APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE MIDDLE DISTRICT OF PENNSYLVANIA.
Seitz, Chief Judge, A. Leon Higginbotham, Jr. and Sloviter, Circuit Judges.
A. LEON HIGGINBOTHAM, JR., Circuit Judge.
This case involved the district court's award of attorneys' fees and costs to union members who filed an action to redress their rights under Title I of the Labor-Management Reporting and Disclosure Act (LMRDA), 29 U.S.C. §§ 401-531. We are asked to decide whether the district court abused its discretion in awarding attorneys' fees and whether it erred in determining the amount awarded. We will affirm in part and remand in part.
In 1976 John A. Pawlak brought an action against his Union, Local 764 of the International Brotherhood of Teamsters, Chauffeurs, Warehousemen and Helpers of America (Local 764), seeking equitable relief and damages under Section 301 of the Labor-Management Relations Act (LMRA), 29 U.S.C. § 185, for an alleged breach of its duty of fair representation. Pawlak v. Intern. Broth. of Teamsters, Etc., 444 F. Supp. 807, aff'd mem., 571 F.2d 572 (3d Cir. 1978). The district court dismissed Pawlak's action because he failed to exhaust the Union's internal grievance and arbitration procedures as required by Section 301 of LMRA. Id. at 812. Relying on Article XIX, § 12(b) of the Union's Constitution which authorizes the Union to recover all costs and expenses it incurs in successfully defending an action brought by one of its members who failed to exhaust internal Union remedies, the Executive Board of Local 764 assessed Pawlak $2,635 in legal expenses.
In January 1978, Pawlak, James A. Stafford and other members of Local 764 proposed amendments to the Union's bylaws. Prior to the April 1978 vote on the proposed amendments, Local President Greenawalt sent a letter to the local rank and file advising the members to reject the proposed amendments. Pawlak and Stafford then requested access to the membership list and union funds to finance a counter-mailing in support of the amendments. The Executive Board refused both requests.
Pawlak and Stafford filed this second action in October 1978 against Local 764, Greenawalt as President of Local 764, the Teamster's Joint Council No. 53*fn1 and International Brotherhood of Teamsters, Chauffeurs, Warehousemen and Helpers of America (International). The first of the two-count complaint alleged that the defendants violated LMRDA, 29 U.S.C. § 411(a)(4), by fining Pawlak $2,635 to recover the expenses Local 764 incurred in defending against his 1976 action. Joint Appendix (J.A.) at 121-24. The second count alleged that Joint Council No. 53, Local 764 and Greenawalt denied Pawlak's and Stafford's right to express their views and to participate in the 1978 bylaw referendum in violation of 29 U.S.C. §§ 411(a)(1) and (a)(2) and 501. J.A. at 124-27. Local 764 counterclaimed against Pawlak for the $2,635 in legal fees it had assessed against him. After Council No. 53 was dismissed from the action, the remaining parties moved for summary judgment.
The district court granted plaintiffs' motion for summary judgment. Pawlak v. Greenawalt, 477 F. Supp. 149 (M.D. Pa. 1979), aff'd, 628 F.2d 826 (3d Cir. 1980), cert. denied, 449 U.S. 1083, 66 L. Ed. 2d 808, 101 S. Ct. 869 (1981). The court declared that Article XIX, § 12(b) of the Union's Constitution violated 29 U.S.C. § 411 (a)(4) because it limited the Union member's right to sue. 477 F. Supp. at 151. The court therefore enjoined defendants from enforcing Article XIX, § 12(b) and from collecting the fine imposed upon Pawlak. Id. It also granted plaintiffs' request for an additional order directing the International to publicize this order in its monthly magazine. Id.
Count two was resolved in 1979 by a consent order. J.A. at 164-66. Plaintiffs waived their claim for damages, but they were granted equal access to union resources to promote bylaw proposals in 1980. Id. at 165. If the Union sent a mailing to rank-and-file members at Union expense, it was required to afford plaintiffs the opportunity at Union expense to insert a letter in the mailing in support of their proposed bylaw amendments. Id.
After the district court's judgment was affirmed and the Supreme Court denied certiorari, plaintiffs filed an application for attorneys' fees and costs. They asked for $33,844.35 in attorneys' fees and $1,578.66 in costs for the original action. Id. at 3. However, the parties to count two entered into a settlement agreement that relieved Greenawalt of all liability for attorneys' fees, that relieved Local 764 of all liability for attorneys' fees related to count one, that fixed the amount of fees to be awarded in regard to count two at $4,000 and which limited the issues to be decided by the court with respect to this count to two: whether plaintiffs were the prevailing parties on count two and whether the litigation with respect to count two created a substantial common benefit for the members of Local 764. Id. at 349-54. The agreement also stipulated the record upon which these issues were to be decided.
Consequently, the fee application is divisible as to the two counts. Plaintiffs seek an award as to count one from the International. They seek an award as to count two from Local 764 and Charles Greenawalt. They also asked for fees and costs for work on the fee application. Id. at 3.
Title I of LMRDA contains no provision for an award of attorneys' fees. However, the Supreme Court recognized a decade ago in Hall v. Cole, 412 U.S. 1, 7-9, 36 L. Ed. 2d 702, 93 S. Ct. 1943 (1973),*fn2 that reimbursement of the successful plaintiff's attorneys' fees in an action to vindicate rights under Title I of LMRDA is authorized under the common benefit doctrine affirmed in Mills v. Electric Auto-Lite, 396 U.S. 375, 393-97, 24 L. Ed. 2d 593, 90 S. Ct. 616 (1970). This doctrine applies when "the plaintiff's successful litigation confers 'a substantial benefit on the members of an ascertainable class, and where the court's jurisdiction over the subject matter of the suit makes possible an award that will operate to spread the costs proportionately among them. '" Hall v. Cole, 412 U.S. at 5, quoting Mills v. Electric Auto-Lite, 396 U.S. at 393-94.
The Court explained how LMRDA cases could come within the common benefit doctrine. Noting that Title I of LMRDA "was specifically designed to promote the 'full and active participation by the rank and file in the affairs of the union, '" Hall v. Cole, 412 U.S. at 7-8, quoting American Federation of Musicians of the United States and Canada v. Wittstein, 379 U.S. 171, 182-83, 13 L. Ed. 2d 214, 85 S. Ct. 300 (1964), the Court concluded that a member's vindication of his own right of participation in union affairs "necessarily rendered a substantial service to his union as an institution and to all its members." Hall v. Cole, 412 U.S. at 8. The Court also explained that the award of attorneys' fees would be paid out of the union treasury and thus shifted the cost of the litigation to the class benefited by it. The Court held, therefore, "that an award of counsel fees to a successful plaintiff in an action under § 102 of the LMRDA falls squarely within the traditional equitable power of federal courts to award such fees. . . ." Id. at 9.
With the exception of local counsel Bruce F. Bratton, plaintiffs' attorneys in this case are employed by a public interest organization, Public Citizen Litigation Group, an arm of Public Citizen, Inc. which is an umbrella organization engaging in a wide variety of public interest activity. J.A. at 3, 31. Public Citizen, Inc. provides the funding for Public Citizen Litigation Group, and it also pays the expenses incurred by attorneys employed by Public Citizen Litigation Group. Because they are salaried employees, plaintiffs' attorneys will not directly receive the attorneys' fees awarded in this case; the award will be turned over to Public Citizen, Inc. Id. at 3-4, 32.
The district court referred the application to a magistrate for a report and recommendation. The magistrate recommended that the fee application be denied in its entirety because plaintiffs' counsel failed to keep adequate time records and to make proper allocations among the two claims and the various parties, id. at 85, and because the settlement agreement produced no substantial common benefit. Id. at 85-86. In the alternative for count one, the magistrate recommended an award for fees at a reduced hourly rate in the amount of $10,287.50 and costs of $1,036.59 reduced by 25% to $7,815.61 and $744.77 because of plaintiffs' counsels' failure to keep adequate records and to make proper allocations among claims and parties. Id. at 85. In the alternative for count two, he recommended an award of fees and costs of $4,000 against Local 764 alone. The magistrate recommended that under no circumstances should fees and costs be awarded for the work performed on the fee application. Id.
Based upon a de novo review of the record pursuant to 28 U.S.C. § 636(b)(1), the district court rejected the magistrate's recommendations. J.A. at 4. The court reviewed the recommendations as to each count separately. It found that the resolution of count one "unquestionably conferred upon all of the membership of International at the very least the benefit of removing a chill cast upon the rights of all union members to institute court actions in order to vindicate their rights." Id. at 7. It also found that the cost of the award would be borne by the Union members who were benefited by the action. Relying on Hall v. Cole, supra, the district court concluded that plaintiffs met the threshold requirements of Title I of LMRDA, 29 U.S.C. § 412 for an award of attorneys' fees. The court also found that the time "records kept by counsel Levy and Fox are adequate in most respects to support the award of fees for the time reflected in those records and that the time is also adequately allocated by counsel between the counts." J.A. at 9. However, it did deny an award for the time submitted by counsel Bratton, Sims*fn3 and Morrison because they failed to keep any time records. Id.
The court also rejected the magistrate's recommendation denying the request for fees for time spent on the fee application. Characterizing plaintiffs' action as a vindication of "the civil rights of union members," id. at 10, the district court awarded fees for the time spent on the fee application. Id. Moreover, it concluded
that the [requested] hourly rates for Levy and Fox are reasonable rates for attorneys similarly situated geographically and in terms of experience, education, and quality of the work performed.
Id. at 11. These rates are as follows:
Levy (Pre-January 1980) $65.00
Levy (post-January 1980) 75.00
The court thus calculated the amount of the award by multiplying the hours submitted by Levy and Fox by the rates requested:
Levy (Pre-January 1, 1980) 116.25 $65.00 $7,556.25
Levy (Post-January 1, 1980) 245.00 75.00 ...