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Interfaith Community Organization v. Honeywell International

October 19, 2005; as amended November 10, 2005

INTERFAITH COMMUNITY ORGANIZATION; LAWRENCE BAKER; MARTHA WEBB HERRING; MARGARET WEBB; REV. WINSTON CLARKE; MARGARITA NAVAS
v.
HONEYWELL INTERNATIONAL, INC. FORMERLY KNOWN AS ALLIEDSIGNAL, INC.; RONED REALTY OF JERSEY CITY, INC.; RONED REALTY OF UNION CITY, INC.; W.R. GRACE & COMPANY; ECARG, INC.; W.R. GRACE, LTD.
W.R. GRACE & COMPANY; ECARG, INC.; W.R. GRACE, LTD., DEFENDANTS/THIRD-PARTY PLAINTIFFS
v.
HELLER-JERSEY CITY, L.L.C.; HOME DEPOT, U.S.A.; SEAMAN FURNITURE COMPANY, INC., THIRD-PARTY DEFENDANTS
HACKENSACK RIVERKEEPER, INC.; WILLIAM SHEEHAN
v.
HONEYWELL INTERNATIONAL, INC. F/K/A ALLIEDSIGNAL, INC.; RONED REALTY OF JERSEY CITY, INC.; RONED REALTY OF UNION CITY, INC.; W.R. GRACE, LTD.
HONEYWELL INTERNATIONAL, INC., APPELLANT



On Appeal from the United States District Court for the District of New Jersey (D.C. Nos. 95-cv-02097 & 00-cv-01451) District Judge: Honorable Dennis M. Cavanaugh

The opinion of the court was delivered by: Becker, Circuit Judge.

PRECEDENTIAL

Argued June 30, 2005

Before: RENDELL, BARRY, and BECKER, Circuit Judges.

OPINION

This case stems from a lawsuit filed by Interfaith Community Organization ("ICO") against Honeywell International seeking the cleanup of a heavily polluted area along the banks of the Hackensack River in Northern New Jersey. ICO prevailed at trial, and, as a result, moved for attorney fees pursuant to 42 U.S.C. § 6972(e). The District Court, after holding a hearing on the motion, awarded ICO over $4.5 million in fees. Honeywell now appeals this award, raising a number of issues.

First, Honeywell argues that the District Court erred in awarding fees based on prevailing market rates in Washington, DC, where ICO's attorneys practiced, rather than in northern New Jersey, where the suit was litigated. We agree with Honeywell that, under normal circumstances, a prevailing party's attorneys should be compensated based on market rates in the vicinage of the litigation. However, if a prevailing party can show that it required the particular expertise of counsel from another vicinage, or that local counsel were unwilling to take on the litigation, then it will be entitled to compensation based on prevailing rates in the community in which its attorneys practice.

The District Court concluded that ICO had satisfied both of these exceptions. While we do not agree that ICO satisfied the first exception, we are satisfied that the District Court's finding that ICO had satisfied the second exception was not clearly erroneous. We will therefore affirm the District Court's decision to award compensation based on prevailing market rates in Washington, DC. Concomitantly, we find that ICO is entitled to compensation for the travel time of its attorneys as well as the reasonable fees of its local counsel.

Honeywell also submits that the District Court erred in its determination of prevailing market rates in Washington, DC. Specifically, Honeywell contends that the District Court erroneously awarded compensation based on a matrix of hourly rates produced by ICO's attorneys. While we question the accuracy of the matrix supplied by ICO's attorneys, we nonetheless conclude that the District Court's finding in this regard was not clearly erroneous. For this reason, we will affirm the District Court's determination of the appropriate hourly rates.

In addition, Honeywell challenges several aspects of the fee award as excessive or unjustified. Honeywell contends that ICO's attorneys and its expert witnesses devoted too many hours to a variety of tasks, and that the District Court failed to conduct a sufficiently thorough review of the hours claimed by ICO's attorneys and expert witnesses. We agree that the District Court's review was inadequate, and hence we will vacate those aspects of the award challenged by Honeywell, and remand for further proceedings. We also agree that the fee request was excessive, but do not quantify our conclusion on this point, leaving its resolution to the District Court on remand.

Honeywell challenges the District Court's decision to award fees for the costs of overtime and temporary workers. We conclude that the District Court's decision to do so was not an abuse of discretion, and we will therefore affirm that aspect of the award. Honeywell also submits that the District Court erroneously awarded ICO compensation for time spent by experts who did not testify at trial. Because we conclude that the relevant statute permits such awards, we reject this contention.

Honeywell argues that the District Court erroneously awarded ICO fees for certain time spent by its attorneys litigating against the other defendants in this suit. We agree with Honeywell that the District Court failed to determine whether the time in question was actually related to ICO's suit against Honeywell, and will therefore vacate this aspect of the award and remand for further consideration. Finally, Honeywell challenges the District Court's decision to award ICO nearly $150,000 in photocopying costs based on a rate of twenty cents per page. Because we conclude that this rate is excessive, and because we find that the District Court did not conduct a thorough review of the number of copies claimed by ICO's attorneys, we will vacate this portion of the award and, again, remand for further proceedings.

I. Background Facts and Procedural History*fn1

Mutual Chemical Company of America, at one point the largest chrome manufacturer in the world, operated a plant in Jersey City, New Jersey from 1895 to 1954. During much of this time, Mutual dumped industrial waste residue containing high concentrations of hexavalent chromium, a known carcinogen, in wetlands along the banks of the Hackensack River. Over time, Mutual dumped around 1.5 million tons of waste, which ultimately developed into a separate land mass "15 to 20 feet deep, on some 34 acres." ICO I, 399 F.3d at 252. The dumping ended in 1954 when Mutual sold the plant to the Allied Corporation. Allied was later succeeded by AlliedSignal, Inc., and then by Honeywell. No significant effort was made to clean the site for almost three decades.

In 1982, the New Jersey Department of Environmental Protection (NJDEP) initiated efforts to clean up the site. After a largely unsuccessful attempt to fashion a temporary solution, NJDEP pursued an administrative action and entered an Administrative Consent Order (ACO) in 1993. ICO v. Allied Signal, 928 F. Supp. 1339, 1343-1344 (D.N.J. 1996). In 1993, the parties agreed to a consent order under which AlliedSignal agreed to pay $60 million to clean up a total of eighteen sites listed in the ACO including this site. Id. at 1344.

The cleanup was slow in getting started. As a result, ICO and five residents of the surrounding community brought suit against AlliedSignal and several other defendants under the citizen suit provisions of the Resource Conservation and Recovery Act (RCRA), 42 U.S.C. § 6972(a)(1)(B). That section permits individuals to bring suit against any person "who has contributed or who is contributing to the past or present handling, storage, treatment, transportation, or disposal of any solid or hazardous waste which may present an imminent and substantial endangerment to health or the environment." Following a two-week bench trial, the District Court ruled in favor of ICO and issued an injunction requiring Honeywell (which had succeeded AlliedSignal by that time) to clean up the site. A panel of this Court affirmed the District Court's decision, see ICO I, 399 F.3d at 252, and the Supreme Court denied certiorari, see Honeywell Int'l, Inc. v. Interfaith Cmty. Org., 125 S.Ct. 2951 (2005).

In its opinion granting injunctive relief, the District Court also granted ICO attorney fees pursuant to 42 U.S.C. § 6972(e), which provides that, in actions brought under RCRA, the court "may award costs of litigation (including reasonable attorney and expert witness fees) to the prevailing or substantially prevailing party, whenever the court determines such an award is appropriate."*fn2 ICO then filed a Fee Application seeking reimbursement of $4,706,506.09 in fees; in a subsequent filing, it reduced its request to $4,587,990.22. Following extensive briefing and a hearing, the District Court found that ICO was entitled to $4,530,327.00 in fees. See Interfaith Cmty. Org. v. Honeywell Int'l, Inc., 336 F. Supp. 2d 370, 404 (D.N.J. 2004) Honeywell then filed a timely notice of appeal.

II. Appellate Jurisdiction

The District Court properly exercised jurisdiction pursuant to the RCRA, 42 U.S.C. § 6972. The parties submit that the August 26, 2004, order of the District Court was a "final decision" and that we therefore may exercise jurisdiction under 28 U.S.C. § 1291, which grants us jurisdiction to review "all final decisions of the district courts." A fee award is not appealable until it is reduced to a definite amount. See Polonski v. Trump Taj Mahal Assocs., 137 F.3d 139, 144 (3d Cir. 1998). There is no dispute that the August 26, 2004, order reduced ICO's fee award to a definite amount for the period leading up to the verdict in this case. However, in two subsequent orders dated August 30, 2004, and June 15, 2005, the District Court granted ICO additional fees to cover the expenses of litigating the first fee application.

In the June 15, 2005, order, the District Court granted ICO an additional $362,505.44 in fees. Moreover, the District Court indicated in its August 26, 2004, opinion that it would consider a later application for fees relating to the costs of monitoring the cleanup. The question thus arises as to whether these later orders and declarations deprive us of jurisdiction, which we always have the independent duty to consider. See Richman Bros. Records, Inc. v. U.S. Sprint Communications Co., 953 F.2d 1431, 1446 (3d Cir. 1991).*fn3

The Court of Appeals for the Ninth Circuit addressed a similar set of facts in Gates v. Rowland, 39 F.3d 1439 (9th Cir. 1994). In concluding that it had jurisdiction over a partial fee award, that Court observed:

The facts weigh in favor of review now. Legal issues determined at this stage will smooth the process for future awards. The fees orders are final, and the defendants must pay the plaintiffs' counsel. The compliance period has not been limited to a definite time frame, thus review could be postponed for many years, if not granted now. The defendants suggest that the periodic motions before the district court could be grouped annually for possible appeals. We encourage the district court to group the motions in some such manner. However, we hold that the claim presently before us is reviewable.

Id. at 1450. We are persuaded by this logic.*fn4 In a complex environmental action such as this, monitoring will likely continue well into the future. Were we to conclude that § 1291 bars jurisdiction over awards such as this, we would delay meaningful appellate review for years if not decades. Such a holding would contravene the Supreme Court's admonition that "the requirement of finality is to be given a 'practical rather than a technical construction.'" Gillespie v. United States Steel Corp., 379 U.S. 148, 152 (1964) (citation omitted).

We therefore conclude that, in a complex and ongoing action such as this, § 1291 should not act as a bar to our exercise of jurisdiction over a fee award which resolves all fee claims for the period leading up to a verdict. In so holding, we do not decide whether we will have jurisdiction over any possible appeals from future fee awards, but note our agreement with the sentiment expressed in Gates that a district court is well-advised to group such awards so as to allow for meaningful appellate review.

III. The Appropriate Hourly Rate: The Forum Rule and its Exceptions

A. Introduction

The general jurisprudence governing the calculation of an award of attorney fees and the standard of appellate review is familiar, and we summarize it in the margin.*fn5 What is less clear from this jurisprudence is the question central to this appeal, which is whether courts should award fees to out-of-town counsel based on prevailing hourly rates in the forum of the litigation or those in the vicinage in which the fee applicant's attorneys practice law.

The District Court concluded that ICO's attorneys, who did not charge the organization for their services, were entitled to compensation based on prevailing rates in Washington, DC, where they practiced, rather than in northern New Jersey, the litigation forum. Honeywell contends that this conclusion was erroneous.

B. The Relevant Market; The Forum Rate Rule

ICO was represented at trial by Terris, Pravlik & Millian ("the Terris firm" or "Terris"), a Washington, DC public-interest firm that specializes in complex environmental cases. We have held that public-interest law firms that typically charge clients below-market fees, or no fees at all, are nonetheless entitled to compensation based on prevailing market rates in the relevant community. Student Pub. Interest Research Group v. AT & T Bell Labs., 842 F.2d 1436, 1448 (3d Cir. 1988) ("SPIRG").*fn6 In SPIRG, we concluded that this rule (the "Community Market Rate" rule) represented "the best compromise among the conflicting policies behind the fee shifting statutes" and that it was "the simplest, most workable rule [available]." Id.

What SPIRG did not resolve, however, was how we choose the "relevant community" for purposes of determining the appropriate billing rate for a public interest law firm. In this case, there are two obvious choices: Washington, DC, where the Terris firm is located, or northern New Jersey, where the underlying suit was litigated.

Two decades ago, we commissioned a Task Force on court-awarded attorney fees that addressed this and numerous other questions. The Task Force recommended that we adopt the "forum rate" rule, whereby an "out-of-town lawyer would receive not the hourly rate prescribed by his district but rather the hourly rate prevailing in the forum in which the litigation is lodged." Report of the Third Circuit Task Force on Court Awarded Attorney Fees, 108 F.R.D. 237, 261 (1985). The Task Force recommended that deviation from this rule be permitted "only when the need for 'the special expertise of counsel from a distant district' is shown or when local counsel are unwilling to handle the case." Id. (footnote omitted).

In recommending that we adopt the forum rate rule, the Task Force observed that it was "contrary to current Third Circuit practices," id., citing our decisions in Cunningham v. City of McKeesport, 753 F.2d 262, 267 (3d Cir. 1985) and In re Fine Paper Antitrust Litigation, 751 F.2d 562, 590-91 (3d Cir. 1984). In Fine Paper, we reviewed a decision by the District Court for the Eastern District of Pennsylvania to award attorney fees based on a three-tiered hourly rate structure which did not take into account the market in which the attorney actually practiced. See 98 F.R.D. at 83. We reversed, finding that "the approach taken by the trial court in this case, of applying hypothetical national rates to all attorneys, regardless of the market rate they would command in the community in which they practice, was legal error." 751 F.2d at 591. We further observed:

Our premise has been that the reasonable value of an attorney's time is the price that time normally commands in the marketplace for legal services in which those services are offered.

Id. at 590.

The locution "the marketplace for legal services in which those services are offered" is somewhat opaque, and, in the wake of Fine Paper, panels of this Court have, consistent with the Task Force's recommendations, applied the forum rate rule. In Public Interest Research Group v. Windall ("PIRG"), we concluded that Fine Paper and other relevant cases did not "establish[] a per serule in favor of the market rate for the community in which the law firm is located. Indeed, we think these cases eschew any rigid rule."51 F.3d 1179, 1186 n.9 (3d Cir. 1995); see SPIRG, 842 F.2d at 1442 n.4 ("This opinion should not be construed, however, as endorsing a fee based upon an outside market rate at variance with the market rate of the site of the litigation, for we do not reach that issue."). In no case since the Task Force Report was issued have we set aside a decision employing the forum rate rule on the ground that earlier decisions require courts to award fees on the basis of prevailing rates in the community in which the attorney practices.

ICO nonetheless argues that Fine Paper held that the relevant community for determining an attorney's billing rate is where the attorney practices, not the locus of the litigation. Thus, to the extent that these later cases conflict with our holding in Fine Paper, ICO claims that they impermissibly attempted to overrule that earlier decision. It is well settled in this Circuit that a three-judge panel may not overrule a decision by an earlier panel. See Third Circuit Internal Operating Procedure 9.1; O. Hommel Co. v. Ferro Corp., 659 F.2d 340, 354 (3d Cir. 1981). Thus, if ICO is correct that Fine Paper held that we look to an attorney's place of business to determine his or her hourly rate, then we must follow that decision. We do not think that it so holds.

As noted above, Fine Paper held that it was error for a district court to apply "hypothetical national rates" in determining the size of a fee award. Thus, Fine Paper does not answer the question we address today, which is whether a court should look to prevailing rates in the attorney's home community or the locus of the litigation in determining the appropriate compensation for an out-of-town attorney. We agree with the Task Force that, in most cases, the relevant rate is the prevailing rate in the forum of the litigation. We therefore hold that district courts in the Third Circuit should award attorney fees based on the "forum rate" rule as set forth in the Task Force Report.

As noted above, the forum rate rule recommended by the Task Force contains two exceptions: first, "when the need for 'the special expertise of counsel from a distant district' is shown"; and, second, "when local counsel are unwilling to handle the case." 108 F.R.D. at 261 (footnote omitted). Both of these exceptions are sensible. Thus, when a party can show that it qualifies for either exception, the Court may award attorney fees based on prevailing rates in the community in which the parties' attorneys practice. The District Court held ...


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