Paris v. U.S. Dept. ( 1993 )

March 4, 1993 UNITED STATES COURT OF APPEALS
FOR THE FIRST CIRCUIT
No. 92-1763
ANTONIA PARIS, ET AL.,
Plaintiffs-Appellants,
v.
U.S. DEPARTMENT OF HOUSING AND
URBAN DEVELOPMENT, ET AL.,
Defendants-Appellees.
APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF RHODE ISLAND
[Hon. Ernest C. Torres, U.S. District Judge]
Before
Torruella, Circuit Judge,
Bownes, Senior Circuit Judge,
and Stahl, Circuit Judge.
John W. Dineen, with whom Yesser, Jessup & Green, was on
brief for appellants.
Herbert E. Forrest, Federal Programs Branch, Civil Division,
Department of Justice, with whom Stuart M. Gerson, Assistant
Attorney General, Lincoln C. Almond, United States Attorney and
William G. Kanter, Attorney, Appellate Staff, were on brief for
appellee U.S. Department of Housing and Urban Development.
Nora J. Mann, with whom Leigh A. McLaughlin and Gilman,
McLaughlin & Hanrahan, were on brief for appellee Corcoran
Management Co., Inc.
March 4, 1993
TORRUELLA, Circuit Judge. This case requires that we
decide whether a party who loses on the only litigated claim, but
achieves the relief sought as a result of intervening
congressional action prior to a ruling by the district court on
the remaining grounds in the complaint, can nevertheless recover
attorney's fees. We hold that, in appropriate cases, the
district court may award attorney's fees. Because we find this
to be such a case, we reverse the district court ruling to the
contrary, and remand for action consistent with this opinion.
I
BACKGROUND1
BACKGROUND
Appellants, a group of very low income families,
challenged a tenant selection scheme at the Chad Brown public
housing project in Providence, Rhode Island. In the late 1970s,
the Department of Housing and Urban Development ("HUD") and the
Providence Housing Authority ("PHA") hired Corcoran Management
Co., Inc. ("Corcoran") to supervise the modernization of the
project. In order to achieve an economic mix of tenants,
Corcoran, with HUD's approval, attempted to implement a plan that
would skip-over very low income families on the waiting list and
settle higher income families first.
In 1986, appellants sought declaratory and injunctive
relief against both HUD and Corcoran. The complaint alleged that
HUD's adoption of the income mixing scheme violated the United
States Housing Act of 1937 ("Housing Act"), 42 U.S.C. 1437 et
1 The facts underlying this case are detailed at Paris v. Dept.
of Housing & Urban Development, 843 F.2d 561 (1st Cir. 1988)
("Paris I").
seq. (Supp. 1992); the Fair Housing Act, 42 U.S.C. 3601 et seq.
(1977 & Supp. 1992); and the Due Process and Equal Protection
Clauses of the Constitution of the United States. Appellants
also brought a claim against Corcoran under 42 U.S.C. 1983 for
violation of their civil rights on the same statutory and
constitutional grounds. The district court granted a preliminary
injunction based on the Housing Act claim. We reversed,
expressly leaving the other issues open for resolution by the
district court. Paris I, 843 F.2d at 574 n.20.
In the summer of 1988, Congress passed the Stewart B.
McKinney Homeless Assistance Amendments Act of 1988. This law
prohibited public housing agencies from by-passing the order of
the waiting list for the purpose of assisting higher income
families first.2 The Conference Report stated that, "[w]hile the
conferees affirm the principle of income mix in assisted housing
projects, this amendment (which is necessary in light of the
decision in Paris v. HUD, 843 F.2d 561) makes it clear that lower
income families on a waiting list may not be skipped over in
2 The act provided in relevant part:
Sec. 1001. Income Eligibility for
Assisted Housing. (b) CLARIFICATION.--
Section 6(c)(4)(A) of the United States
Housing Act of 1987 (42 U.S.C.
1437d(c)(4)(A)) is amended by inserting
before the semicolon at the end the
following: "and shall not permit public
housing agencies to select families for
residence in an order different from the
order on the waiting list for the purpose
of selecting relatively higher income
families for residence." Pub. L. No.
100-628, 1001(b), 102 Stat. 3263.
-3-
order to help a higher income family first." H.R. Conf. Rep. No.
1089, 100th Cong., 2d Sess. 91-92 (1988), reprinted in 1988
U.S.C.C.A.N. 4450, 4475-76 (emphasis supplied). HUD and Corcoran
amended the income mixing plan to conform to these statutory
changes. Appellants moved for a voluntary dismissal having
achieved their goal. The district court dismissed the suit
without reaching the other legal issues in the case.
In 1990, appellants moved for an attorney's fee award
against HUD under the Equal Access to Justice Act ("EAJA"), 28
U.S.C. 2412(d)(1)(A), and the Fair Housing Act, 42 U.S.C.
3613(c)(2). Appellants similarly sought fees from Corcoran
under the Civil Rights Attorney's Fees Awards Act of 1976, 42
U.S.C. 1988, and the Fair Housing Act. The district court
rejected the claim under the EAJA finding that appellants were
not "prevailing parties" and that the government's position in
the litigation was "substantially justified." It refused
recovery under the Fair Housing Act and 1988, reasoning that it
could not award fees pursuant to those statutes unless the party
prevails on those claims. Since appellants voluntarily dismissed
the action before the court considered those issues, the court
denied the fee request.
II
EAJA CLAIM
A party seeking attorney's fees under 2412(d)(1)(A)
of the EAJA must demonstrate that it is a "prevailing party" and
-4-
that the government's position was not "substantially
justified."3 The prevailing party inquiry under the EAJA is
consistent with that under other federal fee-shifting statutes.
Texas State Teachers Ass'n v. Garland Independent School Dist.,
489 U.S. 782, 784 (1989); Guglietti v. Secretary of HHS, 900 F.2d
397, 398 (1st Cir. 1990). In general, the court looks for some
"material alteration of the legal relationship of the parties in
a manner which Congress sought to promote in the fee statute."
Texas Teachers, 489 U.S. at 792-93; see also Farrar v. Hobby, 113
S. Ct. 566, 572-73 (1992). We have identified two main avenues
by which a party may demonstrate the changed legal relationship.
The party either must enjoy bottom-line success in the litigation
or act as a catalyst in causing the desired alteration.
Guglietti, 900 F.2d at 400-01; Nadeau v. Helgemoe, 581 F.2d 275,
278-79 (1st Cir. 1978). Unlike other fee-shifting statutes, the
EAJA presents the additional hurdle of showing that the
government's position was not substantially justified. Compare
42 U.S.C. 1988(b) (Civil Rights Attorney's Fees Awards Act) and
42 U.S.C. 3613(c)(2) (Fair Housing Act) with 28 U.S.C.
3 28 U.S.C. 2412(d)(1)(A) (Supp. 1992) provides:
Except as otherwise specifically provided
by statute, a court shall award to a
prevailing party other than the United
States fees and other expenses, in any
civil action (other than cases sounding
in tort), including proceedings for
judicial review of agency action, unless
the court finds that the position of the
United States was substantially justified
or that special circumstances make an
award unjust.
-5-
2412(d)(1)(A) (EAJA).
We review the district court's prevailing party and
substantial justification determinations under the abuse of
discretion standard. Pierce v. Underwood, 487 U.S. 552, 558-63
(1988) (substantial justification); McDonald v. Secretary of
HHS, 884 F.2d 1468 (1st Cir. 1989) (prevailing party). When the
district court errs with respect to a purely legal issue,
however, our review is de novo. Domegan v. Ponte, 972 F.2d 401,
406-07 (1st Cir. 1992); see also Guglietti, 900 F.2d at 399.
For the moment we shall postpone consideration of the
district court's finding on prevailing party status because
appellants' claim under the EAJA is dispensed with easily under
the substantial justification prong of the EAJA fee award
inquiry. Appellants predicate their EAJA claim on their alleged
success on the substantive Housing Act claim. Because the
Housing Act does not have its own fee-shifting provision,
appellants were forced to seek fees under the general federal
fee-shifting statute, the EAJA. HUD and Corcoran's position with
respect to the Housing Act was clearly justified prior to the
McKinney Amendments. Indeed, this court agreed with their
interpretation of the Housing Act in Paris I. Congress' later
action does not alter our conclusion. Thus, the district court
did not abuse its discretion in denying attorney's fees under the
EAJA.
III
FAIR HOUSING ACT AND SECTION 1988
-6-
Unlike the EAJA, neither the Fair Housing Act's fee-
shifting provision,4 nor section 1988,5 require that appellants
demonstrate that the government's position was not substantially
justified. The district court rejected appellants' arguments
reasoning that success on these claims, by which it must have
meant--judicial consideration prior to success that mooted the
court proceedings--was the sine qua non of an award of fees
pursuant to these statutes. HUD and Corcoran make the
superficially appealing argument that fees cannot be awarded to a
party who lost on the only issue that was litigated. We are
unpersuaded.
In Maher v. Gagne, 448 U.S. 122 (1980), the Supreme
Court considered whether a party that sued state officials under
the Social Security Act, 42 U.S.C. 402(a)(7), 602(a)(7), and
the Equal Protection and Due Process Clauses of the Fourteenth
Amendment of the United States Constitution, but settled the case
4 The Fair Housing Act fee-shifting provision, 42 U.S.C.
3613(c)(2) (Supp. 1992) provides in relevant part:
[T]he court, in its discretion, may allow
the prevailing party, other than the
United States, a reasonable attorney's
fee and costs. The United States shall
be liable for such fees and costs to the
same extent as a private person.
5 42 U.S.C. 1988 (b) (Supp. 1992) provides:
In any action or proceeding to enforce a
provision of section[] . . . 1983 . . .
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.
-7-
by entry of a consent decree prior to determination by the
district court of whether her constitutional rights had been
violated, could recover attorney's fees under section 1988.6
The court held that the district court's power to award fees was
not conditioned on "full litigation of the issues or on a
judicial determination that the plaintiff's rights have been
violated." Maher, 448 U.S. at 129. The Court stated that
"Congress intended fees to be awarded where a pendent
constitutional claim is involved, even if the statutory claim on
which the plaintiff prevailed is one for which fees cannot be
awarded under the Act."7 Id. at 132 n.15. The Maher court
recognized that such a policy provided a perfect balance between
the congressional policy of encouraging suits to vindicate
constitutional rights and the policy against unnecessary decision
of constitutional questions. Id. at 133.
The Court did not intend that the district court
litigate the merits of the claims once the case had been resolved
6 In Maine v. Thiboutot, 448 U.S. 1, 9-10 (1980), the Court held
that 1988 provides a basis for awards for any 1983 action,
including those based on statutory, rather than, constitutional
violations. In Maher, as here, the unlitigated claims were both
statutory and constitutional.
7 The legislative history accompanying H.R. 15460, a bill almost
identical to that passed stated: "if the claim for which fees
may be awarded meets the 'substantiality' test, see Haggans v.
Lavine, [415 U.S. 528 (1974)]; United Mine Workers v. Gibbs, 383
U.S. 715 (1966), attorney's fees may be allowed even though the
court declines to enter judgment for the plaintiff on that claim,
so long as the plaintiff prevails on the nonfee claim arising out
of a 'common nucleus of operative fact.' United Mine Workers v.
Gibbs, supra, at 725." Maher, 448 U.S. at 133 n.15 (quoting H.R.
Rep. No. 1558, 94th Cong., 2d Sess. 4 n.7 (1976)).
-8-
in order to decide the fee issue. On the contrary, the Court has
cautioned against such wasteful secondary litigation. Texas
Teachers, 489 U.S. at 791. In Haggans v. Lavine, 415 U.S. 528(1974), the Court developed a "substantiality" test to aid lower
courts in determining when it is appropriate for them to exercise
jurisdiction over statutory causes of action that, although
pendent to constitutional claims over which the court has
jurisdiction, have no independent jurisdictional basis. Id. at
542. Applied in this different context, the Haggans test serves
as a proxy for determination on the merits of the claims once the
litigation is resolved to establish that an attorney's fee award
is justified. The threshold "substantiality" test conserves
judicial resources while continuing to require that plaintiffs
demonstrate that their success is sufficiently related to a civil
rights victory before receiving fees under a fee-shifting regime.
In Smith v. Robinson, 468 U.S. 992 (1984), the Supreme
Court clarified principles implicit in Maher, by explaining that
"plaintiffs may not rely simply on the fact that substantial fee-
generating claims were made during the course of the litigation."
Id. at 1007. Further examination of the claims and their
relationship is required. The Court specifically stated that
there was nothing wrong with seeking relief under a certain
statute, or amending a complaint, to include a claim for which
attorney's fees are available. Id. at 1009 n.12. The court
concluded, however, that where petitioners "have presented
-9-
distinctly different claims for different relief, based on
different facts and legal theories, and have prevailed only on a
nonfee claim, they are not entitled to a fee award simply because
the other claim was a constitutional claim that could be asserted
through 1983." Id. at 1015.
This case does not present that situation; the facts
arise from a common nucleus of operative fact, and the theories
are but different statutory avenues to the same goal. The
appellants are victims of a happenstance that the district court
opted to decide on the basis of the Housing Act claim, and that
the appeal proceeded as it did, before Congress intervened. Nor
are we presented with the situation in Smith, in which the
Supreme Court held that one of the several statutory and
constitutional claims was the exclusive avenue of redress,
thereby barring recovery under another fee-shifting statute
alleged in the complaint.8
On the contrary, we think that the principles of Maher
clearly apply to the present case. Maher considered one manner
in which cases are resolved without formal adjudication or
8 In Smith, plaintiffs asserted claims based on state law; the
Education of the Handicapped Act (EHA), 84 Stat. 175, as amended,
20 U.S.C. 1400 et seq.; section 504 of the Rehabilitation Act
of 1973, 87 Stat. 394, as amended, 29 U.S.C. 794; and the Due
Process and Equal Protection Clauses of the Fourteenth Amendment.
The Court concluded that where a remedy was provided with
"clarity and precision" under the EHA, a plaintiff may not
circumvent that exclusive avenue by appeal to other statutory
schemes. Smith, 468 U.S. at 1021. Congress subsequently altered
the Court's specific holding under the EHA to provide fees in the
Handicapped Children's Protection Act of 1986, Pub. L. No. 99-
372, 100 Stat. 796, codified at 20 U.S.C. 1415 (Supp. 1992).
-10-
decision by a court on all issues raised by the parties.
Voluntary dismissal is but another way in which a plaintiff saves
judicial resources once it has achieved its desired goal.
After a case is resolved, by whatever method, and a
party requests attorney's fees, we look for a "prevailing party"
within the meaning of term as spelled out in the case law.
Appellants are not a "prevailing party" under the merits test
since the court never considered the merits of the claims in
issue. Langton v. Johnston, 928 F.2d 1206, 1224 (1st Cir. 1991);
Coalition for Basic Human Needs v. King, 691 F.2d 597, 599 (1st
Cir. 1982) (merits test "states the obvious, that a party has
prevailed if it wins the litigation"). Appellants, however, are
a catalyst under Guglietti, 900 F.2d at 401-02, and Nadeau, 581
F.2d at 279-80. To be a catalyst the party must demonstrate (1)
a causal connection between the litigation and the relief sought
and (2) that the success was not obtained by a gratuitous gesture
of the fee-target. Guglietti, 900 F.2d at 401. The suit need
not be the sole cause but must play a "provocative" role or be a
"competent producing cause." Id.The district court summarily determined that appellants
were not catalysts because it believed that Congress, not the
litigation, caused defendants to change their income mix policy.
We think this argument is incorrect.
The fact that Congress delivered the plaintiffs'
requested relief rather than the parties sued, HUD and Corcoran,
provides no relevant distinction. Corcoran, HUD, and Congress
-11-
are manifestations of the same entity, the government. HUD is
simply an instrument of Congress' will, and Corcoran does HUD's
bidding.
The district court also relied on our decision in
Guglietti, 900 F.2d 397, to deny appellants prevailing party
status under the catalyst theory. In Guglietti, plaintiff's
Social Security disability benefits were terminated. Guglietti
sought review of the determination. While on appeal to this
court, Congress amended the statute and directed that cases on
appeal, such as Guglietti's, be remanded for a determination
under the new statutory standard. Under that standard, his
benefits were reinstated. Guglietti obtained attorney's fee
under the EAJA in the district court. On appeal, we reversed the
award. Guglietti, 900 F.2d at 403. We reasoned that because
plaintiff was just one of thousands of similar claims, the
relationship between the litigation and Congress' action was too
tenuous to be considered the "provocative" cause of legislation.
Id. at 401 (relying on Hendricks v. Bowen, 847 F.2d 1255, 1258
(7th Cir. 1988); Truax v. Bowen, 842 F.2d 995, 997 (8th Cir.
1988)).
This case is clearly distinguishable from Guglietti,
however. Here the Congressional change was wrought by one case,
Paris I. The Conference Report specifically states that the
amendments were necessary to change the result in Paris I. H.R.
Conf. Rep. No. 1089 at 91-92, see ante at p. 3. Guglietti
recognized that assigning a particular case among thousands in
-12-
the context of social securities benefits strains the notion of
provocative cause. To read Guglietti to prevent attorney's fee
in the present case is to negate the possibility of ever granting
attorney's fees when Congress amends or clarifies legislation and
thereby secures plaintiff's requested interpretation of a
statute. Plaintiffs would be forced to choose between litigation
and pursuing legislative changes via lobbying activities, or risk
losing an award of fees. Such an insurmountable barrier to
recovery would contravene Congress' intent in enacting fee-
shifting statutes. Texas Teachers, 489 U.S. at 793. In any
event, this case sits at the opposite end of the spectrum from
Guglietti since Congress specifically mentioned the case in the
legislative history as being the "necessary" force behind its
enactment.
Appellants' suit is, thus, fairly characterized as a
catalyst of Congress' amendment. The district court erred in
holding to the contrary. As such, appellants' law suit affected
a "material alteration of the legal relationship of the parties
in a manner which Congress sought to promote" in the fee-shifting
provisions of the Fair Housing Act with respect to the
government, and in 1988 with respect to Corcoran. Texas
Teachers, 489 U.S. at 792-93.
Unfortunately this case is not at an end. On remand,
the district court must determine two matters. First, the court
must decide whether appellants raised statutory and/or
constitutional claims that pass the "substantiality" test of
-13-
Maher and Haggans in order to recover under the alternative fee-
shifting regimes pursuant to unlitigated claims.9 Second, the
district court must determine the amount of fees to which
appellants are entitled under Hensley v. Eckerhart, 461 U.S. 424(1983), as "the degree of the plaintiff's overall success goes to
the reasonableness of the award under Hensley, not to the
availability of a fee award vel non." Texas Teachers, 489 U.S.
at 793.
Reversed and remanded for action consistent with this
opinion.
9 As we have not heard argument on those claims we cannot answer
that question.
-14-