KRAVITCH, Circuit Judge:
Appellant Donald M. Fitzpatrick appeals from a district court judgment granting him the statutory minimum $1,000 damages for injuries from violations of the Privacy Act, 5 U.S.C. § 552a, and awarding $3,000 of a requested $19,700 in attorneys' fees. Appellant contends that the district court erred in not granting him damages for proven mental injuries resulting from illegal disclosures of personal information, and abused its discretion in reducing his requested attorneys' fees without adequate explanation. Because we hold that damages under the Privacy Act are recoverable only for proven out-of-pocket losses, we affirm that part of the judgment granting appellant the statutory minimum $1,000 in damages. We agree with appellant, however, that the trial court failed to adequately explain the reduction of the requested attorneys' fees and therefore we remand the case to the district court for a more thorough explanation.
Appellant Fitzpatrick brought suit under the Privacy Act for unlawful disclosures concerning his disability discharge from the Internal Revenue Service. As part of his application for disability benefits, appellant completed an IRS form indicating he had been suffering from mental distress. The trial court found that appellant's supervisor was guilty of four acts of willfully disclosing appellant's mental condition in violation of the Act,
To prove damages, appellant introduced the uncontradicted testimony of a psychiatrist that the disclosures had caused appellant to become paranoid about acquaintances knowing that he had retired because of a mental disability. The psychiatrist further testified that the disclosures had
II. Damages Under the Privacy Act
The Privacy Act, 5 U.S.C. § 552a(g)(4) states:
Appellant does not contest the trial court's finding that the evidence as to his future tax consulting service was too speculative to sustain a damage award. Rather, appellant vigorously argues that his evidence of mental injuries was uncontested and that he therefore suffered damages compensable under the Act.
This issue is one of first impression. Ordinarily, our first step in construing a statute is to interpret the statutory language in accordance with its "plain meaning." E. g., United States v. Yeatts, 639 F.2d 1186, 1189 (5th Cir. 1981).
Because "actual damages" has no "plain meaning" in legal lexicon, we must turn to the legislative history and attempt to discern Congressional intent on this issue.
First and most important, the evolution and structure of the damage provisions indicate Congressional intent to restrict damage liability to a maximum consistent with private enforcement of the Act. Throughout the Privacy Act debate, a central concern was the scope of potential government liability for damages. In the House this concern was so strong that the House version of the bill not only limited recovery to "actual damages" but required as a predicate to recovery that the plaintiff prove a disclosure was "willful, arbitrary or capricious." H.R. 16373, 93d Cong., 1st Sess. § 3(g)(3) (1974) reprinted in Joint Committee on Government Operations, The Legislative History of the Privacy Act of 1974: Sourcebook on Privacy 288 (Joint Comm.Print 1976) [hereinafter cited as Sourcebook]. The Senate, on the other hand, initially was far more generous: the original version of S. 3418 provided for punitive damages if appropriate and predicated recovery upon a showing of only negligence. S. 3418, 93d Cong., 2d Sess., § 303(C) (1974) reprinted in Sourcebook at 27. After much debate, the "punitive damages" language was deleted in favor of a provision for "actual and general damages." Sourcebook at 371. The final version of the Act was a compromise between the House and Senate bills; it reduced the standard of proof from "willful, arbitrary, or capricious" to "willful or intentional," but in an obvious quid pro quo dropped the general damages provision of the Senate bill. To avoid a situation in which persons suffering injury had no provable damages and hence no incentive to sue, a $1,000 damage floor was added, and costs and attorneys' fees were included as additional elements of recovery.
The evolution and structure of the Privacy Act damages provisions, therefore, indicate that Congress expressly rejected liability for general damages in favor of the more restrictive "actual damages." Viewed in this light, "actual damages" as used in the Act cannot be synonymous with common law general damages, and must refer to pecuniary loss. This conclusion is strongly supported by the remarks of Senator Ervin, the chief architect of S. 3418, on the final compromise bill. The final version of the Privacy Act included a provision for a Privacy Protection Study Commission to study the new Act and make recommendations for changes to Congress.
120 Cong.Rec. 40405 (1974) (remarks of Sen. Ervin) (emphasis added), reprinted in Sourcebook at 859.
This Commission, moreover, concluded that:
Personal Privacy in an Information Society: The Report of the Privacy Protection Study Commission 530 (GPO 1977).
In light of the legislative history's support of a narrow reading of "actual damages," we hold that "actual damages" as used in the Privacy Act permits recovery only for proven pecuniary losses and not for generalized mental injuries, loss of reputation, embarrassment or other non-quantifiable injuries. Because appellant proved only that he suffered a general mental injury from the disclosure, he could not recover beyond the statutory $1,000 minimum damages, costs and reasonable attorneys' fees.
III. Attorneys' Fees
Pursuant to subsection (g)(4)(B) of the Privacy Act, providing that a successful plaintiff should recovery reasonable attorneys' fees, appellant's attorneys submitted detailed affidavits itemizing 394 hours expended on the case at a rate of $50 per hour for a total of $19,700. The district court, purportedly following the Fifth Circuit's decision in Johnson v. Georgia Highway Express, Inc., 488 F.2d 714 (5th Cir. 1974), concluded that the fees requested were excessive and reduced the award. In its order the court stated:
Applying the Johnson criteria, the court concludes that the plaintiff should be awarded attorney's fees in the amount of $3,000.00.
Appellants argue that the district court abused its discretion in awarding only 15% of the requested fees, and failed to adequately explain the reasons for the reduction. The government, on the other hand, asserts that the trial court did all it was required to do under Johnson and reached a fair fees award.
Johnson, the leading Fifth Circuit case on attorneys' fees awards, delineated twelve factors a court should consider in reaching a proper determination of attorney's fees:
Johnson, supra, at 717-19. Because a trial court is in a far better position to judge what is a reasonable fee than an appellate court, the trial court enjoys wide discretion in determining a reasonable fee. E. g., Copper Liquor, Inc. v. Adolph Coors Co., 624 F.2d 575, 581 (5th Cir. 1980); Matter of First Colonial Corp. of America, 544 F.2d 1291, 1298 (5th Cir.), cert. denied, 431 U.S. 904, 97 S.Ct. 1696, 52 L.Ed.2d 388 (1977). Nevertheless, later cases applying Johnson have specified certain procedures a trial court must follow in setting a fee. Chief among these procedures is providing an adequate explanation of "the findings and reasons upon which the award is based, including an indication of how each of the twelve factors in Johnson affected his decision." First Colonial, supra, at 1300. An adequate explanation of the fee award is absolutely essential to appellate review; without it, review is impossible because no basis exists to judge the trial court's exercise of its discretion. A perfunctory explanation simply will not suffice. "What we require is not a meaningless exercise in parroting and answering each of Johnson's twelve criteria, but some assurance that the court has arrived at a just compensation based upon appropriate standards." Davis v. Fletcher, 598 F.2d 469, 470 (5th Cir. 1979).
To insure that a trial court develops a proper basis for a fees award and can adequately explain that award, the First Colonial court specified the exact order in which a trial court should consider the Johnson factors. First, the court must "ascertain the nature and extent of the services supplied by the attorney." First Colonial, supra, at 1299. If the court finds the number of hours excessive, it should identify the hours disallowed and explain why it is disallowing them. If the parties dispute the facts, an evidentiary hearing must be held. Second, the court must determine the value of the services rendered according to the customary charges in the area and the quality of the work produced. Special experience or expertise, or the lack of it, will be reflected in the hourly rate allowed. When the court has finished these two steps and arrived at a nominal fee, it should then consider the remaining Johnson factors appropriate to the particular case and briefly articulate how each of these factors affect the final compensation. Copper Liquor, supra,
After reviewing the district court order in this case, we conclude that it did not meet our standards of an adequate explanation as developed in First Colonial, Davis, and Copper Liquor. In Copper Liquor, for example, the attorneys requested a fee of $250,000. The trial court made detailed findings of fact concerning each of the Johnson factors but failed to explain how each factor affected the final award. Rather, the court merely listed its findings, then concluded that "taking into consideration all the [listed] factors" a $45,000 fee was appropriate. On appeal the Fifth Circuit held that the failure to articulate how each factor affected the fee award rendered the explanation inadequate. Copper Liquor, supra, at 582-83.
Here the trial court not only failed to explain how the Johnson factors affected its award, but also failed to make specific findings of fact as to the Johnson factors. The court, for example, asserted that many of the itemized hours were duplicative but failed to specify which hours it considered unnecessary. The court also found that the case was not novel or complex and resulted in only $1,000 damages
AFFIRMED IN PART; VACATED AND REMANDED IN PART.