Filed: Aug. 09, 2016
Latest Update: Mar. 03, 2020
Summary: UNPUBLISHED UNITED STATES COURT OF APPEALS FOR THE FOURTH CIRCUIT No. 14-1428 SUE DOE, Plaintiff - Appellant, v. LINDA KIDD; STAN BUTKUS; KATHI LACY; SOUTH CAROLINA DEPARTMENT OF DISABILITIES AND SPECIAL NEEDS; ROBERT KERR; SOUTH CAROLINA DEPARTMENT OF HEALTH AND HUMAN SERVICES, Defendants – Appellees, v. SANDRA RAY, Party-in-interest. No. 14-1429 SUE DOE, Plaintiff - Appellee, v. LINDA KIDD; STAN BUTKUS; KATHI LACY; SOUTH CAROLINA DEPARTMENT OF DISABILITIES AND SPECIAL NEEDS; SOUTH CAROLINA DEP
Summary: UNPUBLISHED UNITED STATES COURT OF APPEALS FOR THE FOURTH CIRCUIT No. 14-1428 SUE DOE, Plaintiff - Appellant, v. LINDA KIDD; STAN BUTKUS; KATHI LACY; SOUTH CAROLINA DEPARTMENT OF DISABILITIES AND SPECIAL NEEDS; ROBERT KERR; SOUTH CAROLINA DEPARTMENT OF HEALTH AND HUMAN SERVICES, Defendants – Appellees, v. SANDRA RAY, Party-in-interest. No. 14-1429 SUE DOE, Plaintiff - Appellee, v. LINDA KIDD; STAN BUTKUS; KATHI LACY; SOUTH CAROLINA DEPARTMENT OF DISABILITIES AND SPECIAL NEEDS; SOUTH CAROLINA DEPA..
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UNPUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
No. 14-1428
SUE DOE,
Plaintiff - Appellant,
v.
LINDA KIDD; STAN BUTKUS; KATHI LACY; SOUTH CAROLINA
DEPARTMENT OF DISABILITIES AND SPECIAL NEEDS; ROBERT KERR;
SOUTH CAROLINA DEPARTMENT OF HEALTH AND HUMAN SERVICES,
Defendants – Appellees,
v.
SANDRA RAY,
Party-in-interest.
No. 14-1429
SUE DOE,
Plaintiff - Appellee,
v.
LINDA KIDD; STAN BUTKUS; KATHI LACY; SOUTH CAROLINA
DEPARTMENT OF DISABILITIES AND SPECIAL NEEDS; SOUTH CAROLINA
DEPARTMENT OF HEALTH AND HUMAN SERVICES; ROBERT KERR,
Defendants – Appellants,
v.
SANDRA RAY,
Party-in-interest.
No. 15-1022
SUE DOE,
Plaintiff - Appellant,
v.
LINDA KIDD; STAN BUTKUS; KATHI LACY; SOUTH CAROLINA
DEPARTMENT OF DISABILITIES AND SPECIAL NEEDS; ROBERT KERR;
SOUTH CAROLINA DEPARTMENT OF HEALTH AND HUMAN SERVICES,
Defendants – Appellees,
v.
SANDRA RAY,
Party-in-interest.
No. 15-1024
SUE DOE,
Plaintiff - Appellee,
v.
LINDA KIDD; STAN BUTKUS; KATHI LACY; SOUTH CAROLINA
DEPARTMENT OF DISABILITIES AND SPECIAL NEEDS; SOUTH CAROLINA
DEPARTMENT OF HEALTH AND HUMAN SERVICES; ROBERT KERR,
Defendants – Appellants,
v.
2
SANDRA RAY,
Party-in-interest.
No. 15-1026
SUE DOE,
Plaintiff - Appellant,
v.
LINDA KIDD; STAN BUTKUS; KATHI LACY; SOUTH CAROLINA
DEPARTMENT OF DISABILITIES AND SPECIAL NEEDS; ROBERT KERR;
SOUTH CAROLINA DEPARTMENT OF HEALTH AND HUMAN SERVICES,
Defendants – Appellees,
v.
SANDRA RAY,
Party-in-interest.
Appeals from the United States District Court for the District
of South Carolina, at Columbia. Margaret B. Seymour, Senior
District Judge. (3:03-cv-01918-MBS)
Argued: January 27, 2016 Decided: August 9, 2016
Before GREGORY, Chief Judge, and KING and WYNN, Circuit Judges.
Vacated and remanded by unpublished opinion. Chief Judge
Gregory wrote the opinion, in which Judge King and Judge Wynn
joined.
ARGUED: Armand G. Derfner, DERFNER & ALTMAN, LLC, Charleston,
South Carolina; Patricia L. Harrison, PATRICIA LOGAN HARRISON
3
ATTORNEY AT LAW, Columbia, South Carolina, for Appellant/Cross-
Appellee. Kenneth Paul Woodington, DAVIDSON & LINDEMANN, P.A.,
Columbia, South Carolina, for Appellees/Cross-Appellants. ON
BRIEF: William H. Davidson, II, DAVIDSON & LINDEMANN, P.A.,
Columbia, South Carolina, for Appellees/Cross-Appellants.
Unpublished opinions are not binding precedent in this circuit.
4
GREGORY, Chief Judge:
This is an appeal and cross-appeal of an award of
attorneys’ fees in a civil rights action brought by Sue Doe, a
young woman with developmental disabilities, including epilepsy,
mild intellectual disability, and cerebral palsy. She filed
this 42 U.S.C. § 1983 action against the South Carolina
Department of Disabilities and Special Needs (“DDSN”), the South
Carolina Department of Health and Human Services (“DHHS”), as
well as Linda Kidd, Stan Butkus, Kathi Lacy, and Robert Kerr, in
their official capacities as state administrators (collectively,
“defendants”). The suit alleged that the defendants violated
various sections of the Medicaid Act related to the provision of
services.
This case has been before this Court on two previous
occasions. In Doe v. Kidd, 501 F.3d 348 (4th Cir. 2007)
[hereinafter “Doe I”], this Court reversed the district court’s
summary judgment finding in favor of the defendants, holding
that § 1396a(a)(8) of the Medicaid Act creates a private right
of action that is enforceable through §
1983. 501 F.3d at 356.
In Doe v. Kidd, 419 F. App’x 411 (4th Cir. 2011) (unpublished)
[hereinafter “Doe II”], this Court again reversed the district
court’s summary judgment finding in favor of the defendants,
holding that, as a matter of law, the defendants failed to
comply with the Medicaid Act “through their ongoing refusal to
5
finance residential habilitation services at an acceptable . . .
placement to” Doe. 419 F. App’x at 418. This Court further
held that Doe was “the prevailing party, [and] she is entitled
to attorney’s fees.” Id.
Despite two successful appeals, the district court
significantly reduced Doe’s request for attorneys’ fees,
guardian ad litem fees, and costs, finding, among other things,
that there “ha[d] been no change in the status quo.” J.A. 2300.
Because this finding, and others, were clearly wrong, we vacate
the attorneys’ fee award and direct entry for an award of
$669,077.20, exclusive of costs; we vacate the guardian ad litem
fee award and direct entry for an award of $39,173.75; and we
remand for further proceedings consistent with this opinion.
I.
A.
The basic history of this case is laid out in further
detail in Doe I and Doe II. Below is a brief summary of the
facts.
Medicaid is an optional, federal-state program through
which the federal government provides financial assistance to
states for the medical care of needy individuals. Wilder v. Va.
Hosp. Ass’n, 496 U.S. 498, 502 (1990). Once a state elects to
participate in the program, it must comply with all federal
6
Medicaid laws and regulations. Id. DHHS is the state agency
responsible for administering and supervising Medicaid programs
in South Carolina. DDSN has specific authority over the state’s
treatment and training programs for people with intellectual
disability.
This case involved the Medicaid waiver program created by
42 U.S.C. § 1396n(c), which permits states to waive the
requirement that persons with intellectual disability or a
related disability live in an institution in order to receive
certain Medicaid services. See generally Bryson v. Shumway, 308
F.3d 79, 82 (1st Cir. 2002) (“[The program] allow[s] states to
experiment with methods of care, or to provide care on a
targeted basis, without adhering to the strict mandates of the
Medicaid system.”). When an individual in South Carolina
applies for DDSN services, including the waiver program, DHHS is
required to make certain determinations.
The waiver application process has three steps: first,
DHHS needed to decide whether Doe was eligible for any Medicaid
funding; next, DDSN was required to evaluate Doe to determine
what services she was entitled to; and, finally, DDSN had to
decide the most appropriate “level of care” for Doe as well as
the least restrictive environment or care setting. Doe I, 501
F.3d at 351. These settings may include, listed in order of the
least to the most restrictive placement (1) a Supervised Living
7
Program II (“SLP II”), an apartment where recipients of DDSN
services reside together; (2) a Community Training Home I (“CTH
I”), a private foster home where a services recipient resides
with a family, one member of which is a trained caregiver; or
(3) a Community Training Home II (“CTH II”), a group home with
live-in caregivers for four or fewer recipients. Id. at 351-52.
Appeals from DDSN decisions are taken to a DHHS hearing officer
and thereafter may be appealed to a South Carolina
administrative law judge.
In December 2002, without having made a final decision as
to Doe’s eligibility for a waiver, DDSN placed Doe on the waiver
program’s noncritical waiting list. Doe appealed this decision
to DHHS, and claimed that DDSN had failed to provide her with
services within a reasonably prompt time frame as required by
federal regulations. Pending that appeal, DDSN moved Doe to its
critical waiting list in February 2003. Doe was advised that
she met certain DDSN eligibility requirements in March 2003.
She was then moved to the top of the critical waiting list.
At a March 2003 hearing on the appeal, a DHHS hearing
officer dismissed the matter. He found that, by moving Doe to
the top of the critical waiting list and determining that she
was eligible for services, DDSN had resolved all of Doe’s claims
in her favor. The hearing officer also found that DDSN had not
provided Doe with services in a “reasonably prompt” period of
8
time. However, because DDSN was then promising to provide Doe
with services, the hearing officer found that he lacked the
power to provide any other relief and the appeal was dismissed.
In April 2003, DDSN approved a “plan of care” that was
developed for Doe pursuant to 42 C.F.R. § 441.301(b) (“2003
plan”). The 2003 plan included a regime of personal care,
psychological evaluations, and other services to be provided in-
home at the residence of Doe’s mother. It also recommended that
Doe “receive residential habilitation from a DDSN approved
provider” within three months at a “setting located within the
Columbia area to be chosen by her family.” Doe II, 419 F. App’x
at 414.
In May 2003, in response to the declining mental health of
Doe’s mother, Doe asked to terminate the in-home services and,
per the 2003 plan, receive “residential habilitation services”
in either a CTH I or CTH II. In June 2003, after failing to
receive any residential habilitation services, Doe initiated
this action, wherein she accused the defendants of violating the
Medicaid Act. She sought injunctive relief from DDSN, the
payment of medical expenses, and attorneys’ fees.
In a letter dated June 26, 2003, DDSN authorized CTH I or
SLP II services for Doe at a residential center (the
“authorization letter”). According to the authorization letter,
an assessment of Doe by DDSN revealed that her needs for “out-
9
of-home placement/residential habilitation supervision, care and
skills training” could be met at either of these two placements.
However, Doe rejected the DDSN chosen provider, the Babcock
Center, because she believed that the facility could not safely
provide her with appropriate services. Through August 2003, the
defendants and Doe discussed some alternative placements,
including the possibility of upgrading the services at another
CTH I setting or placement at a CTH II facility closer to her
family. The defendants maintained that a CTH I setting
“represent[ed] the best long-term option” for Doe. Id. at 414.
In an August 16, 2003 letter, DDSN gave Doe permission to
reside in a CTH II facility, where she would receive “respite”
or temporary services. The defendants contended that it
provided Doe with CTH II placement because of Doe’s family
circumstances, not because she was qualified for the most-
restrictive setting; in fact, DDSN found Doe to need a CTH I
(foster home) or SLP II (apartment) setting.
In February 2005, DDSN reevaluated Doe’s eligibility for
Medicaid services. Based on this reevaluation, DDSN maintained
that Doe was not intellectually disabled and, therefore, is
ineligible for the waiver program. According to Doe, the
reevaluation was initiated in retaliation for her filing of this
lawsuit. She also believes it contradicts the Social Security
Administration’s prior determination that Doe is intellectually
10
disabled and the similar longstanding diagnosis of Doe’s
physicians. Doe administratively appealed this reevaluation.
However, both a DHHS hearing officer and a state administrative
law court judge agreed with DDSN. See generally Doe v. S.C.
Dep’t of Health and Human Servs., No. 06–ALJ–08–0605–AP, 2008 WL
2828634 (S.C. Admin. L. Ct. June 20, 2008). Doe appealed.
While Doe’s appeals concerning her eligibility for waiver
services under the Medicaid Act were proceeding in state court,
this Court heard two separate appeals. In Doe I, this Court
recognized for the first time that § 1396a(a)(8) unambiguously
conferred rights enforceable under § 1983. In other words, Doe
was entitled to proceed under § 1983 to assert her right to
receive services with reasonable promptness. Thus, this Court
remanded to the district court the issue of whether Doe had
received, with reasonable promptness, the services authorized by
DDSN in the 2003 plan. On remand, the district court granted
summary judgment in favor of the defendants on the reasonable
promptness issue, holding that the defendants offered Doe with
CTH I services in June 2003, but she rejected those services.
Doe appealed.
In Doe II, this Court held, as a matter of law, that the
“defendants have violated the Medicaid Act through their ongoing
refusal to finance residential habilitation services at an
acceptable CTH I placement of [Doe’s] choice.” 419 F. App’x at
11
421. This Court further held that, “given the defendants’
continuing violations of the timeliness provisions of the
Medicaid Act and its regulations, they are ordered to provide
Doe with services in a SLP II or CTH I facility of her choice
(at least pending the outcome of her state appeal).” Id.
(emphasis added). This Court reasoned that after Doe rejected
the CTH I services offered in June 2003, the defendants were
still obligated to present her with alternative CTH I services
within a reasonably prompt period of time.
Id. Because this
Court reversed the district court, and directed it to grant
summary judgment in her favor, we found that there could “be no
question that Doe is the ‘prevailing party’ for purposes of
§ 1988. She is therefore entitled to reasonable attorney’s fees
as determined by the district court.”
Id. at 420.
After Doe II, the defendants - for well over two years -
did not provide Doe with CTH I or SLP II possible placements in
order for Doe to decide which facility best suited her needs.
In fact, the district court determined that the defendants did
not comply with this Court’s order - or the Medicaid Act - until
August 2013, a full two and a half years after Doe II was
decided. J.A. 2300.
During this same time period, Doe’s counsel presented
several possible placements to the defendants that the
defendants rejected on the basis that Doe was either seeking a
12
CTH II placement or additional accommodations inconsistent with
a “true” SLP II placement, such as twenty-four hours
supervision. Unable to reach an agreement, Doe’s counsel filed
a motion for remedial relief with the district court. On August
12, 2013, the district court ordered that the defendants provide
Doe with a list of all potential qualified SLP II or CTH I
placements every fourteen days until Doe’s state administrative
process is exhausted or Doe accepts a placement, whichever comes
first. The defendants complied with this order.
In December 2011, some months after the decision of Doe II,
the Supreme Court of South Carolina held that the DHHS hearing
officer in the Medicaid eligibility proceeding should have
applied a different legal standard under state law about the
latest possible age of onset of intellectual disability. Doe v.
S.C. Dep’t of Health and Human Servs., 727 S.E.2d 606 (S.C.
2011). Thus, the court remanded to the hearing officer to
determine eligibility under the correct legal standard.
Thereafter, the hearing officer in late 2013 issued an order
finding that Doe was “mentally retarded after the age of
eighteen years and prior to the age of twenty-two years.” J.A.
2285. The order further held that the agencies were to
determine the appropriate level of care.
Id. Neither party
appealed. As a result of the state administrative decisions in
2014, DDSN authorized residential habilitation services in such
13
facilities as a CTH II. Consequently, this case became moot, as
Doe was provided proper accommodations in a CTH II facility.
B.
On August 28, 2013, Doe’s counsel filed a motion for
attorneys’ fees. After filing an amended fee petition, Doe
sought $1,868,958 in attorneys’ fees, of which $997,489
represented time expended in the state litigation and $871,469
represented time expended in the federal litigation. Doe also
sought $19,742,54 in costs and $59,018.75 in fees for the
guardian ad litem. After applying the framework set forth in
Robinson v. Equifax Info. Servs., LLC, 560 F.3d 235 (4th Cir.
2009), the district court determined that Doe’s efforts in the
state litigation were not compensable under § 1988 and that Doe
was entitled to $100,000 in attorneys’ fees, $5,523.13 in costs,
and $3,750 in guardian ad litem fees for the federal litigation.
Both parties timely appealed. We possess jurisdiction
pursuant to 28 U.S.C. § 1291.
II.
We review for abuse of discretion a district court’s award
of attorneys’ fees, but we will only reverse such an award if
the district court is “clearly wrong” or has committed an “error
of law.” Brodziak v. Runyon, 145 F.3d 194, 196 (4th Cir. 1998)
(citations omitted); see also Mercer v. Duke Univ.,
401 F.3d
14
199, 203 (4th Cir. 2005) (“A district court’s decision to grant
or deny attorney’s fee[s] under section 1988 is reviewed for
abuse of discretion.”).
III.
The general rule in our legal system is that each party
must pay its own attorneys’ fees and expenses, see Hensley v.
Eckerhart, 461 U.S. 424, 429 (1983), but Congress enacted 42
U.S.C. § 1988 to ensure that federal rights are adequately
enforced. Specifically, Congress “found that the private market
for legal services failed to provide many victims of civil
rights violations with effective access to the judicial
process.” City of Riverside v. Rivera,
477 U.S. 561, 576 (1986)
(citations omitted). “Congress attributed this market failure
in part to the fact that ‘[t]hese victims ordinarily cannot
afford to purchase legal services at the rates set by the
private market.’” Lefemine v. Wideman,
758 F.3d 551, 555 (4th
Cir. 2014) (quoting City of
Riverside, 477 U.S. at 576).
“Section 1988 provides that a prevailing party in certain
civil rights actions may recover ‘a reasonable attorney’s fee as
part of the costs.’” Perdue v. Kenny, 559 U.S. 542, 550 (2010).
Unfortunately, Congress did not explain what it meant by
“‘reasonable’ fee, and therefore the task of identifying an
appropriate methodology for determining a ‘reasonable’ fee was
15
left for the courts.” Id. In Perdue, the Supreme Court
concluded that “a ‘reasonable fee’ is a fee that is sufficient
to induce a capable attorney to undertake the representation of
a meritorious civil rights case.”
Id. at 552; see also
Pennsylvania v. Del. Valley Citizens’ Council for Clean Air,
478
U.S. 546, 565 (1986) (“[I]f plaintiffs . . . find it possible to
engage a lawyer based on the statutory assurance that he will be
paid a ‘reasonable fee,’ the purpose behind the fee-shifting
statute has been satisfied.”). The aim of § 1988, therefore, is
to enforce the covered civil rights statutes, not to provide “‘a
form of economic relief to improve the financial lot of
attorneys.’”
Perdue, 559 U.S. at 552 (quoting Del.
Valley, 478
U.S. at 565).
The proper calculation of a reasonable attorneys’ fee award
involves a three-step process. First, the court must “determine
[the] lodestar figure by multiplying the number of reasonable
hours expended times a reasonable rate.” Robinson, 560 F.3d at
243. To ascertain what is reasonable in terms of hours expended
and the rate charged, the court is bound to apply the factors
set forth in Johnson v. Georgia Highway Express Inc.,
488 F.2d
714, 717–19 (5th Cir. 1974). 1
Id. at 243–44. Next, the court
1We have characterized the twelve Johnson factors as
follows: (1) The time and labor expended; (2) the novelty and
difficulty of the questions raised; (3) the skill required to
(Continued)
16
must “subtract fees for hours spent on unsuccessful claims
unrelated to successful ones.” Id. at 244. Finally, the court
should award “some percentage of the remaining amount, depending
on the degree of success enjoyed by the plaintiff.”
Id. The
district court erred on all three steps, particularly the third
step, as it understated Doe’s success.
A.
As a preliminary matter, the defendants contend that the
only reasonable award of attorneys’ fees in this case is an
award of no fees at all. We disagree.
In Doe II, this Court determined that, in light of our
holding that the defendants continued to violate the timeliness
provisions of the Medicaid Act, “there can be no question that
Doe is the ‘prevailing party’ for purposes of § 1988.” 419 F.
App’x at 420. This conclusion, however, means only that Doe is
properly perform the legal services rendered; (4) the attorney’s
opportunity costs in pressing the instant litigation; (5) the
customary fee for like work; (6) the attorney’s expectations at
the outset of the litigation; (7) the time limitations imposed
by the client or circumstances; (8) the amount in controversy
and the results obtained; (9) the experience, reputation, and
ability of the attorney; (10) the undesirability of the case
within the legal community in which the suit arose; (11) the
nature and length of the professional relationship between
attorney and client; and (12) attorneys’ fees awards in similar
cases. See Barber v. Kimbrell’s Inc., 577 F.2d 216, 226 n.28
(4th Cir. 1978) (adopting twelve factors for determining the
reasonableness of attorneys’ fees that Fifth Circuit identified
in Johnson).
17
eligible for, rather than entitled to, an award of attorneys’
fees. See Mercer, 401 F.3d at 203. Although Doe is a
prevailing party, the district court has discretion to determine
what constitutes a reasonable fee, a determination that requires
the court to consider the extent of the plaintiff’s success.
See Farrar v. Hobby,
506 U.S. 103, 114 (1992) (“Once civil
rights litigation materially alters the legal relationship
between the parties, the degree of the plaintiff’s overall
success goes to the reasonableness of a fee award . . . .”
(internal quotation marks omitted)). If the prevailing party
has recovered only nominal damages or their success is purely
technical or de minimis, the Supreme Court has explained that
“the only reasonable fee is usually no fee at all.”
Id. at 115.
In Mercer, we set forth three factors for courts to
consider in distinguishing cases in which the only reasonable
attorney fee award is no attorney fees. The Mercer factors
include: (1) the extent of relief sought compared to the relief
obtained; (2) the significance of the legal issues on which the
plaintiff prevailed; and (3) whether the litigation served a
public purpose. Mercer, 401 F.3d at 204. All three factors
easily weigh in favor of an award of attorneys’ fees to Doe.
As for the first factor, Doe, since the inception of this
case, claimed that the defendants violated the Medicaid Act by
providing her with temporary respite services instead of
18
providing her, with reasonable promptness, the residential
habilitation services approved in her 2003 plan of care. This
Court agreed, holding that “[t]he law places the burden on
Defendants to work with Doe to find or establish an acceptable
SLP II or CTH I setting, which, so far, they have utterly failed
to do.” Doe II, 419 F. App’x at 418. We further held:
(1) that Defendants never provided Doe with
residential habilitation services in a SLP
II or CTH I setting; (2) that the CTH II
respite services that have been provided to
Doe since July 2003 are not the equivalent
of the SLP II or CTH I residential
habilitation services to which she is
entitled; and (3) that, given Defendants’
continuing violations of the timeliness
provisions of the Medicaid Act and its
regulations, they are ordered to provide Doe
with services in a SLP II or CTH I facility
of her choice (at least pending the outcome
of her state appeal).
Id. at 419 (emphasis added). In light of these emphatic
holdings, there can be very little doubt that this Court’s order
“materially alter[ed] the legal relationship between the parties
by modifying the defendant’s behavior in a way that directly
benefit[ed] the plaintiff.”
Farrar, 506 U.S. at 111-12.
Turning to the second factor, we hold that the legal issue
on which Doe prevailed is an important one. Doe’s case
established that § 1396a(a)(8) of the Medicaid Act creates a
private right of action that is enforceable through § 1983.
Doe’s case was the first to so hold in this Circuit, and has
19
served as guidance to courts and parties facing this issue and
similar issues that have arisen under the Medicaid Act, and will
continue to do so. See, e.g., Planned Parenthood of Ind., Inc.
v. Comm’r of Ind. State Dep’t Health, 699 F.3d 962, 975-76 (7th
Cir. 2012); Grammer v. John J. Kane Reg’l Ctrs.-Glen Hazel,
570
F.3d 520, 527 (3d Cir. 2009). This case, unquestionably, opened
the courthouse doors that had formerly been closed to such
actions.
The final factor we must consider is whether the litigation
served a public purpose, as opposed to simply vindicating the
plaintiff’s individual rights. See Farrar, 506 U.S. at 121–22
(O’Connor, J., concurring) (explaining that a plaintiff’s
“success might be considered material if it also accomplished
some public goal other than occupying the time and energy of
counsel, court, and client”). As previously discussed, Doe’s
case was the first to establish in this Circuit that a litigant
can enforce their rights under the Medicaid Act through § 1983.
Thus, Doe’s case was important in that it marked a milestone in
the development of the law under the Medicaid Act.
For these reasons, the district court did not abuse its
discretion in determining that Doe was entitled to attorneys’
fees.
20
B.
Having determined that the district court did not abuse its
discretion in its determination that Doe is entitled to
attorneys’ fees, we turn to the district court’s calculation of
the attorneys’ fee award.
1.
Returning to step one – calculation of the lodestar fee
amount – we find that the district court abused its discretion
in two separate ways: first, when it determined the prevailing
market rate for similar work in calculating Doe’s lead counsel’s
hours; and second, when it reduced Doe’s paralegal and co-
counsel rates without providing any explanation on why it did
so. See Robinson, 560 F.3d at 243. We, however, find no error
in the district court’s twenty-five percent reduction to Doe’s
lead counsel’s and paralegal’s hours for excessiveness.
Doe’s legal team consisted of two lawyers and a paralegal:
Patricia Harrison as lead counsel, Armand Derfner as co-counsel,
and Nancy Law as their paralegal. In Doe’s motion, she sought
attorneys’ fees as follows: Harrison’s hourly rate was $425 for
1,770.4 hours; Derfner’s hourly rate was $480 for 148.8 hours;
and Law’s hourly rate was $150 for 317.5 hours. In total, Doe
sought $871,469 in legal fees for the federal litigation.
The district court determined that, “given lead counsel’s
limited litigation experience, the nature of the case, and the
21
market in South Carolina, $280 is an adequate hourly rate” for
Harrison. J.A. 2299. The court then, without providing any
explanations, reduced Law’s hourly rate to $85 and, despite
acknowledging “Derfner’s national reputation,” J.A. 2299,
reduced his hourly rate to $450. Further, based on the first
Johnson factor - time and labor expended – the court reduced
Harrison’s and Law’s hours by twenty-five percent. Therefore,
the district court determined the lodestar multipliers to be as
follows: Harrison’s hourly rate was $280 for 1,327.8 hours;
Derfner’s hourly rate was $450 at 148.8 hours; and Law’s hourly
rate was $85 at 238.13 hours. Based on these numbers, the
district court determined the lodestar figure to be $458,985.05.
Both parties appeal the district court’s lodestar calculation.
a.
Both Doe and the defendants contend, for different reasons,
that the district court abused its discretion in its
determination of Harrison’s hourly rate. The defendants’
contention that the district court failed to consider any
applicable rates in the relevant community is wholly without
merit, as the district court clearly did. See J.A. 2295-96.
Doe, however, argues that the district court erred by failing to
determine the prevailing market rates in the relevant community,
as required by our precedent. See, e.g., Plyler v. Evatt, 902
F.2d 273, 277 (4th Cir. 1990). We agree.
22
As the fee applicant, Doe bore the burden of establishing
the reasonableness of those hourly rates. See id. A fee
applicant is obliged to show that the requested hourly rates are
consistent with “the prevailing market rates in the relevant
community for the type of work for which [s]he seeks an award.”
Id. The evidence we have deemed competent to show prevailing
market rates includes “affidavits of other local lawyers who are
familiar both with the skills of the fee applicants and more
generally with the type of work in the relevant community.”
Robinson, 560 F.3d at 245. Both parties submitted affidavits
about the appropriate rate for Harrison. Doe submitted two
affidavits in support of the requested rate for Harrison – both
affiants testified that $425 per hour is a reasonable rate for
Harrison. While it appears that the court did not find Doe’s
affidavits persuasive (or the defendants’), it did note that
this was a “complex civil litigation” case. J.A. 2296.
Despite its finding that this was a “complex civil
litigation” case, the district court, remarkably, only reviewed
attorney rates in ordinary run-of-the-mill civil cases. The
district court reviewed rates in three cases – an employment law
case, an intellectual property law case, and a copyright
infringement case. None of the cases reviewed by the court
could remotely be considered a “complex civil litigation” case.
In fact, the courts in all three cases determined that the cases
23
before them were straightforward, requiring no expertise or
special skills. See, e.g., Evans v. Milliken & Co., 7:13-cv-
02908-GRA, 2014 WL 508508 at *2 (D.S.C. Feb. 6, 2014). In
Evans, for example, the district court determined that a rate of
$280 for two lawyers was appropriate in a case that required no
“special skill.”
Id. (“While attorneys Kilgore and Giles have
experience in the employment law field and may command premium
rates for work that requires that expertise, the Court believes
that an hourly rate of $280 is appropriate for the type of legal
work performed and for which an award is being made. In the
opinion of the Court, the work performed in this case relating
to jurisdiction and venue does not require special skill in the
employment law area.”); see also H&C Corp., Inc. v.
PukaCreations, LLC., 4:12-cv-00013-RBH,
2013 WL 2303248 at *2
(D.S.C. May 24, 2013) (“While attorneys Klett and Kanos have
expertise in the intellectual property field and may command a
higher hourly rate for work that requires that expertise, the
Court believes that an hourly rate of $265 is appropriate for
the type of legal work performed and for which an award is being
made. The work performed in this case relating to the
defendant’s default does not require special skill in the
intellectual property law area in the opinion of the Court.”
(emphasis added)).
24
In support of her motion for attorneys’ fees, Doe cited to
South Carolinians for Responsible Government v. Krawcheck, 2012
WL 2830274 (D.S.C. July 9, 2012). Like this case, the plaintiff
in Krawcheck brought its case pursuant to § 1983. The plaintiff
claimed that a South Carolina statute violated its rights under
the First Amendment. The same district court involved in this
case determined that a rate of $425 was appropriate for lead
counsel – a counsel with less experience than Harrison - in
Krawcheck.
Id. at *2. Surprisingly, this district court did
not address, let alone distinguish, why the rate in Krawcheck
was inappropriate for this case.
For these reasons, the district court abused its discretion
in its determination of the prevailing market rates in South
Carolina for complex civil litigation. Based on the record
before the district court, Doe has more than met her burden of
establishing the reasonable hourly rate for Harrison. 2
2 Likewise, the district court abused its discretion in its
determination of Derfner’s and Law’s hourly rate. The district
court did not provide any reasons on why both rates should be
reduced, and, as the district court is well aware, it must
explain how it arrived at its determination with sufficient
specificity to permit an appellate court to determine whether
the court abused its discretion in the way the analysis was
undertaken. See, e.g., McCown v. City of Fontana, 565 F.3d
1097, 1102 (9th Cir. 2008);
Robinson, 560 F.3d at 245. In fact,
the district court, oddly, acknowledged Derfner’s national
reputation before it reduced his rate. Further, on at least one
other occasion, this district court found an hourly rate of $140
for a paralegal reasonable, which is very near the hourly rate
(Continued)
25
b.
Doe and the defendants both contend, for different reasons,
that the district court abused its discretion in its twenty-five
percent reduction of Harrison’s and Law’s hours for
excessiveness under the first Johnson factor. 3 The defendants
assert that there should have been a greater reduction. Doe
argues that there should have been no reduction for
excessiveness. For the reasons stated below, we reject both
arguments as baseless and hold that the district court did not
abuse its discretion.
In determining the appropriate number of hours to be
included in a lodestar calculation, the district court should
exclude hours “that are excessive, redundant, or otherwise
unnecessary.” Hensley, 461 U.S. at 434. Here, the district
Doe seeks here. Krawcheck,
2012 WL 2830274 at *2. Based on
this record, Doe has met her burden in establishing the
reasonable hourly rate for Derfner is $480 and, consistent with
what the district court did in Krawcheck, we find that an hourly
rate of $140 for Law is appropriate.
3 The defendants further argue that the district court
abused its discretion by failing to find Derfner’s hours
excessive under the first Johnson factor. Defs.’ Opp. Br. at
50. While it is true that the defendants did object to
Derfner’s hours under this factor, the district court determined
that it was “satisfied with the number of hours billed by
counsel Derfner.” J.A. 2294. Moreover, the defendants do not
proffer any reasons as to why Derfner’s hours should be reduced
for excessiveness. Accordingly, we affirm the district court’s
decision on this issue.
26
court determined that Harrison’s hours should be reduced by
twenty-five percent for excessiveness because her time “includes
numerous entries for copying, organizing files, and other
clerical/paralegal tasks,” and “the court was required to hold a
hearing and issue an order instructing lead counsel as to
inappropriate questions that could not be propounded during
depositions.” J.A. 2294. Similarly, the court concluded that
Law’s hours were excessive because she included an exorbitant
amount of time reviewing the file and performing clerical tasks.
Id. We find no abuse of discretion in these findings, and will
not accept the parties’ invitation to reweigh the evidence. 4 We
therefore affirm the court’s twenty-five percent reduction.
4Doe makes the passing argument that the district court
abused its discretion because it did not take into account over
three hundred “hours of voluntary reductions” made by Harrison.
It can hardly be said that the district court abused its
discretion because it failed to take into account a reduction by
Harrison in her hours, some of which were reduced because of
billing errors on her end. Doe Br. 15. Further, it appears
that Doe does not even contest the district court’s reduction
for Law. Thus, we reject Doe’s argument as meritless. See
Brodziak, 145 F.3d at 196 (stating that we will only reverse an
attorney’s fee award if the district court is “clearly wrong” or
has committed an “error of law”).
The defendants assert that the district court should have
reduced Harrison’s and Law’s hours by a greater percentage for
excessiveness. The defendants only cite a chart that they
prepared for the district court – with vague numbers indicating
what they believed was excessive billing. The court considered
and, in exercising its judgment, declined to adopt the
defendants’ chart. The defendants cannot seriously argue that
the court abused its discretion; in fact, the defendants only
(Continued)
27
2.
After determining the lodestar figure – hours expended
multiplied by attendant rates - a court is obliged to “subtract
fees for hours spent on unsuccessful claims unrelated to the
successful ones.” Grissom v. Mills Corp., 549 F.3d 313, 321
(4th Cir. 2008).
Here, the district court, in a very cursory analysis,
stated that the “defendants’ arguments are well taken,” cited a
vague chart provided by the defendants, and then significantly
cut Doe’s lead counsel and paralegal hours as follows: 700
hours were cut from the court’s calculation of Harrison’s
lodestar hours, resulting in a fifty-two percent reduction; and
70 hours were cut from the court’s calculation of Law’s lodestar
hours, resulting in a thirty percent reduction. The court did
not provide any reasons on why it made such a steep cut; it just
cited a chart prepared by the defendants.
The chart the defendants proffered, and the district court
relied so heavily on, provides very vague categories of hours
they believed Harrison and Law spent on unsuccessful claims.
For example, one category is, interestingly, entitled “Vague.”
generally remark that the court “erred in not making the greater
reductions [they suggested] to the hours of Harrison and Law.”
Defs.’ Br. 50-51. The defendants, however, proffer no arguments
on why they believe the district court abused its discretion.
28
J.A. 2185. Another category is labelled “Not related to matters
actually litigated,” id., but it does not contain what those
matters are. Further, the defendants asked the district court
to deduct hours for work that Doe’s lawyers performed after Doe
II, including seeking placement in a facility that this Court
said was appropriate. This chart – besides being completely
useless and unhelpful – cannot support any reductions, let alone
such significant reductions, made by the district court.
Therefore, because the district court already made a
twenty-five percent reduction for excessiveness and clerical
tasks, 5 and because the district court’s reliance on the
defendants’ chart was clear error, we find that a reduction for
hours spent on unsuccessful claims is unwarranted.
5 We have serious concerns that the district court, because
it did not state with any specificity the reasons for the
substantial reduction in hours for unsuccessful claims, may have
double counted a Johnson factor already considered in
calculating the lodestar. See, e.g., Black v. SettlePou, P.C.,
732 F.3d 492, 502 (5th Cir. 2013) (“The lodestar may not be
adjusted due to a Johnson factor that was already taken into
account during the initial calculation of the lodestar.”);
Millea v. Metro–N. R.R. Co.,
658 F.3d 154, 167 (2d Cir. 2011)
(“[A] court may not adjust the lodestar based on factors already
included in the lodestar calculation itself because doing so
effectively double-counts those factors.”). Surely, the twenty-
five percent reduction for excessiveness would cover several
categories in the “unsuccessful aspects of the case” chart
provided by the defendants, such as the “discovery,” “clerical,”
and “Post-Doe II.” Compare J.A. 2185 (defendants’ chart
providing hours spent on unsuccessful aspects of the case), with
J.A. 2187 (defendants’ chart for excessive hours).
29
3.
In the final step before making an attorneys’ fee award
under § 1988, a district court must “consider the relationship
between the extent of success and the amount of the fee award.”
McAfee v. Boczar, 738 F.3d 81, 92 (4th Cir. 2013); see also
Johnson v. City of Aiken,
278 F.3d 333, 337 (4th Cir. 2002)
(“Once the court has subtracted the fees incurred for
unsuccessful, unrelated claims, it then awards some percentage
of the remaining amount, depending on the degree of success
enjoyed by the plaintiff.”). The court will reduce the award if
“the relief, however significant, is limited in comparison to
the scope of the litigation as a whole.”
Hensley, 461 U.S. at
439–40. Indeed, the Supreme Court has recognized that the
extent of a plaintiff’s success is “the most critical factor” in
determining a reasonable attorneys’ fee under § 1988.
Id. at
436. What the court must ask is whether “the plaintiff
achieve[d] a level of success that makes the hours reasonably
expended a satisfactory basis for making a fee award.”
Id. at
434.
After the district court completed the first two steps, it
calculated the remaining fees to be $265,675.05. The court then
reduced that number to $100,000, or sixty-three percent,
because “there ha[d] been no change in the status quo.” J.A.
2300. The district court reasoned that “DDSN was required to
30
tender alternate placement in a CTH I or SLP II facility in 2003
when the initial offer was rejected.” Id. And, because “lead
counsel’s objective in this litigation has been to obtain
residential habilitation in a CTH II facility, a remedy this
court could not provide,” Doe’s success has been “limited under
the circumstances.”
Id. The district court’s analysis grossly
understates Doe’s success.
As Doe observed in her brief, the litigation was vigorously
contested by the defendants at every step, and in view of the
district court’s rulings, Doe was required to appeal twice to
this Court, each time succeeding in her effort. As a result,
Doe contends, and we agree, that her case changed the legal
landscape under the Medicaid Act. For reasons previously
discussed, see supra Part III.A, this case opened the courthouse
doors to claims that courts in this Circuit, including this
district court, had routinely closed on plaintiffs. Plaintiffs
now can enforce their rights under the Medicaid Act through
§ 1983 – a direct result of Doe’s efforts in this case.
Importantly, the district court failed to recognize that the
defendants – not Doe – repeatedly violated the Medicaid Act,
even after Doe I and Doe II was decided. It was not until
August 2013, two and a half years after Doe II, that the
defendants came into compliance with the Medicaid Act.
Moreover, the fact that the state administrative body found in
31
Doe’s favor – allowing her to seek CTH II placement – before
this district court awarded her appropriate relief, does not
diminish what Doe accomplished in this case.
For these reasons, the district court abused its discretion
in imposing a sixty-three percent across-the-board reduction of
the fee request.
*****
Under such circumstances, we typically would remand this
case for further work by the district court and the lawyers. We
have recognized, however, that “[a] request for attorney’s fees
should not result in a ‘second major litigation.’” Rum Creek
Coal Sales, Inc. v. Caperton, 31 F.3d 169, 181 (4th Cir. 1994)
(citing
Hensley, 461 U.S. at 437 n.12).
Consistent with Rum Creek, and to avoid further expense and
the nonessential use of judicial resources associated with
remand proceedings and other appeals, we are satisfied to vacate
the attorneys’ fee award and direct that it be entered as
follows: Harrison shall receive a rate of $425 an hour for
1,327.80 hours (1770.4 x .75, which reflects the twenty-five
percent reduction), for a total of $564,315; Law shall receive a
rate of $140 (the same rate this district court determined to be
reasonable in Krawcheck) for 238.13 hours (317.5 x .75, which
reflects the twenty-five percent reduction), for a total of
$33,338.20; and Derfner shall receive a rate of $480 for 148.8
32
hours for a total of $71,424. In total, Doe is entitled to
$669,077.20 in fees, exclusive of costs. See id. (modifying
award of attorneys’ fees “[t]o avoid further litigation expenses
that would follow a remand and the risk of yet a fourth
appeal”).
C.
In addition to attorneys’ fees, Doe sought to assess
guardian ad litem fees against the defendants in the amount of
$39,173.75 for the federal litigation, which included 223.85
hours at a rate of $175 per hour. 6 The district court determined
that $3,750 was appropriate in guardian ad litem fees, reducing
the guardian ad litem hourly rate to $75 and hours to 50. The
district court reasoned that even if a guardian ad litem’s fees
and expenses may be taxed as costs under Rule 54(d), those costs
and fees may not include services the guardian ad litem performs
as attorney to Doe. J.A. 2301 (citing Kollsman v. Cohen, 996
F.2d 702, 706 (4th Cir. 1993)). Because “much of the work
performed by the guardian ad litem included legal work,” the
district court significantly reduced Doe’s request.
Id. Doe
then filed a motion for reconsideration under Federal Rule of
6
In total, Doe sought $59,018.75 in guardian ad litem fees,
which included hours spent by the guardian ad litem in both the
federal and state litigation (337.25 hours at a rate of $175 per
hour).
33
Civil Procedure 59(e), which the district court denied for
similar reasons.
We review the denial of a Rule 59(e) motion for abuse of
discretion. Mayfield v. Nat’l Ass’n for Stock Car Auto Racing,
Inc., 674 F.3d 369, 378 (4th Cir. 2012). A Rule 59(e) motion
may only be granted in three situations: “(1) to accommodate an
intervening change in controlling law; (2) to account for new
evidence not available at trial; or (3) to correct a clear error
of law or prevent manifest injustice.”
Id.
Courts have interpreted Federal Rule of Civil Procedure
54(d) to allow taxation of guardian ad litem expenses as costs
against the United States. See
Kollsman, 996 F.2d at 702;
Lebron v. United States,
279 F.3d 321, 332 (5th Cir. 2002).
Rule 54(d) states, “costs - other than attorneys’ fees – should
be allowed to the prevailing party.” Fed. R. Civ. P. 54(d).
Where the same person performs services as a guardian ad litem
and as an attorney, only fees for services rendered in the role
of guardian ad litem are taxable as costs. Hull v. United
States,
971 F.2d 1499, 1510 (10th Cir. 1992). It is well
recognized that the guardian ad litem serves essentially as an
officer of the court and looks after the interests of the
plaintiff. See
Kollsman, 996 F.2d at 702;
Hull, 971 F.2d at
1510; duPont v. S. Nat. Bank of Hous.,
771 F.2d 874, 882 (5th
Cir. 1985); Schneider v. Lockheed Aircraft Corp.,
658 F.2d 835,
34
854 (D.C. Cir. 1981); Franz v. Buder, 38 F.2d 605, 606 (8th Cir.
1930). The guardian ad litem is there not only to manage the
litigation for the incompetent but also to assist the court in
performing its duty to zealously protect the incompetent’s
interests. See
Kollsman, 996 F.2d at 706. As such, the
guardian ad litem’s “costs and expenses are appropriately
chargeable under Rule 54.”
Id.
Even if the guardian ad litem performed legal tasks for the
plaintiff, such as legal research, the court can tax these
expenses as costs so long as the guardian ad litem did not
perform the legal tasks in the role of the plaintiff’s attorney.
Hull v. United States,
53 F.3d 1125, 1128 (10th Cir. 1995). To
the extent that the guardian ad litem was performing her
guardian role - acting as an officer of the court and looking
after the interests of the plaintiff - the defendant should pay
the guardian ad litem fees.
In 2003, the district court appointed Dr. Sandra Ray to
serve as Doe’s guardian ad litem pursuant to Federal Rule of
Civil Procedure 17(c). Dr. Ray was selected as guardian ad
litem because of her specialized experience working with persons
who have mental and physical disabilities. Dr. Ray has logged
223 hours in the federal litigation. There was active
litigation in this case for over eleven years (2003-2014), which
35
means Dr. Ray spent, on average, approximately 20.27 hours per
year as guardian ad litem to Doe.
Dr. Ray provided all of her time entries with a description
of what she spent the time on to the district court. It is
clear that Dr. Ray at no point performed legal tasks on behalf
of Doe, but, instead, was looking after Doe’s interests. For
example, she would review filings in this Court, spending a half
hour and up to an hour and a half reviewing appellate briefs.
Similarly, Dr. Ray would review Doe’s responses to
interrogatories. This is hardly performing legal tasks in the
role as Doe’s attorney, as Dr. Ray never drafted any documents,
filed any documents, or conducted legal research in this case.
In fact, this is what courts expect from a guardian ad litem –
to zealously protect the incompetent’s interests. See Kollsman,
996 F.2d at 706. For these reasons, we find that the district
court erred in reducing the guardian ad litem’s hours.
We further find that the district court erred in its
determination of the guardian ad litem’s rate. The district
court, citing no authority or declarations, determined a rate of
$75 per hour to be adequate. Doe provided two declarations
supporting the rate requested for Dr. Ray. Both affiants
testified that $175 is a reasonable hourly rate for a guardian
ad litem in South Carolina for a complex case, as both affiants
have received rates between $150-$250, depending on the
36
complexity of the case. Further, while there are not many cases
that discuss the rate of the guardian ad litem, courts have
recently determined that hourly rates of $200 and $350 are
reasonable for a complex case, albeit in different markets.
See, e.g., Jacobs v. United States, No. 08-civ-8061, 2012 WL
5504783, at *23 (S.D.N.Y. Nov. 13, 2012) (guardian ad litem rate
of $350 reasonable); Metro. Life Ins. Co. v. Brown, 300-cv-
1017L,
2002 WL 32140310, at *4 (N.D. Tex. Dec. 23, 2002)
(guardian ad litem rate of $200 reasonable).
We, therefore, direct that the district court enter an
order awarding Doe with the total amount - $39,173.75 - she
requests in guardian ad litem fees for the federal litigation.
D.
The district court determined that Doe was not entitled to
any fees related to the state litigation. The court reasoned
that the work performed by counsel in state court related to the
defendants’ determination to terminate the benefits to which it
had found Doe entitled to in 2003. In other words, because DDSN
maintained that Doe was not intellectually disabled, she was no
longer eligible for the waiver program. The court further
reasoned that the “state court proceedings were not necessary to
advance the litigation in this court, i.e., whether Defendants
provided placement at a qualified CTH I or SLP II facility with
reasonable promptness.” J.A. 2293. We disagree, and find that
37
the state litigation “was both useful and of a type ordinarily
necessary to advance the civil rights litigation to the stage it
reached,” see Webb v. Dyer Cty. Bd. of Educ., 471 U.S. 234, 243
(1985), before Doe ultimately received a placement she believed
would address her needs.
In 2003, the defendants determined that Doe was eligible
for the Medicaid waiver program and authorized CTH I or SLP II
services for Doe at a residential center. That same year, Doe
filed this suit after failing to receive any residential
habilitation services. Doe sought an injunction that would
require the defendants to provide the services that they deemed
she was eligible for with reasonable promptness, as required by
the Medicaid Act. Rather than comply with the Medicaid
timeliness provisions, the defendants reevaluated Doe,
determining (wrongly) that she no longer met the state-law
definition of intellectual disability; Doe thus was ineligible
for the waiver program. At that point, Doe had two options:
first, she could waive her right to appeal the defendants’
determination through state proceedings, and, consequently, give
up her claim for injunctive relief in this case. Second, she
could do exactly what she did here – challenge the defendants’
determination in state administrative proceedings in order to
enforce her rights under the Medicaid Act. The “choice,” if we
can call it that, was easy, as the penalty was clear.
38
And, because Doe successfully challenged the defendants’
determination in state proceedings, she received the relief she
desperately sought – this Court ordered the defendants to
provide Doe with services in a SLP II or CTH I facility of her
choice in a reasonably prompt manner. For this reason, we find
that the state litigation “was both useful and of a type
ordinarily necessary to advance the civil rights litigation to
the stage it reached.” See Webb, 471 U.S. at 243.
We therefore remand to the district court for appropriate
consideration of Doe’s request for fees in the state
administrative proceedings.
IV.
For the foregoing reasons, we vacate the attorneys’ fee
award and direct entry for an award of $669,077.20, exclusive of
costs; we vacate the guardian ad litem fee award and direct
entry for an award of $39,173.75; and we remand for further
proceedings consistent with this opinion.
VACATED AND REMANDED
39
