Benton v. Oregon Student Assistance Commission , 421 F.3d 901 ( 2005 )


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  •                   FOR PUBLICATION
    UNITED STATES COURT OF APPEALS
    FOR THE NINTH CIRCUIT
    MELINDA BENTON, Individually and        
    Representative of a Class,
    Plaintiff-Appellee,
    v.
    OREGON STUDENT ASSISTANCE                    No. 03-35975
    COMMISSION; OREGON OFFICE OF
    DEGREE AUTHORIZATION; ALAN                    D.C. No.
    CONTRERAS, in his Official and              CV-00-06272-HO
    Individual Capacities; JEFF
    SVEJCAR, in his official capacity as
    executive director of Oregon
    Student Assistance Commission,
    Defendants-Appellants.
    
    MELINDA BENTON, Individually and        
    Representative of a Class,
    Plaintiff-Appellant,
    v.
    OREGON STUDENT ASSISTANCE                     No. 03-36002
    COMMISSION; OREGON OFFICE OF
    DEGREE AUTHORIZATION; ALAN                     D.C. No.
    CV-00-06272-MRH
    CONTRERAS, in his Official and
    OPINION
    Individual Capacities; JEFF
    SVEJCAR, in his official capacity as
    executive director of Oregon
    Student Assistance Commission,
    Defendants-Appellees.
    
    11573
    11574      BENTON v. OREGON STUDENT ASSIST. COMM’N
    Appeal from the United States District Court
    for the District of Oregon
    Michael R. Hogan, Chief District Judge, Presiding
    Argued and Submitted
    May 4, 2005—Portland, Oregon
    Filed August 25, 2005
    Before: Alfred T. Goodwin and Richard R. Clifton,
    Circuit Judges, and John S. Rhoades, Sr.,* District Judge.
    Opinion by Judge Rhoades
    *The Honorable John S. Rhoades, Sr., Senior United States District
    Judge for the Southern District of California, sitting by designation.
    BENTON v. OREGON STUDENT ASSIST. COMM’N     11577
    COUNSEL
    Stephen K. Bushong (argued) and Daniel J. Casey (briefed)
    Oregon Department of Justice, Salem, Oregon, for
    defendants-appellants-cross-appellees.
    Wendell R. Bird (argued) and Jonathan T. McCants (briefed),
    Bird & Loechl, LLC, Atlanta, Georgia, for the plaintiff-
    appellee-cross-appellant.
    11578      BENTON v. OREGON STUDENT ASSIST. COMM’N
    OPINION
    RHOADES, District Judge:
    I.    Introduction
    The parties have filed cross-appeals of the district court’s
    order awarding $371,362 in attorney’s fees and $70,828.84 in
    costs in a case where the sole relief obtained was a judgment
    in the amount of one dollar. We have jurisdiction pursuant to
    
    28 U.S.C. § 1291
    , and we reverse.
    II.   Background
    Melinda Benton (“plaintiff”) is a professor at a community
    college in Oregon. She holds a degree from Bob Jones Uni-
    versity, an unaccredited institution that emphasizes conserva-
    tive values. At the time she brought this action, Oregon law
    provided in relevant part:
    No person who has been warned by the Oregon
    Student Assistance Commission, through the Office
    of Degree Authorization, to cease and desist shall
    claim or represent that the person possesses any aca-
    demic degree unless the degree has been awarded to
    or conferred upon the person by a school that:
    (a) Has accreditation recognized by the United
    States Department of Education or the foreign equiv-
    alent of such accreditation . . . .
    
    Or. Rev. Stat. § 348.609
    .
    Plaintiff brought this action pursuant to 
    42 U.S.C. § 1983
    .
    Plaintiff brought this § 1983 action as a class action seeking
    declaratory and injunctive relief. Plaintiff alleged seven
    claims for violation of the federal and state constitutional
    rights to free speech, free exercise of religion, due process and
    BENTON v. OREGON STUDENT ASSIST. COMM’N          11579
    equal protection. These claims were predicated upon allega-
    tions that the Oregon Office of Degree Authorization had
    decreed that plaintiff should be fired from her position at the
    college because her degree was “illegal” or face criminal
    sanctions and then later decreed that plaintiff need not be fired
    but must give a disclaimer regarding her degrees.
    Plaintiff initially named four defendants: the Oregon
    Department of Education, the Oregon Student Assistance
    Commission, the Oregon Office of Degree Authorization and
    Alan Contreras, the administrator of the Oregon Office of
    Degree Authorization, in his official and individual capacities.
    Plaintiff later amended her complaint to drop the institutional
    defendants and add two more individuals: Stan Bunn, in his
    official capacity as Superintendent of Public Instruction and
    Head of the Oregon Department of Education, and Jeff Svej-
    car, Executive Director of the Oregon Student Assistance
    Commission.
    The district court denied class certification and dismissed
    defendant Bunn from the case. Subsequently, the Oregon Leg-
    islature amended 
    Or. Rev. Stat. § 348.609
     to provide an addi-
    tional exception to the “cease and desist” requirement where
    the school is “located in the United States and has been found
    by the [Oregon Student Assistance Commission through the
    Office of Degree Authorization] to meet standards of aca-
    demic quality comparable to those of an institution located in
    the United States that has accreditation, recognized by the
    United States Department of Education, to offer degrees of
    the type and level claimed by the person.” 
    Or. Rev. Stat. § 348.609
    (1)(d). The district court then dismissed plaintiff’s
    claims for declaratory and injunctive relief as moot in light of
    the amendment to 
    Or. Rev. Stat. § 348.609
    .
    Plaintiff then sought leave to amend her complaint to add
    a claim for compensatory damages against defendants Svejcar
    and Contreras in their individual capacities in an unspecified
    amount. The district court allowed the amendment.
    11580       BENTON v. OREGON STUDENT ASSIST. COMM’N
    Finally, at some point in the litigation, plaintiff unsuccess-
    fully attempted to amend the complaint to add claims against
    several past and present members of the Oregon Student
    Assistance Commission.
    At the pretrial conference, plaintiff sought reconsideration
    of the district court’s previous rulings disposing of much of
    her case. The district court entertained additional briefing and
    took evidence at trial but ultimately affirmed its prior sum-
    mary judgment rulings. After a bench trial, the district court
    found that defendant Contreras had violated plaintiff’s consti-
    tutional rights. Specifically, the district court concluded that
    defendant “Contreras’ application of the regulations to plain-
    tiff’s degrees resulted not from an intent to achieve the goals
    of the regulations, but because of bias toward the institution
    from which they were received.” That finding is not chal-
    lenged on appeal. The district court awarded plaintiff nominal
    damages in the amount of one dollar. Although plaintiff con-
    tends that she received a declaratory judgment that her rights
    were violated, a review of the judgment reveals that the judg-
    ment is a damages judgment only.
    Plaintiff subsequently sought attorney’s fees in the amount
    of $857,278 and costs in the amount of $104,213.05. The trial
    court awarded plaintiff $371,362 in attorney’s fees and
    $70,828.84 in costs.
    Both plaintiff and defendants1 have filed timely notices of
    appeal of the district court’s award.
    1
    Because cross-appeals were filed and for ease of reference, we will use
    the terms “plaintiff” and “defendants” rather than appellee/cross-appellant
    and appellants/cross-appellees. Although the judgment is only against
    defendant Contreras, reference is made to “defendants” throughout the
    briefs and in the district court’s fee order. Thus, the term “defendants” will
    be used in this opinion.
    BENTON v. OREGON STUDENT ASSIST. COMM’N          11581
    III.   Analysis
    A.    Standard of review
    We review an attorney’s fee award pursuant to 
    42 U.S.C. § 1988
     under an abuse of discretion standard. See Wilcox v.
    City of Reno, 
    42 F.3d 550
    , 553 (9th Cir. 1994); Corder v.
    Brown, 
    25 F.3d 833
    , 836 (9th Cir. 1994). “A district court
    abuses its discretion when it awards fees ‘based on an inaccu-
    rate view of the law or a clearly erroneous finding of fact.’ ”
    Wilcox, 
    42 F.3d at 553
     (quoting Corder v. Gates, 
    947 F.2d 374
    , 377 (9th Cir. 1991)). “Any elements of legal analysis
    which figure in the district court’s decision are, however, sub-
    ject to de novo review.” Corder, 
    25 F.3d at 836
    . “[I]t is vital
    that the court provide ‘some indication or explanation of how
    [it] arrived at the amount of fees awarded.’ ” Cummings v.
    Connell, 
    402 F.3d 936
    , 947 (9th Cir. 2005) (second alteration
    in original) (quoting Chalmers v. City of Los Angeles, 
    796 F.2d 1205
    , 1213 (9th Cir. 1986), amended by 
    808 F.2d 1373
    (9th Cir.1987)). “Moreover, when confronted with an objec-
    tion on the basis of the limited nature of relief obtained by the
    plaintiff, ‘the district court should make clear that it has con-
    sidered the relationship between the amount of the fee
    awarded and the results obtained.’ ” Cummings, 
    402 F.3d at 947
     (quoting Hensley v. Eckerhart, 
    461 U.S. 424
    , 437
    (1983)).
    B.   Plaintiff’s Entitlement to Fees
    In an action brought pursuant to 
    42 U.S.C. § 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 . . . .” 
    42 U.S.C. § 1988
    (b). A § 1983 plaintiff who
    receives a nominal damage award is a prevailing party for
    purposes of § 1988. See Farrar v. Hobby, 
    506 U.S. 103
    , 112
    (1992). That does not, however, mean that such a plaintiff is
    necessarily entitled to an award of fees. See Farrar, 
    506 U.S. at 114
     (explaining that although the “ ‘technical’ nature of a
    11582       BENTON v. OREGON STUDENT ASSIST. COMM’N
    nominal damages award . . . does not affect the prevailing
    party inquiry, it does bear on the propriety of fees awarded
    under § 1988”).
    In Hensley, the Supreme Court explained that “[t]he most
    useful starting point for determining the amount of a reason-
    able fee is the number of hours reasonably expended on the
    litigation multiplied by a reasonable hourly rate.” 
    461 U.S. at 433
    . After calculating this “lodestar” amount, the district
    court should then determine whether “other considerations”
    warrant increasing or decreasing the lodestar amount. 
    Id.
     As
    explained in Hensley, these “other considerations” include the
    following twelve factors:
    (1) the time and labor required; (2) the novelty and
    difficulty of the questions; (3) the skill requisite to
    perform the legal service properly; (4) the preclusion
    of employment by the attorney due to acceptance of
    the case; (5) the customary fee; (6) whether the fee
    is fixed or contingent; (7) time limitations imposed
    by the client or the circumstances; (8) the amount
    involved and the results obtained; (9) the experience,
    reputation, and ability of the attorneys; (10) the “un-
    desirability” of the case; (11) the nature and length
    of the professional relationship with the client; and
    (12) awards in similar cases.
    Id. at n. 3.2
    [1] Although this is the analysis generally applied by dis-
    trict courts in determining fee awards, as we noted in Morales
    v. City of San Rafael, 
    96 F.3d 359
     (9th Cir. 1996), amended
    by 
    108 F.3d 981
     (9th Cir. 1997), the Supreme Court in Farrar
    “held that ‘nominal damages’ cases in which the relief is de
    2
    As the Court noted, “many of these factors usually are subsumed
    within the initial calculation of hours reasonably expended at a reasonable
    hourly rate.” Hensley, 
    461 U.S. at
    434 n.9.
    BENTON v. OREGON STUDENT ASSIST. COMM’N          11583
    minimis are exempted from the general requirements that gov-
    ern the calculation of attorney’s fees . . . .” Id. at 362. This
    includes “the requirement that a lodestar first be calculated,”
    id., as well as the requirement that the district court “recit[e]
    the 12 factors bearing on reasonableness,” Farrar, 
    506 U.S. at 115
    . After Farrar, the district court’s first consideration
    must be whether the nominal damages plaintiff is entitled to
    any fees at all.
    [2] In Farrar, the plaintiffs filed a lawsuit for $17 million
    dollars against six defendants. After ten years of litigation,
    they obtained a nominal damages judgment of one dollar
    against one defendant. The district court nonetheless awarded
    the plaintiffs $280,000 in attorney’s fees. As the Supreme
    Court explained, “ ‘the most critical factor’ in determining the
    reasonableness of a fee award ‘is the degree of success
    obtained.’ ” Farrar, 
    506 U.S. at 114
     (quoting Hensley, 
    461 U.S. at 436
    ). “In a civil rights suit for damages . . . the award-
    ing of nominal damages [ ] highlights the plaintiff’s failure to
    prove actual, compensable injury.” Id. at 115. In light of the
    nominal damages award, the Supreme Court concluded that
    the Farrar litigation “accomplished little beyond giving peti-
    tioners ‘the moral satisfaction of knowing that a federal court
    concluded that [their] rights had been violated’ in some
    unspecified way.” Id. at 114 (alteration in original) (quoting
    Hewitt v. Helms, 
    482 U.S. 755
    , 762 (1987)). Affirming the
    court of appeals’ decision reversing the district court’s award
    of fees, the Supreme Court explained that “[w]hen a plaintiff
    recovers only nominal damages because of his failure to
    prove an essential element of his claim for monetary relief,
    the only reasonable fee is usually no fee at all.” Id. at 115
    (emphasis added) (internal citation omitted).
    [3] As we have noted, “Farrar therefore teaches that an
    award of nominal damages is not enough” to justify an award
    of attorney’s fees. Wilcox, 
    42 F.3d at 555
    . “If a district court
    chooses to award fees after a judgment for only nominal dam-
    ages, it must point to some way in which the litigation suc-
    11584       BENTON v. OREGON STUDENT ASSIST. COMM’N
    ceeded, in addition to obtaining a judgment for nominal
    damage.” 
    Id.
     For example, “[i]f the lawsuit achieved other
    tangible results—such as sparking a change in policy or estab-
    lishing a finding of fact with potential collateral estoppel
    effects—such results will, in combination with an enforceable
    judgment for a nominal sum, support an award of fees.” 
    Id.
    Other factors recognized by Justice O’Connor as supporting
    an award of fees when the plaintiff receives only nominal
    damages include “the significance of the legal issue on which
    the plaintiff claims to have prevailed” and whether the suc-
    cess “accomplished some public goal . . . .” Farrar, 
    506 U.S. at 121
     (O’Connor, J., concurring). We have approved consid-
    eration of these factors. See Cummings, 
    402 F.3d at 947
    .
    We now consider whether the district court properly con-
    cluded that plaintiff here obtained “other tangible results” that
    would warrant the award of attorney’s fees and costs.
    1.     Benefit to the Public At Large
    The district court offered two reasons for its decision to
    award fees. First, it concluded that the public at large would
    benefit from plaintiff’s success on the merits. The district
    court stated:
    The court declines to credit the legislative and
    administrative changes that precede the judgment in
    this case for purposes of determining an appropriate
    fee award. However, the court notes the significant
    salutary effect achieved by this litigation in that
    future action by defendants, with respect to similarly
    situated degree recipients, will be guided by the con-
    stitutional parameters delineated by plaintiff’s
    efforts. In this respect, the success of plaintiff in
    obtaining a declaration that Contreras’ conduct in
    singling out plaintiff’s degree for regulation because
    of bias toward the viewpoints of the institution from
    which they were received not only serves to vindi-
    BENTON v. OREGON STUDENT ASSIST. COMM’N                 11585
    cate the harm to plaintiff, but to protect the public at
    large.
    It is true that legislative and administrative
    changes significantly advanced plaintiff’s cause.
    Nonetheless, in light of the discretion still exercised
    by Contreras and the Office of Degree Authorization
    with respect to serious minded, but unaccredited
    institutions, plaintiff’s victory at trial serves a signif-
    icant purpose . . . .
    (emphasis added).
    Defendants contend that, in awarding fees, the district court
    should not have considered the public benefit derived from
    the judgment because of the Supreme Court’s ruling in Buck-
    hannon Board and Care Home, Inc. v. West Virginia Depart-
    ment of Health & Human Resources, 
    532 U.S. 598
     (2001).
    However, Buckhannon, which considered whether a party
    who has failed to secure a judgment is a prevailing party, in
    no way undermines Justice O’Connor’s Farrar concurrence
    or our decision in Wilcox, which addressed distinctly different
    issues.
    In Buckhannon, the issue was whether the term “prevailing
    party” as used in a fee statute3 “includes a party that has failed
    to secure a judgment on the merits or a court-ordered consent
    decree, but has nonetheless achieved the desired result
    because the lawsuit brought about a voluntary change in the
    defendant’s conduct.” 
    Id. at 600
     (emphasis added). The theory
    that a “prevailing party” is one whose lawsuit does nothing
    more than bring about a voluntary change in the defendant’s
    conduct was known as the “catalyst theory.” As the Supreme
    3
    While Buckhannon did not deal with § 1988 directly, we have applied
    its holding to 
    42 U.S.C. § 1988
    . See Labotest, Inc. v. Bonta, 
    297 F.3d 892
    ,
    895 (9th Cir. 2002); Bennett v. Yoshina, 
    259 F.3d 1097
    , 1101 (9th Cir.
    2001).
    11586     BENTON v. OREGON STUDENT ASSIST. COMM’N
    Court explained in Buckhannon, a “ ‘material alteration of the
    legal relationship of the parties’ ” is “necessary to permit an
    award of attorney’s fees.” Id. at 604 (quoting Tex. State
    Teachers Ass’n v. Garland Indep. School Dist., 
    489 U.S. 782
    ,
    792-93 (1989)). While “enforceable judgments on the merits
    and court-ordered consent decrees create the ‘material alter-
    ation of the legal relationship of the parties’ necessary to per-
    mit an award of attorney’s fees,” 
    id.
     (quoting Tex. State
    Teachers Ass’n, 
    489 U.S. at 792-93
    ), the Court explained that
    the “catalyst theory” “allows an award where there is no judi-
    cially sanctioned change in the legal relationship of the par-
    ties,” id. at 605. Thus, the Supreme Court determined that a
    plaintiff who does not secure a judgment on the merits “but
    has nonetheless achieved the desired result because the law-
    suit brought about a voluntary change in the defendant’s con-
    duct” is not a “prevailing party” for purposes of awarding
    attorney’s fees. Id. at 600; see also id. at 605.
    Buckhannon did not address the issue of the factors to be
    applied in determining the reasonableness of an attorney’s fee
    award to a prevailing party. Moreover, nothing in Buckhan-
    non suggests that, in assessing the success of a nominal dam-
    ages plaintiff for purposes of determining the reasonableness
    of a fee award, a district court cannot consider the factors set
    forth in Justice O’Connor’s Farrar concurrence and our deci-
    sion in Wilcox.
    Furthermore, although an inquiry into whether a plaintiff
    who is awarded only nominal damages has accomplished
    some public purpose or achieved some public goal so that an
    award of fees would be reasonable may on its face appear
    very similar to the inquiry under the catalyst theory, they are
    two separate inquiries with two separate purposes. The pur-
    pose of the catalyst theory was to confer upon a plaintiff “pre-
    vailing party” status in cases where the plaintiff failed to
    obtain a judgment. This theory of conveying “prevailing
    party” status was rejected because to be entitled to fees there
    must be a change in the legal relationship of the parties. See
    BENTON v. OREGON STUDENT ASSIST. COMM’N          11587
    id. at 604. A court engages in the analysis set forth in Wilcox
    and Justice O’Connor’s Farrar concurrence only where the
    plaintiff is a prevailing party because there has been a change
    in the legal relationship of the parties due to the procurement
    of a judgment. Then, the court only engages in that analysis
    for the limited purpose of determining a reasonable fee award.
    Finally, as we recently reaffirmed, in determining the rea-
    sonableness of fees a district court should consider, inter alia,
    “whether the plaintiff’s success ‘also accomplished some pub-
    lic goal . . . .’ ” Cummings, 
    402 F.3d at 947
     (quoting Farrar,
    
    506 U.S. at 121-22
    ) (O’Connor, J., concurring)). Thus, defen-
    dants’ contention that this is not an appropriate factor to con-
    sider is simply unavailing.
    [4] The foregoing notwithstanding, we conclude that the
    district court erred in awarding fees based on a finding that
    plaintiff’s lawsuit ultimately serves to benefit the public at
    large. The district court’s reasoning for awarding fees can be
    boiled down to the conclusion that because it found that
    defendant Contreras violated plaintiff’s constitutional rights,
    defendant Contreras will necessarily think twice before violat-
    ing the rights of others in the future. However, well prior to
    the district court’s finding of a constitutional violation and
    award of nominal damages, defendant Contreras exercised his
    discretion under the revised version of 
    Or. Rev. Stat. § 348.609
     in plaintiff’s favor by recognizing her degree as
    being from an institution that met the standards of academic
    quality comparable to an accredited institution. Because
    defendant Contreras’ wrongful conduct occurred under the
    previous statute and because defendant Contreras voluntarily
    exercised his discretion under the revised statute consistent
    with the requirements of the Constitution, we find that the
    record in this case does not support the district court’s conclu-
    sion that its finding of a constitutional violation under the for-
    mer version of the statute will in any way guide defendant
    Contreras’ future conduct. Thus, this factor identified by the
    11588       BENTON v. OREGON STUDENT ASSIST. COMM’N
    district court does not justify the imposition of fees in this
    case.
    2.     Benefit to Plaintiff Personally
    [5] As a second basis for awarding fees, the district court
    explained:
    Furthermore, even though plaintiff no longer faced
    restriction on the use of her degrees in Oregon even
    absent the judgment, her career will always be
    marked by this occurrence. Obtaining a declaration
    that her rights were violated serves an important pur-
    pose for plaintiff. She now has a judgment to point
    to in support of the trustworthiness of her education
    and her credentials.
    The district court’s language suggests that plaintiff obtained
    a declaratory judgment; however, she did not. It is undisputed
    that the district court dismissed plaintiff’s claim for declara-
    tory judgment as moot in light of the change in the statute,
    and nothing in the language of the judgment itself suggests
    that plaintiff was awarded declaratory relief. Moreover,
    although plaintiff moved in court “to amend the judgment in
    order to add the declaratory judgment language from Page
    Seven of the opinion,” a review of the docket reveals that the
    district court did not amend the judgment, and its refusal to
    do so is not before us on appeal. The “declaration” to which
    the district court refers is the district court’s conclusion in its
    Findings of Fact and Conclusions of Law that plaintiff had
    proven that her constitutional rights had been violated. That
    conclusion did no more than support the imposition of the
    nominal damages award.
    [6] As noted, to justify an award of attorney’s fees in this
    case, the district court must identify “some way in which the
    litigation succeeded, in addition to obtaining a judgment for
    nominal damage.” Wilcox, 
    42 F.3d at 555
    . In other words, the
    BENTON v. OREGON STUDENT ASSIST. COMM’N          11589
    lawsuit must have “achieved other tangible results” besides
    the nominal damages judgment. 
    Id.
     Here, a finding that plain-
    tiff’s rights were violated was a prerequisite to the award of
    nominal damages; in fact, a finding of a constitutional viola-
    tion will always be present in a civil rights case where nomi-
    nal damages have been awarded. See Farrar, 
    506 U.S. at 120
    (O’Connor, J., concurring) (“Every nominal damage award
    has as its basis a finding of liability, but obviously many such
    victories are Pyrrhic ones.”) (quoting Lawrence v. Hinton,
    
    937 F.2d 603
     (4th Cir. 1991). Moreover, every plaintiff who
    receives a nominal damages judgment will necessary have a
    “judgment to point to” that shows that the plaintiff was in the
    right and the defendant in the wrong. Thus, the finding that
    plaintiff’s rights were violated and the accompanying judg-
    ment cannot be the “something more” required for an award
    of attorney’s fees and costs here.
    [7] Finally, the judgment is not, as the district court found,
    evidence that plaintiff can point to “in support of the trustwor-
    thiness of her education and her credentials.” Rather, the
    judgment is merely evidence that the former version of O.R.S.
    § 348.609 was applied to plaintiff in a biased manner. The
    evidence that plaintiff can point to regarding the legitimacy of
    her credentials is the finding by defendant Contreras and the
    Office of Degree Authorization made pursuant to the revised
    version of the statute that Bob Jones University meets the
    standards of academic quality comparable to an accredited
    institution. However, given that this finding was made well
    prior to the finding of liability and entry of judgment in this
    case, this determination regarding the legitimacy of plaintiff’s
    credentials cannot be considered a “tangible result” of this lit-
    igation that would support an attorney’s fee award in this
    case.
    IV.   Conclusion
    The district court’s order awarding attorney’s fees and costs
    is REVERSED.