Petition for Writ of Certiorari — Jenkins v. Missouri

Supreme Court, U.S,

FILBD

JUL 9 1968

No. 87- JOBEPH F SPANIOL, J,

In the Supreme Court of the United States

OCTOBER TERM, 1987

KALIMA JENKINS, et al.,

Petitioners,

-\-

THE STATE OF MISSOURL et al.,

Respondents.

PETITION FOR A WRIT OF CERTIORARI TO THE

UNITED STATES COURT OF APPEALS

FOR THE EIGHTH CIRCUIT

RUSSELL E. LOVELL II*

3111 40th Place

Des Moines, lowa 50310

515-271-3985

ARTHUR A. BENSON II

1430 Commerce Tower

911 Main Street

Kansas City, Missouri 64105

816-842-7603

Attorneys For Petitioners

Kalima Jenkins, et al.

*Attorney of Record

QUESTIONS PRESENTED

Whether the courts below erred in

denying petitioners a contingency enhan-

cement despite finding "that the Kansas

City market generally compensates’ for

assuming the risk of contingency cases"

and uncontroverted proof that in major

school desegregation cases plaintiffs

encounter great difficulty obtaining coun-

sel on a contingent fee basis even with

the prospect of a court-awarded con-

tingency enhancement.

PARTIES TO THE PROCEEDING

IN THE COURT OF APPEALS

The parties to the proceeding in the

Court of Appeals were as follows:

Appellees/cross-appellants (now

petitioners):

Kalima Jenkins, by her next friend,

Kamau Agyel

Carolyn Dawson, by her next friend,

Richard Dawson

Tufanza A. Byrd, by her next friend,

Teresa Byrd

Derek A. Dydell, by his next friend,

Maurice Dydell

Terrance Cason, by his next friend,

Antoria Cason

Jonathan Wiggins, by his next friend,

Rosemary Jacobs Love

Kirk Allan Ward, by his next friend,

Mary Ward

Robert M. Hall, by his next friend,

Denise Hall v4

Dwayne A. Turrentine, by his next

friend, Sheila Turrentine

Gregory A. Pugh, by his next friend,

Barbara Pugh

Cynthia Waters, by her next friend,

David Winters, on behalf of them-

selves and the class of black and

- ii -

white present and future students

in the Kansas City, Missouri School

District.

Appellant/cross-appellees (now

respondents) the Kansas City, Missouri

School District and Dr. George Garcia,

Superintendent.

Appellants/cross-appellees (now

respondents):

The State of Missouri

Honorable John Ashcroft, Governor of

the State of Missouri

Robert Bartman, Commissioner of

Education of the State of Missouri

Wendell Bailey, Treasurer of the State

of Missouri

The Missouri State Board of Education:

Roseann Bentley, President

Dan Blackwell

Terry A. Bond

Roger L. Tolliver

Raymond McCallister, Jr.

Susan D. Finke

Thomas R. Davis

Cynthia B. Thompson

TABLE OF CONTENTS

QUESTIONS PRESENTED... cccccccccccccecses i

PARTIES TO THE PROCEEDING IN THE

COURT OF APPEALS .cccccccccccccccecs ii

Zemes Ge BSE CEOs ccceccscseceocbecces vii

CRSMEGUD Bsa cccticccccecesianvceseees 2

PUREST LOM cc cccccsceccosccsccececeess 2

STATUTORY PROVISIONS INVOLVED.......... 3

STATEMENT OF THE CASE. .cccccccccccccces 3

I. Preliminary Statement............ 3

A. The "Merits" Litigation...... 4

B. The “Fees” Litigation........ 5

1. Extraordinary Preclusion

and Delay in Payment

Problems Were Presented

DY CRO CeOGccccencesecooe 9

2. Desegregation Plaintiffs

Experience Great Difficulty

Obtaining Counsel Without

The Prospect of Risk

Enhancement...... eccccees 1l

3. The Kansas City Market

Compensates for Risk in

Successful Contingent

POG CBBOB. ccccccccccccces 14

C. The District Court Decision.. 16

D. The Court of Appeals

st ht. Pererrerre Terre rrrrrrre 18

REASONS FOR GRANTING THE WRIT.......... 22

I. The Court Should Grant Certio-

rari Because The Contingency

Enhancement Evidentiary Standard

Applied By The Court Of Appeals

Either Conflicts With This Court's

Decision In Delaware Valley II,

Or, Reflecting The Existing

Confusion In The Lower Courts,

Represents An Important Question

Of Federal Law Which Has Not Been,

But Should Be, Settled 3y

PRIS Courtcccccccecccscsseccsccsameos 44

Fae 2 eee ee ee ee ee 22

1. Delaware Valley II........ 22

2. The "Two Court" Rule Does

Not ApplY.ccccccccccccoces 25

B. The Court Should Grant

Certiorari Because The Court

Of Appeals' Decision Denying

Plaintiffs A Contingency

Enhancement Squarely Conflicts

with Delaware Valley II...... 27

C. The Court Should Grant Certio-

rari Because The Evidentiary

Standard To Establish

Entitlement To A Contingency

Enhancement, As Fashioned By

The Court Of Appeals, Permits

Enhancement Only In The Rare

Or Exceptional Case, A

Standard Far More Stringent

Than And In Conflict With

This Court's Decision In

Delaware Valley II........... 33

D. There Is Confusion And Conflict

Among The Circuits As To

Whether The Individual Case's

Likelihood Of Success, The

Factor Upon Which The District

Court Denied Petitioners’

Contingency Enhancement,

Remains A Relevant

Consideration After

Delaware Valley I1......... -- 38

E. The Court Should Grant Certio-

rari Because The Evidentiary

Standard Which Plaintiffs Must

Meet In Order To Establish

Entitlement To A Contingency

Enhancement Is An Important

Question Of Federal Law Which

Has Not Been, But Should Be,

Settled By This Court........ 41

CONCLUSION... ceeccsccces eccccccccccece 49

TABLE OF AUTHORITIES

Cases

Black Grievance Committee v. Philadelphia

Electric Co., E.D.Pa. No. 75-3156

(6-20-1988). wc cccccccccces ececes 45,46

Blum v. Stenson,

GSe Gebbe Geese CEPSCGD ceccsssecensce 37

Blum v. Witco Chemical Corp.,

829 F.2d 367 (3d Cir. 1987)..20,34,35,

36,42,43,44,47

Catlett v. Missouri Highway and

Transportation Commission, 828 F.2d

1260 (8th Cir. 1987).............. 21

Conklin v. Lovely,

834 F.2d 543 (6th Cir. 1987)...... 40

Coup v. Heckler,

834 F.2d 313 (3d Cir. 1987)....... 36

Crumbaker v. Merit Systems Protection

Board, 827 F.2d 761

(PeG CAF. A9STdccccccescescceccese 34

Friends of the Earth v. Eastman

Kodak Co., 834 F.2d 295

fa Gale Gee rectoussedsbdosscocees 40

Graver Mfg. Co. v. Linde Co.,

336 U.S. 271 (1949) .cccccccccccces 26

Hensley v. Eckerhart,

461 U.S.424 (1983) .cccccccccece 7,8,17

Hidle v. Geneva County Bd. of Educ.,

681 F.Supp. 752 (M.D.Ala. 1988)... 45

Jacobs v. Mancuso,

825 F.2d 559 (lst Cir. 1987)...... 39

- vii -

Jenkins by Agyei v. State of Missouri,

838 F.2d 260 (8th Cir. 1988)...... 18

Jenkins v. State of Missouri,

593 F. Supp. 1485 (W.D. Mo. 1984). 5

Jenkins v. State of Missouri,

639 F. Supp. 19 (W.D. Mo. 1985)... 5

Jenkins v. State of Missouri,

807 F.2d 657 (8th Cir. 1986)

(en banc),cert. denied. U.S.

, 108 S.Ct. 70, 98 L.Ed.2d 34

el yp FPP PTT Ter Tere rrrrrrrryrrTesT? 5,6

Leroy v. City of Houston,

831 F.2d 576 (5th Cir. 1987).... 34,36

McKenzie v. Kennickell, D.D.C. No.

73-0974 (4-18-1988)... ccc ccccccs 28,45

Milliken v. Bradley,

433 U.B. 267 CAOTTdecccccccscccces 5

Norman v. Housing Authority of City of

Montgomery, 836 F.2d 1291

(llth Cir. 19BB).ccccccccscccccces 36

Northcross v. Bd. of Ed. of Memphis

City Schools, 611 F.2d 624

(6th Cir. 1979, cert. denied,

447 U.S. 911 (19BO) .cccccccccccces 40

Palmer v. Shultz,

679 F.surp. 68 (D.D.C. 1988)..28,45,47

Pennsylvania v. Delaware Valley

Citizens’ Council for Clean Air,

__ U.S. __, ~ 106 S.Ct. 3088,

CAPES Pc cccneseeoeesecédseedseoesere 37

Pennsylvania v. Delaware Valley

Citizens’ Council for Clean Air,

__ U.S. _, 107 &.Ct. 30768,

y= * 8 oo) ys reer passim

- viii -

Spell v. McDaniel,

824 F.2d 1380 (4th Cir. 1987)... 34,39

Student Public Interest Research Group

of New Jersey, Inc. et al. v. AT&T

Bell Laboratories, 842 F.2d 1436

(3G CSS sc B9SSdcccccccccccesccesces 36

Thompson v. Kennickell,

836 F.2d 616 (D.C.Cir. 1988)..34, 36,39

Statutes

The Civil Rights Attorneys Fees Awards

Act of 1976, 42 U.S.C. § 1988

C192 decccccccccccccceccecccors 3,4,22

No. 87-

IN THE

SUPREME COURT OF THE UNITED STATES

October Term, 1987

KALIMA JENKINS, et al.,

Petitioners,

_—

THE STATE OF MISSOURI, et al.,

Respondents.

PETITION FOR A WRIT OF CERTIORARI

TO THE UNITED STATES COURT OF APPEALS

FOR THE EIGHTH CIRCUIT

Petitioners, KALIMA JENKINS, the named

representative of a certified class, et

al., respectfully pray that a writ of cer-

tiorari issue to review the judgment of

the United States Court of Appeals for the

Eighth Circuit affirming the denial of a

contingency enhancement of the attorney's

fees awarded petitioners for the work of

their lead counsel, Arthur Benson.

OPINIONS BELOW

The opinion of the United States Court

of Appeals for the Eighth Circuit,

reported at 838 F.2d 260, is set out in

the Appendix, 2a. The unpublished May ll,

1987 order of the United States District

Court for the Western District of Missouri

is at 43a. The unpublished July 14, 1987

order of the District Court amending its

May 11, 1987 order is at 9la.

JURISDICTION

The jurisdiction of the Court is

invoked under 28 U.S.C. § 1254(1). The

Court of Appeals entered judgment on

January 29, 1988, and denied the State of

Missouri respondents' request for

rehearing on April 13, 1988.

STATUTORY PROVISIONS INVOLVED

This case involves The Civil Rights

Attorneys Fees Awards Act of 1976, 42

U.S.C. § 1988 (1982), which provides in

relevant part:

In any action or proceeding to

enforce a provision 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 reasonable

attorney's fee as part of

the costs.

STATEMENT OF THE CASE

I. Preliminary Statement

This petition arises from the attor-

neys' fees phase of the Kansas City,

Missouri school desegregation case. The

action arose under the Constitution and

laws of the United States and 28 U.S.C. §

1343 and jurisdiction of the United States

District Court was based on 28 U.S.C. §

1331. The school children petitioners, as

prevailing parties in the school desegre-

gation case concluded against the State of

Missouri and the School District of Kansas

City, Missouri (KCMSD), sought a

reasonable attorney's fee for their

counsel's work in vindicating their

constitutional rights, principally

pursuant to 42 U.S.C. § 1988.

A. The "Merits" Litigation

Following extensive discovery that

involved over 180 depositions and a trial

that required 93 days, petitioners

obtained a judgment against the State of

Missouri and the KCMSD imposing joint

liability for the segregated schools of

Kansas City on September 17, 1984.

Jenkins v. State of Missouri, 593 F.Supp.

1485 (W.D.Mo. 1984). After two more weeks

of trial, petitioners obtained an order

against the State and the KCMSD on June

14, 1985, requiring $37 million in capital

improvements and $50.7 million in new

operating programs to remedy the constitu-

tional violations found by the district

court. Jenkins v. State of Missouri, 639

F. Supp. 19 (W.D. Mo. 1985).

On appeal, the United States Court of

Appeals for the Eighth Circuit affirmed

the district court's dismissal of the

Suburban school districts and certain

federal defendants and affirmed the

Milliken II (Milliken v. Bradley, 433

U.S. 267 (1977)) remedies imposed on the

State and the KCMSD (with some

modifications). Jenkins v. State of

Missouri, 807 F.2d 657 (8th Cir. 1986)(en

banc), cert. denied, us - , 108

S.Ct. 70, 98 L.Ed.2d 34 (1987).

B. The “Fees” Litigation

Arthur Benson, petitioners' lead

counsel, commenced his representation of

petitioners in February 1979. During the

course of the litigation Benson's repre-

sentation encompassed not only his

personal efforts, but also those of two

associates, seven paralegals, and his

secretarial and clerical staff. Because

the resources of his law office were

limited to those just described, Benson

eventually obtained the assistance of the

NAACP Legal Defense and Education Fund,

Tae. (LDF). Several LDF attorneys

assisted Benson on the litigation and the

LDF shared the burden of the litigation

expenses. (Since this Petition for Writ

of Certiorari is limited to the denial of

a contingency enhancement on petitioners'

claim for Benson's services, the factual

discussion will be limited to the legal

services Benson provided petitioners.)

Petitioners’ attorney's fees request

covered seven years' work through June 30,

1986, and included work on the liability

and the initial remedy stages of the case

and first year monitoring. In recognition

that petitioners were unsuccessful in cer-

tain claims against the suburban districts

and the federal defendants, and that

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

would require some reduction in fees,

petitioners volunteered a reduction of

4,490 of Benson's hours. 96a - 97a.

(This voluntary reduction, based on the

hourly rates actually awarded by the

district court, was $318,761, approxima-

tely 21% of the lodestar petitioners

requested for Benson.) The requested

lodestar, after the Hensley reductions,

was based on 9677 attorney hours and 5586

paralegal hours.

Petitioners sought a risk or _ con-

tingency enhancement on behalf of Benson,

requesting an enhanced hourly rate of $375

for Benson for work done through September

17, 1984, the date of the district court's

ruling on liability (and a $240 hourly

rate for his associates' work). The

requested enhancement was reduced to $250

per hour for Benson (and $160 per hour for

his associates) for the remedy work done

through June 30, 1985, the date of the

principal decision on remedies. See

generally, “Suggested Approach to Awarding

Fees," filed Jan. 16, 1987, Tab XII, at

pages 4-5. No risk enhancement was sought

for monitoring or for the fees

litigation.

The district court held a one-day

evidentiary hearing on February 27, 1987.

l. Extraordinary Preclusion and Delay

in Payment Problems Were Presented

by the Case.

Benson's contract with the petitioners

provided for payment only through court-

awarded attorney's fees should the litiga-

tion prove successful. Benson Aff., Feb.

5, 1986, Tab D at 2. Neither petitioners

nor the LDF paid Benson any fees for his

work on this case. The district court

made the following findings in its May ll,

1987 Order (5la - 52a):

{[F]Jrom early 1983 until the end

of 1985 Benson devoted nearly all

of his professional time to this

case and was thereby precluded

from accepting other employment.

Similarly, Benson's staff was

also precluded from other

employment for a period of at

least one year while working full

time on this litigation.

a

- 10 -

From 1983 through 1986 Benson borrowed

in excess of $633,000 in order to maintain

his law firm as a viable organization

through the course of the litigation.

Benson Aff., Jan. 16, 1987, Tab III; T. at

131-132; see also June 30, 1987 D.Ct.

Order, at page l. This debt was incurred

by Benson to obtain the funds necessary

pay his own and staff salaries, his

office overhead, and $73,000 in direct

litigation expenses. Through December 31,

1986, Benson had paid $113,706 in interest

on this indebtedness, and he continued to

pay approximately $5000 per month in

interest. Benson Aff., Jan.16,1987, Tab

Ill. In addition to the $633,000 owed

financial institutions, Benson owed his

associates and staff some $97,000 in

deferred compensation for overtime worked

on the case. T. at 125, 131.

= ii «

The economic loss due to delay in

payment was quantified by the uncontro-

verted testimony of Robert Weil, a promi-

nent expert on law office economics, and

John Ward, a University oof Missouri

professor of economics. Both testified

that payment at current hourly rates would

not adequately compensate for the delay in

payment, with Weil explaining that “hourly

rates have not gone nearly as high as the

compounding effect of use on interest

rates." T. at 116. Weil explained that,

even assuming Benson's hourly rate was

only the midwest average of $72.50 in

1979, Benson would have to be paid $203

per hour in 1987 (based on the prime rate

plus 1%) to be fully compensated for tie

Gelay in payment for work done in 1979.

T. at 113-114; P.Ex. 5 at p.l10d.

2. Desegregation Plaintiffs

Experience Great Difficulty

Obtaining Counsel Without The

Prospect of Risk Enhancement.

= 12 -

Max Foust, one of Kansas City's most

experienced and respected trial attorneys,

Gordon Gee, a Kansas City attorney

experienced in complex federal litigation,

and Mark Bennett, the leading civil rights

private practitioner in Iowa, testified as

to the enormous investment required of

Benson to litigate this case and the

extraordinary and complete preclusion of

Benson's law practice for nearly three

years. T. at 80-87; Attachments V

(Bennett at 3-5) and VII (Gee at 6-7) to

Plaintiffs’ Brief, filed Jan. 16, 1987.

Foust and Gee testified that their law

firms would not have undertaken this case

due to the economic devastation such

preclusion would have had on their firm's

overall practice.) TT. at 87; Attachment

VII, Supra at 6-7. Bennett testified that

lrpoust testified (T. at 88): "[I]t

would have presented a matter of such

magnitude that it would have destroyed my

= })3 -

his firm. which specializes in civil

rights ii* sation, would not have repre-

sented “the plaintiffs without remunera-

tion of a substantial retainer and ongoing

payment of my hourly rate of $125.00 per

hour." Attachment V, supra at 5-6.2

Julius Chambers, Executive Director

for the NAACP Legal Defense and Education

Fund, testified that this case proved to

be the largest and most expensive ever

litigated by the LDF. T. at 48. Chambers

testified that the LDF's litigation

efforts rely heavily on the labors of

attorneys in the community in which the

litigation occurs. These private

office and what I do. I mean, I wouldn't

have had the personnel, and I have got

seven lawyers. I wouldn't even have con-

sidered it, as I understand what all went

on."

2Bennett testified: “In my opinion,

this case presented, at the outset, a very

substantial degree of risk due to the

sheer magnitude and complexity of litiga-

tion that is not present in most civil

pO EE oEoEoeE—eG

« j4 «

attorneys, called "cooperating" attorneys,

are paid no fees by the LDF. fT. at 50.

Chambers testified (T. at 51-52):

We have encountered in recent

years some real difficulty in

getting cooperating attorneys to

become involved with us in cases.

sk 8 In school cases, because

school cases take so long and the

recoveries are so limited in

terms of attorney fees, generally

that, we have difficulty in

getting cooperating attorneys to

become involved in these cases.

3. The Kansas City Market Compensates

for Risk in Successful Contingent

Fee Cases.

Foust also testified his firm regu-

larly reviews its yield on each case and

has made it a practice to maintain

rights cases. Indeed, the magnitude of

this litigation presents such formidable,

if not insurmountable, hurdles, I know of

no small or mid-size firm, let alone a

firm that specializes in civil rights,

which would have been in a position to

undertake this litigation." Attachment V,

Supra at 6.

» 4% =

"meticulous [time] records on contingent

fees for probably 15 years." T. at 1%

Those records showed that the attorneys in

Faust's firm have earned fees in success-

ful cases litigated on a contingency fee

basis which average $400 to $500 per hour,

T. at 78-79, or roughly three to four

times what an attorney's hourly billing

rate would be in noncontingent cases. T.

at 87; see also affidavits of Kansas City

attorneys Michael Waldeck (contingency fee

compensation is “often three to four times

and can be as much as ten times greater

than the fee which would be received if

the case were billed on an hourly basis")

and Ilus Davis, Plaintiffs' Motion for

Partial Award of Attorneys' Fees’ and

Expenses, Tab E, filed February, 1986.

Faust testified his firm's experience was

representative of contingent fee compen-

» 36 «

Sation in the Kansas City area. 7. 2

78-79. Law office economics expert Robert

Weil confirmed that the $400 to $500

hourly return from successful contingent

fee litigation accurately represented the

national experience as well. T. at 117.

C. The District Court Decision

On May 1l, 1987, the district court

awarded petitioners fees and expenses of

$1,614,437 for the work of Benson and his

staff on the merits and $72,702 for their

work on the fees litigation. 85a. The

district court amended its judgment on

July 14, 1987 and awarded an additional

$42,090 for Year I monitoring fees and

expenses. 95a. The total amended fees

judgment for Benson's work is

$1,729,230.37.3

3This judgment includes nearly $55,000

which Benson owes to counsel who assisted

=~ 7 -

The district court based its’ fees

calculation on hourly rates of $80 for

Benson's associates, $40 for Benson's

paralegals, and $200 for Benson's personal

time (87a - 88a); it awarded the hours

requested in their entirety (which

reflected the 21% Hensley reduction).

The district court stated that the hourly

rates awarded Benson included an

enhancement to compensate him for the

Substantial delay in payment, preclusion

of other work, and the loss of work due to

the undesirability of the case. 5la - 53a

The precise amount of the enhancement was

not stated; but the apparent result was a

$25-40 per hour increase of Benson's per-

him on the fees litigation or on part of

the merits litigation. 87a - 88a. It

also includes nearly $80,500 in reimbur-

sement for direct litigation expenses.

88a - 89a.

=» 18 «

sonal hourly rate (and a total enhancement

in the range of $125,520 to $200,832). The

district court, however, declined to award

any contingency enhancement to petitioners

for Benson's work on the ground that

"plaintiffs' likelihood of success. in

their claim against the State of Missouri

defendants was very high, and thus

Benson's risk of nonpayment was’ very

slight". 56a.

D. The Court of Appeals Decision

The court of appeals affirmed the

judgment of the district court in all

respects. Jenkins by Agyei v. State of

Missouri, 838 F.2d 260 (8th Cir. 1988).

The court acknowledged that «= the

"district court's order was entered before

the Supreme Court handed down its decision

in Pennsylvania Vv. Delaware Valley

« 346 -«

Citizens' Council for Clean Air, __ U.S.

» -A67 8.Ct. —3078, 97 4.86.24 . 385

(1987)(Delaware Valley II)", 38a. The

court found that Justice O'Connor's opi-

nion was the touchstone by which to judge

contingency enhancement ' requests. It

concluded plaintiffs must prove. (1) "that

the relevant market compensates for con-

tingency cases as a class, rather than on

proof of any particular risks peculiar to

the case in question", 39a, and (2) "that

‘without an adjustment for risk the pre-

vailing party "would have faced substan-

tial difficulties in finding counsel in

the local or other relevant market."'"

Id. (quoting J. O'Connor Op. which quoted

J. White Plurality Op.).

Although the court recognized

Delaware Valley II represented an inter-

vening decision and that the district

- 26 «

court did not apply the correct standard

to petitioners' contingency enhancement

request,

remand:

the court declined to reverse or

[P]laintiffs would have fared no

better under Justice O'Connor's

analysis, since they failed to

adduce proof that they would have

faced substantial difficulties

finding representation without an

adjustment for contingency.

While plaintiffs presented evi-

dence that the Kansas City market

generally compensates successful

attorneys for assuming the risk

of contingency cases, they did

not introduce any evidence about

availability of counsel to plain-

tiffs in the absence of con-

tingency adjustments. Several

attorneys testified that they

would not have taken the case at

all, and one civil rights litiga-

tor testified he would not have

taken the case without regular

payments. Testimony of these

individuals comes short of proof

that adjustment for contingency

was a crucial factor in plain-

tiffs' ability to obtain counsel.

See generally Blum _v. Witco

Chemical Corp., 829 F.2d 367,

380-81 (3d Cir. 1987). On the

record, we do not discover the

proof required by Justice

O'Connor asS_ prerequisite for

award of a contingency enhan-

cement. See Catlett [v. Missouri

= 2] «

Highway and Transportation

Commission, 828 F.2d 1260 (8th

Cie. 1967)} at 1271.

40a - 4la.

- 22 -

REASONS FOR GRANTING THE WRIT

I. THE COURT SHOULD GRANT CERTIORARI BE-

CAUSE THE CONTINGENCY ENHANCEMENT

EVIDENTIARY STANDARD APPLIED BY THE

COURT OF APPEALS EITHER CONFLICTS WITH

THIS COURT'S DECISION IN DELAWARE

VALLEY II, OR, REFLECTING THE EXISTING

CONFUSION IN THE LOWER COURTS,

REPRESENTS AN IMPORTANT QUESTION OF

FEDERAL LAW WHICH HAS NOT BEEN, BUT

SHOULD BE, SETTLED BY THIS COURT.

A. Introduction

1. Delaware Valley II

In Pennsylvania v. Delaware Valley

Citizens' Council for Clean Air, U.S.

, 107 S.Ct. 3078 (1987)(Delaware Valley

II), this Court, on a 4-1-4 vote, reversed

a contingency enhancement awarded by the

district court for work done in various

Stages of consent decree enforcement due

to the lack of evidentiary

justification.4 Id. at 3091. Although

4n plurality of four justices, in an

= 23 -

joining the plurality in voting to reverse

the particular risk enhancement in

question, Justice O'Connor voted with the

four dissenting justices to create a

majority holding that federal fees-shift

Statutes, such as 42 U.S.C. § 1988, do

authorize the "consideration of

contingency in setting a reasonable fee"

with compensation for contingency to "be

based on the differences in market treat-

opinion by Justice White, rejected the

enhancement on three grounds: first, they

questioned whether an enhancement for risk

was ever appropriate for post-judgment

work; second, they concluded that even if

a risk enhancement were appropriate,

doubling the lodestar was excessive; and

third, they found no evidence that without

a risk enhancement the plaintiffs would

have faced substantial difficulties in

finding counsel in the local market. Id.

at 3088-89.

Justice O'Connor concurred in the

judgment, emphasizing there was no

evidence as to whether contingency was

enhanced in the local market nor as to

whether the large enhancement awarded was

necessary to attract competent counsel.

‘

- 24 -

ment of contingent fee cases as a class,

rather than on an assessment of the

‘riskiness' of any particular case." Id.

at 3089 (emphasis in original).

Justice Blackmun, the author of the

dissenting opinion, wrote that the

district court, in determining whether

plaintiffs are entitled to a basic

contingency enhancement, must determine

"whether a case was taken on a contingent

basis, whether the attorney was able to

mitigate the risk of nonpayment in any

way, and whether other economic risks were

aggravated by the contingency of payment.”

Id. at 3098. Justice O'Connor indicated

that she may require a slightly higher

threshold showing: “I agree with the

plurality that no enhancement for risk is

appropriate unless the applicant’ can

establish that without an adjustment for

- 25 -

risk the prevailing party ‘would have

faced substantial difficulties in finding

counsel in the local or other relevant

market.'" Id. at 3091.

It can come as no surprise that this

Court's splintered, 4-1-4 decision in

Delaware Valley II has left considerable

uncertainty and confusion. This Court

should revisit this unresolved and ex-

tremely important area of attorney's fees

law. Certiorari is appropriate “[wJhen

- «+ « @ federal court of appeals...

has decided an important question of

federal law which has not been, but should

be, settled by this Court, or has decided

a federal question in a way in conflict

with applicable decisions of this Court.”

S.Ct.R. 17.1l(c). This is such a case.

2. The “Two Court” Rule Does Not Apply

- 26 -

The instant case involved de novo

appellate factual review of petitioners’

contingency enhancement request by the

Eighth Circuit. The requested

enhancement had been denied by the

district court in a decision rendered

prior to Delaware Valley II, a decision

based on criteria the Eighth Circuit

acknowledged were inconsistent with

Delaware Valley Il. 39a - 40a. It is

important to note that the Eighth Circuit

did not concur in the findings of fact of

the district court; rather it made its own

findings. 40a - 4la. As a result the

"two court" rule that is frequently

invoked to deny review of cases that turn

on fact finding is not here applicable.

See Graver Mfq. Co. v. Linde Co., 336

U.S. 271, 275 (1949).

B. The Court Should Grant Certiorari

Because The Court Of Appeals’

Decision Denying Plaintiffs A

- 27 -

Contingency Enhancement Squarely

Conflicts with Delaware Valley II.

The Eighth Circuit concluded that

petitioners satisfied the first prong of

Justice O'Connor's standard, finding "that

the Kansas City market generally compen-

Sates successful attorneys for assuming

the risk of contingency cases". 40a. The

court, however, concluded petitioners

failed to prove “that adjustment for

contingency was a crucial factor in

plaintiffs’ ability to obtain counsel."

4la. It appears decisive to the Eighth

Circuit that petitioners "did not

introduce any evidence about availability

of counsel to plaintiffs in the absence of

contingency adjustments.” 40a.

The court of appeals’ focus, as

recognized by at least two courts, runs

counter to the fundamental premise of

Delaware Valley Il. As Judge Parker

ee ————

= 28

instructed in McKenzie v. Kennickell,

D.D.C. No. 73-0974 (4-18-88) at page 14:

It is impossible to demonstrate

that plaintiffs actually had

difficulty finding counsel

without embroiling the courts in

an analysis of the riskiness of

the particular case. Yet

Delaware Valley II resoundingly

rejected such an inquiry.

See also Palmer v. Shultz, 679 F.Supp. 68,

75 (D.D.C. 1988), which, on identical

reasoning, rejects the defendants'

arguments that plaintiffs had failed to

make the requisite showing under Delaware

Valley II because "none of the affidavits

contain any facts indicating that

attorneys in the Washington, D.C.

community will not take a Title VII case

on a straight contingency basis."

Review of the evidence expressly

credited by the Eighth Circuit,

particularly when considered with the

uncontroverted testimony of LDF Executive

= 29 =

Director Julius Chambers as _to- the

difficulties plaintiffs encounter in

obtaining counsel in school desegregation

cases, confirms petitioners satisfied

their evidentiary burden. Although the

court credited the testimony of "[s]Jeveral

attorneys" that "they would not have taken

the case at all", 40a, it declined to

State that each testified that taking on

such an all-encompassing, mammoth case on

a contingent fee basis would break down

their small firm practices due to its

preclusion of all other work. The court

Gid note that "one civil rights litigator"

testified that "he would not have taken

the case without regular payments", 40a -

4la, but it failed to appreciate the

Significance of that testimony. Further-

more, the court failed to acknowledge the

testimony of Julius Chambers, the

- 30 -

respected Executive Director of the LDF,

that it has become very difficult for the

LDF to secure private practitioners as

cooperating counsel in school desegrega-

tion cases because of the uncertainty of

recovering a fully compensatory fee even -

when one prevails. "Statement of the

Case," Supra at 13 - 14.

In sum, the Court of Appeals failed

to draw the obvious and compelling factual

conclusion: there have been and continue

to be very few private practitioners

anywhere who will provide plaintiffs with

representation in a school desegregation

case; there are even fewer who will do so

on a contingent fee basis; and, of those

few who would provide representation on a

contingent fee basis, they rightfully

expect to receive a very substantial

enhancement of their normal hourly rate

3

&

- 3l1-

should plaintiffs prevail after years of

bitterly contested litigation. There is

no scope of review standard which requires

the Supreme Court to be blind to that

which all the world knows.

This was an extraordinary case by any

measure. It required extraordinary

lawyering and leadership. It required an

extraordinary commitment of resources. It

achieved exceptional results -- far-

reaching relief that promises equal

educational opportunity for the black

children of Kansas City and significant

reduction of their racial isolation. The

leader of this entire effort was Kansas

City practitioner Arthur Benson, who made

a financial and personal commitment to

this litigation unprecedented in the

reported fees decisions. The uncontro-

verted facts are that in addition to a

» 3 a

total personal and professional commitment

to this case for three consecutive years

of full-time work, Benson worked substan-

tial portions of five additional years and

went over $730,000 in debt in order to

litigate this case successfully.

Although petitioners did not have the

benefit of Delaware Valley II when they

made theis evidentiary presentation, their

case for a risk enhancement is compelling.

Although, as petitioners demonstrate in

the subsequent section, Delaware Valley II

did not limit contingency enhancements to

the exceptional or rare case, petitioners

Submit their evidentiary showing satisfies

the most stringent of standards.

Finally, petitioners would note that

the record in the instant case would

permit the Court not only to resolve the

standard which must be met to establish

ts niall

- 33-

entitlement to a risk enhancement, but

also to instruct as to the calculation of

such enhancements when entitlement has

been established. Petitioners presented

extensive market-based evidence on this

latter question, which was summarized in

the "Statement of the Case," supra at

14-16. In sum, that uncontroverted Kansas

City market evidence showed the average

hourly return on successful contingent fee

cases is $400-500, an amount which Robert

Weil confirmed was consistent with the

national market. Petitioners' enhancement

request for Benson's work was at the

bottom end or below the Kansas City market

range.

C. The Court Should Grant Certiorari

Because The Evidentiary Standard

To Establish Entitlement To A

Contingency Enhancement, As

Fashioned By The Court Of Appeals,

Permits Enhancement Only In The

Rare Or Exceptional Case, A

Standard Far More Stringent Than

= 34 -

And In Conflict With This Court's

Decision In Delaware Valley II.

The courts of appeals which have had

occasion to apply Delaware Valley II agree

that it authorizes a contingency

enhancement in appropriate cases.

However, there the consensus stops. |

The Third, Fourth, Fifth, Eighth,

District of Columbia and Federal Circuits

have concluded that Justice O'Connor's

opinion effectively establishes the

Standard for the Court. Blum v. Witco

Chemical Corp., 829 F.2d 367, 379-382 (3d

Cart. 1987); Spell v. McDaniel, 824 F.2d

1380, 1404 n.23 (4th Cir. 1987); Leroy v.

City of Houston, 831 F.2d 576, 583-84 (5th

Cir. 1987); Jenkins v. State of Missouri,

Supra; Thompson v. Kennickell, 836 F.2d

616,621 (B.C, Cars 1988); Crumbaker v.

Merit Systems Protection Board, 827 F.2d

761 (Fed.Cir. 1987). These courts read

St tee ee ee

= 3% «

Justice O'Connor's opinion to require the

plaintiffs to prove (1) that the relevant

legal market compensates contingency cases

differently from non-contingency cases,

and (2) that absent the prospect for an

enhancement, the plaintiffs would have

faced substantial difficulty in securing

counsel.

While the Third Circuit in Blum,

Supra, frankly acknowledges the confusion

left by Delaware Valley II as to the

required evidentiary showing for a

contingency enhancement, see Section I(E)

infra, it and the five other courts

adopting Justice O'Connor's standard

appear uniform in their belief that it

permits risk enhancements only in the

“exceptional"™ or "rare" case. Such is

the express holding of the Third, Fifth

and District of Columbia Circuits. Blum,

- 36 -

Supra at 380 n.13; Student Public Interest

Research Group of New Jersey, Inc. et al.

v. AT&T Bell Laboratories, 842 F.2d 1436,

1452 (3d Cir. 1988); Coup v. Heckler, 834

F.2d 313,324 (3d Cir. 1987); Leroy, Supra

at 583-84 (contingency award "reserved for

"exceptional cases'"); Thompson Vv.

Kennickell, supra at 621. See also

Norman v. Housing Authority of City of

Montgomery, 836 F.2d 1291, 1302 (llth Cir.

1988)("the rare case"). Although the

Eighth Circuit did not choose to

characterize the burden of proof imposed

by Justice O'Connor's standard, its

grudging rejection of plaintiffs' factual

showing in the instant case confirms its

accord.

Petitioners submit that had Justice

O'Connor intended that contingency

enhancement only be available in the rare

|

- 37 «

or exceptional case, she would have

clearly so stated. Her decision not to

use such restrictive language takes on

particular Significance when it is

recalled that in Pennsylvania v. Delaware

Valley Citizens Council for Clear Air,

U.S.__, 106 S.Ct. 3088 (1986) (Delaware

Valley I), this Court expressly reaffirmed

its position that upward adjustments of

the lodestar based on the quality of the

legal services provided "are proper only

in certain ‘'rare' and ‘exceptional' cases,

Supported by both ‘specific evidence' on

the record and detailed findings by the

lower courts." Id. at 3098; see also

Blum v. Stenson, 465 U.S. 886, 899

(1984). The Delaware Valley II standard

for contingency enhancement is clearly not

as restrictive as the Delaware Valley I

Standard for quality enhancement.

- 38 -

Petitioners contend that the Eighth

Circuit committed plain error in its

evaluation of petitioners' evidentiary

showing under Justice O'Connor's 2-prong

Standard, an error influenced by its

mistaken view that Delaware Valley II per-

mits risk enhancement only in exceptional

Or rare cases. Because of the importance

of this question of federal law and the

likelihood of frequent repetition of this

error, this Court should grant certiorari

to resolve the conflict and settle the

law. In doing so, this Court would also

Surely settle a related aspect of risk

enhancement law which is still in a state

of considerable confusion.

D. There Is Confusion And Conflict

Among The Circuits As To Whether

The Individual Case's Likelihood

Of Success, The Factor Upon Which

The District Court Denied

Petitioners’ Contingency

Enhancement, Remains A Relevant

Consideration After Delaware

Valley II.

- 39 -

The six circuits that have adopted

Justice O'Connor's standard, see Section

I(C), supra, appear unanimous that the

plaintiff's likelihood of success on the

merits of the particular case was rejected

as a relevant factor in Delaware Valley

II. See, e.g., Spell v. McDaniel, supra

at 1405; Thompson v. Kennickell, supra at

621; Jenkins v. Missouri, Supra at 268.

However, there are three circuits which

take a different tack, creating a 6-3

Split within the circuits on this point.

The First, Second and Sixth Circuits

have not adopted Justice O'Connor's

Standard and have continued to base

post-Delaware Valley II contingency

enhancement decisions in part on their

evaluation of the particular risks posed

by the case. Jacobs v. Mancuso, 825 F.2d

559, 561 (lst Cir. 1987) (denying

- 40 -

enhancement on ground that “liability here

was so plain... . that, aS a practical

matter, the risk of not recovering a fee

was all but eliminated"); Friends of the

Earth v. Eastman Kodak Co., 834 F.2d 295,

298 (2d Cir. 1987)(denying enhancement

because “the risks to plaintiffs’ counsel

appear slight", expressly noting there was

no trial); Conklin v. Lovely, 834 F.2d

543, 553 (6th Cir. 1987)(quoting appro-

vingly from Northcross v. Bd. of Ed. of

Memphis City Schools, 61ll F.2d 624, 638

(6th Cir. 1979, cert. denied, 447 U.S.

911 (1980), a test emphasizing the likeli-

hood of success in the particular case).

This Petition assumes the correctness

of the Eighth Circuit ruling that the

legal risks peculiar to the particular

case are irrelevant to determination of

entitlement to a contingency enhancement,

= 4] -

and will focus principally on the need for

this Court to settle the important

question as to the plaintiffs' evidentiary

burden to establish entitlement to the

enhancement. Nonetheless, further

evidence of the urgency for a Supreme

Court decision settling this important

area of civil rights law is the conflict

which exists within the circuits as to the

relevance of the legal risks peculiar to

the particular case.

E. The Court Should Grant Certiorari

Because The Evidentiary Standard

Which Plaintiffs Must Meet In

Order To Establish Entitlement To

A Contingency Enhancement Is An

Important Question Of Federal Law

Which Has Not Been, But Should Be,

Settled By This Court.

Petitioners submit that the Eighth

Circuit badly misconceived the plaintiffs'

evidentiary burden under Delaware Valley

- 42 -

II, an error which will undoubtedly be

repeated and compounded in many circuits

if not corrected by this Court. The

Eighth Circuit's cursory decision is not

aberrational, but rather manifests’ the

confusion within the lower federal courts

as to the application of Justice

O'Connor's’ standard. The uncertainty

Spawned by Delaware Valley II was evident

immediately to those litigants and courts

familiar with fees law, a fact pointedly

made in one of the first post-Delaware

Valley II decisions.

The Third Circuit in Blum vy. Witco

Chemical Corp., 829 F.2d 367 (3d Cir.

1987), was openly critical of’ the

ambiguities of Justice O'Connor's

Standard. It observed at the outset that

the calculation of any contingency

multiplier had been made "a daunting task

indeed" as a result of Delaware Valley II:

on some of the gray areas left by Delaware

- 43 -

The 4-1-4 division makes it

difficult to identify the

reasoning or derive guidance from

the various alliances the court

formed to reach its holdings. In

addition, the opinions them-

selves, insofar as they add up to

five votes on the critical

points, do not present clear

mandates. Most difficult of all,

the district court must tackle

the task of translating’ the

court's message into a blueprint

for an evidentiary hearing, and

make findings that will satisfy

the DVCCCA II rule. Although we

could pretermit this discussion

and merely remand the counsel fee

question to the district court

for further consideration in

light of DVCCCA II, awaiting

development of a full record in

this or some other case on appeal

before coming to grips with some

of the difficult problems that

DVCCCA II poses, bearing in mind

that counsel fee litigation is

daily fare these days, our

concern for the problems that

will be faced day in and day out

by the district judges within the

circuit in the wake of DVCCCA II

compels us to say something on

the issue now.

at 380.

The Third Circuit proceeded to comment

- 44 -

Valley II. The Court speculated as to

whether it would be necessary for plain-

tiffs to utilize an expert economist to

develop an econometric model, at a cost of

"tens of thousands of dollars". Id. at

381. It also pointed out:

"[S]uch a study would address

only one side of Justice

O'Connor's inquiry, for it says

nothing about the question

whether the multiple is necessary

to attract competent counsel. __

U.S. at , 107 &.Ct. at 3089-

3090. How that question is to be

answered--short of estimating the

Supply curve for. plaintiff's

legal services in these cases--

is equally unclear. An econo-

metric answer here would also be

extremely expensive. The

district court may wish to con-

Sider whether such studies are

feasible and whether there are

alternatives that will meet the

DVCCCA II test."

Id. at 381.

No district court decision awarding a

contingency enhancement based on Delaware

Valley II standards has yet been reviewed

tia pCi edith Seg i Binaries &

oe ig

ce KL MAE ag tent Sak CBB ERES 2AABOEE ls LI

Bae Dae

~ 46 «

by a court of appeals. However, there are

at least four prominent district court

decisions which have awarded substantial

contingency enhancements on essentially

the same evidentiary showing rejected by

the Eighth Circuit in the instant case.

All four cases were Title VII

employment discrimination cases; three

were class actions. Each expressly

followed Justice O'Connor's standard.

Hidle v. Geneva County Bd. of Educ., 681

F.Supp. 752 (M.D.Ala. 1988) (contingency

enhancement of 100%, nearly $85,000);

Palmer v. Shultz, 679 F.Supp. 68 (D.D.C.

1988)(contingency enhancement of 50%,

$71,806); McKenzie v. Kennickell, D.D.C.

No. 73-0974 (4-18-1988) (contingency

enhancement of 50%, $345,000); Black

Grievance Committee Vv. Philadelphia

Electric Co.» E.D.Pa. No. 75-3156

- 46-

(6-20-1988 ) (contingency enhancement of

200%, $200,000). These courts’ based

enhancement on the following evidence:

l. attorneys who take cases on a con-

tingent fee basis expect to earn a higher

hourly fee upon success than when paid

regularly on a non-contingent fee basis;

2. the hourly return on_ successful

contingent fees cases is generally at

least double or triple that earned on a

non-contingent hourly basis and often

approaches $500 per hour;

| Pe has become increasingly

difficult for plaintiffs in civil rights

cases to obtain counsel on a contingent

fee basis because the economic. risks

assumed have not been adequately

compensated:

a. many attorneys have cut back

Substantially on the civil rights

portion of their practice; and

Nth Oia RATT IIS MRR A i An SENN ARR Nin ht nA bp OM LARKIN talks

« @7 -

b. bar referral services are

experiencing considerable difficulty

in securing counsel for civil rights

complainants.

The court in Palmer v. Shultz, supra

at 75, summarized:

It is clear therefore that the

unavailability of contingency

enhancements, combined with the

demanding and protracted nature

of Title VII class action litiga-

tion, would make it economically

unfeasible for a great majority

of attorneys to undertake such

cases on a purely contingent

basis.

Petitioners acknowledge that this

conflict between these four district court

opinions and the Eighth Circuit's ruling

does not in itself present an independent

basis for certiorari review, but it does

confirm the Third Circuit's prediction in

Blum that lower court confusion = and

disagreement would be considerable until

this Court provides further guidance.

- 48 -

Confusion and disagreement breed litiga-

tion, a particularly unsatisfactory result

in an area of the law that this Court has

counseled should not become "second major

litigation."

oe =

CONCLUSION

For the foregoing r

a writ of certiorar

*Attorney of Record

easons the petition for

i should be granted.

Respectfully submitted,

RUSSELL E. LOVELL II*

3111 40th Place

Des Moines, Iowa 50310

515/271-3985

ARTHUR A. BENSON Ii

1430 Commerce Tower

911 Main Street

Kansas City, Missouri 64105

816/842-7603