JOHNSON v. LAFAYETTE FIRE FIGHTERS ASS'N LOC. 472

MORAN, Chief District Judge.

Appellant Lafayette Firefighters' Association Local 472 (the Union) appeals the award of attorney's fees to appellees James Johnson and Jerry Croker (collectively "plaintiffs"), non-union members of the City of Lafayette fire department, under 42 U.S.C. § 1988. The Union argues that plaintiffs' fee petition was untimely under Federal Rule of Civil Procedure 54(d), that plaintiffs are not prevailing parties for the purposes of § 1988, that the award of fees in this case was unreasonable, and that because plaintiffs received legal representation from a charitable legal assistance foundation they did not incur "costs" as the term is used in § 1988. We affirm.

I.

The City of Lafayette and the Union have negotiated a series of collective bargaining agreements that contain a provision granting the Union the right to collect fair share or agency shop fees from non-union firefighters. In 1986 Johnson wrote the Union informing it of what he believed to be a fair amount for him to pay for his fair share fee. The Union did not respond until it sent letters to Johnson and Croker in 1992 notifying them of their failure to pay the fair share amount in the collective bargaining agreement and threatening them with further action if they failed to pay what was due.

Soon thereafter Johnson and Croker retained the National Right To Work Legal Defense Fund (NRTWF) and filed a complaint in the Northern District of Indiana under 42 U.S.C. § 1983, alleging that the fair share provision of the collective bargaining agreement violated their First, Fifth, and Fourteenth Amendment rights by failing to provide the procedural protections set out in the Supreme Court's decision in Teachers' Local Number 1 v. Hudson, 475 U.S. 292, 106 S.Ct. 1066, 89 L.Ed.2d 232 (1986).2 The complaint sought a declaratory judgment that the fair share agreement violated the Constitution; a permanent injunction preventing the Union from enforcing the fair share provision of the collective bargaining agreement; and nominal damages stemming from the Union's demand that plaintiffs comply with the fair share provision.

The parties filed cross-motions for summary judgment. In ruling on the motions the district court held that "[w]hen the complaint was filed ... it was readily apparent that Local 472 was not in compliance with [Hudson]. It is also apparent that since the filing of this complaint, Local 472 has been engaged in an effort to back and fill with reference to these requirements." The Union's "back and fill" efforts included sending letters to plaintiffs — while the parties were in the process of briefing the pending motions — detailing the Union's expenses for the period in question. The court then found that this correspondence satisfied the Union's financial disclosure obligation under Hudson and, accordingly, granted partial summary judgment in favor of the Union. The court noted that it was plaintiffs' obligation to object to the Union's calculations to effectuate the rest of Hudson's requirements.

Complaining that they were "sandbagged" by the Union's eleventh-hour disclosure, plaintiffs sought an opportunity to show the court that the Union's correspondence did not meet Hudson's financial disclosure requirements. The district court held an evidentiary hearing under Fed.R.Civ.P. 43 and concluded that the Union did not comply with Hudson's requirement of an independent audit. The court set aside its prior grant of summary judgment for the Union and entered judgment for plaintiffs on December 14, 1993. The Union filed a motion for reconsideration, which the court denied on February 28, 1994. The court then denied plaintiffs' prayer for a permanent injunction and for nominal damages.

On April 8, 1994, plaintiffs petitioned for costs and attorneys' fees. The Union filed an objection alleging that the petition was untimely under the federal rule, 54(d)(2)(B), because it requires fee petitions to be filed within 14 days of judgment. The district court rejected that argument, relying on a local rule in the Northern District of Indiana which grants 90 days to file such petitions, and granted the fee petition in part on July 22, 1994. The court accepted the hourly rate and hours spent submitted by plaintiffs, but reduced the award by 25% in light of plaintiffs' partial success in the case, yielding a total award of $33,096.96.

The Union is now appealing the fee award but not the underlying Hudson decision. The International Association of Firefighters, AFL-CIO-CLC, has filed an amicus curiae brief in support of Local 472.

II.

A. Timeliness Of the Fee Petition

The 1993 Amendments to Fed. R.Civ.P. 54(d), which governs the awarding of attorneys' fees, state:3

Fed.R.Civ.P. 54(d)(2)(B). Plaintiffs filed their fee petition on April 8, 1994 — 39 days after the district court denied the Union's motion for reconsideration,4 and clearly more than the 14 days provided in the federal rule. The court found that plaintiffs' petition was not time-barred by relying on Northern District of Indiana Local Rule 54.1, which states:

The Union argues that since a local rule may not conflict with the applicable federal rule, see Fed.R.Civ.P. 83; 28 U.S.C. § 2071; Colgrove v. Battin, 413 U.S. 149, 161, 93 S.Ct. 2448, 2455, 37 L.Ed.2d 522 (1973), Local Rule 54.1 is invalid. Plaintiffs argue that the federal rule and the local rule do not conflict because Local Rule 54.1 is "an order of the court" and thus qualifies as an exception to the limitations period in Fed.R.Civ.P. 54(d)(2)(B).5 This issue is one of first impression.6

We agree with plaintiffs that a local rule is an order of the court, at least for the purposes of Fed.R.Civ.P. 54(d)(2)(B). Local rules are adopted by the majority of the judges in a district to govern the practice and procedure of litigation in that district. As such, local rules are, in effect, "standing orders," such that Local Rule 54.1 should be viewed as an order of the court of the Northern District of Indiana.7 And while these standing orders generally cannot conflict with the Federal Rules of Civil Procedure, the Supreme Court and Congress have frequently used the federal rules to adopt default rules of procedure that are modifiable by the districts through the adoption of local rules. See, e.g., Fed.R.Civ.P. 26(a)(1). We believe that the 14-day filing period contained in Fed.R.Civ.P. 54(d)(2)(B) is one such default rule and that the districts are free to modify the filing period through local rules.

That our reading of Fed.R.Civ.P. 54(d)(2)(B) is the most logical reading of the rule, is made apparent after considering the prior law. Before the enactment of the 1993 Amendments, districts were free to adopt local rules to govern the filing of fee petitions. See White v. New Hampshire Dep't of Employment Security, 455 U.S. 445, 102 S.Ct. 1162, 71 L.Ed.2d 325 (1982). After White, many districts adopted local rules to govern the filing of fee petitions. See e.g., Southern District of Georgia Local Rule 11.2(b). If the Supreme Court and Congress had wanted to preempt these local rules they would have done so in definite terms that would not place practitioners in the difficult position of guessing what time period governed the filing of fee petitions. But Fed. R.Civ.P. 54(d)(2)(B) does not contain clear language stripping districts of their power to promulgate local rules to govern the filing of fee petitions. Rather, the rule contains the ambiguous phrase "order of the court," which we do not believe evidences the intent of the Supreme Court and of Congress to so fundamentally change the law in this area.8

Therefore, we hold that Local Rule 54.1 is an order of the court for the purposes of Fed.R.Civ.P. 54(d)(2)(B), and since plaintiffs' petition was filed within 90 days of judgment, the district court properly considered it timely.

B. "Prevailing Party" Status

The Union argues that even if the fee petition was timely, plaintiffs are not entitled to a fee award because they are not prevailing parties for the purposes of § 1988.9

The law in this area is relatively clear. If judgment is entered for the plaintiff, we look to the Supreme Court's decision in Farrar v. Hobby, ___ U.S. ___, 113 S.Ct. 566, 121 L.Ed.2d 494 (1992) to determine whether he qualifies as a prevailing party under § 1988. There the Court held that

Id. at ___, 113 S.Ct. at 573. If the plaintiff obtains relief through settlement or a voluntary change in behavior rather than a judgment, we look to a two-part test, sometimes called "the catalyst rule," to determine whether he should be considered a prevailing party.10 See Zinn v. Shalala, 35 F.3d 273, 274 (7th Cir.1994); Dixon v. City of Chicago, 948 F.2d 355 (7th Cir.1991). "First, `the plaintiffs' lawsuit must be causally linked to the achievement of the relief obtained,' and second, `the defendant must not have acted wholly gratuitously, i.e. the plaintiffs' claims, if pressed, cannot have been frivolous, unreasonable, or groundless.'" Zinn, 35 F.3d at 274 (quoting Stewart v. McGinnis, 5 F.3d 1031, 1039 (7th Cir.1993), cert. denied, ___ U.S. ___, 114 S.Ct. 1075, 127 L.Ed.2d 393 (1994)); see also Brown v. Griggsville Com. Unit School Dist. No. 4, 12 F.3d 681, 685 (7th Cir.1993) (a litigant is not a prevailing party if the change was on account of "a reason unrelated to the proceeding"); Cady v. City of Chicago, 43 F.3d 326, 328-29 (7th Cir. 1994). A district court's determination of causation is a factual determination that is reviewed under the clearly erroneous standard. Brown, 12 F.3d at 685.

The Union argues that the district court's order declaring that the Union's fair share practice violated Hudson was "a judicial pronouncement [that does] not entitle Croker and Johnson to enforce anything," Appellant's Br. at 18, and therefore has not "materially alter[ed] the legal relationship between the parties." See Farrar, ___ U.S. at ___, 113 S.Ct. at 573. The Union further asserts that since it "voluntarily" amended its procedures, this lawsuit is not causally linked to any change favorable to plaintiffs. See Zinn, 35 F.3d at 274.

We disagree. The district court determined that the Union came into compliance with the constitutional requirements of Hudson as result of this lawsuit and made the specific factual finding that the Union did not alter its procedures voluntarily. The court's findings are supported by the fact that the Union failed to comply with Hudson for six years and only modified its procedures after the commencement of the lawsuit. Furthermore, the court determined that Hudson required the Union to have its expenses verified by an independent auditor, which the Union had not voluntarily done to that point. The Union has made the requisite financial disclosures, a change in the Union's behavior which materially benefits plaintiffs and which was unquestionably a result of this lawsuit. Plaintiffs thus qualify as prevailing parties under § 1988.

C. Was the Award of Fees "Reasonable"?

The Union claims that even if plaintiffs can be considered prevailing parties, the fee award was unreasonable in light of their allegedly de minimis victory. The Union relies on a line of Supreme Court and Seventh Circuit cases finding that a nominal damage award does not justify attorney's fees. See generally Farrar, ___ U.S. ___, 113 S.Ct. 566; Maul v. Constan, 23 F.3d 143 (7th Cir.1994).

This circuit has adopted the three-part test laid out in the concurring opinion of Justice O'Connor in Farrar to determine whether a prevailing party has achieved a mere technical victory inappropriate for fees. We should "look at the difference between the judgment recovered and the recovery sought, the significance of the legal issue on which the plaintiff prevailed and, finally, the public purpose of the litigation." Cartwright v. Stamper, 7 F.3d 106, 109 (7th Cir.1993) (citing Farrar, ___ U.S. at ___ _ ___, 113 S.Ct. at 578-79 (O'Connor, J., concurring)). A district court's analysis of these factors, and its determination as to the appropriateness of a fee award, is afforded "great discretion" and will not be disturbed unless it constitutes an abuse of discretion. Id.

Here the district court properly applied the three-part test, and its decision to award a fee was not an abuse of discretion. On the first element, the district court determined that plaintiffs achieved the end goal of the litigation by forcing the Union into compliance with Hudson. The mere fact that this goal was achieved through the Union's prejudgment decision to amend its practices is unimportant in light of the district court's conclusion that the Union would not have acted absent the lawsuit. Plaintiffs won a declaratory judgment, and the district court concluded that injunctive relief was unnecessary in light of the Union's remedial actions.11 Moreover, damages were never a serious part of this lawsuit, which is reflected in plaintiffs' prayer for only nominal damages. On the second element, the district court found that the legal issues presented were of great importance. Indeed, the Supreme Court has noted that "`procedural safeguards have special bite in the First Amendment context.'" Hudson, 475 U.S. at 303 n. 12, 106 S.Ct. at 1074 n. 12 (quoting G. Gunther, Cases and Materials on Constitutional Law 1373 (10th ed. 1980)). As for the final element, the district court concluded that since plaintiffs' success "ensures proper procedure for each future non-member prior to payment of their fair share fee," plaintiffs' success serves the public purpose. Since the Union offers no compelling reason why these conclusions amount to an abuse of discretion, we will not disturb the district court's decision to award a fee.12

D. Did Plaintiffs Incur "Costs"

The Union argues that since Johnson and Croker received their legal representation from a foundation that provides legal representation at no charge,13 they have not incurred any costs or fees appropriate for a fee award. The Union cites Barrow v. Falck, 977 F.2d 1100, 1105 (7th Cir.1992), as support. In Barrow we held that a "reasonable" attorney's fee is the market rate for the attorney's time, and "the market rate for legal time is the opportunity cost of that time, the income foregone by representing this plaintiff." Barrow, 977 F.2d at 1105. The Union argues that since the NRTWF lawyers who prosecuted this case would have had no paying clients anyway, the opportunity cost of their working on this case is zero.

The Union's argument misreads Barrow and runs counter to Supreme Court caselaw. Barrow is wholly inapposite. The issue there was whether an attorney could recover the rate other lawyers in the area charge, when he has never charged that rate. We held that the best place to look to determine a reasonable fee is what the attorney usually charges his paying clients. In such a situation the amount the attorney would have received had he been working on another case is the "market rate" for that attorney. Barrow, 977 F.2d at 1105. Barrow does not, however, address the situation of a legal assistance attorney who has no regularly paying clients and therefore no "opportunity cost rate."

Rather than Barrow, this case is governed by the Supreme Court's decision in Blum v. Stenson, 465 U.S. 886, 104 S.Ct. 1541, 79 L.Ed.2d 891 (1984). There the Court held that "Congress did not intend the calculation of fee awards to vary depending on whether plaintiff was represented by private counsel or by a non-profit legal services association." Id. at 894, 104 S.Ct. at 1547. The Court in Blum upheld the fee award for lawyers from the Legal Aid Society of New York, which, like the NRTWF, is a private non-profit legal assistance organization. The Court then allowed the charitable foundation attorneys to recover fees at the market rate for attorneys in the area. Blum, 465 U.S. at 894, 104 S.Ct. at 1547. The district court was correct to do the same here. Plaintiffs are entitled to recover attorney's fees as measured by the prevailing market rate, whether or not their representation was an act of charity from a non-profit legal assistance foundation.

We affirm the award of attorney's fees.