Freeman v. Director of New Jersey Division of Alcoholic Beverage Control , 538 F. App'x 204 ( 2013 )

NOT PRECEDENTIAL
UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
________
No. 12-3829
_________
ROBERT FREEMAN; JUDY FREEMAN; WALTER HANSEL WINERY INC;
MEYER FRIEDMAN, and BEVERLY FRIEDMAN
v.
DIRECTOR OF THE NEW JERSEY DIVISION OF ALCOHOLIC BEVERAGE
CONTROL,
Appellant
________
On Appeal from the United States District Court
for the District of New Jersey
(D.C. No. 2-03-cv-03140)
District Judge: Honorable Katharine S. Hayden
_______
Submitted Pursuant to Third Circuit L.A.R. 34.1(a)
September 12, 2013
Before: MCKEE, Chief Judge, SMITH, and SLOVITER, Circuit Judges
(Filed: September 13, 2013)
______________
OPINION
_______________
SLOVITER, Circuit Judge.
The Director of the New Jersey Department of Alcoholic Beverage Control
(“ABC”) appeals the District Court’s award of $802,221 in attorneys’ fees and expenses
to the Appellees. We will vacate the award in part and affirm in part.
I.
Appellees, four New Jersey consumers of wine and one California winery, sued
ABC in the District of New Jersey, alleging that New Jersey’s ABC laws discriminated
against out-of-state wineries in violation of the Commerce Clause. Appellees’ original
complaint noted a number of differences between how the ABC laws treated in-state and
out-of-state wineries and sought an injunction permitting out-of-state wineries to ship
wine directly to New Jersey residents, as in-state wineries could do. During a stay of the
litigation, and in response to Granholm v. Heald, 544 U.S. 460, 493 (2005), which held
that “[i]f a State chooses to allow direct shipment of wine, it must do so on evenhanded
terms,” New Jersey amended its laws to eliminate direct shipping of wine altogether. Act
of July 14, 2004, 2004 N.J. Laws 102. Appellees then amended their complaint to allege
that the new ban on direct shipping violated the Commerce Clause, and to clarify the
other ABC provisions the Appellees still sought to challenge as discriminatory.
On cross-motions for summary judgment, the District Court found all but two of
the challenged provisions constitutional. Both sides appealed. This court found the
direct-shipment ban constitutional, but held that several other provisions did discriminate
against out-of-state wineries in violation of the Commerce Clause. See Freeman v.
Corzine, 629 F.3d 146, 164-65 (3d Cir. 2010). Because the discrimination could be
2
remedied either by eliminating benefits for in-state wineries or by extending them to out-
of-state wineries, we remanded the case to the District Court to determine the proper
result. See id. at 165. Appellees then petitioned this court for an interim award of
attorneys’ fees pursuant to 42 U.S.C. § 1988(b) for the work done on appeal. This court
denied Appellees’ request without explanation.
On remand, the litigation was stayed by all parties’ consent. The New Jersey
legislature rewrote the relevant statutory provisions, and the parties entered a consent
agreement that concluded the substance of the litigation. After the entry of the consent
order, Appellees requested attorneys’ fees and expenses in the District Court. Appellees
provided time records, explanations of their litigation tasks, and evidence of the
prevailing hourly rate for attorneys of similar experience in the area. The District Court’s
lodestar analysis 1 led it to make two small reductions in Appellees’ fee request, but it
otherwise granted the request as written. The total award, which included compensation
for the appellate fees this court had denied, was $802,221. ABC timely appealed the
District Court’s award of fees and costs. 2
II.
First, ABC argues that the District Court lacked authority to grant appellate fees
and costs that this court has explicitly denied. Because this objection raises a question of
1
A lodestar analysis requires the court to first determine the lodestar – hours reasonably
expended multiplied by a reasonable hourly rate – and then adjust the lodestar amount if
necessary to reach a reasonable fee award. See Pub. Interest Research Grp. of N.J., Inc.
v. Windall, 51 F.3d 1179, 1185 (3d Cir. 1995).
2
The District Court had jurisdiction pursuant to 28 U.S.C. § 1331; this court has
jurisdiction pursuant to 28 U.S.C. § 1291. See Jama v. Esmor Corr. Servs., 577 F.3d 169,
173 (3d Cir. 2009).
3
law, our review is plenary. See McKenna v. City of Phila., 582 F.3d 447, 455 (3d Cir.
2009).
Once this court “has entertained an application for appellate attorney’s fees, a
district court may not.” Yaron v. Twp. of Northampton, 963 F.2d 33, 37 (3d Cir. 1992).
In Yaron, as in this case, this court denied an appellate fee request “without explanation,”
id. at 35, and the district court later awarded appellate fees. The Yaron panel vacated the
award, reasoning “that an order denying fees on appeal is analogous to a remand with a
specific mandate. In such a case, the district court is required to follow our mandate.”
Id. at 37.
The District Court found Yaron inapposite because it concerned fees for prevailing
defendants, rather than plaintiffs. It held that to apply Yaron in this case “would be at
odds with binding caselaw,” App. at 27, and cited Perdue v. Kenny A. ex rel Winn, 130 S.
Ct. 1662, 1676 (2010), for the proposition that courts cannot deny § 1988 fees to
prevailing plaintiffs without explanation. Perdue specifically addresses trial courts,
however, and requires explanation in order to enable appellate review. See id. We do not
read it as abrogating Yaron’s clear rule.
The District Court also distinguished Yaron on the basis that it involved a fee
request following a final disposition, whereas the fee petition in this case was made
“before the litigation was complete.” App. at 27. This is a distinction without a
difference. The Appellees’ appeal was complete when this court denied their fee
application. The further proceedings in the District Court were not relevant to whether
4
Appellees deserved fees for the appeal. There is no more of a basis to infer that the
denial in this case was procedural than there was in Yaron.
We are sympathetic to the Appellees’ argument that what may have been a
procedural denial should not bar a later fee award, but there is simply no sound basis to
exempt this case from Yaron’s broad holding. Pursuant to that precedent, the District
Court lacked authority to award Appellees fees for the prior appeal. We will vacate that
component of the fee award, and will also vacate the fees awarded for time spent
litigating the Yaron issue below. See Hensley v. Eckerhart, 461 U.S. 424, 435 (1982).
III.
Second, ABC contends that the District Court abused its discretion by failing to
reduce the award to reflect Appellees’ loss on the issue of the direct-shipment ban. Cf.
id. at 434-36 (holding that fee awards must account for “limited success”); see also Tex.
State Teachers Ass'n v. Garland Indep. Sch. Dist., 489 U.S. 782, 790 (1989). None of
ABC’s arguments in support of this claim have merit.
ABC asserts for the first time on appeal that Appellees should receive no fees for
work done prior to their Second Amended Complaint. The argument is waived. See
Webb v. City of Phila., 562 F.3d 256, 263 (3d Cir. 2009). 3 More broadly, ABC argues
that the District Court abused its discretion by accepting the Appellees’ calculation of
hours worked, which the Appellees say excluded time spent on the direct-shipment ban.
ABC contends that Appellees’ records were too vague to be credible, and that the District
3
We are not persuaded that the quality of Appellees’ records “hampered the State’s
ability” to make this objection below. Appellants’ Br. at 28.
5
Court should have further reduced the fee award to account for the fact that the direct-
shipment ban was the focus of the case. It is clear, however, that the core of the lawsuit
was the larger discrimination claim. See Freeman, 629 F.3d at 151-53 (describing issues
in lawsuit). Furthermore, Appellees’ fee petition contained ample detail to support the
District Court’s determination. Cf. Lindy Bros. Builders, Inc. of Phila. v. Am. Radiator &
Standard Sanitary Corp., 487 F.2d 161, 167 (3d Cir. 1973). The District Court did not
abuse its discretion in declining to reduce the award.
IV.
Third, ABC argues that the District Court abused its discretion by compensating
Appellees for legal work performed on behalf of non-prevailing parties. “A district court
abuses its discretion if its decision rests upon . . . an improper application of law to fact.”
Johnston v. HBO Film Mgmt. Inc, 265 F.3d 178, 183 (3d Cir. 2001) (internal quotation
marks omitted).
Because “it is the party, rather than the lawyer, who is . . . eligible” for fees
pursuant to § 1988, Venegas v. Mitchell, 495 U.S. 82, 87 (1990), courts must take care to
award fees only to prevailing parties. This is particularly challenging in a multi-party
case involving multiple claims. See McKenna, 582 F.3d at 457. In this case, the District
Court awarded fees for work done on behalf of Oliver Winery, which was voluntarily
dismissed as plaintiff before the resolution of the case, on the ground that “[p]laintiffs’
attorneys . . . should not be penalized for developing the claims of what would otherwise
be a suitable plaintiff.” App. at 35. The District Court also awarded fees for Appellees’
unsuccessful efforts to substitute Chateau Thomas Winery for plaintiff Hansel Winery,
6
and to locate additional plaintiffs. Because these components of the award compensated
the prevailing attorneys rather than the prevailing parties, they did exceed the District
Court’s discretion. We will vacate them as well.
V.
We note, lastly, that Appellees’ request for attorneys’ fees for the instant appeal is
premature. A prevailing party may request appellate attorneys’ fees and costs by motion
supported by an affidavit to the same panel that heard the appeal. See Vasquez v.
Fleming, 617 F.2d 334, 336 (3d Cir. 1980); 3d Cir. L.A.R. Misc. 108.1. Because
Appellees have not had the chance to argue that they are prevailing parties, and ABC has
not had an adequate opportunity to oppose the motion, Appellees must separately move
for appellate attorneys’ fees. See id.VI.
The District Court did not have authority to grant compensation to Appellees for
(1) the prior appeal or time spent litigating the Yaron issue, (2) work done solely on
behalf of Oliver Winery, (3) work done in support of Appellees’ unsuccessful effort to
substitute Chateau Thomas Winery for plaintiff Hansel Winery, and (4) time spent
seeking additional plaintiffs. We will therefore vacate these elements of the award of
fees and costs, affirm the award in all other respects, and remand to the District Court to
enter judgment in the amount of the reduced award.
7