BELINDA DUPUY, PILAR BERMAN, NORMAN BERMAN, et al., Plaintiffs-Appellees, v. BRYAN SAMUELS, Director, Illinois Department of Children and Family Services, Defendant-Appellant.
No. 04-4294
United States Court of Appeals For the Seventh Circuit
ARGUED JUNE 9, 2005—DECIDED SEPTEMBER 9, 2005
Before BAUER, RIPPLE and MANION, Circuit Judges.
Appeal from the United States District Court for the Northern District of Illinois, Eastern Division. No. 97 C 4199—Rebecca R. Pallmeyer, Judge.
The district court granted the plaintiffs attorneys’ fees and costs. For the reasons set forth in the following opinion, we now reverse the district court’s award of attorneys’ fees.
I
BACKGROUND
A. Facts
A more thorough rendition of the facts underlying this case is available in our opinion addressing the merits of the district court’s preliminary injunction. See Dupuy v. Samuels (“Dupuy III”), 397 F.3d 493 (7th Cir. 2005). For the purposes of this opinion, the following description shall suffice.
The plaintiffs are child-care workers and foster parents who had been indicated, in reports maintained on DCFS’ State Central Register (“Central Register”), as perpetrators of child abuse or neglect. They brought this suit against the Director of DCFS on behalf of themselves and other similarly situated individuals. The plaintiffs sought injunctive relief on the ground that DCFS procedures for investigating and reporting allegations deprived them of due process of law. See
The district court granted the plaintiffs’ request for a preliminary injunction. See Dupuy v. McDonald (“Dupuy I”), 141 F. Supp. 2d 1090 (N.D. Ill. 2001). In Dupuy I, the district court found that a number of the DCFS policies that the plaintiffs had challenged were “not constitutionally adequate.” Id. at 1134. However, rather than enter specific relief, the court afforded the parties sixty days in which to develop constitutionally adequate procedures.
The parties later negotiated changes to DCFS policies in court-mediated sessions. At the same time, DCFS itself also drafted new procedures for assessing the credibility and relevancy of the information obtained during an investigation of suspected child abuse. Specifically, the new draft procedures required DCFS employees to consider all evidence, both inculpatory and exculpatory, in an investigation into a suspected incident of child abuse.
After this process was completed, the district court issued an order directing specific relief and resolving the remaining disputes between the parties. R.443. With respect to the standard for assessing evidence of suspected child abuse, the district court found DCFS’ new draft policies to be a salutary improvement and directed DCFS to continue weighing all evidence in
The district court also found that due process required some form of formal appeals process before an indicated report was recorded on the Central Register. Therefore, the court ordered a limited telephonic administrative review (“the administrative conference”) prior to the entry on the Central Registry of any indicated finding of child abuse.
The district court also ordered more rapid post-deprivation hearings for child-care workers; specifically, the court ordered that child-care workers who timely requested an appeal would be entitled to a hearing and a final decision within thirty-five days. The district court specified which members of the plaintiffs’ class would be entitled to the administrative conference and the expedited hearings.
The parties appealed, and this court affirmed in part and reversed in part the district court’s injunction. See Dupuy III, 397 F.3d at 515.
B. District Court Fee Proceedings
In February 2004, the plaintiffs filed a petition for attorneys’ fees. See
In an order issued October 21, 2004 (the “fee order” or “district court’s fee order”), the district court granted in part and denied in part the plaintiffs’ petition for fees. The court also ordered the Director to make an interim payment of $1,000,000. The court noted that the plaintiffs had “w[o]n a judicial order granting them relief,” R.584 at 3— relief which the court described as “substantial,” “effectively permanent” and largely “unchallenged on appeal,” id. at 5. Thus, because the plaintiffs were “prevailing part[ies]” as described by
The court did not award attorneys’ fees in the entire amount which the plaintiffs had requested. The district court noted that local court rules establish a procedure for parties to share information with the goals of developing a “joint statement” concerning the amount of fees sought and identifying disputes between the parties related to fees. N.D. Ill. R. 54.3. However, because the Local Rule 54.3 process would require significant efforts both from the court and from the parties, and because the litigation had not reached a final conclusion, the court decided that it would award a reduced amount of the fees rather than engage in the Local Rule 54.3 process. Therefore, the court awarded the plaintiffs attorneys’ fees in the amount of $1,000,000. The Director appealed to this court.
II
ANALYSIS
A. Jurisdiction
We first must resolve the question of our jurisdiction to hear this appeal. An interim award of attorneys’ fees generally is interlocutory and not appealable until the conclusion of the underlying suit on the merits. See Estate of Drayton v. Nelson, 53 F.3d 165, 166-67 (7th Cir. 1994). There is, however, one exception to this rule: An interim award of fees may be appealed if “the party against whom the award is made will not be able to get his money back if he prevails at the end of the case and the award is vacated then.” Id. at 167.
The plaintiffs assert that the exception is inapplicable here and therefore that this court lacks jurisdiction over this appeal. From the plaintiffs’ submissions to this court before oral argument, it was unclear whether they actually claimed that they would be able to repay the fee award if the Director ultimately prevailed in the underlying suit and the award were vacated. See, e.g., Appellees’ Reply Br. at 3 (“There is no non-repayment risk—much less the type of substantial risk the case law refers to—because there is no reversal risk. And there is no reversal risk because the Director’s appeal, on its merits, is frivolous . . . .”). At oral argument, it became clear that there is indeed a risk that the plaintiffs and their counsel will lack the financial wherewithal to repay the award should it be reversed sometime in the future. However, the plaintiffs continued to assert at oral argument that there is no risk of non-repayment because it is unlikely repayment ever will be ordered. In the plaintiffs’ view, the chances are quite slim that the Director will prevail on the merits, thus requiring them to repay the fee award.
The plaintiffs’ theory does not reflect accurately the reasoning behind our cases concerning the appealability of an interim fee award. “Our court has . . . [been] careful to emphasize that appeal depends on a demonstration that the money, once disbursed, is effectively beyond recall in the event of reversal at the end of the case.” Constr. Indus. Ret. Fund of Rockford v. Kasper Trucking, Inc., 10 F.3d 465, 468 (7th Cir. 1993); see also Palmer v. City of Chicago, 806 F.2d 1316, 1319 (7th Cir. 1986) (finding jurisdiction over appeal of interim fee order when members of class to whom fee was paid “might be insolvent” or “might have disappeared” by the end of litigation), cert. denied, 481 U.S. 1049 (1987).
It is clear from our cases that it is the future financial solvency of the party to whom fees are being awarded that matters in the determination whether jurisdiction exists. The parties have not brought to our attention any case explicitly finding a lack of jurisdiction on the theory that the party against whom interim fees are awarded has a very low chance of ultimately prevailing on the merits. Thus, because the plaintiffs have admitted that there is a risk they would be unable to repay the fee award in the future if so required, we find that we have jurisdiction over this appeal.
B. The Plaintiffs’ Eligibility for Fees
1. Standard of Review
When reviewing attorneys’ fees under
2. 42 U.S.C. § 1988 and “Prevailing Party” Status
In the United States, the parties to a lawsuit generally are required to bear their own costs. Buckhannon, 532 U.S. at 602. However, in
The Supreme Court has given us guidance on what it means to prevail for the purposes of
Of particular import to this case is the question of at what point before the entry of final judgment the “judicially sanctioned change” in the parties’ relationship can be said to have taken place, thus making an award of attorneys’ fees appropriate. Certainly, as we have explained, “[a] district court has the power to award fees before the entry of a final judgment.” Palmer, 806 F.2d at 1320. According to the Supreme Court, “[i]t is evident . . . that Congress contemplated the award of fees pendente lite in some cases.” Hanrahan, 446 U.S. at 757. However, the Court has emphasized that “Congress intended to permit the interim award of counsel fees only when a party has prevailed on the merits of at least some of his claims.” Id. at 758. In other words, “[a] prevailing party must be one who has succeeded on any significant claim affording it some of the relief sought, either pendente lite or at the conclusion of the litigation.” Garland, 489 U.S. at 791 (emphasis added). We have interpreted the Supreme Court’s decisions on interim fee awards to mean that, “[o]nce a plaintiff obtains substantive relief that is not defeasible by further proceedings, he can seek interim fees and the district court has the power to award them.” Richardson v. Penfold, 900 F.2d 116, 119 (7th Cir. 1990).
3. This Court’s Precedents
Several of our cases provide examples of the circumstances in which an interim award of attorneys’ fees is appropriate or in which an attorneys’ fee award should be upheld despite a lack of a final judgment in a case.
a.
In Young v. City of Chicago, 202 F.3d 1000 (7th Cir. 2000), we upheld an award of attorneys’ fees that had been made based only on a preliminary injunction. The plaintiffs in Young had obtained a preliminary injunction against the City of Chicago. The plaintiffs alleged that the City had violated their First Amendment rights by establishing a security perimeter excluding protesters from the areas around the site of the 1996 Democratic National Convention. The City’s appeal, taken after
b.
In Palmetto Properties, 375 F.3d 542, we upheld an award of attorneys’ fees that had been made in a case in which no final judgment had been entered. The plaintiffs sued DuPage County, Illinois, on the basis of a local ordinance that the plaintiffs claimed violated the First Amendment by restricting possible locations for their planned adult entertainment nightclub. The district court granted partial summary judgment for the plaintiffs, declaring a part of the challenged ordinance unconstitutional. After summary judgment, the County offered to repeal the unconstitutional portions of its ordinance, and the district court continued the case to allow the repeal to take place, ultimately dismissing the case as moot.
Following dismissal, the plaintiffs sought attorneys’ fees pursuant to
It would defy reason and contradict the definition of “prevailing party” under Buckhannon and our subsequent precedent to hold that simply because the district court abstained from entering a final order formally closing the case—a result of the Defendant’s assertions that it would repeal the challenged portion of the ordinance—Palmetto somehow did not obtain a “judicially sanctioned change” in the parties’ legal relationship. . . . In this case, not only did the district court make a substantive determination as to essentially all the constitutional claims save one, . . . the County repealed the ordinance only after that determination had been made and presumably because of it. . . . [T]heir action is most persuasively construed as involuntary—indeed exhibiting judicial imprimatur.
Id. at 549-50 (emphasis in original). Thus, in Palmetto Properties, attorneys’ fees were appropriate because the court had reached a judgment on the merits as to some of the plaintiffs’ claims, even though the procedural step of entering final judgment had not been used.
c.
In Balark v. City of Chicago, 81 F.3d 658 (7th Cir. 1996), we affirmed an award of attorneys’ fees to parties who had done the work of obtaining and maintaining a consent decree, even after the decree ultimately was vacated. In the litigation that led to Balark, the district court had granted the plaintiffs partial summary judgment on their claims and had enjoined the City from continuing its practice of paying tort judgments of $1000 or less immediately
We overruled Evans I on the ground that the plaintiffs had been prevailing parties within the meaning of the fee-shifting statute. Even though the protracted litigation had ended unfavorably to the plaintiffs, the City had signed the consent decree (which remained in place for a decade) and “the decree became the equivalent of a judicial decree once the district court entered it.” Balark, 81 F.3d at 665. Thus, the suit had been subject to a “conclusion of [a] portion of the litigation through the entry of a consent decree.” Id. At the time we decided the plaintiffs’ eligibility for fees in Balark, the Supreme Court had established that a party could attain prevailing party status through a consent decree and settlement. See Maher v. Gagne, 448 U.S. 122, 129 (1980).1
The court declined to take an “ex post view of all consent decrees” and stated that it would not “deny attorney’s fees whenever subsequent events cause a court to set [a] decree aside.” Balark, 81 F.3d at 665. Indeed, we emphasized that “[t]he only possible perspective from which the entitlement to fees can be considered is at the time the final judgment determining who prevails is entered.” Id. Thus, in Balark, the plaintiffs were entitled to an award of fees because they had obtained a consent decree that was the equivalent, for
With the foregoing principles in mind, we now shall consider whether the plaintiffs in this case appropriately may be termed prevailing parties eligible for an award of attorneys’ fees.
4. Application to this Case
The Director contends that the preliminary injunction was not a final determination on the merits of any claims. He also submits that, because it is not clear what the district court’s ultimate decision will be, it will be impossible to determine prevailing party status until the district court has entered final relief. The plaintiffs, on the other hand, assert that Dupuy I constituted a determination on the merits of at least some of their claims. See Appellees’ Br. at 26 (“[T]he district court made unqualified merits rulings, not preliminary relief resting on the provisional assessment of ‘reasonable likelihood of success on the merits.’ ”) (emphasis in original). For instance, they contend that, by noting its “find[ing] that certain . . . current DCFS policies and procedures do in fact deprive class members of constitutionally-protected rights,” Dupuy I, 141 F. Supp. 2d at 1092, the district court made a determination of the merits of their due process
Although certain language in the district court’s fee order can be read to suggest that the court had adopted a particular view of the merits of the case, when the writings of the district court are read in their totality, we cannot say that they make it sufficiently clear that the court had resolved any aspect of the case in a sufficiently “concrete and irreversible” way as to warrant an interim attorneys’ fee award. In the fee award, the district court indicated that “[p]laintiffs have . . . made substantial efforts to reach the merits of the disputes between the parties, [and] have presented testimony and evidence over several days at two lengthy hearings that functioned as bench trials.” R.584 at 5. The court also expressed its belief that there would be no “lengthy further proceedings before entry of a final judgment.”3 Id. Notably, however, the court stopped significantly short of deciding definitively any aspect of the case. Although the district court expressed the expectation that the remaining proceedings would not be lengthy, it also made it clear that there was still work to be done.
An examination of the district court’s earlier writings, when it granted the preliminary injunction, makes even more clear that definitive resolution of the chief aspects of the case had not been attained. The court worked extensively with the parties in a commendable and painstaking process to craft the terms of the preliminary injunction. At the same time, it never went so far as to decide on the terms of the definitive remedy. For instance, referring to the pre-deprivation administrative conference, the court expressed a willingness “to revisit the matter if history proves the conferences ineffective at addressing the error rate which troubled the court.” R.443 at 12. In dealing with the matter of delay, the court indicated that it was “unwilling at this time to impose Plaintiffs’ proposed remedy of expungement.” Id. at 16. Most importantly, referring to the plaintiffs’ additional requests for relief, the court denied without prejudice the proposals “[a]bsent agreement between the parties or a fully developed record.” Id. at 18.
In our own review of the preliminary injunction proceedings, we took note of the still unstable state of the record and of the relief when we noted that the suit was at a
We must conclude, therefore, that the district court’s award of attorneys’ fees, even on an interim basis, was premature. We pause to point out, however, that our decision today does not establish a hard and fast rule that a preliminary injunction can never be an adequate predicate for such an interim award. Indeed, in Young, we upheld an award granted to a party that had obtained only a preliminary injunction. That case, however, was significantly different from this case. In Young, the plaintiffs had obtained a preliminary injunction, and the case was mooted before they sought attorneys’ fees. The relief the plaintiffs had obtained through the preliminary injunction therefore was not defeasible for the same reason that the case was moot: The sole event covered by the injunction, the 1996 Democratic National Convention, had ended. In the present case, by contrast, at the time the district court issued the fee order, it explicitly contemplated further proceedings on the merits of the plaintiffs’ claims.
We have recognized that there is a difference, for the purpose of awarding attorneys’ fees under
In short, the plaintiffs have not brought to our attention any case in which we have affirmed an award of attorneys’ fees that was made at a procedural point similar to the point at which the award was made in this case: when a preliminary injunction
We also think that it is worth pointing out that the district court’s fee order suggests that, at the time that it entered the fee order, the court misapprehended, perhaps due to the parties’ own representations, the nature and extent of the parties’ challenges to the preliminary injunction. The court noted that, although it had “not reviewed the briefs on appeal,” it understood that the Director’s cross-appeal did “not challenge the preliminary injunction in all respects, but argue[d] that some of the schedules imposed by the injunction are unworkable.” R.584 at 4. In fact, the Director’s challenge to the preliminary injunction concerned more central aspects of the injunction than the timetables for hearings. See Dupuy III, 397 F.3d at 501 (noting the Director’s contentions on appeal).
We are mindful of the extreme outlay of expenses that this case has required of the plaintiffs. Cf. Bradley v. Sch. Bd. of City of Richmond, 416 U.S. 696, 723 (1974) (recognizing that, in some circumstances, “[t]o delay a fee award until the entire litigation is concluded” may be to “work substantial hardship on plaintiffs and their counsel”). Nonetheless, the case law of the Supreme Court and of this court simply does not permit an interim award of attorneys’ fees to be made at the point in the litigation at which this award was made.
We trust that the parties will cooperate fully with the district court to bring this litigation to a prompt end.7
For the foregoing reasons, we must reverse the award of attorneys’ fees assessed against the Director.
REVERSED
Teste: _____________________________
Clerk of the United States Court of Appeals for the Seventh Circuit
Notes
In Select Milk Producers, the District of Columbia Circuit upheld the district court’s award of attorneys’ fees that had been made after the parties stipulated to the dismissal of the case as moot. Although the fee award had been made under the attorneys’ fees provision of the Equal Access to Justice Act,
In Watson, the Ninth Circuit stated that “a preliminary injunction issued by a judge carries all the ‘judicial imprimatur’ necessary to satisfy Buckhannon.” 300 F.3d at 1096. However, it must be noted that Watson involved a different procedural context than the one in the present case. In Watson, the plaintiff had obtained a preliminary injunction in a suit against the County of Riverside, California. The County was granted summary judgment on all its other claims except one for a permanent injunction. Before the propriety of a permanent injunction was decided, the case became moot. Subsequent to the case becoming moot, the plaintiff applied for and was awarded attorneys’ fees. The Ninth Circuit noted the importance to its decision of the fact that, although “Watson’s claim for permanent injunctive relief was not decided on the merits,” the “preliminary injunction was not dissolved for lack of entitlement. Rather, Watson’s claim for permanent injunction was rendered moot when his employment termination hearing was over, after the preliminary injunction had done its job.” Id.
As well, the Eleventh Circuit in Taylor, 810 F.2d at 1558, stated that, when a preliminary injunction is granted “on the merits” of a case—as distinguished from “a merely temporary order which decides no substantive issues but merely maintains the status quo”—an interim award of attorneys’ fees is appropriate. However, we do not think this statement conflicts with our holding here, because—as was the case in Young—the plaintiffs in Taylor moved for attorneys’ fees after “both parties agreed that plaintiffs’ suit [was] moot.” Id. at 1555; see also Monahan v. State of Nebraska, 687 F.2d 1164, 1171-72 (8th Cir. 1982).
The Fourth Circuit has held that a preliminary injunction is insufficient to constitute “an enforceable judgment on the merits or something akin to one for prevailing party purposes.” Smyth v. Rivero, 282 F.3d 268, 277 (4th Cir.) (internal quotation omitted), cert. denied, 537 U.S. 825 (2002). In so deciding, the court placed great importance on the fact that, although a preliminary injunction hearing often includes “an inquiry into the merits of a party’s claim,” “the merits inquiry in the preliminary injunction context is necessarily abbreviated.” Id. at 276. Moreover, the court reasoned that, because the grant of a preliminary injunction is dependent on several factors including the likelihood of success on the merits and “a balancing of likely harms,” it indicates merely “a prediction of a probable, but necessarily uncertain, outcome.” Id. See also Smith v. Univ. of North Carolina, 632 F.2d 316, 346 (4th Cir. 1980) (holding that plaintiff who had obtained a preliminary injunction was not entitled to an award of attorneys’ fees based on that injunction when “on none of her claims [had she] ultimately obtained what she sought”). To the extent that the Fourth Circuit has adopted a per se rule that a preliminary injunction can never serve as a predicate for an interim fee award, we are in respectful disagreement. Instead we follow the approach of the other circuits outlined earlier.
Similarly, in Deerfield Medical Center, the Fifth Circuit made an interim award of attorneys’ fees to plaintiffs after they secured, on appeal, an injunction that permitted the plaintiffs to begin operating an abortion clinic. The Fifth Circuit reasoned that the plaintiffs were prevailing parties because “they ha[d] at least partially achieved the result sought in filing this action.” Deerfield Med. Ctr., 661 F.2d at 339. Although the court cited the Supreme Court’s Hanrahan decision to support its reasoning, it did not explain how awarding attorneys’ fees was consistent with the Court’s instruction that “Congress intended to permit the interim award of counsel fees only when a party has prevailed on the merits of at least some of his claims.” Hanrahan, 446 U.S. at 758 (emphasis added). The lack of transparent reasoning in these two cases convince us that neither Chu Drua Cha nor Deerfield Medical Center is useful to the plaintiffs.