORARI

TO THE UNITED STATES COURT OF

APPEALS FOR THE THIRD CIRCUIT

Petitioner Philadelphia Electric Company respect-

fully prays that a Writ of Certiorari issue to review the

judgment of the United States Court of Appeals for the

Third Circuit entered in this matter on September 22,

1986.

OPINIONS BELOW

The August 13, 1985, Memorandum Opinion and

Order of the United States District Court for the Eastern

District of Pennsylvania, Honorable James, T. Giles,

]

awarding certain attorneys’ fees and costs to the prevail-

ing class below is not reported and appears in the Ap- _

pendix at A-1-A-24. The September 22, 1986, Opinion

and Judgment of the United States Court of Appeals for

the Third Circuit vacating Judge Giles’s Order, but ex-

pressly affirming the two legal rulings of Judge Giles

which the Philadelphia Electric Company seeks to have

this Court review, are not yet officially reported and ap-

pear in the Appendix at A-24-A-44. The decision of the

Court of Appeals is informally reported at 41 CCH Em-

ployment Practices Decisions 936, 504.

JURISDICTION

The judgment of the Court of Appeals was entered

on September 22, 1986, and this petition was filed within

90 days of that date. The statutory provision which con-

fers jurisdiction on this Court to review the judgment of

the Court of Appeals by Writ of Certiorari is 28 U.S.C.

§1254(1).

RELEVANT STATUTORY PROVISIONS

Section 2000e-5(k), of Title 42, U. S. Code, reads as

follows:

“In any action or proceeding under this

subchapter the court, in its discretion, may ailow the

prevailing party, other than the Commission or the

United States, a reasonable attorney’s fee as part of

the costs, and the Commission and the United States

shall be liable for costs the same as a private person.”

Section 1988 of Title 42, U. S. Code, reads in rele-

vant part as follows:

“In any action or proceeding to enforce a provi-

sion of sections 1981, 1982, 1983, 1985 and 1986 of

this title . . . the court, in its discretion, may allow the

prevailing party, other than the United States, a rea-

sonable attorney's fee as part of the costs.”

STATEMENT OF THE CASE

This case presents important issues under the fed-

eral fee shifting statutes which have engaged the atten-

tion of this Court in recent Terms. All substantive

aspects of this company-wide Title VII and §1981 class

action by all of the black employees and applicants for

employment at the Philadelphia Electric Company (“the

Company”) alleging race discrimination were settled for

monetary amounts and forms of injunctive relief sub-

stantially less in every instance than those originally

sought by the class. The settlement was approved by the

district court after hearing, was not challenged on ap-

peal, and has been fully carried out by the Company.

Jurisdiction of the courts below was based on 42 U.S.C.

§1981 and 42 U.S.C. §2000e-5(e)(3). \

The parties were unable to settle the claim of the

class for attorneys’ fees and costs. The class’s attorneys

therefore filed a fee petition, supported by affidavits,

which was partially opposed by the Company. Neither

party sought a live hearing, and the district court on the

papers entered an award of $424,535.25 in fees and

$43,730.43 in costs.

As in all cases of this magnitude, the fee petition

dealt with a number of discrete issues, most of which are

not presented in this Petition. In particular, the district

court first determined a “lodestar” amount, after exclud-

ing certain claimed hours, including others, and deter-

mining reasonable hourly rates. The court then

considered the post-lodestar issues which are challenged

here. First, it awarded an enhancer of 50% of the lodestar

for what it characterized as the “contingent nature” of

the case. Then, addressing this Court’s requirement in

Hensley v. Eckerhart, 461 U.S. 424, that the lodestar

must be adjusted downward to reflect less than complete

success, the district court concluded factually that “only

about 25% of the objective relief was obtained” in the

settlement. Then, without further explanation, the dis-

trict court in thé next sentence said:

“However, it is my belief that the value to the

class of the affirmative action steps included. . . war-

rants an added factor of 50%.” (App. A-20).

The district court thereupon increased the multiplier

threefold — from 25% to 75% — with the result that the

lodestar was correspondingly reduced by only 25% in-

stead of the 75% Hensley lack of actual success.

The Company appealed these two legal issues and

certain other issues (on some of which it prevailed in the

court of appeals below). It also paid to counsel for the

class fees and costs, in excess of $100,000, which were

not challenged by the appeal below. The class

cross-appealed.

Argument before the court of appeals below was held

on June 3, 1986. Because the decision of this Court con-

cerning the lawfulness of enhancers to a lodestar was

pending at that time in Pennsylvania v. Delaware Valley

Citizens Council for Clean Air, October Term 1985, No.

85-5, the court of appeals deferred decision to await this

Court’s ruling. However, on July 17, 1986, this Court

decided only some of the issues pending in the Delaware

Valley Citizens case aiid deferred the issue of the law-

fulness of contingency enhancers to the present Term.

Thereafter, the court of appeals issued its opinion and

judgment on September 22, 1986.

The court of appeals reviewed each of the discrete

issues raised by the appeal and cross-appeal, affirming

the district court as to some issues and reversing as to

others. Because some of these reversals impacted the

calculation cf the lodestar, the judgment of the court of

appeals vacated the entire award below and remanded,

with directions to recalculate the lodestar and to grant

other relief. However, the court of appeals expressly

ruled:

“The district court need not, however, recon-

sider its decision to reduce the lodestar by 25% be-

cause of the result-obtained factor.” (App. A-43).

As to the district court’s award of a 50% “contingency”

enhancer, the court of appeals ruled:

“The court’s contingent risk findings are not

clearly erroneous. Furthermore, the amount of the

multiplier is a matter within the district court’s dis-

cretion and here the court has not abused that

discretion.” (App. A-38).

REASONS FOR GRANTING THE WRIT

I. The Decision Below Affirming a Contingency Enhancer

Conflicts with This Court’s Decision in Blum v. Stenson.

In Blum v. Stenson, 465 U.S. 886, this Court vacated

a 50% enhancer for contingency awarded by the district

court and affirmed by the court of appeals, finding no

support in the record for such an award. Id. at 901. While

the plaintiffs here, with the Blum decision to guide them,

referred to and attempted to address the issue of

“contingency,” they in fact presented no facts to support

_their repeated affidavit rhetoric of “complexity,”

“contingency,” “novelty,” and “risk.” The court of ap-

peals summarized the plaintiffs’ attempt in this area as

foliows:

“They point out that (1) this case involved a

large number of discrete issues, (2) allegations of

company-wide racial discrimination are factually

and legally difficult to prove, (3) certain legal de-

fenses presented open questions of law, and (4)

PECO was prepared to provide a strong defense.”

(App. A-37).

The plaintiffs and the district court in its order approving

the settlemeni (App. A-37) also referred to the size and

complexity of the action and to the existence of a 1973

Consent Decree in a case brought against the Company

under Title VII by the United States, United States v.

Philadelphia Electric Company, Docket No. 72-1483

(E.D.Pa.). In fact, these questions of size and complexity

do not go to the issue of risk at all — merely to possible

lengthy litigation time, all of which is compensated by

the lodestar, while the pattern and practice suit by the

United States demonstrates the opposite of what it is

cited for by the plaintiffs, the district court and the court

of appeals. Patterns of alleged discrimination in the elec-

tric utility industry were widely recognized in the period

1973-75 when this case was brought and a suit against

the Company by the United States, as in the analogous

antitrust area, was a signal to counsel in 1975 that the

case (while undoubtedly involving a lot of facts and pa-

per work) was very likely to be successful. See, e.g.,

Griggs v. Duke Power Co., 401 U.S. 424 (1971); United

States v. Georgia Power Co., 474 F.2d 916 (5th Cir.

1973); United States v. Virginia Electric & Power Co.,

327 F.Supp. 1034 (E.D.Va. 1971); United States v. De-

troit Edison Co., 365 F.Supp. 87 (E.D. Mich. 1973) (all

ruling in favor of plaintiff classes). See also Anderson,

Negro Employment in Public Utilities (U. of Pa. Press

1970) (discussing inter alia Philadelphia Electric Com-

pany ).

Thus, the record in the case below was operatively as

devoid of evidence of contingency or risk as was the ac-

tually blank record in Blum v. Stenson. By affirming the

district court’s exercise of “discretion” on such a record,

the court below in effect held that the holding of this

Court in Blum can be avoided as a practical matter by the

use of unsupported rhetoric in large class actions. This

Court should not permit such a nullification of its hold-

ings.

II. The Court of Appeals Applied the Third Circuit Stan-

dard for a Contingency Enhancer which is Presently

Pending on Certiorari for Review by This Court in

Pensylvania v. Delaware Valley Citizens Council for

Clean Air.

In Pennnsylvania v. Delaware Valley Citizens for

Clean Air, this Court granted certiorari to review a de-

cision of the Third Circuit allowing a district court broad

discretion to award an enhancer to the lodestar because

of the “contingency” of the case. On July 17, 1986, this

Court deferred decision on this issue and rescheduled it

for reargument and decision in the present Term. Had

this Court decided the issue in July of 1986, its decision,

one way or the other, would have governed the decision

of the panel in this case below. When this Court deferred

its decision, the panel below was institutionally required

to follow its own precedent, which this Court has already

deemed sufficiently important to warrant review on cer-

tiorari. Were the decision below affirming a contingency

enhancer to the lodestar to remain unreviewed, it could

become the law of the case on the remand to the district

court. Because the important issue being reviewed in

Delaware Valley Citizens is equally present here, this

Court should grant certiorari pending decision of the Del-

aware Valley Citizens case to permit a correct applica-

tion of the law of contingency enhancers for the court of

appeals and the District court below here and ensure

uniformity in the application of this Court’s rulings.

Ill. The Decision Below Conflicts With the Congressional

Allowance of Attorneys’ Fees Only to “Prevailing

Parties” as Construed by This Court in Hensley v.

Eckerhart.

In Hensley v. Eckerhart, 461 U.S. 424, this Court

considered the congressional standard of “prevailing

party” in federal fee shifting statutes. This Court con-

cluded that in determining the extent that a party pre-

vails — and hence becomes entitled to any fee at all —

“the most critical factor is the degree of success

obtained.” 461 U.S. at 436.

The district court below acknowledged and quoted

this standard. It then undertook a detailed factual anal-

ysis of the over-all success of the class in the settlement

as compared to the relief sought by the class. (App. A-

18-A-20). After this review, the district court concluded:

“Plaintiffs did not obtain through settlement the

extensive monetary or injunctive relief for individu-

als and class members as was originally envisioned.

A comparative analysis of the plaintiffs’ demands

and the final settlement in the Consent Decree

would suggest that only about 25% of the objective

relief was obtained.” (App. A-20).

Under the standard established by this Court in Hensley,

this factual analysis and conclusion by the district court

required a 25% multiplier, or, equivalently, a 75% re-

duction in the ledestar. But the district court did not fol-

low this requirement of Hensley. Without explanation,

the district court went on in the very next sentence to

State:

“However, it is my belief that the value to the

class of the affirmative action steps included are of

immediate and long range significance and benefit

to the class and warrants an added factor of 50%.”

(App. A-20).

In affirming this action by the district court, the court of

appeals imported into the Hensley analysis of degree of

success, which defines the degree of “prevailing” under

the statute, and which alone entitles a prevailing party to

any fee at all, a wholly subjective reward to counsel anal-

ogous to those disallowed in Blum v. Stenson. This is

necessarily so because the concept of “value to the class”

as used by the district court and approved by the court of

appeals can have no substantive meaning apart from the

concept of degree of success. A reference to “value to the

class” merely begs the basic Hensley question as to pre-

vailing, namely, “value” as compared to what? Obviously

the “value” of the full original claims “envisioned” by the

class as analyzed by the district court in its opinion (App.

A-20) would have been much, much more “valuable” to

the class than the mere 25% relief over all which the

district court found the class actually obtained in the set-

tlement. In this context, reference to “value to the class”

is nothing but an effort to avoid the true degree of suc-

cess.' The district court found that the degree of success

in this case was only 25% of the over-all claim.

By affirming the intrusion of an additional enhancer

of 50% into the basic “Hensley calculation,” the court of

appeals both distorted the proper Hensley analysis of

how far a party has prevailed and imported through the

back door the kind of standardless, subjective reward to

counsel which was rejected in Blum v. Stenson.

This case represents an early, major attempt to apply

this Court’s decision in Hensley v. Eckerhart. Because it

so misapplies the Hensley standard, it must be corrected

by this Court.

1. As just one example among many, the district court found:

“In the area of hiring, plaintiffs sought an order requiring hiring at

a level to create a 333% minority work force company-wide. This

was not achieved. Rather, the Company agreed not to move for dis-

solution of the 1973 Consent Decree for a period of 3-5 years.” (App.

A-19). Patently, while the retention of the 1973 hiring rate had some

“value” to the class, the 333% quota sought would have had very

much more “value.” The same thing applies to all of the “extensive”

equitable relief sought by the class which, as the district court ex-

pressly found, they “did not obtain through settlement . . .” (App.

A-20).

CONCLUSION

For the foregoing reasons this Court should grant a

writ of certiorari to review the two issues presented by

this Petition.

Respectfully submitted,

Robert W. Maris

John F. Smith, III

Hope A. Comisky

DILWORTH PAXSON KALISH & KAUFFMAN

2600 The Fidelity Building

Philadelphia, PA 19109-1094

(215) 875-7000

Attorneys for Petitioner

CERTIFICATE OF SERVICE

I hereby certify that three copies of this Petition for

Writ of Certiorari were served by postage prepaid first-

class mail on Herbert B. Newberg, Esq., counsel for the

respondent, on December 2, 1986. I further certify that

all parties required to be served have been served.

/s/ Robert W. Maris

ROBERT W. MARIS

2600 The Fidelity Building

Philadelphia, PA 19109-1094

Attorney for Petitioner

Philadelphia Electric Company

IN THE UNITED STATES DISTRICT COURT

FOR THE EASTERN DISTRICT OF PENNSYLVANIA

BLACK GRIEVANCE COMMITTEE, et al.

VU.

PHILADELPHIA ELECTRIC COMPANY

Civil Action No. 75-3156

MEMORANDUM ENTERED: AUGUST 13, 1985

GILES, J.

On December 21, 1984, this court entered a Consent

Decree which settled the parties’ merit contentions in

the above-captioned case. The plaintiff class, and named

plaintiffs, have now petitioned for counsel fees and costs

as the “prevailing party” in this litigation which has

spanned more than ten years. Philadelphia Electric

Company (“PECO”) agrees that plaintiffs are prevailing

parties and are entitled to some fee award. However, it

contests the extent of the claimed lodestar of $537,499,

and some of the expert witness expenses included in the

costs claimed of over $20,000. Plaintiffs ask for an up-

ward adjustment in the lodestar for delay in payment,

contingency, quality of work, as well as what they per-

ceive as exceptional success in the relief ultimately

gained through the 1984 Consent Decree. PECO chal-

lenges any upward adjustment and contends that, after

considering each of the possible adjustment factors,

there should be a net downward adjustment.

Plaintiffs have filed a joint petition for counsel fees

and cosis. PECO’s chief objection to the claimed lodestar

hours focuses on the time spent by the lead attorneys,

Herbert Newberg, Esquire and Alice Ballard, Esquire, in

pursuing matters which were not, from defendant’s

A-1

A-2

viewpoint, reasonably related to this employment race

discrimination litigation. It challenges as excessive the

maximum hourly rates asserted by lead counsel as well

as the rates claimed by Earl Trent, Esquire, who had

contacts with the clients but who was rarely involved di-

rectly in pleadings or other matters which involved the

court. There is no substantial challenge to the lodestar

claim of Phillip Fuoco, Esquire whose time involvement

was small in comparison with the claims of plaintiffs’

other attorneys.

This action was initiated by the Black Grievance

Committee (“BGC”), a PECO employee organization

whose membership is comprised principally of black per-

sons, and seven named plaintiffs who were members of

BGC. Jurisdiction over the claims of employment dis-

crimination based upon race was first asserted under the

Civil Rights Act of 1871, 42 U.S.C. §1981. Later, there

was added a claim under Title VII of the Civil Rights Act

of 1964, as amended, 42 U.S.C. §2000, et seq. This lit-

igation came on the heels of a 1973 Consent Decree is-

sued by the Honorable Louis C. Bechtle stemming from

a Justice Department race discrimination lawsuit against

PECO. United States v. Philadelphia Electric Company,

351 F. Supp. 1394 (E.D. Pa. 1972). By reason of the 1973

Consent Decree, PECO agreed to affirmative action re-

tention and promotion of minority applicants and em-

ployees.

The Justice Department was, and remains, respon-

sible for monitoring compliance with that Consent De-

cree and is obligated to seek court intervention in the

event of non-compliance. In the context of that federal

agency failing to find non-compliance, this litigation was

started. In many respects, the injunctive relief sought by

the class duplicated that already gained through the ex-

isting 1973 Consent Decree goals and timetables to in-

crease hiring of minorities. Nevertheless, this lawsuit

sought across-the-board relief, monetary and injunctive,

in all phases of employment activity. Actual damages

A-3

were sought for all members of the class, present and

former employees, beginning from January 1, 1968, to-

gether with punitive damages wherever appropriate. The

putative class also included all disappointed employment

applicants covering the same time period.

1. CALCULATION OF THE LODESTAR

A “lodestar” is determined by multiplying a reason-

able number of hours expended during the litigation

times a reasonable hourly rate. Hensley v. Eckerhart,

461 U.S. 424, (1983).

A. MR. NEWBERG

1. Hourly Rate

Mr. Newberg claims hourly rates as follows:

9/75 to 8/78 — $135 per hour

/78 to 8/80 — $150 per hour

9/80 to 1/81 — $175 per hour

1/82 to 12/83 — $200 per hour

1/84 to present — $225 per hour

Apparently, PECO does not contest his hourly rates

for the period through 12/81, but does contend that he

should be limited to an hourly rate of $175 thereafter,

citing District Judge Huyett’s conclusion in 1982 as to

Mr. Newberg’s hourly rate in another Title VII case,

Kuhn v. Philadelphia Electric Company, C.A. No.

77-1107, Fee Order, January 20, 1982, and a civil rights

action, Institutionalized Juveniles v. Secretary of Public

Welfare, 568 F. Supp. 1020, 1034 (E,D. Pa. 1983). Mr.

Newberg has produced billings from some other

non-contingent fee matters to evidence that he has

charged some clients the rates claimed. However, there

is no showing that these rates were, in fact, collected or

that the maximum hourly rate charged there would be

appropriate for the kind of work done in this case.

A-4

I accept the findings of Judge Huyett in Kuhn and

Institutionalized Juveniles as to Mr. Newberg’s maxi-

mum hourly rate of $175 as of 1983. It would appear

from the billing history thereafter in non-contingent fee

matters that Mr. Newberg has attempted to realize an

increase in his hourly rate on a yearly basis. It would also

appear that the maximum level of skill and expertise is

not required to perform all the services that a client

might require in the representation. It cannot be said on

this record that all the rates that have been asserted by

Mr. Newberg are prevailing market rates. Further, Mr.

Newberg had the assistance of three other co-counsel.

and particularly, another lead counsel in performing the

various legal tasks associated with this case. This fact

runs counter to a claim of an advanced hourly rate which

presumptively represents the ability to perform all legal

facets of the representation independently.

Considering all of the above factors, I find that for

the period January 1982 through December 1983, an

hourly rate of $175 is appropriate and reasonable and for

the period of January 1984 to the present an hourly rate

of $190 is fair and reasonable. This is especially so, in-

asmuch as these rates will apply to all aspects of the work

done by Mr. Newberg, including that which was routine

and which arguably should not have been billed at a

maximum hourly rate. Therefore, the hourly rates for

Mr. Newberg’s non-fee petition work will be reflected as

follows:

9/75 to 8/78 — $135 per hour :

9/78 to 8/80 — $150 per hour

9/80 .o 12/81 — $175 per hour

1/82 to 12/83 — $175 per hour

1/84 to present — $190 per hour

2. Hours

It has been agreed between the parties that Mr.

Newberg’s original claim of hours total 1351.9. inclusive

ee Oe

A-5

of 3.8 hours for fee petition work. My calculations, how-

ever, show a total of 1326.4 hours. From these hours,

PECO claims deductions should be made for inade-

quately described legal work, work on unrelated Title VII

and NLRB litigation and injunctive relief improvidently

sought before this court.

(a) Inadequately Described Work

PECO seeks to exclude 115.5 hours for the period

1975 through approximately 1980 as being inadequately

described by Mr. Newberg. Counsel for plaintiffs bear

the burden of describing adequately the nature of the

work performed. Richerson v. Jones, 506 F. Supp. 1259,

1264 (E.D Pa. 1981). I have reviewed the entries for the

period in question. There are many entries which cer-

tainly could be more definite. However, I am satisfied,

given what is now known about the work by counsel,

that the hours charged, which PECO challenges as in-

adequately described, are related to this multi-faceted

case. Consequently, because I have no concern that im-

proper hours are claimed, I find that these hours should

be included in the lodestar.

(b) Chemical Spill

In March 1979, Mr. Newberg spent 8 hours in an

unsuccessful -attempt to have this court enjoin the di-

rectives of Henkel & McCoy, the employer of two con-

tingent construction workforce employees, not to return

to the PECO premises to work. For what were given as

safety reasons, they had refused an order of a PECO su-

pervisor to clean up a chemical powder spill. PECO had

requested that their employer not sent them back there

to work. Neither man was a member of the class nor a

named plaintiff. Mr. Newberg contends that he believed

that the incident represented a prime example of retal-

iation and harrassment against contingent workers, in

general, who were seeking to enforce their civil rights.

The petition for a temporary restraining order was de-

nied. The incident was a labor relations problem that did

not pertain to the merits of the issues before the court.

A-6

They were not prevailing parties on this score. Accord-

ingly, these 8 hours will be disallowed.

During the course of the litigation, plaintiffs sought

a temporary restraining order on behalf of a group of col-

lectors, employees who visit the homes of deliquent cus-

tomers to collect amounts due. The collectors are

authorized to cut the power lines if payment is not forth-

coming. PECO had had a policy of sending out collectors

in teams of two. Allegedly, after the collector workforce

became predominatly black, the policy was changed

such that on occasion a single collector could be sent out

on the job. The plaintiffs considered this new policy to

create a dangerous condition for the collectors, particu-

larly since customers faced with a cessation of service

could become hostile and threaten the collectors physi-

cally. Plaintiffs’ counsel assert that their work on this as-

pect of the case provided them with a cameo example of

PECO assigning harsher working conditions in areas

where black employees were concentrated. The petition

for a temporary restraining order was denied. Any griev-

ances were resolved through PECO’s personnel chan-

nels. Plaintiffs failed, therefore, to show that race was the

motivation for the change in policy or that there was a

need for injunctive relief. The policy under attack po-

tentially affected white collectors and black collectors

alike. Plaintiffs were not “prevailing parties” in this sup-

plemental action. It did not later appear through any pre-

trial memorandum to have been a factual basis for the

relief ultimately sought in the case. Accordingly, I find

that the time devoted to this activity must be deducted

from the claimed lodestar. The 26 hours spent by Mr.

Newberg on this matter are disallowed.

(d) Final Pretrial Memorandum

PECO also seeks reduction of the claimed lodestar

by the number of hours Newberg and Ballard expended

on a pretrial memorandum in January 1981. This mem-

orandum proved to be inadequate and prompted the

A-7

need for a new submission. Plaintiffs’ lead counsel each

spent 16 hours on its preparation, including attendance

at a pretrial conference. Nevertheless, the memorandum

lacked the specificity necessary to advise this court or the

defendant, in a reasonable fashion, of the plaintiffs’ the-

ories. It also failed to indicate which witnesses and doc-

uments would be used in the attempt to prove these

theories. However, plaintiffs contend that this submis-

sion provided the basis for the second memorandum and,

therefore, was not wasted. The time spent by counsel on

the first memorandum was not reasonably related to the

progress of the case. The work duplicated the subse-

quent better directed efforts of counsel. The submission

of an unsuitable final pretrial memorandum from plain-

tiffs at that point in time delayed the case, prompted a

motion from PECO to dismiss the suit and an order of the

court requiring another final pretrial memorandum. Ac-

cordingly, the 16 hours claimed by Mr. Newberg for his

efforts on the first final pretrial memorandum will be dis-

allowed.

(e) The NLRB Proceedings

The more substantial dispute concerns time charges

related to plaintiffs’ counsels’ claims for time spent as-

sisting the Philadelphia Regional Office of the National

Labor Relations Board (“NLRB”) in the investigation

and-prosecution of unfair labor practice charges of the

Black Grievance Committee (“BGC”). The BGC con-

tended that the organization itself and its individual

members, some of whom were white, had been discrim-

inated against by the company. It contended the

company’s favored treatment of the Independent Group

Association (“IGA”) and concomitant refusal to recog-

nize the BGC as an authorized representative of partic-

ular employees with individual grievances against PECO

resulted in their suffering discriminatory treatment. Al-

legedly, the IGA was accorded this recognition. Through

the NLRB process, plaintiffs’ counsel contend that they

hoped to gain the same recognition for the BGC and

A-8

thereby bring pressure on PECO to cease and desist the

alleged discriminatory treatment of black workers and

other members of the BGC.

Neither the BGC nor the IGA had been certified as

the exclusive collective bargaining agent as a result of an

NLRB conducted election or through an equivalent in-

formal process. Relying on existing precedent, an ad-

ministrative law judge (“ALJ”) ruled in favor of PECO on

the complaint filed by the NLRB Regional Office. The

ALJ held that no violation of §8(a)(1) of the National La-

bor Relations Act (“NLRA”), 29 U.S.C. §158(a)(1)

(1982) occurs where an employer chooses to show par-

tiality to one employee organization over another for pur-

poses of dealing with terms and conditions of

employment when neither organization purports to rep-

resent a majority of the employees in the workplace nor

seeks status as the exclusive bargaining agent under

§9(a) of the NLRA. A three member panel of the NLRB

adopted the ALJ’s findings and holding without opinion.

268 N.L.R.B. NO. 123 (1984). The NLRB complaint

averred that the failure to accord the same status to the

BGC as was given to the IGA was motivated by race.

Race discrimination is not a per se violation of the NLRA.

There was no determination whether there was a nexus

between any alleged violation of employee rights pro-

tected under the NLRA and alleged race discrimination.

The settlement of this case occurred before the Third

Circuit reversed and remanded in Black Grievance Com-

mittee v. NLRB, 749 F.2d 1072 (3d Cir. 1984). Although

the NLRB proceeding was very much a part of the set-

tlement discussions, as is evidenced by the proposed set-

tlement agreement, it did not become part of the Consent

Decree.

Plaintiffs attempt to justify the time spent on the

NLRB matter as instrumental to the discovery process in

their Title VII and §1981 cases before this court and as

essential leverage for effectuating settlement of the in-

stant case. I disagree. Any discovery of factual issues or

A-9

legal principal witnesses in the NLRB matter would have

had to have been duplicated in this case. The thrust of

the NLRB proceeding was not whether there was race

discrimination but rather whether there was a violation

of organizational rights of employees protected under the

NLRA. The Regional Attorney of the NLRB was in

charge of prosecuting the theories of the complaint, not

plaintiff’s attorneys. An ALJ, and not this court, was in

charge of deciding the relevancy of proferred evidence.

Indeed, any determination of racial nexus in the NLRA

context would have been of no controlling consequence

or evidentiary value in the trial of the various race issues

before this court. The NLRA proceeding was a separate

proceeding from the one before this court. As important

as counsel’s NLRA work must have been to the BGC

enhance its stature with PECO and its employees, it is

not possible to give plaintiffs’ counsel credit for work that

was not done in this case and which would have had to

have been duplicated here had the case not settled.

Moreover, this court is not in a position to judge whether

plaintiffs’ counsels’ efforts in the NLRA proceedings

were wasteful, knowledgeably pursued or duplicative of

the efforts and expertise of the NLRB attorneys who

were responsible under law to investigate, evaluate and

press the complaint on behalf of PECO employees and

the BGC. While counsel have an expertise in Title VII

and §1981 race discrimination matters, they do not hold

themselves out as experts in the area of NLRA matters.

For these reasons, the work by plaintiffs’ counsel on the

NLRA matter is not compensable in this case.

Finally, the Third Circuit's reversal did not establish

a nexus between any violation of §7 of the NLRA and

alleged race discrimination. Black Grievance Committee,

supra at 1077 n.4. Thus, under Title VII, plaintiffs were

not “prevailing parties.” Mr. Newberg spent 86.7 hours

on this work. Ms. Ballard spent 268.9 hours on the mat-

ter. These hours will be subtracted from the lodestar.

A-10

(f) Newberg Associates

The work of the associates of Mr. Newberg will be

compensated at $50.00 per hour which was the billing

rate at the time their services were rendered. The hours

number 169.5. Therefore, the lodestar for this work is

$8,475.00 (169.5 x $50) and will be included in Mr.

Newberg’s portion of the lodestar.

(g) Paralegal and Law Student Time

The plaintiffs have sought to include the time spent

by paralegals and law students in the lodestar. This re-

quest is denied. Paralegals and law students work ac-

cording to the directives of counsel. The assistance they

provide allows counsel te spend their hours more pro-

ductively on those aspects of the case requiring their skill

and expertise. Consequently, counsels’ hourly rate re-

flects the value of making that non-lawyer time produc-

tive. Although there is precedent supporting plaintiff's

counsels’ position, this court prefers to follow Bogosian v.

Gulf Oil Corporation, Nos. 71-1137, 71-2543. slip op. at

7 (E.D. Pa. April 1, 1985) where the court rejected in-

cluding in the lodestar, the hours of paralegals and law

students. Accordingly, that time will be treated as one of

the costs incurred by plaintiffs, and excluded from the

lodestar.

(h) Fee Petition Work

Plaintiffs’ counsels’ time spent preparing the fee pe-

tition will be compensated outside of the lodestar. The

parties dispute whether this time should be calculated at

the maximum hourly rate for the lawyer involved or at

the minimum rate for any associate of the law office.

PECO argues for $60 an hour. This court recognizes that

work done on a fee petition does not require great legal

skill. Richerson v. Jones, 506 F. Supp. 1259, 1265 (E.D.

Pa. 1981), citing Fernandez v. Shapp, No. 74-2959, slip

op. at 9 (E.D. Pa. May 29, 1980). In this case, I find that

the preparation of this fee petition warrants compensa-

tion at the hourly rates reflecting an attorney's mechan-

ical application of established principles of law as

A-I1

opposed to rates which reflect some professed expertise

in specialized litigation. I find that the appropriate rate is

$75 per hour. The hours spent by Mr. Newberg on a mo-

tion for interim fees will be disallowed altogether. That

motion was denied and this court finds that the time

spent by Mr. Newberg on it was unnecessary.

(i) Kuhn Litigation

Mr. Newberg has erroneously charged in this case

11.5 hours for time spent on the matter of Kuhn v. Phil-

adelphia Electric Company. That time will be deducted.

(j) Summary of Deductions of Hours from Mr.

Newberg’s Lodestar

(8/78-8/80) Chemical Spill — 8 hours

(8/78-8/80) Collectors —26 hours

(8/78-8/80 ) Kuhn Litigation — 11.5 hours

(9/80- 12/81) Final Pretrial Memo —16_ hours

(1/82-12/83) NLRB Proceedings — 86.7 hours

(1/84-present) Fee Petition — 3.8 hours

In addition, the charges for fee petition preparation

and briefing and the paralegal and law student time will

not be included in the lodestar.

(k) Summary of Newberg Lodestar

Billing Hours Hours Hours

Period Claimed Deducted Allowed Rate

(4/75-8/78) 496.5 QO - 496.5 ; bo = 67,027.50

(8/78-8/80 ) 340.25 45.5 994.75 x 150 = 44,212.50

(9/80-12/81) 138.75 16 iy Re i oan Ch 21,481.25

(1/82-12/83) 301.5 86.7 214.8 x lf «= 37,590.00

(1/84-Present) 49.4 3.8 46.6 x 190 = 8,664.00

178,975.25

Newberg

Associates 169.5 0 169.5 x 50 8,475.00

NEWBERG LODESTAR TOTAL: $187,450.25

B. MS. BALLARD

1. Hourly Rate

Ms. Ballard claims an hourly rate of $150 per hour

for all work. PECO answer that the reasonable rate

should be $90 per hour. In 1982 in Kuhn v. Philadelphia

A-12

Electric Company, a clas action sex discrimination

against defendant, Judge Huyett determined that Ms.

Ballard’s hourly rate for lodestar purposes was $90. I

adopt that decision as the best historical evidence of her

market rate through 1982. Currently, she claims an

hourly billing rate of $150. However, there is insufficient ’

evidence that she bills all non-contingent fee hours and

is paid consistently at that rate for all hours billed. Con-

sidering that her determined market rate was $90 in

1982, the inquiry becomes what is a fair and reasonable

expectation for hourly rates in each of the succeeding

years. I find that the reasonable rate for 1983 was $100

per hour; for 1984 it was $115 per hour, and for 1985 it

was $125 per hour. These rates represent an increase in

the skill, expertise and responsibility of counsel in the

trial of employment discrimination cases which was

brought to bear in concluding the litigation.

2. Hours

Ms. Ballard claims in the petition, by my calcula-

tions, a total of 1029.1 hours:

\ Year Hours

1979 — 67.1

1980 — 152

1981 — 237.6

1982 — 261.8

1983 — 216.8

1984 — 63.2

1985 — 30.6

Included in these hours are 9 hours for fee petition prep-

aration done in 1985; 268.9 hours (10.6 hours in 1980.

22.2 hours in 1981, 218.2 hours in 1982, 15.9 hours in

1983 and 2 hours in 1984) devoted to NLRB matters:

16.8 hours (.4 hours in 1980 and 16.4 hours in 1981)

towards the final pretrial memorandum; 35.4 hours

towards Collectors’ Temporary Restraining Order (.7

hours in 1979 and 34.7 hours in 1980) and 9.5 hours (3.7

hours in 1979, 5.5 hours in 1980 and .3 hours in 1981)

devoted to interviews of black female employees in the

A-13

Kuhn v. Philadelphia Electric Company case. These

hours will be deducted from the lodestar. Except for the

hours related to the fee petition preparation, the time de-

ducted will be disallowed for the same reasons they were

disallowed in the instance of Mr. Newberg. In addition,

respecting the Kuhn hours, presumably this time has al-

ready been compensated by Judge Huyett in his fee

award. Counsel does not show the contrary to be true.

Even though the Kuhn female plaintiffs may have also

discussed black employee concerns, the time expended

connot be doubly compensated by an additional award in

this case.

Therefore, Ms. Ballard’s compensable hours are as

follows:

Hours Hours’ Hours

Year Claimed Deducted Allowed Rate

1979 67.1 4.4 62.7 Xx 90 = $ 5,643.00

1980 152.0 51.2 100.8 Xx 90 = 9,072.00

1981 237.6 38.9 198.7 x 90 = 17,883.00

1982 261.8 218.2 43.6 Xx 90 = 3,924.00

1983 216.8 15.9 200.9 x 100 = 20,090.00

1984 63.2 2 61.2 s 0% = 7,038.00

1985 30.6 9 21.6 x 125 = 2,700.00

BALLARD’S LODESTAR TOTAL = $66,350.00

C. MR. FUOCO

Mr. Fuoco’s claimed hourly rates are not challenged

by PECO. However, I do not find the asserted 1985 rate

of $135 per hour justified or proven, particularly consid-

ering the allowed rate for Ms. Ballard’s work. Moreover,

the two hours charged in 1985 pertain to time he spent

preparing the fee petition. Therefore, the two hours

charged in 1985 will be compensated at the rate of $75

per hour, the rate found reasonable by this court for time

spent on fee petition preparation. Since his work in 1985

pertains to preparation of the fee petition, it will be ex-

cluded for purposes of lodestar computation. His lodestar

A-14

is computed as follows:

1975 12.75 hours at $65 = § £828.75

1976 _ 93.5 hours at $75 = 7,012.50

1977 46.5 hours at $75 = 3,487.50

1978 9.5 hours at $85 = 807.50

FUOCO LODESTAR TOTAL = $12,136.25

D. MR. TRENT

Mr. Trent claims an hourly rate of $100 per hour for

the period 1979-80; $115 per hour 1981-82; and $125

per hour 1983-84. His involvement in the case and,

therefore, his demonstration of expertise in the litigation

of Title VII cases was not as extensive as that of Ms.

Ballard. He has not proven that his billings and receipts

for hours worked in non-contingent fee matters during

these periods averaged the claimed rates. I find that a fair

and reasonable hourly rate for him is $90 per hour for all

work.

Total Hours x Hourly Rate = 185.50 x $90

TRENT LODESTAR TOTAL = $16,695.00

E. TOTAL LODESTAR

Newberg $187,450.25

Ballard 66,350.00

Fuoco 12,136.25

Trent 16,695.00

$282,631.50

Newberg letter 3/6/85 (1.8 x $190) 342.00

Ballard letter 4/25/85 (.04 x $125) 50.00

$283,023.50

Il. ADJUSTMENTS TO THE LODESTAR

A. DELAY IN PAYMENT

The lodestar having been determined, the next step

will be to ascertain whether it should be adjusted upward

—— es

A-15

for delay in payment. PECO concedes that it should, but

argues for an adjustment not to exceed 25%. Plaintiffs

argue for application of a “prevailing interest rate” con-

cept. I reject the plaintiffs’ contention. No counsel fees

became potentially payable until the Consent Decree

was approved at which point plaintiffs could be deemed

the prevailing party. Indeed, no fees become payable un-

til this court rules on the fee petition. A reasonable up-

ward adjustment is appropriate for the delay in payment.

Twenty-five percent is reasonable.

B. CONTINGENCY

PECO contends that the contingency value of the

case was such that an upward adjustment of plaintiffs’

lodestar is not appropriate. I disagree. Even though there

was a resolution of certain discrimination claims through

the Consent Decree in United States v. Philadelphia

Electric Co., supra, there continued to be many com-

plaints by black employees at PECO about adverse em-

ployment practices based on race. The volume of

individual complaints suggested the existence of con-

tinuing systemic discrimination in areas addressed, and

not addressed, by the 1973 Consent Decree. The search

for the source of those complaints through the adversary

process, especially in the face of the aforementioned |

Consent Decree, and the fact that the United States had

sought no enforcement action for non-compliance

makes this an appropriate case in which to make an up-

ward adjustment based on the contingency factor. There

was also considerable risk that the source of the com-

plaints was not systemic race discrimination but a series

of individual grievances stemming from employee (in-

cluding plaintiffs or class members) misconduct, atti-

tudes of fellow workers generated by community biases

as opposed to company instilled or tolerated prejudices,

or changes in economic circumstances. There was also a

risk of discovering mid-stream that the power struggle

A-16

for labor relations recognition by a predominantly black

employee organization was a matter within the exciusive

province of the NLRA and not a Title VII or § 1981 mat-

ter at all. These were some of the risks which existed at

the time the case was commenced which could have dis-

suaded counsel from undertaking the representation.

The plaintiffs have not prevailed in the sense of proving

that there was discrimination. Nonetheless, they have

prevailed in obtaining some affirmative action helpful to

the class that was not initiated by the company on its

own and which may not have been achieved but for the

prosecution of this lawsuit. Balancing the risks under-

taken in the context of what was not proven and the

scope of the relief which was obtained, I find tht an up-

ward adjustment of .50 for the contingency factor is ap-

propriate.

C. QUALITY OF WORK

Predictably, plaintiffs urge an upward adjustment of

the lodestar while defendant urges a downward adjust-

ment based on the quality of the plaintiffs’ counsels’

work during the course of this litigation. Due to the com-

plexity of the necessary proof, generated in large part by

the ambitious structuring of the across-the-board claims,

I find that no downward adjustment is warranted for

quality. Nor do I find that an upward adjustment is ap-

propriate.

Plaintiffs sought the broadest possible relief and the

broadest possible class in their efforts to remedy what

they perceived to be “patterns and practices” of discrim-

ination. This was so, despite a 1973 Consent Decree in

United States v. Philadelphia Electric Co., supra, in

which the defendant pledged to set and fulfill certain hir-

ing and promotional goals for minorities in various cat-

egories of employment. While the efforts by plaintiffs’

counsel were laudable, and certainly well-intentioned,

there was much wasted time and energy. For example,

<— i

A-17

the NLRB involvement detracted from discovery that

should have been pursued and developed in this case on

the issue of race discrimination. That ancillary proceed-

ing became overwhelmingly concerned with the unfair

labor practice charges of a white employee who was not

a member of the class. Considerable effort was made to

expand the class to include all white employees in the

contingent work force when, in fact, those persons had

interests different from, and adverse to, the black em-

ployees in the group. In fact, these white employees

hired another attorney, Santo Federico, Esquire, to make

known their objections to the settlement proposal. These

objections demonstrate that despite the great expendi-

ture of time in consulting with the employees, plaintiffs’

counsel did not adequately determine the interests of

this segment of the proposed subclass of all contingent

workers.

Plaintiffs’ counsels’ performance in this case, in

terms of complying with court schedules for completion

of discovery and pretrial memorandum and, generally,

readying this case for trial disposition, was not so supe-

rior as to warrant a quality adjustment above their hourly

rates, as determined here, which reflect expected exper-

tise. The case was pursued through a period when the

controlling case law was in flux. Some theories of liability

fell by the wayside because of decisions by appellate

courts, including the Supreme Court of the United

States. In all of this, counsel were looking for a key to

discovery of systemic discrimination as opposed to indi-

vidual discrimination. Test validation was represented as

one such key. However, plaintiffs did not depose PECO’s

testing or statistical experts. As of the time of trial, nei-

ther plaintiffs’ theories nor evidence on that score had

been fully developed. Moreover, data discovered during

the pending litigation showed that the statistical analysis

on which plaintiffs may have been content to rest at one

time was invalid.

A-18 \

Plaintiffs assert that because there was a settlement

of value hammered out on the eve of trial, ten years after

the complaint was filed, there should be an upward ad-

iustment of the lodestar. While it is true that many

months of trial were avoided by the settlement, that fact

does not weigh on the side of quality work adjustment.

The Consent Decree does not establish the existence of

illegal discriminatory conduct, systemic or individual. A

trial may have resulted in a verdict for PECO. The set-

tlement avoided for the class and individual plaintiffs the

risk of losing and of obtaining no additional affirmative

action commitments from the company. The settlement

terms, though of significance for the employees, gener-

ally, were not tantamount to a “win” given the conten-

tions in the complaint. Accordingly, plaintiffs’ request for

an upward adjustment is denied.

D. HENSLEY ANALYSIS

In Hensley v. Eckerhart, 461 U.S. 424, (1983), the

Supreme Court held that under the Civil Rights

Attorney’s Fee Award Act, 42 U.S.C. § 1988, the district

court must consider, among other factors, the relation-

ship between the extent of success and the amount of

the attorney fee award. The Court stated that where “a

plaintiff has achieved only partial or limited success, the

product of hours reasonably expended on the litigation as

a whole times a reasonable hourly rate may be an exces-

sive amount... . [T|he most critical factor is the degree

of success obtained.” Id. at 436. In this case, brought

under § 1981 as well as Title VII, the Civil Rights

Attorney’s Fee Award Act is applicable.

A Hensley analysis is appropriate to assess plaintiffs’

degree of success. Plaintiffs suggest that Hensley is in-

apposite because plaintiffs obtained the results sought.

This position fails to acknowledge the numerous objec-

tions made to the proposed settlement by members of the

A-19

class who complained that the relief sought by the law-

suit was not being provided. In the area of hiring, plain-

tiffs sought an order requiring hiring at a level to create

a 33¥%% minority workforce company-wide. This was

not achieved. Rather, the company agreed not to move

for dissolution of the 1973 Consent Decree for a period of

3-5 years. In the areas of qualifications and testing,

which were contended to be clearly discriminatory,

plaintiffs failed to adduce evidence sufficient to make out

a prima facie case of illegality. The Consent Decree pro-

vides for training classes for minorities interested in tak-

ing aptitude and trade qualifying tests. In the area of

promotions, transfers, management selection and perfor-

mance evaluations, plaintiffs had charged that the cri-

teria being utilized by PECO were discriminatory. The

plaintiffs obtained an agreement from PECO to establish

a career counseling function to review career paths open

to any employee and to encourage qualified employees to

pursue their individual goals. Moreover, PECO agreed to

develop a sensitivity training program for supervisors fo-

cusing on the problems, concerns and potentials of mi-

nority employees in the Management Training Program.

The contingent construction work force claim prin-

cipally resulted in an acceleration of PECO’s existing

commitment to persons listed for relief in the 1973 Con-

sent Decree and a settlement fund of $60,000 for 10

named individuals and $60,000 for the remaining con-

tingent workers. Plaintiffs had sought individual mone-

tary awards for 54 named workers which they ultimately

failed to obtain. They had also sought an order requiring

PECO to rehire the entire group of workers, who are

presently on the payroll of an independeni contractor,

and to give all such persons full back-pay, benefits and

seniority rights as though they had continued in the em-

ploy of PECO. Plaintiffs settled for no equitable relief in

this area beyond that which already existed in the 1973

Consent Decree.

A-20

With respect to the general back pay claim of the

class, monetary relief had been sought reaching back to

January 1, 1968. Front pay and punitive damages were

sought as well. The class consisted of many hundreds of

past and present employees as well as a group of alleged

applicant discriminatees. The potential monetary claim,

then, was many millions of dollars. The Consent Decree

reflects an agreement that PECO create a total fund of

$500,000 which included the $120,000 already dis-

cussed which was set aside for named individuals and

the contingent work force and $300,000 for minor-

ities employed at the company from’ 1969-83.

Eighty-Thousand dollars was to be distributed to the

class members in the Electric T&D department.

Through the Consent Decree the plaintiff class did

gain a voice in addressing employee grievances and dis-

putes. PECO agreed to create a nine-member Affirma-

tive Action Committee chaired by the Manager of

Personnel and Industrial Relations. The class was given

one seat on the Committee. Although the formation of

this Committee had not specifically been sought, it was

an innovative step towards a monitoring alternative to

close court supervision of the Consent Decree. Further,

the Committee concept has an advantage of redressing

grievances and resolving employee concerns before they

might escalate into formal discrimination charges and

lawsuits.

Plaintiffs did not obtain through settlement the ex-

tensive monetary or injunctive relief for individuals and

class members as was originally envisioned. A compar-

ative analysis of the plaintiffs’ demands and the final set-

tlement in the Consent Decree would suggest that only

about 25% of the objective relief was obtained. However,

it is my belief that the value to the class of the affirmative

action steps included are of immediate and long-range

significance and benefit to the class and warrants an

added factor of 50%. Accordingly, under a Hensley an-

alysis, plaintiffs successfully achieved only 75% of the

SO ee = =

A-21

relief sought. Therefore, plaintiffs’ lodestar shall be ad-

justed downward by 25%.

Net Adjustments to Lodestar

Delay in Payment + .25

Contingency + .25

Quality of Work .0O

Time & Expense Saved .0O

Furthering the Civil Rights Law .0O

Hensley Analysis - .25

NET + .50

Adjusted Lodestar Fee Award

$283,023.50 increased by .50 = $424,534.25

I will not allocate the fee award between the attor-

neys because the disallowed time devoted by any one

lawyer ray cause a disproportionate allocation. For ex-

ample, Ms. Ballard spent over 260 hours on NLRB work

which was disallowed. Since the attorneys made a joint

decision as to allocation of work, I will leave it to them in

the first instance to make an allocation of the fee.

Costs

Attorneys Newberg and Ballard claim expert witness

expenses relating to Drs. Brent Baxter and James

Kirkpatrick, who reviewed test validation studies previ-

ously conducted by PECO, and Regan R. Rockhill, a cer-

tified public accountant, who testified at the settlement

approval hearing on the costs to PECO of implementa-

tion of the proposed consent decree. I find that these ex-

penses were reasonably relatea to the prosecution of the

merits and the settlement of the case.

The costs of travel, postage, overtime typists, and

telephone usage, will be excluded as expenses included

in overhead contemplated by the hourly rates awarded

and as other than extraordinary costs. Vecchione v.

Wohlgemuth, 481 F. Supp. 776, 798-800 (E.D. Pa.

A-22

1979). The costs of photocopying, programming and

computer use will be allowed as reasonably necessary to

the test validation review by plaintiffs and their experts.

The costs of deposition transcripts will be allowed, ex-

cept for the transcript of attorney Robert Orcutt, who

was a collector.

Accordingly, for Ms. Ballard the total allowable costs

are

Paralegals $18,328.00

Law Students 5,750.00

Expert Witnesses 5,716.71

Programmer 500.00

Computer Facility 1,507.42

Photocopying 173.30

Deposition Transcripts 756.00

$32,731.43

For Mr. Newberg the total allowable costs are

Expert Witnesses $ 7,497.59

Computer 500.00

Deposition Transcripts & Tapes 649.34

Court Reporter 723.60

Notary 2.50

Photocopying 1,625.97

$10,999.00

Fee Petition Preparation

| have found that the appropriate hourly rate is

$75.00 for time spent preparing the fee petition and that

the time expended on fee petition preparation was rea-

sonable. However, the time expended on the motion for

interim fees has been disallowed as unreasonable.

Mr. Newberg

Original Petition 45.1 x 75 3,382.50

Reply Brief re Fees 25.1 x 75 1,882.50

Letter 3/6/85 Lo 2 % 112.50

$5,377.50

———

A-23

Ms. Ballard

Original Petition 23.2 x 75 1,740.00

Reply Brief re Fees as = Fe »47.50

Letter 4/25/85 2.1 x 7% 157.50

$2,145.00

Mr. Fuoco

Original Petition 2 x 75 150.00

Joint Attorneys Fee

Ballard’s Costs

Newberg's Costs

TOTAL = $7,672.50

$424,535.25

32,731.43

10,999.00

Ballard’s Fee Petition Preparation 2,145.00

Newberg’s Fee Petition Preparation 5,377.50

Fuoco’s Fee Petition Preparation 150.00

$475,938.18

Accordingly, PECO shall pay to plaintiffs’ counsel a

joint attorneys’ fee of $424,535.25 together with costs of

$32,731.43 and a fee petition preparation award of

$2,145.00 payable to Ms. Ballard, costs of $10,999.00

and a fee petition preparation award of $5,377.50 payable

to Mr. Newberg and a fee petition preparation award of

$150.00 payable to Mr. Fuoco.

An appropriate order follows.

A-24

IN THE UNITED STATES DISTRICT COURT

FOR THE EASTERN DISTRICT OF PENNSYLVANIA

BLACK GRIEVANCE COMMITTEE, et al.

VU.

PHILADELPHIA ELECTRIC COMPANY

CIVIL ACTION NO. 75-3156

ORDER

AND NOW, this 13th day of August, 1985, for the

reasons stated in the accompanying memorandum, it is

hereby ORDERED that defendant shall pay to plaintiffs’

counsel a joint attorneys’ fee of $424,535.25 together

with costs of $32,731.43 and fee petition preparation

award of $2,145.00 payable to Ms. Ballard, costs of

$10,999.00 and a fee petition preparation award of

$5,377.50 payable to Mr. Newberg and a fee petition

preparation award of $150.00 payable to Mr. Fuoco.

BY THE COURT:

A-25

UNITED STATES COURT OF APPEALS

FOR THE THIRD CIRCUIT

No. 85-1561 and 85-1562

BLACK GRIEVANCE COMMITTEE — ULYSSES MILES,

ALFRED MURRAY, HENRI P. FREELAND, ROBERT

PARRISH, JOANNE BOND, GEORGE WRIGHT, WILLIAM

HAND, CALVIN BROWN, on behalf of themselves and all

others similarly situated and WILLIE ROBINSON, WILLIE

BLACKSHEAR, ALFRED L. TRAPPANESE, SR., ANDREW

GAVIN, and PHILIP CARANCI,

Intervenor-Plaintiffs

PHILADELPHIA ELECTRIC COMPANY,

Appellant in 85-1561

Cross-Appellee in 85-1562

(D.C. Civil No. 75-3156)

ON APPEAL FROM THE UNITED STATES DISTRICT

COURT FOR THE EASTERN DISTRICT OF

PENNSYLVANIA

Argued: June 3, 1986

Before: GIBBONS, BECKER, and STAPLETON,

Circuit Judges

(Opinion Filed: September 22, 1986)

A-26

ALICE W. BALLARD. ESQ.

JEAN R: STERNLIGHT. ESQ.

Suite 920, 1500 Walnut Street

Philadelphia, PA 19102

HERBERT B. NEWBERG. ESQ. (Argued)

Lippincott Building

Suite 200. 227 South 6th Street

Philadelphia. PA 19106

EARL W. TRENT, JR.. ESQ.

210A Church Street

Philadelphia. PA 19106

PHILLIP S. FUOCO. ESQ.

P. O. Box 1006

24 Wilkins Place

Haddonfield. New Jersey 08033

Attorneys for Appellees and Cross-Appellants.

Black Grievance Committee

ROBERT W. MARIS, ESQ. (Argued)

JOHN F. SMITH, Ill. ESQ.

ALEXANDRA D. SANDLER, ESQ.

HOPE A. COMISKY. ESQ.

DILWORTH. PAXSON. KALISH & KAUFFMAN

2600 The Fidelity Building

Philadelphia, PA 19109

Attorneys for Appellant and Cross-Appellee.

Philadelphia Electric Company

OPINION OF THE COURT

GIBBONS, CIRCUIT JUDGE:

This appeal involves a dispute over attorneys’ fees

that arose after an employment discrimination class

eT Se 7)

A-27

action was settled. The settlement did not deal with the

attorneys’ fees issue, and following a hearing on the

plaintiffs’ fee petition the district court ordered the

defendant to pay $475,938.18 in attorneys’ fees and

costs. Defendant appealed and plaintiffs cross-

appealed. We will vacate the fees and costs awards and

remand for further consideration.

The underlying action asserted claims under

section 16 of the Civil Rights Act of 1870 (codified as

amended at 42 U.S.C. § 198] (1982)), and was originally

filed by the Black Grievance Committee (BGC) and

seven individual employees in November of 1975. In

1976 the complaint was amended to add claims under

Title VII of the Civil Rights Act of 1964, 42 U.S.C.

§§ 2000e to 2000e-17 (1982). Subsequently, in 1978, a

company-wide class of employees was certified, and

after various pretrial conferences and extended periods

of discovery, triai was finally set for July of 1983. BGC’s

basic theory for its claims was that the defendant,

Philadelphia Electric Company (PECO) had engaged in

company-wide racial discrimination in hiring,

assigning. testing, promoting, and terminating black

employees. Just prior to the commencement of trial,

however, the parties agreed to settle the suit. Notice of

settlement was given to the class and, after the court

approved the settlement in the form of a consent

decree, the decree was signed on January 3. 1985.

The consent decree reserved the issue of

reasonable attorneys’ fees and, after BGC and PECO

were unable to settle the fee issue, BGC filed a fee

petition. This petition sought a lodestar of

$537.499.00. increased by a multiplier of 2.75 to 3.0

and costs totaling $20,024.07. PECO responded by

conceding that BGC was the “prevailing party,” but it

challenged certain hours and the hourly fees used to

A-28

calculate the lodestar. On August 13, 1985 the district

court ordered PECO to pay plaintiffs’ counsel attorneys’

fees of $424,535.25. This award consisted of a lodestar

of $283,023.50 adjusted by a 25% delay enhancer, a

50% contingency enhancer, and a 25% result-obtained

reducer. The district court also awarded plaintiffs’

attorneys $7,672.50 for the time spent in preparing

the fee petition and $43,730.43 in costs.

The Civil Rights Attorneys’ Fees Awards Act of 1976

and the attorney's fee provision contained in Title VII of

the Civil Rights Act of 1964 provide that in federal civil

rights actions “the court, in its discretion, may allow

the prevailing party . . . a reasonable attorney's fee as

part of the costs.” 42 U.S.C. § 1988 (1982); 42 U.S.C.

§ 2000e-5(k) (1982).' A reasonable attorneys’ fee is “one

that is ‘adequate to attract competent counsel, but. . .

[that does] not produce windfalls to attorneys.’” Blum

v. Stenson, 465 U.S. 886, 897 (1984) (quoting S. Rep.

No. 94-10ll, 94th Cong., 2d Sess. 6, reprinted in 1976

U.S. Code Cong. & Ad. News 5907, 5913). The basic fee.

therefore, is usually “calculated by multiplying the

number of hours reasonably expended on the litigation

times a reasonable hourly rate.” Blum, 465 U.S. at 888:

Hensley v. Eckerhart, 461 U.S. 424, 433 (1983).

Because each litigation involves unique factors,

however, the basic fee (known as the lodestar) may be

adjusted upward or downward based on such factors

as the result obtained. See Hensley, 461 U.S. at 434;

see also City of Riverside v. Rivera, 106 S. Ct. 2686,

2691 (1986) (plurality opinion).

= The standards applicable to determining what constitutes

reasonable attorneys’ fees are the same under both § 1988 and Title

Vil. See Hensley v. Eckerhart. 46] U.S. 424. 433 n.7 (1983).

Bitede im t >REAA PLT APRON HE os ane LY EO

A-29

While both the Supreme Court and this court have

pointed to various factors and attempted to explain

how a fee should be calculated, the determination is

primarily a matter committed to the discretion of the

district court. See Blum, 465 U.S. at 896-97; Hensley,

461 U.S. at 436-37; Institutionalized Juveniles v.

Secretary of Public Welfare, 758 F.2d 897, 919, 921-22

(3d Cir. 1985). As this court has explained,

an award of reasonable attorneys’ fees is

within the district court’s discretion... .

Thus our standard of review is a narrow one.

We can find an abuse of discretion if no

reasonable [person] would adopt the district

court's view. . . . We may also find an abuse of

discretion when the trial court uses improper

standards or procedures in determining fees,

or if it does not properly identify the criteria

used for such determination. Factual findings,

of course, are subject to the clearly erroneous

standard of review.

Silberman v. Bogle, 683 F.2d 62, 64-65 (3d Cir. 1982)

(citations omitted).

il.

Between them PEOC and BGC raise ten challenges

to the district court's attorneys’ fees and cost awards.

Two challenges raised by BGC relate to the calculation

of the lodestar, an additional challenge by BGC plus

four challenges raised by PECO relate to the

adjustments that were made to the lodestar, while the

remaining three challenges (one raised by BGC and two

raised by PECO) concern the award for costs and the

award for the expense incurred in preparing the fee

petition.. Because various calculations.affect other

calculations we will first review the challenges to the

A-30

lodestar calculation. we will then consider the

challenges to the adjustment of the lodestar. and finally

we will review the costs and fee petition awards.

1. The Billing Rate_for BGC'’s Attorney

In their cross-appeal, the attorneys for BGC

challenge the district court's reduction of some of their

hourly rates. Attorneys Herbert Newberg, Alice Ballard,

and Earl Trent each set forth their historic hourly rate

in affidavits attached to the fee petition. PECO did not

challenge. and the district court did not reduce,

Newberg’s rate for the period from September of 1975 to

December of 198] or Ballard’s rate for the period from

January of 1979 to October of 1980. However. for the

period thereafter PECO asserted that Newberg’s rate

should have been limited to S175 per hour and that

hour. In addition PECO contended that the market

rate for an attorney of Trent’s experience was at best

S90 per hour.

PECO based its contention concerning the

reduction in the rates for Newberg and Ballard on the

fact that the S175 and S90 rates were the rates that had

been awarded to Newberg and Ballard in prior civil

rights fee disputes. See Institutionalized Juveniles v.

Secretary of Public Welfare, 568 F. Supp. 1020, 1034

(E.D. Pa. 1983), affd in part and vacated in part, 758

F.2d 897 (3d Cir. 1985) (dealing with Newberg): Kuhn

v. Philadelphia Electric Co., Civil Action No. 77-l107

(E.D. Pa. Jan. 20, 1982) (fee order) (dealing with both

Newberg and Ballard). Relying on these prior cases. the

district court found that those fee awards established

Newberg’s and Ballard’s marketplace billing rates for

2. BGC's counsel also challenges the district court's reduction

of the billing rate of Philip Fuoco for the year 1985. Because the

hours for which Fuoco was billing in 1985 relate to the fee petition.

Fuoco's rate reduction will be discussed in subsection III. 10.

A-31

the period of time discussed in those decisions

(through 1982 for Ballard and through 1983 for

Newberg). Thus the court reduced Newberg’s hourly

rate for the period of January 1982 to December of 1983

from 8200 to $175. Similarly. the court reduced

Ballard’s hourly rate for the period from October of 1980

to December of 1982 from SII5 to S90. Having reduced

Newberg’s and Ballard’s rate from 1980 through 1983.

the district court went on to find that there was

“insufficient evidence” to support the post-l982 and

post-1983 rates claimed by Ballard and Newberg. The

court. therefore. reduced both Newberg's and Ballard’s

claimed billing rates to rates it felt were “fair and

reasonable.” With regard to Trent. the court found that

he was less experienced than Alice Ballard. and.

consequently the court concluded that S90 per hour

was a reasonable rate for all the hours Trent had

worked.

The reasonable value of an attorneys time is the

price that time normally commands in the

marketplace. which is generally reflected in the

attornev's normal billing rate. See In re Fine Paper

Antitrust Litigation. 751 F.2d 562, 590-91 (3d Cir. 1984):

Lindy Brothers Builders. Inc. v. American Radiator &

Standard Sanitary Corp.. 487 F.2d 161. 167 (3d Cir.

1973) (Lindy I). The question of an attorney's

marketplace billing rate. therefore. is a factual

question which is subject to a clearly erroneous

standard of review. See In re Fine Paper. 75] F.2d at

591.

The hourly billing rate used in calculating the fees

in Institutionalized Juveniles and Kuhn establish a

factual basis for Newberg’s and Ballard’s marketplace

rates. Accordingly. the district court’s reduction of

Newberg’s rates between 1981 and 1983 and the

reduction of Ballard’s rates between 1980 and 1982 are

not clearly erroneous. However there is no factual

A-32

support in the record for the reductions after 1982 and

1983. PECO contended that the rates used in

Institutionalized Juveniles and Kuhn represented the

maximum rate because inflation slowed in 1984 and

1985. The district court did not accept PECO’s

argument. but it also did not accept the

uncontradicted rates set forth in Newberg’s and

Ballard’s affidavits. Instead. it appears the court felt

that because it had reduced the rates for 1980-82 and

1981-83. it should also reduce the claimed rates for

1984-85. The rate reductions for 1984-85 have no

support in the record. The historic billing rates set

forth in their uncontested affidavits establish

marketplace rate. Thus. except for the periods

discussed in Institutionalized Juveniles and Kuhn the

district court should have accepted the rates in

Newberg's and Ballard’s affidavits. Moreover. there was

no factual basis for reducing the rates set forth in

Trent's affidavit. Attorneys are not fungible. Trent's

experience relative to Ballard’s experience was not

determinative of his billing rate: rather the question is

what rate Trent commanded in the marketplace.

Ballard's affidavit asserts that the rates she charged for

her services in relevant periods are consistent with

rates charged by comparable practitioners in the

Philadelphia legal community for work of similar

nature. The rates sought by Trent are for the most part

lower. PECO filed no affidavit and offered no testimony

contesting the accuracy of Ballard’s statement with

respect to charges by comparable practitioners. Thus

the uncontradicted affidavits were never put in issue.

and the district court was not on this record free to

disregard them.

Because the district court erred in reducing

undisputed hourly rates we will reverse and direct the

district court to recalculate the lodestar using the rates

fe a ae ae el a A Md ae reno Main

A-33

set forth in the uncontested affidavits. The following

chart summarizes the rates to be used:

Newberg

Rate Rate Used by_ Rate to be

Time Claimed District Court Used on Remand

9/75 to 8/78 $135/hr $135/hr $135/hr

9/78 to 8/80 $150 $150 $150

9/80 to 12/8] $175 $175 $175

82 to 12/83 $200 $175 $175

V/84 to 8/85 $225 $190 $225

Ballard

Rate Rate Used by_ Rate to be

Time Claimed District Court Used on Remand

V/79 to 10/80 S 90/hr S 90/hr S 90/hr

10/80 to 12/82 ~=s SII5 $s 90 Ss 90

V83 to 12/83 $i25 S100 $125

V/84 to 7/84 $125 S15 $125

8/84 to 8/85 $150 $125 $150

Trent

Rate Rate Used by_ Rate io be

Time Claimed District Court Used on Remand

1979-80 $100/hr S 90/hr $i00/hr

1981-82 Si5 $s 90 SH5

1983-84 $125 S$ 90 $125

2. Hours Spent on Related Proceedings

Counsel for BGC also cross-appeals the district

court's refusal to include in the lodestar the hours

spent in preparing for a National Labor Relations

Board (NLRB) proceeding and two temporary

restraining orders. The NLRB proceeding involved an

unfair labor practice action brought by BGC in which

BGC alleged that PECO was giving privileged treatment

to another nonmajority employee association while

refusing to accord similar treatment to BGC. See Black

Grievance Committee v. NLRB. 749 F.2d 1072 (3d Cir.

1984). cert. denied. 105 S. Ct. 2703 (1985). One of the

A-34

temporary restraining orders involved a decision by-

PECO not to use two independent union hall workers

who had disregarded certain orders. The other

temporary restraining order attempted to prohibit

PECO from changing its practices of sending out

collectors in pairs. BGC asserted that the NLRB

proceeding provided valuable discovery and that the

two temporary restraining orders grew out of

Situations that illustrated PECO’s discriminatory

practices. The district court carefully considered BGC’s

arguments and rejected them.

A prevailing party in a Title VII or section 198] suit

is entitled to recover attorney's fees for the time

“reasonably expended on litigation.” Hensley. 461 U.S.

at 433. In protracted litigations the district court must

distinguish between those hours that were related to

the issues on which the party prevailed and those

hours that were expended on unrelated matters. See

Pennsylvania v. Delaware Valley Citizens’ Council

for Clear Air. 106 S. Ct. 3088. 3096 (1986) (prevailing

party in action under the Clean Air Act could recover

attorneys’ fees for time spent monitoring the

defendant's performance of a consent decree): see

Webb v. Board of Education of Dyer County. 105 S. Ct.

1923, 1928 (1985) (prevailing party in section 1983 suit

could not recover attorney's fees for time spent

pursuing administrative proceedings). The classifi-

cation the district court makes in this respect is

subject to an abuse of discretion standard of review.

See Delaware Valley, 106 S. Ct. at 3096: Webb. 105 S.

Ct. at 1929.

The NLRB proceeding and the temporary

restraining orders were separate matters from the

employment discrimination class action. Moreover.

neither restraining.order was granted. Thus the

district court did not .abuse its discretion in

concluding that these proceedings were not useful or

A-35

necessary to secure the settlement of the class action.

See Webb. 105 S. Ct. at 1929. We will therefore affirm

the court's refusal to award fees for the hours spent on

these matters.

3. The “Result-Obtained” Adjustment

In Hensley the Supreme Court held that “where

the plaintiff achieved only limited success, the district

court should award only that amount of fees that is

reasonable in relation to the result obtained.” 46] U.S.

at 440. While it is clear that a district court must now

consider the result-obtained factor. there is no “precise

rule or formula” for evaluating the result obtained and

the determination is a matter of district court

discretion. Id. 436-37. In the present case the district

court adjusted BGC’s lodestar downward by only 25%

because BGC was not completely successful .>

obtaining the relief it sought.

PECO challenges the district court’s result:

obtained adjustment on two grounds. First. PECO

advocates a mechanical comparison of the claims

alleged in one of BGC’s pretrial memoranda to the relief

obtained in the consent decree. This argument only

underscores the need for district court discretion in

determining the result-obtained adjustment. As PECO

itself admits there is an initial problem in determining

what to compare. Here this problem is compounded by

the fact that the case was settled rather than fully

litigated. Even where claims can be compared to

results. however, because the claims do not bear a

quantitative relationship to the result, the comparison

is subjective. For these reasons the Hensley Court

expressly rejected a mechanical comparison. See 461

U.S. at 435 n.ll. PECO’s first argument concerning the

result-obtained factor, therefore, is without merit.

Second, PECO argues that the district court erred

in adding a 50% “value to the class” factor to its

A-36

result-obtained adjustment. While it is true that the

district court seemed to segregate its analysis by first

determining the success factor and then adding a

value-to-the-class consideration to come up with an

overall result-obtained adjustment, the court's

determination is not inconsistent with Hensiey. In

Hensley the Court emphasized that it was the overall

result of the litigation that mattered. 46] U.S. at 435.

Because BGC's suit involved a class action the value to

the class is certainly an important consideration in

measuring the overall success. Cf. City of Riverside,

106 S. Ct. at 2694-95 (holding that attorneys’ fees do

not have to be proportionate to the amount of damages

a civil rights plaintiff receives because “a civil rights

plaintiff seeks to vindicate important civil and

constitutional rights that cannot be valued solely in

monetary terms.”) In addition the settlement provided

broad-based relief such as hiring goals, training

programs, and department reforms that could result in

future class benefits. Thus the district court was not

really adding a new factor into the Hensley

result-obtained adjustment, and because the litigation

ended in a settlement that provided broad-based relief,

the district court did not abuse its discretion in

making only a 25% downward adjustment in the

lodestar for the result obtained.

4. Contingency Adjustment

In addition to adjusting the lodestar because of the

result-obtained factor, the district court also adjusted

the lodestar upward by 50% for the contingent risk

faced by BGC's counsel in bringing this lawsuit. This

adjustment was designed to compensate BGC's

attorneys for the risk that they may have recovered no

fees because BGC may not have prevailed in its lawsuit.

The Supreme Court has yet to decide whether a

contingent risk adjustment is proper. See Delaware

Valley, 106 S. Ct. at 3100: see also Blum. 465 U.S. at

A-37

901 n.17. This court, however, has held that contingent

risk adjustments are permissible. See Hall v. Borough

of Roselle, 747 F.2d 838. 842-43 (3d Cir. 1984): Lindy

Brothers Builders, Inc. v. American Radiator &

Standard Sanitary Corp.. 540 F.2d 102, 116-117 (3d Cir.

1976) (Lindy II). Nevertheless, to harmonize this

holding with the Supreme Court's decision in Blum,

where the Court held that the mere recital of

adjustment factors was insufficient to justify a lodestar

adjustment without actual support from the record,

this court has placed the burden of proving the

necessity for a contingent adjustment on the plaintiff.

See Hall, 747 F.2d at 843.

BGC's attorneys specifically identified the risks

they faced in instituting this litigation. They point out

that (1) this case involved a large number of discrete

issues, (2) allegations of company-wide racial

discrimination are factually and legally difficult to

prove. (3) certain legal defense presented open

questions of law. and (4) PECO was prepared to provide

a strong defense. The district court also pointed out

the difficulty BGC faced in demonstrating

company-wide racial discrimination through a large

number of individual complaints and the risk BGC

faced in that the litigation may have proven to be a

iabor dispute within the exclusive jurisdiction of the

National Labor Relations Board rather than a Title VII

or section 198] suit. The district court thus stated that

the present lawsuit has been as extended, as

complex. as expensive and as likely to

consume the time of the court. the parties and

counsel as any Title VII or other class action

ever tried in the United States.

Joint Appendix at 497a. Plaintiffs also knew that they

would have to deal with the fact that certain of PECO’s

most egregious practices had. at least on paper. already

A-38

been purportedly remedied by the 1973 Consent

Decree in United States v. Philadelphia Electric Co..

thereby leaving plaintiffs the task of combatting the

more subtle and difficult-to-prove forms of

discrimination. In order to meet this challenge.

plaintiffs devised a number of novel approaches. see

Supra part 2 (“Hours spent on related proceedings’).

This approach to the case development reflects the

difficulty of the case. Thus the court's contingent risk

findings are not clearly erroneous. Furthermore: the

amount of the multiplier is a matter within the district

court's discretion and here the court has not abused

that discretion.* See Lindy II. 540 F.2d at 116. See also

Ursic v. Bethlehem Mines. 719 F.2d 670. 674-75 (3d

Cir. 1983).

5. Double Counting

PECO argues that the district court considered the

success factor twice: once in its evaluation of the

relief-obtained adjustment and again in its calculation

of the contingent-risk adjustment. Thus PECO asserts

that the district court committed a legal error by

double counting the success factor. After a careful

reading of the district court's opinion. we are unable to

say with confidence whether or not the relief obtained

: played any role in his assessment of the contingency

adjustment. On remand. the district court should

clarify the rationale underlying its .50 contingency

adjustment. If the relief obtained played any role in

determining that adjustment. it should be

reconsidered without reference to the relief obtained.

6. Delayed Payment Adjustment

The final lodestar adjustment the district court

4 PECO’s argument that only the risks faced at the time of the

thing can be considered must fail given this court's decision in In re

Fine Paper Antitrust Litigation, 751 F.2d 562 (3d Cir. 1984).

A-39

made was a 25% upward adjustment for the delay in

payment. The court justified the size of this

adjustment by reasoning that “|nJo counsel fees

became potentially payable until the consent decree

was approved at which point plaintiff could be named

the prevailing party. Indeed, no fees became payable

until this court rules on the fee petition.” See Black

Grievance Committee v. Philadelphia Electric Co.,

Civil Action No. 75-3156, slip op. at 19 (E.D. Pa. August

13, 1985). reprinted in Joint Appendix at 975. BGC

challenges the size of the court’s delayed-payment

adjustment, arguing that the court adopted an unduly

narrow view of the remedial purpose of the

deiayed-payment adjustment.

Several principles affecting our resolution of this

issue are already established. First, recognizing that

the payment for attorney services rendered in the past

deprives an attorney of the time value of money, the

Third Circuit has permitted an adjustment for the

delay in payment. See Institutionalized Juveniles, 758

F.2d at 922. Second, while the district court is not

required to award a delay-in-payment adjustment that

is equal to the prevailing rate of interest, id. at 923, the

adjustment should not be limited to the period of time

from the fee determination. See id. at 923-24. In

contrast to a contingent fee arrangement, statutory

fees are designed to compensate an attorney as if the

plaintiff was a normal fee-paying client. See S. Rep. No.

94-10ll, 94th Cong., 2d Sess. 6. reprinted in 1976

U.S. Code Cong. & Ad. News 5908, 5913. The delay-in-

payment adjustment. therefore, is designed to compen-

sate the attorney for the time gap between the actual

expenditure of services and the fee award. See In re

Fine Paper. 715 F.2d at 588. The period following the

fee determination, on the other hand, is covered by

post-judgment interest provided for in section 196] of

title 28 of the United States Code. See Institution-

A-40

alized Juveniles, 758 F.2d at 927. Although “(t]he

decision to award a multiplier for delay in payment and

the amount of such a multiplier are determinations

within the discretion of the district court,” id. at 922,

the court abused its discretion in this case by not

considering the appropriate time period for which the

delay-in-payment adjustment is designed to

compensate. We will, therefore. remand for a correct

analysis.

7. Order of Lodestar Adjustments

After determining the various lodestar

adjustments, the district court added these

adjustments together and multiplied the lodestar by

that net adjustment. These adjustments -- a 25% delay

enhancer, a 50% contingency enhancer, and a 25%

result-obtained reducer -- produced an overall

adjustment of 50%, which when multiplied by the

lodestar ($283,023.50) yielded an adjusted lodestar of

$424,535.25. PECO contends that the district court

erred in simply adding the various reducers and

enhancers together to obtain a net adjustment.

Neither the Supreme Court nor this court has

adopted a specific methodology for applying

adjustments to the lodestar. To establish a uniform

practice in the Third Circuit, we now hold that a

district court should first apply the result-obtained

adjustment to the lodestar. Following this adjustment,

the court should then add together the other (whether

they be reducer or enhancer) adjustments it has found

to be justified and multiply that combined factor by the

result-obtained-adjusted lodestar. We establish this

rule because of the practical desirability of having a

uniform methodology. We adopt this particular meth-

odology because the Supreme Court has recently

indicated that the result-obtained adjustment is closely

related to the lodestar, see Delaware Valley, 106 S. Ct.

at 3098, and consequently this method is consistent

A-41

with current Supreme Court pronouncements on

lodestar adjustments, see id.; Blum, 465 U.S. at

898-901; Hensley, 461 U.S. at 436.* We, therefore,

remand and direct the district court to recalculate the

fee award using the lodestar adjustment methodology

we have adopted.

8&9. Time Spent in Preparing the Fee Petition

The district court awarded BGC’s attorneys

$7,672.50 for the time spent in preparing the fee

petition. In calculating this award the court reduced

the hourly rate of each attorney to a standard $75.00

per hour and treated these hours outside the

civil-rights-litigation lodestar. Both PECO and BGC

attack this determination. PECO challenges the award

because it fails to take account of BGC’s lack of success

in obtaining the fee petition award it sought. BGC, on

the other hand, argues that the court improperly

reduced the hourly rate to a standard $75 per hour.

Like the time spent in litigating the civil rights

claim, the time spent in preparing the fee petition is

recoverable as a statutorily authorized attorney's fee

award. See Durett v Cohen, 790 F.2d 360, 363 (3d Cir.

1986); Prandini v. National Tea Co., 585 F.2d 47, 54

(3d Cir. 1978). The fee petition litigation, however, is “a

separate entity subject to lodestar and Hensley

reduction analysis.” Institutionalized Juveniles, 758

F.2d at 924. Thus, although the district court still has

discretion to determine the compensation for the fee

litigation, id. at 925, that discretion must be exercised

in light of the same considerations that affect the

lodestar determination. See Durett, 790 F.2d at 363,

In the instant fee petition award the district court

abused its discretion twice: once in failing to consider

4. Once the Hensley reducer is used, the fee in a partial-success

case is the functional equivalent of the final lodestar in a

complete-success case.

A-42

the petitioning counsel's success in obtaining the full

fee award sought. and a second time in reducing the

hourly rate to a standard $75 per hour when PECO

filed no affidavit contesting the historical rates or the

time spent. We will therefore direct the district court to

accept the hourly rates set out in the attorneys’

uncontested affidavits and remand so that the district

court can reconsider the fee award for work on the fee

petition in light of the result-obtained factor and any

other factor the court finds to be an appropriate

consideration.

iO. Expert Witness Fee Expenses

The final issue that PECO raises in its appeal

concerns the district court’s award of $13,213.30 in

costs for expert witnesses expenses. These expenses

were awarded to cover BGC’s payments to two

industrial psychologists and a certified public

accountant. BGC’s affidavits state that the industrial

psychologists were retained to “review test validation

studies previously conducted by PECO .. .[and] each

[doctor] would have testified concerning improperly

validated tests that were then in use by PECO.” Joint

Appendix at 914. The affidavits also explain that the

accountant was hired to give an “opinion at the

settlement approval hearing of the steps necessary for

PECO to implement the several provisions requiring

changes in personnel policies or establishment of new

programs as required by the Consent Decree.” Id. at

915. .

PECO contends that we should remand because

the district court failed to articulate the reasons

justifying its award of actual expenses. which was

greater than the standard witness fee allowed for in

section 182] of title 28 of the United States Code.

Section 182] provides a standard per diem fee for the

compensation of witnesses who appear in federal

court. 28 U.S.C. § 1821 (1982). This court has held.

we eee

A-43

however. that a district court has “equitable

discretion” to award expert fees beyond those provided

for in section 182! when the expert's testimony is

indispensable to the determination of the case. See

Roberts v. S.S. Kyriakoula D. Lemos, 651 F.2d 201, 206

(3d Cir. 1981) (maritime tort action).

In the instant case. the district court failed to

make specific findings concerning the indispensability

of the experts’ testimony to the achievement of the

settlement of the employment discrimination class

action. We therefore reverse and remand so that the

district court can consider the importance of the

experts’ testimony and make specific findings in light

of Roberts.

IV.

For the foregoing reasons, we will vacate the

district court's fees and costs awards. On remand the

district court is directed to recalculate the lodestar

using the uncontested billing rates set out in the

attorneys’ affidavits. while considering any testimony

PECO may offer that these rates were unreasonable. In

light of this opinion the court will also have to

reconsider and/or recalculate the Contingency and

delay-in-payment adjustment, the order in which the

various adjustments are applied to the lodestar. the fee

award for work on the fee petition, and the award for

experts costs. The district court need not. however.

reconsider its decision to reduce the lodestar by 25%

because of the result-obtained factor. Nor should the

court reconsider its decision to exclude from the

lodestar the hours spent by BGC’s counsel in preparing

for the NLRB proceeding and the two temporary

restraining orders.

Each party shall bear its own costs on this appeal,

and no fee award shall be considered for work done in

connection with this appeal until the district court has

A-44

recalculated the fees and costs consistent with this

opinion. Once the fees and costs for the underlying

settlement and fee dispute are established the parties

to the district court. Cf. Guido v. Schweiker, 775 F.2d

107 (3d Cir. 1985).

A True Copy:

Teste:

Clerk of the United States Court of Appeals

for the Third Circuit

“tight!

sie

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.