Shipes v. Trinity Industries, Inc.

685 F. Supp. 607, 1987 U.S. Dist. LEXIS 13485, 49 Empl. Prac. Dec. (CCH) 38,686, 50 Fair Empl. Prac. Cas. (BNA) 757, 1987 WL 46559
CourtDistrict Court, E.D. Texas
DecidedDecember 7, 1987
DocketCiv. A. No. TY-80-462-CA
StatusPublished
Cited by4 cases

This text of 685 F. Supp. 607 (Shipes v. Trinity Industries, Inc.) is published on Counsel Stack Legal Research, covering District Court, E.D. Texas primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Shipes v. Trinity Industries, Inc., 685 F. Supp. 607, 1987 U.S. Dist. LEXIS 13485, 49 Empl. Prac. Dec. (CCH) 38,686, 50 Fair Empl. Prac. Cas. (BNA) 757, 1987 WL 46559 (E.D. Tex. 1987).

Opinion

ORDER

JUSTICE, Chief Judge.

On July 15, 1987, this court ordered that the defendant pay plaintiffs’ counsel $144,-712.70 as partial interim attorney’s fees. That sum represented the lodestar payment to which plaintiffs’ attorneys, Nell Hahn, Esquire, and Martha Owen, Esquire, were entitled. In the July 15 order, additional findings were made respecting the character of the litigation and the nature of plaintiffs’ representation. These findings answered the desiderata, set forth in Johnson v. Georgia Highway Express, 488 F.2d 714, 717-19 (5th Cir.1974), and largely adopted by the U.S. Supreme Court in Blum v. Stenson, 465 U.S. 886, 893, 104 S.Ct. 1541, 1546, 79 L.Ed.2d 891 (1984), for the computation of enhancements or multipliers to an attorney's lodestar fee.

However, the July 15 order did not give these additional factors a monetary value. Instead, resolution of that issue was deferred until the impact of last term’s Supreme Court decision in Pennsylvania v. Delaware Valley Citizens’ Council, — U.S.-, 107 S.Ct. 3078, 97 L.Ed.2d 585 (1987), could be briefed and considered. In Delaware Valley, a divided court held that it was improper to enhance a lodestar fee in order to compensate for a prevailing attorney’s risk of losing the case and not being paid. Accordingly, before the court for consideration here is whether plaintiffs’ counsel are entitled to upward adjustment of their lodestar in the wake of the Delaware Valley decision.

In the July 15 order, this court found that various Johnson factors existed. The case was novel and difficult (the second Johnson factor). At least some of this difficulty was aggravated by the defendant’s obstinate conduct in the course of pretrial discovery. Litigation of the merits required more than usual skill (the third Johnson factor), because it involved the analysis and presentation of highly technical information and data. Attorney Hahn had to devote a substantial portion of her time on this matter, to the preclusion of other employment (the fourth Johnson factor). In part due to defendant’s discovery tactics, plaintiffs’ counsel were forced to work under torturous time constraints with an enormous amount of undigested discovery material (the seventh Johnson factor), and nevertheless were able to secure an impressive victory on behalf of their clients. This outcome benefits a large number of claimants, whose relief could be worth more than $1,000,-000.00. Thus, the outcome of the case (the eighth Johnson factor) was significant. All of these factors support an upward adjustment of the lodestar.1

The order also discussed the sixth Johnson factor, consisting of the related issues [609]*609of whether the fee was fixed or contingent, and the risk of nonpayment. It was found that Hahn and Owen, by their commitment to the plaintiffs’ cause, had significantly exposed themselves to the possibility of nonpayment. These risks went beyond what normally is associated with the contingency fee arrangement. In particular, counsel’s inability to obtain the necessary statistical discovery material until the eleventh hour narrowed the tightrope that they walked to a razor’s edge. It was observed, however, that Hahn took far more of a gamble in this respect than Owen.

Here, the court must gauge the impact of the Delaware Valley decision on these Johnson factors. It is best first to list the Johnson factors that Delaware Valley does not affect at all. It has no impact on the upward adjustment of fees because of delay, or because of difficulties posed by defendants' conduct. 107 S.Ct. 3081-82. Nor does the decision affect adjustments made due to the unpopularity of the cause.2 Id. at 3082. Also, the extent to which courts may consider the importance of the outcome is not changed by Delaware Valley.

Instead, the Supreme Court’s Delaware Valley holding is explicitly quite narrow, and somewhat technical. It deals only with one Johnson factor: the contingency of the fee, or in other words, the risk of nonpayment. While the four-judge plurality opinion stated that fee-shifting statutes per se do not permit the adjustment of lodestars for an attorney’s assumption of the risk of nonpayment, id. 3081-89, the outcome of the case was determined by the added single concurrence of Justice O’Connor, who disagreed with this view. Id. at 3089-90. Instead, her opinion held only that the risk enhancement that had been awarded by the lower court in that particular case was unwarranted. Id. at 3090-91.3 It is significant that the four-justice plurality opinion states as an alternative holding that, if the fee statutes permit risk enhancement, it nonetheless was inappropriate to award it in the circumstances of the Delaware Valley case. Id. at 3087-89. Because Justice O’Connor concurs only with this alternative aspect of the plurality opinion, her opinion constitutes the holding of the Supreme Court. Thus, it is appropriate to parse it out by a close reading.

Justice O’Connor’s opinion describes three criteria for evaluating a prevailing attorney’s risk of nonpayment, and attaching a value to it. The first criterion is the parameter of the legal marketplace. Id. at 3090. There should be some “consistency” in adjustments for contingency. The courts should avoid “[haphazard and wildly divergent compensation for risk.” Id. Contingency cases should be treated “as a class.” The court must standardize its findings from case to case, based on “how a particular market compensates for contingency.” Id. Thus, risk enhancement decisions should not be made on an ad hoc basis; instead, because these decisions posit a similar market, a fee decision in one case should control future cases as well.

Second, the fee applicant has the burden of showing how a market compensates for contingency. Id. at 3090-91. Within the attorney’s market, compensation for risk is inappropriate unless the prevailing party otherwise “would have faced substantial difficulties in finding counsel.” Id. at 3091, quoting plurality opinion at 3089. Thus, the prevailing party must show the existence, extent, and value of these difficulties in the relevant market.

Third, the court’s assessment of a risk enhancement should not take into account the normal “legal” risks, or even the unique risks, associated with a particular case. Theoretically, such risks are already reflected in the lodestar, which is a function of the professional skills and time required to obtain a favorable result. According to the Supreme Court majority, an additional bonus for case-specific risk is inappropriate. Id. at 3091.

[610]*610Accordingly, the gravamen of the Delaware Valley case is that lower courts are not permitted to peg contingency enhancements solely to the particular case for which an award is sought. Instead, the particular case must be looked at as part of a class of similar cases, and the permissible award for contingency is to be viewed as something between what the market requires and what it will bear. The risk enhancement award must not be less or more than what is necessary to countervail the difficulties the prevailing party otherwise would have faced in finding counsel within the relevant market.

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685 F. Supp. 607, 1987 U.S. Dist. LEXIS 13485, 49 Empl. Prac. Dec. (CCH) 38,686, 50 Fair Empl. Prac. Cas. (BNA) 757, 1987 WL 46559, Counsel Stack Legal Research, https://law.counselstack.com/opinion/shipes-v-trinity-industries-inc-txed-1987.