World Outreach Conference Cent v. City of Chicago ( 2018 )

In the
United States Court of Appeals
For the Seventh Circuit
No. 17-2476
WORLD OUTREACH CONFERENCE
CENTER, et al.,
Plaintiffs-Appellants,
v.
CITY OF CHICAGO,
Defendant-Appellee.
Appeal from the United States District Court for the
Northern District of Illinois, Eastern Division.
No. 06 C 2891 — Joan Humphrey Lefkow, Judge.
ARGUED MAY 29, 2018 — DECIDED JULY 24, 2018
Before BAUER, BARRETT, and ST. EVE, Circuit Judges.
BAUER, Circuit Judge. This is the third time World Outreach
Conference Center’s (World Outreach) long-running dispute
with the City of Chicago has appeared before us. See World
Outreach Conference Ctr. v. City of Chicago, 591 F.3d 531 (7th Cir.
2009) (“World Outreach I”); World Outreach Conference Ctr. v.
2 No. 17-2476
City of Chicago, 787 F.3d 839 (7th Cir. 2015) (“World Outreach
II”). In this appeal, World Outreach contends that the district
court erred by making a 70% across-the-board reduction to its
award of attorney’s fees. We find no reason to disrupt the
district court’s determination and affirm.
I. BACKGROUND
The dispute and its ensuing litigation between World
Outreach and the City of Chicago has a history beginning in
2005. We assume familiarity with our earlier opinions and
abbreviate our discussion.
In July 2005, World Outreach, a Christian religious organi-
zation, purchased a building in the Roseland neighborhood on
Chicago’s south side from the YMCA. The building contains
168 single-room occupancy (SRO) units. The YMCA operated
a community center and the SROs for the previous 80 years
with little interference from the City’s zoning authority. The
community center was a “legal nonconforming use,” meaning
that the use of the center had previously conformed to zoning
regulations, and when the zoning regulations changed to
prohibit that use, the YMCA was allowed to continue using
the building as a community center. See Chicago Zoning
Ordinance § 17-15-0301.
The legal nonconforming status meant the YMCA, and
ultimately World Outreach, did not need to obtain a Special
Use Permit to operate the center. According to the City’s
zoning ordinance, the “[n]onconforming status runs with the
land and is not affected by changes of tenancy, ownership, or
management.” Chicago Zoning Ordinance § 17-15-0106. The
YMCA and World Outreach only needed to obtain the neces-
No. 17-2476 3
sary licenses from the City to operate the community center
and the SROs.
When World Outreach applied for the necessary commu-
nity center and SRO licenses in August 2005, the City informed
World Outreach that it needed a Special Use Permit. The
mystery as to why the City refused to issue the licenses and
insist on the Special Use Permits, despite the legal
nonconforming status, is not relevant and has been discussed
in our previous opinions. See World Outreach I, 591 F.3d at 536;
World Outreach II, 787 F.3d at 841–42. Regardless, the City’s
denial of the licenses and insistence on obtaining a Special Use
Permit was unlawful.
While the City was preventing World Outreach from
operating its community center and SROs, Hurricane Katrina
struck New Orleans in late August 2005. Thousands of
residents from the Big Easy were evacuated and transplanted
to other cities, including Chicago. Representatives from the
Federal Emergency Management Agency (FEMA) contacted
World Outreach’s director, Pastor Pamela Blossom, about
entering into a contract to utilize their SROs. World Outreach
claimed that it had a verbal agreement with FEMA to use the
rooms at $750 per room, per month, for one year. However,
World Outreach never received any evacuees.
In December 2005, the City pursued its unlawful demands
by suing World Outreach in Illinois state court for operating
the community center without a Special Use Permit. The suit
was frivolous, and the City voluntarily dismissed it in April
2006 after World Outreach presented the City with its affirma-
tive defenses and counterclaims. Shortly thereafter, World
4 No. 17-2476
Outreach turned around and filed a new lawsuit in state court
against the City, which the City removed to federal court.
However, the City continued to deprive World Outreach of the
necessary licenses. Finally, in January 2007, the City signed off
on World Outreach’s license applications, and issued the
licenses in August 2007.
World Outreach’s nine-count lawsuit put forward a variety
of claims, including claims under the Religious Land Use and
Institutionalized Persons Act of 2000 (RLUIPA), 42 U.S.C.
§ 2000cc. The district court initially dismissed the complaint for
failure to state a claim, but we reversed in part, sending the
RLUIPA claims back, among others. See World Outreach I, 591
F.3d at 537–38. On remand, the City and World Outreach each
filed motions for summary judgment; the City on all remaining
claims, and World Outreach only on its RLUIPA claims. The
district court granted summary judgment to World Outreach
on part of its RLUIPA claim relating to defending the frivolous
lawsuit, but found in favor of the City on all the remaining
claims. The court awarded damages to World Outreach for the
amount of fees and expenses incurred in responding to the
frivolous lawsuit, and the parties entered into an agreed final
judgment order in November 2013, awarding $15,000 to World
Outreach.
The City and World Outreach cross-appealed, and we
affirmed the district court’s grant of summary judgment to
World Outreach on the RLUIPA claim relating to the frivolous
lawsuit. However, we reversed and remanded again, but only
with respect to World Outreach’s RLUIPA claim regarding
the City’s unlawful deprivation of the licenses. See World
Outreach II, 787 F.3d at 843–45. We provided the district court
No. 17-2476 5
“guidance” on remand, and noted that the largest element of
damages from the deprivation of the licenses related to the lost
opportunity to house Hurricane Katrina evacuees. Id. at 844
(“$750 times 12 months times 168 rooms is $1,512,000”).
Importantly, we stated that the evidence put forth by World
Outreach was “weak,” and there was uncertainty as to
“whether World Outreach would have received any, let alone
168, evacuees, let alone for a full year.” Id. We concluded that
“[t]here has been a failure of proof, which leaves us uncertain
whether World Outreach can recover substantial damages,”
but that ultimately, there were questions of fact that needed to
be resolved at trial. Id. at 844–45.
On remand, World Outreach continued to produce a
significant amount of discovery on its damages theory.
Throughout the litigation, World Outreach consistently made
substantial damages claims: September 2007, $1.89 million;
February 2010, $2.44 million; December 2015, $1.09 million.
However, by February 2016, World Outreach significantly
reduced its damages claim to $363,000. On April 1, 2016, the
City made an offer of judgment to World Outreach in the
amount of $25,001 “plus reasonable costs and attorney’s fees
accrued as of the date of this offer … as determined by the
Court.” Three days later, the City filed an emergency motion
for leave to file a motion for summary judgment on damages,
and to continue the trial date based on World Outreach’s
repeated revision of its damages claims and belated production
of discovery. That same day, World Outreach accepted the
City’s offer of judgment.
World Outreach then filed a petition for $1,913,929.20 in
attorney’s fees. The City responded with numerous objections,
6 No. 17-2476
and the district court modified the lodestar to $1,559,991.50.
World Outreach Conference Ctr. v. City of Chicago, 234 F. Supp. 3d
904, 909–19 (N.D. Ill. 2017). After calculating the lodestar, the
court determined that a 70% across-the-board reduction was
warranted, reducing the lodestar to $467,973.45. Id. at 920–22.
The court justified its reduction by noting that World Out-
reach’s award of $40,001 was a “dismal failure” in contrast to
the substantial damages it had sought for nearly nine years. Id.
at 920. Additionally, the court stated that the reduction
“recognizes that World Outreach’s attorneys never had a
realistic valuation of the case,” and that “[i]t might have settled
much earlier had counsel … been less concerned with recover-
ing a large fee award.” Id. at 922.
II. DISCUSSION
A district court may award reasonable attorney’s fees to a
prevailing party in RLUIPA actions. 42 U.S.C. § 1988(b). We
review a court’s award of attorney’s fees for an abuse of
discretion. Montanez v. Simon, 755 F.3d 547, 552–53 (7th Cir.
2014). A “district court is in the best position to make the
‘contextual and fact-specific’ assessment of what fees are
reasonable.” Id. at 553 (quoting Sottoriva v. Claps, 617 F.3d 971,
975 (7th Cir. 2010)).
World Outreach does not challenge the district court’s
modified lodestar calculation. Instead, it only challenges the
court’s 70% across-the-board reduction to the lodestar.
“Although the lodestar yields a presumptively reasonable fee,
the court may nevertheless adjust the fee based on factors not
included in the computation.” Id. (internal citations omitted).
A crucial factor in determining whether to adjust an award
No. 17-2476 7
upward or downward is the result obtained by the prevailing
party, particularly when “a plaintiff is deemed ‘prevailing’
even though he succeeded on only some of his claims for
relief.” Hensley v. Eckerhart, 461 U.S. 424, 434 (1983). The district
court must determine whether “the plaintiff achieve[d] a level
of success that makes the hours reasonably expended a
satisfactory basis for making a fee award.” Id. When “a
plaintiff has obtained excellent results, [the] attorney should
recover a fully compensatory fee,” but, if “a plaintiff has
achieved only partial or limited success, [the lodestar] may be
an excessive amount.” Id. at 435–36.
World Outreach offers no reason to disturb the district
court’s thoughtful determination that the lodestar was not a
reasonable amount based on the results World Outreach
obtained. The court correctly found that World Outreach’s
damages award was a far cry from its lofty goals. From
September 2007 until February 2016, World Outreach continu-
ously pursued a seven-figure damages award, yet only
obtained $40,001 after nine years of litigation. Given World
Outreach’s demands throughout, its ultimate damages award
could hardly be characterized as an excellent result.
World Outreach argues that the City engaged in a
“scorched earth defense,” which it claims resulted in the
case being dragged out for nine years. Yet, World Outreach
admitted in its fee petition below that its lawsuit had “two
central purposes:” (1) defeat the frivolous lawsuit; and
(2) obtain the necessary licenses. Both of those objectives were
achieved by August 2007, and from that point until April 2016,
this case was primarily about damages. The district court
judge, who oversaw the case from December 2010 until this
8 No. 17-2476
appeal,1 found that World Outreach’s attorneys “never had a
realistic valuation of the case,” and that the parties might have
settled earlier had World Outreach been more concerned with
resolving the case. In the court’s view, World Outreach was
primarily responsible for the considerable length of the
litigation. This was a reasonable conclusion given that World
Outreach had achieved the equitable relief it sought by August
2007.
The district court did note that World Outreach obtained
some success throughout the litigation. The court considered
that World Outreach prevailed twice before us, which did
delay the resolution of the case, and it acknowledged that
World Outreach II had established precedent under RLUIPA. It
also acknowledged that the litigation resulted in a public
benefit to the Roseland community, although any benefit was
achieved by August 2007 when the City issued the necessary
licenses. World Outreach raises these exact same points on
appeal, but we have no reason to upset the court’s careful
balancing of these successes versus the limited damages award
it ultimately obtained.
We have previously upheld these sorts of reductions to
the lodestar when plaintiffs have achieved limited success. See
Sommerfield v. City of Chicago, 863 F.3d 645, 650–52 (7th Cir.
2017); Montanez, 755 F.3d at 556–57. There is no particular
algorithm for making such reductions to the lodestar. Richard-
son v. City of Chicago, 740 F.3d 1099, 1103 (7th Cir. 2014).
1
The case was reassigned on December 8, 2010, from another district court
judge.
No. 17-2476 9
However, the district court is in a better position to assess
whether a particular damages award “is a spectacular success,
a dismal failure, or something in between; and whether the
plaintiff’s lawyers would have spent substantially less time on
the case had they been more realistic.” Montanez, 755 F.3d at
556.
Even with the 70% across-the-board reduction, the court
awarded $467,973.45 in attorney’s fees, hardly an insignificant
amount and 12 times the damages award of $40,001. The court
properly exercised its discretion in reducing the lodestar, and
awarded reasonable attorney’s fees to World Outreach in light
of the limited results it achieved.
III. CONCLUSION
For the foregoing reasons, we AFFIRM the district court’s
award of attorney’s fees.