Opinion
Case No. 1-03-cv-452.
October 16, 2007
ORDER GRANTING MOTION FOR INTERIM COSTS AND FEES
Before the Court is Plaintiffs' Motion for Interim Costs and Fees, originally briefed in October and November 2004 (docs. 52, 53, 54, 59, 60) and again, by order of the Court, in September 2007 (docs. 117, 119, 121, 122, 123). For the following reasons, the Court GRANTS Plaintiffs' Motion for Interim Costs and Fees as against the Director of the Ohio Department of Job and Family Services in the total amount of $17,427.19.
I. Background
Plaintiffs filed this lawsuit in June 2003 and, shortly thereafter, moved for a preliminary injunction "to enjoin all defendants to . . . give notice to plaintiff's class who have Family First arrearages due, that any erroneous overpayments previously paid to the custodial parents cannot be recouped out of current or future child support collections unless the custodial parent voluntarily agrees to a recoupment plan, and the recoupment plan does not present a hardship to the family." (Doc. 6 at 1.) Whereas Plaintiffs' Complaint asserted a due process claim arising out of Defendants' alleged retention of child support arrears belonging to Plaintiffs, the motion for a preliminary injunction concerned the discrete issue of Defendants' procedures for the recoupment of erroneous overpayments to custodial parents. ( Id. at 3-4.) Specifically, Plaintiffs argued that Defendants' unilateral retention of future support collections to repay an overpayment and use of letters and agreements that did not give custodial parents the option of agreeing or not agreeing to a recoupment or address the issue of hardship violated state and federal law. ( Id. at 4.)
The Court granted Plaintiffs' motion for a preliminary injunction on September 28, 2004 after finding that Plaintiffs had a substantial likelihood of success on the merits of their claim that the recoupment notice and procedures deprived Plaintiffs of due process of law, that the Plaintiffs would otherwise suffer irreparable harm, that the issuance of the injunction would not cause substantial harm to others, and that the public interest would be served by the issuance of the injunction. (Doc. 46.) Defendants Hayes and Burke, directors of the Ohio Department of Job and Family Services ("ODJFS") and the Hamilton County Department of Job and Family Services ("HCDJFS") respectively, were thereafter enjoined "from recouping erroneous overpayments from Plaintiffs' subsequent child support payments without Plaintiffs' explicit consent, or, barring that, without a court procedure awarding the overpayments to Defendants." ( Id. at 11.)
The Court's analysis of Plaintiffs' likelihood of success on the merits only addressed the Defendants' procedure for recouping erroneous overpayments, which was the only issue presented by the motion for the preliminary injunction. (Doc. 46 at 6-9.) The Court did not consider the merits of Plaintiffs' due process claim as it applied to any other issues presented in the Complaint, namely, whether Defendants' audit system was capable of correctly ascertaining amounts owed to custodial parents.
One month later, Plaintiffs filed a motion for interim costs and fees under 42 U.S.C. § 1988(b), arguing that they were entitled to such an award because they were "prevailing parties" by virtue of the Court's granting of their motion for the preliminary injunction. (Doc. 52 at 2.) The County Defendants opposed the amount of fees that Plaintiffs sought but conceded that an award of some amount was appropriate. The State Defendants argued that Plaintiffs were not entitled to any award of interim fees because, inter alia, the preliminary relief obtained by the Plaintiffs was "significantly less that [sic] the relief requested" and because Defendant Hayes was "in the process of making the necessary policy changes in light of the preliminary injunction," thus mooting any claim for permanent relief. (Doc. 54 at 8.)
The County Defendants "concede[d] that the Court's Order [granting the preliminary injunction] indicate[d] a probable success on the merits of plaintiffs' procedural due process claim." (Doc. 53 at 2.)
The State Defendants did, in fact, implement a policy change, amending an existing administrative regulation on January 4, 2005 "on an emergency basis to comply with [this Court's] preliminary injunction of September 28, 2004." (Doc. 63 at 2.) On April 3, 2005, the ODJFS codified the new regulation at Ohio Admin. Code § 5101:12-80-05.6(F) as a "permanent rule to implement the provisions of the September 28, 2004" injunction. ( Id.) The new regulation forbids the automatic deduction of child support payments to custodial parents but rather gives a Child Support Enforcement Agency (CSEA) two options to recoup money from child support payments: the CSEA must either (1) get permission of the custodial parent prior to the withholding, or (2) obtain a court order to do so.
Plaintiffs conceded that the new rule established that the State Defendants were no longer over-withholding child support in violation of the Family First provisions, and the Court found that the new rule brought the ODJFS Director into compliance with the September 28, 2004 injunction. (Doc. 80.) Thus, the Court dissolved the injunction against the ODJFS Director on January 5, 2006. ( Id.) However, noting that "the gravaman of Plaintiffs' complaint is that Defendants' erroneous calculation and redistribution of child support arrearages violated the federal Family First provisions and Plaintiffs' procedural due process rights," the Court found that the rule change did not moot Plaintiffs' remaining due process claims arising out of the Defendants' alleged calculation and distribution errors. (Doc. 80 at 18.)
The injunction remained in place against HCDJFS' Director. (Doc. 80 at 19 n. 24.)
Approximately a year and a half later, Defendants moved the Court for judgment on the pleadings based on Hughlett v. Romer-Senksy, No. 05-3299, 2006 U.S. App. LEXIS 16823 (6th Cir. July 6, 2006), in which the Sixth Circuit held that 42 U.S.C. § 657(a)(3) does not create a privately enforceable right. (Docs. 91, 93.) The Court granted Defendants' motions, finding that 42 U.S.C. § 657(a)(3) of the Family First Provisions did not create an actionable right and that Plaintiffs' remaining argument — that the State's audit procedures were inadequate to accurately state the amount of child support owed to Plaintiffs — did not state a claim for violation of procedural due process. (Doc. 113.) The only issue that remains is whether Plaintiffs are entitled to attorneys fees under 42 U.S.C. § 1988 for fees and costs associated with the Court's September 28, 2004 order enjoining Defendants from recouping erroneous overpayments without consent or a court order.
The underlying property right forming the basis of Plaintiffs' alleged due process violation was Ohio Rev. Code § 3123.19, not 42 U.S.C. § 657.
II. Jurisdiction
As a preliminary matter, the Court addresses the HCDJFS' Director's contention that the Court does not have subject matter jurisdiction over the matter and, accordingly, cannot order the Defendants to pay attorney fees. The crux of the argument is that, pursuant to Hughlett v. Romer-Sensky, 2006 U.S. App. LEXIS 16823 (6th Cir. 2006), the Court had no jurisdiction to hear Plaintiffs' § 1983 claim because 42 U.S.C. § 657(a) does not create a private right of action. (Doc. 121 at 2.) This argument ignores the fact that Plaintiffs also brought a § 1983 claim alleging a constitutional violation, namely, the right to due process. The Court plainly has jurisdiction over a due process claim, even if it is ultimately determined that the claim is not meritorious.
III. Prevailing Party Status
Next, the Court must resolve whether, in light of the fact that they did not obtain a final judgment in their favor, Plaintiffs can nonetheless be deemed "prevailing parties" with respect to the discrete issue that was addressed by the administrative rule change enacted for the purpose of complying with the Court's order granting the preliminary injunction. If so, then the Court may, in its discretion, allow them "a reasonable attorney's fee as part of the costs." 42 U.S.C. § 1988.
"`The touchstone of the prevailing party inquiry,' . . . is `the material alteration of the legal relationship of the parties in a manner which Congress sought to promote in the fee statute.'" Sole v. Wyner, 127 S. Ct. 2188, 2194 (2007) (quoting Texas State Teachers Assn. v. Garland Indep. Sch. Dist., 489 U.S. 782, 792-93 (1989)). More precisely, the change in the legal relationship of the parties must be "judicially sanctioned." Buckhannon Bd. and Care Home, Inc. v. West Virginia Dept. of Health and Human Resources, 532 U.S. 598, 605 (2001). Thus, "[a] defendant's voluntary change in conduct, although perhaps accomplishing what the plaintiff sought to achieve by the lawsuit, lacks the necessary judicial imprimatur on the change." Id. (emphasis added). The United States Supreme Court recently clarified that plaintiffs who achieve a fleeting victory in the form of a preliminary injunction that is "reversed, dissolved, or otherwise undone by the final decision in the same case" are not entitled to prevailing party status. Sole v. Wyner, 127 S. Ct. at 2195.
As applied to this case, these rules require the Court to determine whether the permanent amendment to the Ohio Administrative Code, made to comply with this Court's order enjoining Defendants from "recouping erroneous overpayments from Plaintiffs' subsequent child support payments without Plaintiffs' explicit consent, or, barring that, without a court procedure awarding the overpayments to Defendants," was a judicially sanctioned, material alteration of the legal relationship of the parties that was not ultimately undone by the Court's final decision that the Plaintiffs did not state a cause of action under § 1983 for violation of 42 U.S.C. § 657(a) or a due process violation stemming from the Defendants' alleged inability to perform accurate audits. The Court finds that the Ohio Administrative Rule change, permanently in effect as of April 3, 2005, altered the legal relationship of the parties, was not done voluntarily by the Defendants but was judicially sanctioned, and was not undone by the Court's final ruling.
The Court did not issue its September 28, 2004 injunction hastily. The matter was fully briefed by both parties in late summer 2003 (docs. 6, 8, 12, and 13), and the Court held a conference on July 27, 2004 during which counsel for all parties represented that the motion did not require a hearing. Thus, the Court had deliberately considered the merits of Plaintiffs' claim when, in an eleven-page order, it concluded that Plaintiffs had a property interest in child support payments protected by the Due Process Clause and that the recoupment notice being used by the Defendants was likely insufficient to satisfy the requirements of due process. (Doc. 26 at 8-9.) To comply with the Court's order, the ODJFS Director amended the Administrative Rule to address the due process concern with respect to recoupment. This was not a voluntary change in conduct. Contra Buckhannon, 532 U.S. at 605 (finding that a state's voluntary revision of the challenged statute, while accomplishing the plaintiffs' objectives, was not a "judicially sanctioned change in the legal relationship of the parties."). Thus, because the Court ordered the Defendants to change the procedure with respect to the withholding of erroneous overpayments, the ODJFS' Director did so, and the legal relationship of the parties was altered (because Defendants could no longer withhold erroneous overpayments without consent or a court order), Plaintiffs are prevailing parties with respect to the injunction.
This conclusion is not altered by the fact that, because of the Sixth Circuit decision in Hughlett v. Romer-Sensky, the Court later dismissed Plaintiffs' claim brought under 42 U.S.C. § 657(a). (Doc. 113 at 5-6.) This Court's decision to grant Plaintiffs' request for an injunction did not hinge upon Plaintiffs' claim under § 657(a). Rather, the Court based its decision on Plaintiffs' allegation that the notice and procedure attendant to the Defendants' recoupment of overpayments deprived Plaintiffs of their constitutional right to procedural due process. (Doc. 46 at 9.) Neither does the Court's conclusion that Plaintiffs' last remaining allegation, that Defendants could not perform an accurate audit, did not state a due process claim undo Plaintiffs' earlier success. The relief Plaintiffs sought in their motion for a preliminary injunction — an order enjoining Defendants from withholding erroneous overpayments without consent or a court order — involved a claim that "additional procedural safeguards should have been provided to better protect his property interest" and was therefore a valid due process claim. Caswell v. City of Detroit Hous. Comm'n, 418 F.3d 615, 621 (6th Cir. 2005).
That the Court, at the time of the injunction order, found that Plaintiffs had a property interest in the child support payments by virtue of 42 U.S.C. § 657(a) is of no import because, as the parties later agreed, Plaintiffs also had a property interest in the child support payments by virtue of Ohio Rev. Code § 3123.19. (Doc. 100 at 2 n. 1).
This case is unlike Sole v. Wyner, 127 S. Ct. 2188 (2007), in which the district court granted an emergency preliminary injunction after an abbreviated hearing only to later deny a motion for a permanent injunction based on more complete factual information. In Wyner, "the state law whose constitutionality [Wyner] attacked remained valid and enforceable" at the end of the litigation. Id. at 2195. Thus, her "temporary success rested on a premise the District Court ultimately rejected." Id. at 2196. Such is not the case here, where the state administrative rule that Plaintiffs challenged did not remain enforceable but was permanently amended because of this Court's injunction. This Court's rejection of Plaintiffs' other claims — based on § 657(a) and allegations of inaccurate audits — had no bearing on the merits of Plaintiffs' due process claim with respect to recoupment.
Defendant ODJFS Director's argument that Plaintiffs' due process claim concerning recoupment would ultimately have failed due to the Sixth Circuit's decision in Hughlett v. Romer-Sensky is not persuasive. While the Hughlett Court found that Ohio's administrative review process for child support recipients who want to contest the amount or the manner of delivery of their support payments (Ohio Admin. Code § 5101:6) was an adequate post-deprivation remedy in that case, it does not necessarily follow that it would have been an adequate post-deprivation remedy in this case, which involved a different alleged due process violation. Furthermore, this Court never would have had to consider whether Plaintiffs' due process claim concerning recoupment would withstand the Hughlett opinion because the ODJFS' Director amended the relevant Administrative Code long before that opinion was issued, thus mooting any need for continued judicial review of the matter. Accordingly, Plaintiffs are prevailing parties with respect to the discrete issue that was addressed by the administrative rule change enacted for the purpose of complying with the Court's order granting the preliminary injunction.
The plaintiffs in Hughlett alleged that the defendants had violated their due process rights when they implemented the child support payment computer system without a notice and a hearing. The court found that the notice and comment requirements of Ohio Rev. Code Ch. 119 provided adequate predeprivation protection and that Ohio Admin. Code § 5101:6 provided an adequate postdeprivation remedy. Hughlett, 2006 U.S. App. LEXIS 16823 at 8-9. Plaintiffs in this case did not challenge the implementation of the computer system but rather the procedures in place with respect to recoupment of overpayments. Thus, the predeprivation process upon which the Hughlett Court relied is inapposite, and the adequacy of the postdeprivation remedy for the Hughlett plaintiffs might not have proven adequate to plaintiffs asserting a due process claim based on a completely different state action.
IV. Fees
Having determined that Plaintiffs are prevailing parties with respect to the administrative rule change enacted for the purpose of complying with the Court's injunction, it follows that Plaintiffs' counsel are entitled to their fees only with respect to achieving that success. The Court finds that the hours spent by counsel, as demonstrated by the affidavits and exhibits attached to their motion (doc. 119), are reasonable and related to the issue on which Plaintiffs prevailed with the following exceptions: with respect to Mr. Newman, time entered on June 24, June 25, and July 1 2004 pertained to a different injunction motion than the one herein considered. Thus, the Court must subtract the 0.3 hours Mr. Newman expended on that issue. (See Doc. 119-4 at 2.) For the same reason, the Court must subtract 2.35 hours Mr. Felson expended on the same issue. (See Doc. 119-9 at 3.) Accordingly, Mr. Newman is entitled to compensation for 29.9 hours, and Mr. Felson is entitled to compensation for 28.15 hours.
On July 6, 2004, Plaintiffs moved for another preliminary injunction, this one concerning audits. (Doc. 38.) This motion for fees does not encompass that issue.
The Court also has an obligation to determine the "reasonable" hourly rate in the circumstances of the case. Market Day Corp. v. Maas, No. 1:05-cv-578, 2006 U.S. Dist. LEXIS 33375 (citing Hudson v. Reno, 130 F.3d 1193, 1209 (6th Cir. 1997)). Mr. Newman requests compensation at a rate of $325 per hour, and Mr. Felson requests compensation at a rate of $265 per hour. Both support their requests with affidavits in which they state, inter alia, their standard hourly billing rates. The ODJFS Director counters with evidence that this Court has recently found that fees appropriate for Cincinnati counsel are $250/hour for partners and $200/hour for associates and of counsel. Market Day, 2006 U.S. Dist. LEXIS 33375 at 14. The HCDJFS Director does not contest the rate proposed by Plaintiffs. (Docs. 59, 121.)
"A reasonable hourly rate should be sufficient to encourage competent lawyers in the relevant community to undertake legal representation." Lamar Advertising Co. v. Charter Twp. of Van Buren, 178 F. App'x 498, 501, 2006 WL 1133309 (6th Cir. April 17, 2006) (citing Blum v. Stenson, 465 U.S. 886, 894-95 (1984).) Thus, what is reasonable under the circumstances of a case is not necessarily an attorney's actual billing rate, but an amount more akin to an average billing rate in the community. See, e.g., id. at 502. Based on the evidence before it and the Court's own knowledge of the hourly rates charged by civil rights litigants in this district, the Court finds that $325 per hour is a reasonable hourly rate for the work performed in this case by Mr. Newman, who has been practicing for thirty-eight years, and that $265 per hour is a reasonable hourly rate for the work performed by Mr. Felson, who has been practicing for forty-one years.
The U.S. District Court for the Middle District of Tennessee recently found that $275 per hour was a reasonable hourly rate for a civil rights attorney with fifteen years experience and who customarily billed $350/hour, and that $200 was a reasonable hourly rate for a civil rights attorney with seven years experience and who customarily billed $225 per hour. Randolph v. Schubert, 2007 WL 2220407 (M.D. Tenn. July 27, 2007).
The last step in the analysis is whether counsel have obtained an "exceptional success" entitling Plaintiffs to a Lodestar multiplier. Blum v. Stenson, 465 U.S. 886, 895 (1984). The Supreme Court has set forth twelve factors for a court to consider in rendering the propriety of an enhancement:
(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 other 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 "undesirability" of the case; (11) the nature and length of the professional relationship with the client; and (12) awards in similar cases.Blanchard v. Bergeron, 489 U.S. 87, 92 (1989); see also Paschal v. Flagstar Bank, 297 F.3d 431, 435 (6th Cir. 2002). While the case as a whole stretched over four years, the single matter on which Plaintiffs prevailed was resolved in relatively short order and required briefing but no oral argument. And while the results obtained were certainly beneficial, it cannot be said that they were so exceptional under the circumstances as to warrant a multiplier. Upon full review of the factors, the Court finds that enhancement of the lodestar is not warranted.
Plaintiffs are thus entitled to fees for Mr. Newman's work in the amount of $9717.50, which represents 29.9 hours of work at $325 per hour, and fees for Mr. Felson's work in the amount of $7459.75, which represents 28.15 hours of work at $265 per hour.
V. Costs
Neither Defendant contests the calculation of costs in this matter, which Plaintiffs represent is $249.94.
VI. Conclusion
For the foregoing reasons, the Court orders the Directors of ODJFS and HCDJFS to pay Plaintiffs a compensatory fee in the amount of $17,177.25 and costs in the amount of $249.94.
IT IS SO ORDERED.