Armstrong v. ASARCO, Inc.

United States Court of Appeals
FOR THE EIGHTH CIRCUIT
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No. 96-3277
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John Armstrong; Heather Potter, *
*
Plaintiffs-Appellees, *
*
v. *
*
ASARCO, Inc., a New Jersey *
Corporation, *
*
Defendant-Appellant. *
*
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* Appeal from the United States
United States of America, * District Court for the
* District of Nebraska
Plaintiff-Appellee. *
*
John Armstrong; Heather Potter, *
*
Intervenor Plaintiffs-Appellees, *
*
v. *
*
ASARCO, Inc. *
*
Defendant-Appellant. *
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Submitted: May 19, 1997
Filed: March 9, 1998
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Before McMILLIAN, ROSS and FAGG, Circuit Judges.
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McMILLIAN, Circuit Judge.
ASARCO, Inc. (ASARCO), a New Jersey corporation which owns and
operates a lead refinery in Omaha, Nebraska, appeals from a final order
entered in the United States District Court1 for the District of Nebraska,
awarding litigation costs to citizen plaintiffs John Armstrong and Heather
Potter (plaintiffs) in their action against ASARCO pursuant to the federal
Clean Water Act, 33 U.S.C. §§ 1251-1387. Armstrong v. ASARCO, Inc.,
No. 8:CV9400138 (D. Neb. July 30, 1996) (modifying and adopting the report
and recommendation of the magistrate judge,2 id. (June 5, 1996)). For
reversal, ASARCO challenges the district court’s designation of plaintiffs
as prevailing parties and argues that the district court abused its
discretion in awarding plaintiffs their litigation costs associated with
their motion for a preliminary injunction and litigation costs related to
the consent decree between ASARCO and the United States Environmental
Protection Agency (EPA). Alternatively, ASARCO asserts that the district
court’s decision to award litigation costs should be reversed and the case
1
The Honorable Thomas M. Shanahan, United States District Judge for the
District of Nebraska.
2
The Honorable Thomas D. Thalkan, United States Magistrate Judge for the
District of Nebraska.
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remanded with directions to the district court to provide a better
explanation for the award. For the reasons discussed below, we affirm in
part, reverse in part, and remand the case to the district court for
further proceedings consistent with this opinion.
Jurisdiction
Jurisdiction in the district court was proper based upon 33 U.S.C.
§ 1365. Jurisdiction on appeal is proper based upon 28 U.S.C. § 1291. The
notice of appeal was timely filed pursuant to Rule 4(a) of the Federal
Rules of Appellate Procedure.
Background
ASARCO’s lead refinery (hereinafter “the facility”) is located on the
Missouri River in downtown Omaha and has been in operation since the 1870s.
The facility historically discharged wastewater containing lead and other
pollutants directly into the river. In 1982, ASARCO filed with the
Nebraska Department of Environmental Quality (NDEQ) an application for a
permit under the National Pollutant Discharge Elimination System (NPDES),
as required by the Clean Water Act. Meanwhile, the facility continued to
discharge wastewater into the river.3
During the 1980s, NDEQ and ASARCO entered into two stipulations which
provided that, while NDEQ was processing ASARCO's permit application, NDEQ
would not pursue any enforcement actions against ASARCO so long as ASARCO
was complying with NDEQ's request for monitoring reports. On December 29,
1989,
3
According to plaintiffs, a study conducted in the 1980s concluded that, at a
single discharge point, the so-called Chicago Street sewer, ASARCO was discharging
882,400 gallons of water per day, resulting in several thousand pounds of lead and
other heavy metals and pollutants being discharged into the river annually. Brief for
Appellees at 7.
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ASARCO timely filed a report containing data that NDEQ had requested. No
further actions were taken by NDEQ for the next four years.
By 1993, over ten years after ASARCO filed its permit application,
the application was still pending with NDEQ. In August 1993, the EPA wrote
a letter to NDEQ advising NDEQ that the EPA was considering taking
enforcement action.
In October 1993, counsel for plaintiffs filed, under the Freedom of
Information Act, a request for information regarding the facility from NDEQ
and the EPA. On January 13, 1994, plaintiffs provided ASARCO with a 60-day
notice of their intent to sue, a prerequisite to filing a citizen suit
under the Clean Water Act, 33 U.S.C. § 1365.
On January 28, 1994, NDEQ issued a notice allowing public comment on
ASARCO's NPDES permit application. On March 8, 1994, NDEQ held a public
hearing on the pending permit application.4 On June 6, 1994, NDEQ issued
a NPDES permit which established limitations on the levels of pollutants
ASARCO was permitted to discharge into the river.
Meanwhile, on March 15, 1994, plaintiffs filed the present citizen
suit under the Clean Water Act in federal district court. On March 31,
1994, the EPA filed a similar suit against ASARCO alleging virtually the
same violations as those alleged by plaintiffs. The two lawsuits were
consolidated.
ASARCO and the EPA began negotiations for a settlement. On September
21, 1994, ASARCO and the EPA represented to the district court that they
had tentatively agreed upon a proposed consent decree and asked for a stay
of all discovery.
4
By this time, the permit status of the ASARCO facility apparently had generated
significant public interest and media attention, and the public hearing was well-
attended.
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According to plaintiffs, they (plaintiffs) "continued to urge the United
States not to proceed with the proposed settlement until more discovery had
been conducted." Brief for Appellees at 13. The magistrate judge stayed
some discovery, but specifically allowed the deposition of one ASARCO
witness and ordered the completion of written discovery. Thereafter, the
consent decree was not lodged with the district court.
In December of 1994, ASARCO responded to one of plaintiffs' discovery
requests by disclosing monitoring reports for the time period since 1989
(when ASARCO had last submitted monitoring reports to NDEQ). The newly
disclosed reports revealed, among other things, that the volume of
wastewater and the amount of lead being discharged had increased
significantly.5 After receiving the new monitoring reports, plaintiffs,
on January 11, 1995, moved for a preliminary injunction enjoining ASARCO’s
operation of the facility. On the same date, the magistrate judge granted
plaintiffs' request to lift the partial stay of discovery. The magistrate
judge also set the case for trial in October of 1995.
On June 28, 1995, one day before the preliminary injunction hearing
was scheduled to begin, the EPA lodged a proposed consent decree with the
district court and provided notice for public comment. In addition to
requiring ASARCO to pay a $3.25 million fine, this new proposed consent
decree contained provisions for interim treatment and required ASARCO to
pay $1 million for Supplemental Environmental Projects, neither of which
had been terms of the consent decree that the EPA and ASARCO negotiated in
September 1994 but never lodged with the district court.
The hearing on plaintiffs' motion for a preliminary injunction
occurred on June 29 and 30, 1995. ASARCO produced evidence to show that
newly-installed wastewater
5
According to plaintiffs, the amount of wastewater discharge from the facility had
increased to approximately 1.2 to 1.8 million gallons per day in 1994, including
approximately 11 kilograms of lead per day in 1994. Brief for Appellees at 13.
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treatment equipment had significantly reduced the amount of toxic metals
being discharged into the river. That treatment equipment became
operational after plaintiffs filed their motion for a preliminary
injunction. Although ASARCO conceded it was still violating applicable
effluent limitations, it argued that plaintiffs could not show irreparable
harm. The magistrate judge took the motion for a preliminary injunction
under advisement.
The period for public comment on the proposed consent decree expired
on August 13, 1995. On October 3, 1995, the EPA moved for the district
court to enter the consent decree as a final judgment, and ASARCO joined
in that motion. Plaintiffs opposed the motion on the ground that the
consent decree did not go far enough to address ASARCO’s violations.
Following a hearing on December 22, 1995, the district court granted the
EPA's motion and entered the consent decree as a final judgment concerning
all issues except the remaining attorney fees issue under 33 U.S.C.
§ 1365(d). Armstrong v. ASARCO, Inc., slip op. at 11 (Jan. 5, 1996)
(district court order). The district court found the consent decree to be
“fair, reasonable and adequate in light of the purposes of the Clean Water
Act.” Id. at 10-11. The district court never ruled on the motion for a
preliminary injunction because, the district court explained, it "ha[d]
taken the motion for a preliminary injunction under advisement, pending
[its] decision on the motion for entry of the Consent Decree." Id. at 4.
Pursuant to 33 U.S.C. § 1365(d),6 plaintiffs applied for litigation
costs (including attorney fees) totaling $879,579.81.7 The matter was
initially submitted to the
6
Section 1365(d) provides in pertinent part: "The court . . . may award costs of
litigation (including reasonable attorney and expert witness fees) to any prevailing or
substantially prevailing party, whenever the court determines such award is
appropriate." 33 U.S.C. § 1365(d).
7
According to ASARCO, plaintiffs’ original request included approximately
$206,051.50 for work on the motion for a preliminary injunction and approximately
$304,861.00 for work related to the consent decree. Brief for Appellant at 9.
However, because the district court did not award all of the costs requested and some
work was spent on both activities, the amounts awarded for each of these two activities
cannot be precisely quantified at this time. See id. at 9 & n.4.
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magistrate judge, who concluded, among other things:
ASARCO can hardly consider itself vindicated after the entry of
the consent decree (Filing No. 262) on January 5, 1996. That
consent decree required ASARCO to pay a $3.25 million civil
penalty, to comply with monitoring requirements, to establish
an interim treatment system, and to pay $1 million in
environmental enhancement projects. Considering the original
objective of the citizen plaintiffs in bringing suit against
ASARCO, and weighing the relief ultimately obtained, the court
finds that the citizen plaintiffs are prevailing parties within
the meaning of 33 U.S.C. § 1365(d) and an award of attorney’s
fees would be appropriate. Whether or not the citizen
plaintiffs desired for stiffer penalties to be levied against
ASARCO or for more stringent protection against future damage
to the environment, they received essentially what was sought
in the complaint -- a cessation of pollution by, and a
substantial civil fine levied against, the defendant.
Slip op. at 8 (June 5, 1996) (magistrate judge’s report and
recommendation). The magistrate judge rejected ASARCO’s argument that
plaintiffs should be treated as having achieved only limited success. The
magistrate judge concluded “the citizen plaintiffs have accomplished
virtually everything they set out to do. Accordingly, on the issue of
success on the merits, the court finds that the fees of the attorneys
should not be reduced for lack of success.” Id. at 9. The magistrate
judge then proceeded to consider each item requested by plaintiffs,
reducing some as exceeding a reasonable amount. Id. at 10-23, 24-27. The
magistrate judge also rejected plaintiffs’ request for a lodestar
enhancement, id. at 24, and recommended a total award of $778,364.94, id.
at 28.
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Both ASARCO and plaintiffs filed objections to the magistrate judge's
report and recommendation.8 Upon de novo review, the district court held:
the citizen-plaintiffs are prevailing parties and are entitled
to attorneys' fees and expenses pursuant to 33 U.S.C.
§ 1365(d). In addition, the court does not agree with ASARCO
that the citizen-plaintiffs should be denied fees and expenses
for the variety of efforts characterized by ASARCO as
unnecessary or unsuccessful.
Slip op. at 4 (July 30, 1996) (citing Atlantic States Legal Found., Inc.
v. Eastman Kodak Co., 933 F.2d 124, 128 (2d Cir. 1991) (Atlantic States v.
Kodak)). The district court overruled ASARCO's objections to the report
and recommendation, granted partial relief on plaintiffs' objections, and
awarded the amount calculated by the magistrate judge plus an additional
$12,130.94.9 Id. at 9. ASARCO appealed.
Discussion
The Clean Water Act provides that the district court, “in issuing any
final order in any action brought pursuant to [the Clean Water Act], may
award costs of litigation (including reasonable attorney and expert witness
fees) to any prevailing or substantially prevailing party, whenever the
court determines such award is appropriate.” 33 U.S.C. § 1365(d). As
stated above, the magistrate judge held, and the district court agreed,
that plaintiffs are prevailing parties in the present case. To the
contrary, however, ASARCO characterizes plaintiffs' efforts as
“superfluous,”
8
At ASARCO’s request, the district court construed the magistrate judge's report
as a report and recommendation under 28 U.S.C. § 636(b)(1)(B), (C). Armstrong v.
ASARCO, Inc., slip op. at 2 (July 30, 1996).
9
The district court also gave one of the law firms for plaintiffs an opportunity to
submit a supplemental brief with additional documentation of their expenses. Id. at 9.
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“duplicative,” “wasteful,” “unnecessary,” and “unsuccessful.” ASARCO
maintains that plaintiffs, in fact, subverted the goals of the Clean Water
Act when they disagreed with, and pursued goals contrary to, the EPA’s
position. Consequently, ASARCO argues, plaintiffs must now bear the risk
of having essentially failed in light of the EPA’s success.
“[W]e review de novo the legal question of whether a litigant is a
prevailing party.” Jenkins v. State of Missouri, 127 F.3d 709, 713 (8th
Cir. 1997). In our opinion, plaintiffs played the roles of catalyst and
private attorney general, just as Congress envisioned, thereby successfully
contributing to ASARCO’s remediation efforts and eventual settlement with
the EPA. When a polluter settles with government authorities following the
commencement of a citizen suit, it is permissible to infer that the citizen
suit motivated the settlement, thereby making the plaintiff a prevailing
party. See Atlantic States v. Kodak, 933 F.2d at 128. Thus, we reject
ASARCO’s characterization of plaintiffs’ efforts as essentially
unsuccessful and instead agree with the district court’s conclusion that
plaintiffs are prevailing parties in the present case.
ASARCO now argues on appeal that, because plaintiffs achieved at best
only limited success, the award should be reduced on the ground that it is
not reasonably related to the results obtained, taking into consideration
the scope of the litigation as a whole, the magnitude of plaintiffs'
demands in the litigation, and the issues upon which plaintiffs succeeded
versus those upon which plaintiffs failed, for which costs should be
excluded. Brief for Appellant at 15-17 (citing, among other cases, Hensley
v. Eckerhart, 461 U.S. 424, 435 (1983) (“A reduced fee award is appropriate
if the relief, however significant, is limited in comparison to the scope
of the litigation as a whole.”)); see also Jenkins v. State of Missouri,
127 F.3d at 716 (“If the plaintiff’s success is limited, he is entitled
only to an amount of fees that is reasonable in relation to the results
obtained.”). Specifically, ASARCO argues that plaintiffs should be denied
their litigation costs related to two separate matters: plaintiffs’ motion
for a preliminary injunction and the consent decree between ASARCO and the
EPA.
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In challenging the award of litigation costs associated with
plaintiffs’ motion for a preliminary injunction, ASARCO emphasizes that
injunctive relief was never actually granted by the district court
following the evidentiary hearing. Therefore, ASARCO argues, the motion
was unsuccessful. ASARCO contends that plaintiffs were unable to obtain
injunctive relief because they could not demonstrate that the facility’s
discharges threatened irreparable harm to the environment. Brief for
Appellant at 18 (citing Dataphase Systems, Inc. v. C. L. Systems, Inc., 640
F.2d 109 (8th Cir. 1981) (en banc)). ASARCO further maintains that the
time and effort spent by plaintiffs on their motion for a preliminary
injunction “did not contribute to any overall success they may have
obtained.” Id.
In challenging the district court’s award of plaintiffs’ litigation
costs associated with the consent decree, ASARCO claims that the EPA made
many attempts to involve plaintiffs' attorneys in the settlement process
but plaintiffs elected not to participate. ASARCO suggests that plaintiffs
were opposed to any settlement whatsoever. ASARCO compares this case to
United States v. Hooker Chemicals & Plastics Corp., 591 F. Supp. 966, 968
(W.D.N.Y. 1984), in which the district court denied the plaintiff-
intervenors' request for attorney fees despite their claim that their
opposition to a settlement agreement between the government and the
defendant effected beneficial modifications of the agreement. ASARCO also
relies on Association for Retarded Citizens v. Schafer, 83 F.3d 1008, 1012
(8th Cir. 1996), in which this court admonished that "[a] prevailing party
who aggressively seeks a greater victory and fails is entitled to a
proportionally lesser fee award." Finally, citing the district court’s
observation in this case that the consent decree was "fair, reasonable, and
adequate in light of the purposes of the Clean Water Act," slip op. at 10-
11 (Jan. 5, 1996), ASARCO concludes that plaintiffs’ efforts in opposing
the consent decree had no direct or indirect impact whatsoever on the
outcome of this litigation and cannot be deemed reasonable or necessary.
Section 1365(d) leaves the award of litigation costs to the district
court’s sound
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discretion, which the district court has a duty to exercise upon a proper
motion. Jones v. City of St. Clair, 804 F.2d 478, 481-82 (8th Cir. 1986)
(holding that, upon a proper motion for costs and fees under 33 U.S.C.
§ 1365(d), the trial court has a duty to exercise that discretion and
remanding the case to the district court with directions to consider and
exercise such discretion). In the present case, the district court did
consider and exercise its discretion to award litigation costs. We will
not reverse absent a finding of an abuse of discretion. Jenkins v. State
of Missouri, 127 F.3d at 713-14 (abuse of discretion standard governs
review of fee awards, while prevailing party status is reviewed de novo).
Contrary to ASARCO’s argument, plaintiffs’ effort to obtain a
preliminary injunction was not a failure simply because the district court
never actually ruled on the motion. ASARCO’s wastewater treatment measures
became operational after plaintiffs filed their motion for a preliminary
injunction, but before the hearing on the motion took place. It therefore
appears that the very threat of a possible court-imposed injunction
shutting down the facility -- and the perceived need to undermine
plaintiffs' irreparable harm argument -- motivated ASARCO to implement and
maintain interim treatment measures to reduce effluent levels prior to the
hearing date. Also, as the district court noted, “the citizen-plaintiffs
were not ‘unsuccessful’ in obtaining a preliminary injunction inasmuch as
the requested preliminary injunctive relief was eventually rendered moot
by the Consent Decree in the action.” Slip op. at 4 (July 30, 1996). The
June 1995 consent decree -- which imposed greater sanctions on ASARCO than
the original September 1994 consent decree that was never lodged with the
district court -- was not proposed by ASARCO and the EPA until after the
motion for a preliminary injunction had been filed and the hearing was
about to take place. The hearing on the motion for a preliminary
injunction created a judicial record of ASARCO's history of non-compliance
and presumably also assisted the district court’s evaluation of the
proposed consent decree. In sum, we find substantial support for the
conclusion that plaintiffs’ motion for a preliminary injunction was
successful in many ways, up until the point at which the hearing was
completed. Accordingly, we hold that the district court
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did not abuse its discretion in awarding plaintiffs litigation costs for
work related to the motion for a preliminary injunction through completion
of the hearing, and the award of such costs is affirmed.
Any litigation costs incurred in relation to the motion for a
preliminary injunction after the hearing was completed, however, could not
have been reasonably related to the results obtained. Therefore, to the
extent that any litigation costs were awarded for work performed after June
30, 1995, in relation to the motion for a preliminary injunction, we
reverse. See Hensley v. Eckerhart, 461 U.S. at 440 (a reduced fee award
is appropriate if the relief is limited compared with scope of the
litigation as a whole); Jenkins v. State of Missouri, 127 F.3d at 716 (a
plaintiff is entitled to only the amount of fees that is reasonable in
relation to the results obtained).
As for plaintiffs’ litigation costs related to the consent decree,
we agree with the magistrate judge that
when this suit was originally brought the United States was not
diligently prosecuting the case. It was only after the citizen
plaintiffs filed suit against ASARCO that the government filed
suit. . . . [T]he success of this case and the entry of the
consent decree between ASARCO and the United States was largely
due to the efforts of the citizen plaintiffs.
Slip op. at 9 (June 5, 1996). The facts suggest that plaintiffs’ early
efforts did beneficially contribute directly and indirectly to the process
from which the June 1995 consent decree evolved. Due in part to the
plaintiffs’ efforts, the June 1995 consent decree imposed greater sanctions
upon ASARCO than the September 1994 consent decree that was negotiated by
the EPA and ASARCO but never lodged with the district court. We therefore
affirm the award of litigation costs for plaintiffs’ efforts related to the
consent decree, to the extent that such costs were incurred on or before
June 28, 1995.
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After the June 1995 consent decree was lodged with the district
court, however, plaintiffs actively but unsuccessfully opposed the entry
of the consent decree. The district court entered the June 1995 consent
decree as a final judgment – without modification – upon finding it was
“fair, reasonable and adequate in light of the purposes of the Clean Water
Act.” Slip op. at 10-11 (Jan. 5, 1996). We therefore hold that the
district court abused its discretion insofar as it awarded plaintiffs their
litigation costs for work in opposition to the entry of the June 1995
consent decree because such work was not reasonably related to the results
obtained. See Hensley v. Eckerhart, 461 U.S. at 440; Jenkins v. State of
Missouri, 127 F.3d at 716. Accordingly, the award of litigation costs for
work related to the consent decree is reversed to the extent that such
costs were incurred by plaintiff after June 28, 1995.
Finally, ASARCO argues that the district court’s order awarding
litigation costs should be reversed and the case remanded because the
district court failed to explain its decision adequately. In support of
this contention, ASARCO relies upon the following statement by the Supreme
Court:
[T]he district court has discretion in determining the amount
of a fee award. This is appropriate in view of the district
court’s superior understanding of the litigation and the
desirability of avoiding frequent appellate review of what
essentially are factual matters. It remains important,
however, for the district court to provide a concise but clear
explanation of its reasons for the fee award. When an
adjustment is requested on the basis of either the exceptional
or limited nature of the relief obtained by the plaintiff, the
district court should make clear that it has considered the
relationship between the amount of the fee awarded and the
results obtained.
Hensley v. Eckerhart, 461 U.S. at 437 (emphasis added).
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To the extent ASARCO’s argument on this point is not rendered moot
by our disposition, it is without merit. It cannot seriously be disputed
that the magistrate judge provided a clear and concise explanation of his
reasons for the compensation he recommended. In a nutshell, the magistrate
judge concluded that plaintiffs are prevailing parties in this litigation
as a whole because of their impact as a catalyst and their success in
achieving essentially what they had sought to accomplish. Slip op. at 5-9
(June 5, 1996). In addition, the magistrate judge undertook and set forth
a detailed analysis of plaintiffs’ fee request and each of ASARCO’s
objections thereto. Id. at 9-27.
In its own concise order, the district court, upon de novo review,
expressly accepted the magistrate judge’s report and recommendation with
modifications as specifically set forth in the district court’s order.
Slip op. at 8 (July 30, 1996). Moreover, upon consideration of ASARCO’s
objections to the magistrate judge’s report and recommendation, the
district court stated “the court does not agree with ASARCO that the
citizen-plaintiffs should be denied fees and expenses for the variety of
efforts characterized by ASARCO as unnecessary or unsuccessful.” Id. at
4. The district court then concluded: “Magistrate Judge Thalkan’s
recommended reductions in requested attorneys’ fees (filing no. 288 at 11,
15-19, 20-21) are reasonable and will be adopted by the court because the
record does not warrant further reductions.” Id. We believe that the
district court did make clear that it considered the relationship between
the amount of the fee awarded and the results obtained. Therefore, ASARCO
is not entitled to any relief on appeal for inadequacy of the district
court’s explanation.
Conclusion
For the reasons set forth above, the district court’s award of
plaintiff’s litigation costs pursuant to 33 U.S.C. § 1365(d) is affirmed
except that we reverse the award of any litigation costs incurred after
June 30, 1995, in connection with the motion for a preliminary injunction
and we reverse the award of any litigation costs incurred after
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June 28, 1995, in connection with the consent decree. The case is remanded
for further proceedings consistent with this opinion.
A true copy.
Attest:
CLERK, U.S. COURT OF APPEALS, EIGHTH CIRCUIT.
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