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11/06/84 Tommy Shaw v. Library of Congress

November 6, 1984




Before: ROBINSON, Chief Judge, WALD and GINSBURG, Circuit Judges.



Opinion for the Court filed by Chief Judge ROBINSON.

Dissenting Opinion filed by Circuit Judge GINSBURG.

ROBINSON, Chief Judge: Acorollary to the doctrine of sovereign immunity exempts the United States from liability for interest absent its express consent thereto. *fn1 The sole issue on this appeal is whether the District Court dishonored that precept when, in assessing an attorneys' fee against the United States, it effected a 30 percent upward adjustment of the lodestar *fn2 to compensate the attorney for delay in receipt of payment.

We sustain the adjustment alternatively on two grounds. First, we conclude that the language of the statute authorizing allowances of attorneys' fees against the United States in employment-discrimination cases waives its sovereign immunity with respect to the delay component of the fee award. Second, we find that component validated by a line of cases relaxing the traditional rigor of the sovereign-immunity doctrine. I

In 1976 and again in 1977, Tommy Shaw, a black employee of the Library of Congress, submitted complaints of job-related racial discrimination to the Library's Equal Employment Office. *fn3 In 1978, after the Library remained resistant to these complaints, Shaw's counsel engaged in administrative proceedings and during the course thereof entered into negotiations which culminated in a settlement agreement. *fn4 As part of the settlement, the Library agreed to promote Shaw retroactively with backpay provided the Comptroller General first determined that the Library had authority to do so without a specific finding of racial discrimination. *fn5 The Comptroller General, however, held that the Library lacked power under the Back Pay Act of 19666 to pursue that course.7

Dissatisfied with this turn of events, Shaw sued in the District Court8 and ultimately prevailed on his position that the Library had authority to afford the relief specified in the settlement accord.9 As a result of Shaw's victory, the court ordered that he be awarded litigation costs and reasonable attorneys' fees,10 withholding, however, determination of the dollar amount thereof until after further proceedings and this court's decision in Copeland v. Marshall,11 then pending en banc.12 By this time, primary responsibility for prosecution of Shaw's claim had devolved upon new lawyers, but the efforts of his earlier counsel before the Library and in the District Court had involved considerable time and energy.13 After our decision in Copeland was announced, counsel moved for an allowance of attorney's fees,14 requesting compensation at the rate of $85 per hour for 103.75 hours of work on Shaw's behalf during the course of those proceedings.15

Largely dismissing the Library's challenges to both the hourly rate and the number of hours claimed by Shaw's counsel,16 the District Court computed a lodestar of $8,435,17 based on 99 hours of work at the $85 proposed hourly rate, excluding from its calculation 4.75 hours which counsel devoted to research in an abortive effort to impart a class-action aspect to Shaw's administrative complaints.18 The court then reduced the lodestar by 20 percent to reflect the quality of counsel's representation.19 Lastly, and most importantly for this appeal, the court increased the lodestar by 30 percent to compensate counsel for the delay in actual payment for the legal services he had rendered.20 The court explained:

This case should have ended in August 1978, or at the latest in November of that year. If [Shaw's counsel] had been compensated at about that time, he could have invested the money at an average yield of not less than 10% per year. It is the fault of neither [Shaw] nor [counsel] that payment was not made sooner. It is reasonable to assume that if payment is made promptly, counsel will receive his reimbursement by December 1, 1981. Accordingly, the accompanying order reflects an upward adjustment of 30% for delay.21

Then, offsetting the 30 percent increase in the lodestar by the 20 percent reduction in the lodestar, the District Court granted a net 10 percent addition to the lodestar22 and, accordingly, awarded counsel a fee of $9,278.50.23 The Library has appealed,24 arguing that the 30 percent upward adjustment for delay infringes the rule that interest may not be assessed against the United States in the absence of waiver.25 II

The issue posed on appeal if hardly one of first impression. In Copeland v. Marshal,26 we declared en banc that the United States can be held liable under Title VII of the Civil Rights Act of 196427 for attorneys' fees in an amount augmented to compensate for the lag attending payment. We said:

The delay in receipt of payment for services rendered in an additional factor that may be incorporated into an contingency adjustment. The hourly rates used in the "lodestar" represent the prevailing rate for clients who typically pay their bills promptly. Court-awarded fees normally are received long after the legal services are rendered. That delay can present cash-flow problems for the attorneys. In any event, payment today for services rendered long in the past deprives the eventual recipient of the value of the use of the money in the meantime, which use, particularly in an inflationary era, is valuable. A percentage adjustment to reflect the delay in receipt of payment therefore may be appropriate.28

We have subsequently affirmed this principle29 and, indeed, have upheld an award of attorneys' fees against the United States that in fact was adjusted upward to compensate for delay.30

Despite the seemingly clear applicability of these precedents, however, we do not rest our disposition on stare decisis alone. Whether an upward delay adjustment in an attorneys'-fee award satisfies the rigorous requirements of the sovereign-immunity doctrine is an issue we have dealt with only peripherally,31 and we have never squarely addressed. We recognize, too, the jurisdictional implications of any legal bar created by that doctrine, and acknowledge the existence of decisions of this circuit arguably in conflict with Copeland and its progeny on this point.32 We therefore opt to consider the Library's argument much as if it were presented upon a clean slate. III

The initial inquiry, of this course, is whether the District Court's 30 percent augmentation of the lodestar for delay in payment of the fee constitutes "interest" against the United States within the contemplation of the rule invoked by the Library. Shaw characterizes this component of the fee award as a proper ingredient of a reasonable attorneys' fee, in contradistinction to interest.33 The only way to determine whether this addition to the lodestar is condemned by the traditional interest rule is to ascertain what that rule prohibits.

Perhaps the clearest example of interest appears when a court, after calculating the amount of a monetary judgment, adds a percentage of that amount to compensate the claimant for loss of use of the money during the period between the claimant's initial entitlement to the money and the day the judgment is rendered.34 Here the long-established rule refuses to view the sovereign as having consented to the addition, even though consent to suit on the claim has been established.35 The same results follow court-awarded sums which, though not interest calculated in the classic manner, nonetheless are functionally equivalent to interest. Thus the Supreme Court has rejected a contention that an increase in an assessment by the Court of Claims against the United States, made as compensation for loss of use and occupation of a mining claim appropriated by the United States years earlier, was "compensation" rather than interest.36 The Court reasoned that because "the loss of the use of the money results from the failure to collect sooner a claim held to have accrued when the company's property was taken, that which the company seeks to recover is, in substance, interest."37 We ourselves recently held an "inflation adjustment" in awards of backpay to federal employees amounted to interest against the United States because it served "the same general end of compensating the recipient for differences in the worth of her award between the date of actual receipt and the date as of which the money should have been paid."38

In the case at bar, the District Court's 30 percent addition to the lodestar was designed to reimburse Shaw's counsel for the decrease in value of his uncollected legal fee between the date on which he concluded his legal services and the court's estimated date of likely actual receipt.39 By the court's own description, the addition was based on a rough determination of the "average yield" of the amount of the fee if invested at 10 percent per annum for three years.40 We think the adjustment falls well within the contours of the interest concept. Only by ignoring applicable caselaw as well as the real nature of the disputed adjustment could we find anything other than an assessment of interest against the United States.41 We proceed, then, to the Library's contention that the District Court's action in this regard disregards the dictates of the doctrine of sovereign immunity. IV

The United States cannot be subjected to monetary liability save pursuant to a waiver of its sovereign immunity.42 Moreover, the scope of such a waiver is to be strictly construed.43 The instant case involves a corollary of these principles, which for convenience we term the "interest rule." By this rule, the United States may not be held liable for interest absent an express waiver of its immunity.44 The question we face here is whether Congress has waived that immunity with respect to an allowance of interest as part of an attorneys' fee awarded, as here, under Title VII.

The relevant section of Title VII provides that

in any action or proceeding under this subchapter the court, in its discretion, may allow the prevailing party, other than the [Equal Employment Opportunity] Commission or the United States, a reasonable attorney's fee as part of the costs, and the Commission and the United States shall be liable for costs the same as a private person.45

A private person, of course, may be held liable for interest as an ingredient of a Title VII attorneys'-fees award,46 and this section subjects the United States to liability for "costs the same as a private person," and authorizes assessment of "a reasonable attorney's fee as part of the costs." We conclude that Congress thus has waived the immunity of the United ...

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