656 F.2d 848 | D.C. Cir. | 1981
Lead Opinion
Opinion for the Court filed by Chief Judge SPOTTSWOOD W. ROBINSON, III.
Opinion concurring in the result filed by Circuit Judge TAMM.
John H. Anderson prosecuted a suit in the District Court against the Internal Revenue Service under the Privacy Act of 1974.
What made it something else was the nature of the relationship preexisting between Anderson’s counsel and a labor organization, particularly with respect to court-awarded attorney’s fees. As salaried employees of the National Treasury Employees Union, they had represented Anderson pursuant to the union’s prepaid legal services plan,
When we addressed this appeal earlier, we deemed pivotal the frank reaffirmation of union counsel at oral argument that all fees realized in consequence of Anderson’s motion would go into the union’s treasury.
Shortly after our opinion issued, however, the court elected to accord en bane reconsideration to Copeland v. Marshall,
Our Copeland decision has now been announced,
I. THE BASIS OF OUR HOLDING
Were this a case wherein attorney’s fees were requested for the attorneys themselves, our approach would be completely conventional. The Privacy Act authorizes assessment against the United States of reasonable fees in favor of a complainant who has substantially prevailed.
What makes for the difference here is the simple fact that the fees are not sought for the lawyers who had handled Anderson’s case, but for the union in whose hire they did so. Of that there can be no doubt. At oral argument, union counsel told us that the entire fee recovery would be turned over to their employer; moreover, the union itself asserts the claim that whatever fees are forthcoming will belong, not to the lawyers, but to it.
The obstacle the union faces is rooted in canons prescribed by the American Bar Association’s Code of Professional Responsibility.
Quite conspicuously, the Code’s strictures on the attorney’s professional alliances strongly exert their influence here.
To honor these wholesome principles here is hardly the radical step that the union charges. Indeed, as our earlier opinion noted,
It is our view that the award [of attorney’s fees] must go to counsel rather than to the organizations which pay their salaries .... This procedure' avoids all problems of whether the organization might, by receiving an award directly, be involved in the unauthorized practice of law. On the other hand, . . . counsel [must] reimburse their respective organizations for the kinds of expenses they incurred which would normally be included in an attorney’s fee. . . . But any amount in excess of such reimbursement belongs to counsel themselves.39
The admitted fact here is that the employing organization — the union — compensated the lawyers who represented Anderson at rates well below the going value of their services on the open market.
Drawn as we are into the area of the attorney’s professional relationships, we remain sensitive to the danger of inadvertently treading on associational or other constitutionally-grounded rights.
None of these situations is before us, however. Rather, the settled expectation of the union employer and the employed attorneys that all fees recovered belong to the union means that the employing lay organization would capitalize on the attorney’s services, reap a profit therefrom, and put the monies thus made to any use it chooses. In the absence of any compelling reason to disregard the ethical considerations implicated — and we discern none here — we believe that an allowance of above-cost fees to the union is inappropriate.
II. THE LIMITS ON OUR HOLDING
The union and amici curiae advance two principal arguments for an award of market-value fees in this instance. To do otherwise, the union suggests, will bring us inevitably into conflict with our recent holding in Copeland
Certainly, if true, these would be powerful objections. But onto every parade of horribles some dispersing rain must fall, and we are not persuaded that our decision will have such baleful effects. On the contrary, these criticisms reveal a profound misunderstanding of the principles underlying our original opinion, and as well a failure to appreciate the limited nature of our holding.
A. Implications for the Public Service Bar
Amici point out that a number of courts have approved market-value attorney’s fee allowances directly to legal aid offices and public interest organizations. We are aware that at least nine circuits have vindicated such awards.
These results, we think, are firmly rooted in sound policy. As the Third Circuit has noted,
[t]he award of fees to legal aid offices and other groups furnishing pro bono publico representation promotes the enforcement of the underlying statutes. . . . Legal services organizations often must ration their limited financial and manpower resources. Allowing them to recover fees enhances their capabilities to assist in the enforcement of congressionally favored individual rights.53
Other courts across the country are in accord.
Here, in contrast, there is no hint whatsoever that the sought-after fees would be similarly devoted. So far as we know, they would go toward enrichment of the union’s coffers and support of its diverse operations. The amount over and above the union’s actual cost, we reemphasize, would be a profit on the legal services generating the fees. The ethical exception for fee-splitting within a law office
B. The Impact of Copeland v. Marshall: Of Apples and Oranges
In Copeland, we held that attorney’s fee awards in Title VII litigation were to be computed on the basis of the market value of the services rendered the client.
The answer, once again, is that the instant case is simply not Copeland reincarnated. The distinguishing wrinkle here is that above-cost fees are requested by a lay organization, a circumstance interposing grave ethical difficulties not arising in Copeland, where market-value fees were sought for the attorneys themselves. There thus was no occasion in Copeland for operation of the well-entrenched ethical principles blocking the union’s way in the case at bar.
We do not imply, of course, that Congress could not assign the considerations at stake values different from those ascribed by the legal profession. It suffices merely to observe that for cases like the one before us, Congress has not done so. It is noteworthy that the Copeland fee award was for services rendered in an employment discrimination action, and that some of our most telling arguments for a market-value allowance — the private enforcement scheme of Title VII
Our holding, then, is very narrow. We deem it crucial that market-value attorney’s fees are sought here, not by a private law firm or its public counterpart, but by a lay organization, to enable it to turn a profit on what distinctly was lawyers’ work. We decide no more than that an above-cost allowance in these circumstances would be improper, and that the organization must be limited to recovery of the expense to which it was put in supplying the legal services in question. We remand the case to the District Court for computation and award of the amount thus due the union.
So ordered.
. 5 U.S.C. § 552a (1976).
. See 5 U.S.C. § 552a(g)(3)(B) (1976), quoted infra note 17.
. Appendix (App.) 118-129.
. See Anderson v. United States Dep’t of Treasury, Civ. No. 76-1404 (D.D.C. Nov. 19, 1977) (order granting attorney’s fees and litigation expenses) at 2, App. 146.
. App. 132, 136.
. See Motion of National Treasury Employees Union for Substitution as Party-Appellant, ([ 2, quoted in relevant part infra note 23.
. Anderson v. United States Dep’t of Treasury, supra note 4, at 3, App. 147.
. Anderson v. United States Dep’t of Treasury, 648 F.2d 1 at 3 (D.C.Cir. 1979) (per curiam). Our opinion issued in slip form but, because consideration of a suggestion of rehearing en banc has been deferred, see text infra at note 15, the opinion has not heretofore been submitted for official publication.
. Anderson v. United States Dep’t of Treasury, supra note 8, text at note 21.
. See id., text at notes 20-21.
. The occasion for remand is the silence of the record on the cost to the union of supplying the attorneys’ services to Anderson. Id., text at note 22.
. 205 U.S.App.D.C. 390, 641 F.2d 880 (1980 en banc).
. Civil Rights Act of 1964, Pub.L.No. 88-352, tit. VII, §§ 701 et seq., 78 Stat. 253 (1964), as amended by Equal Employment Opportunity Act of 1972, Pub.L.No. 92-261, §§ 2 et seq., 86 Stat. 103 (1972), codified, as further amended, variously at 42 U.S.C. §§ 2000e et seq. (1976) [hereinafter cited as codified]. Authority to allow attorney’s fees in such cases is conferred by 42 U.S.C. § 2000e-5(k) (1976).
. See Part 11(B) infra.
. Anderson v. United States Dep’t of Treasury, No. 78-1085 (D.C. Cir. en banc Nov. 9, 1979) (order).
. Copeland v. Marshall, supra note 12, 205 U.S.App.D.C. at 418, 641 F.2d at 908.
. “The court may assess against the United States reasonable attorney fees and other litigation costs reasonably incurred in any case under this paragraph in which the complainant has substantially prevailed.” 5 U.S.C. § 552a(g)(3)(B) (1976). See also 5 U.S.C. § 552a(g)(2)(B) (1976).
. “Reasonable attorney fees and costs may be assessed against the government in any case where the plaintiff substantially prevailed. It is intended that such award of fees not be automatic, but rather, that the courts consider the criteria as delineated in the existing body of law governing the award of fees.” H.R. Rep.No. 1416, 93d Cong., 2d Sess. 17 (1974). See also S.Rep.No. 1183, 93d Cong., 2d Sess. 83 (1974), U.S.Code Cong. & Admin.News 1974, p. 6916.
. While Copeland involved a fee award under Title VII, it is manifest from our opinion that we subscribed to market value as the formula normally to be utilized. See Copeland v. Marshall, supra note 12, 205 U.S.App.D.C. at 404, 641 F.2d at 894.
. Id. at 408-410, 641 F.2d at 898-900.
. See id. at 404-406, 641 F.2d at 894-896.
. See note 23 infra.
. See Fed.R.App.P. 43(b). In its motion for substitution, the union alleged “that the award of attorney’s fees is presently the exclusive concern of [Anderson’s] union, ... in that any award of fees will go directly to [the union], and not to [Anderson].” Motion of National Treasury Employees Union for Substitution as Party-Appellant, ])2. The motion then avers that “[accordingly, all interests in this appeal have devolved from ... Anderson to [the union], and [the union] should be able to prosecute any further proceedings concerning this appeal in its own right.” Id. [J 3.
. American Bar Association, Code of Professional Responsibility (1976) [hereinafter cited at ABA Code of Professional Responsibility].
. See, e.g., In re Primus, 436 U.S. 412, 98 S.Ct. 1893, 56 L.Ed.2d 417 (1978); Bates v. State Bar of Arizona, 433 U.S. 350, 97 S.Ct. 2691, 53 L.Ed.2d 810 (1977); Goldfarb v. Virginia State Bar, 421 U.S. 773, 95 S.Ct. 2004, 44 L.Ed.2d 572 (1975); United Transp. Union v. Michigan Bar, 401 U.S. 576, 91 S.Ct. 1076, 28 L.Ed.2d 339 (1971); UMW v. Illinois State Bar Ass’n, 389 U.S. 217, 88 S.Ct. 353, 19 L.Ed.2d 426 (1967); Brotherhood of R.R. Trainmen v. Virginia ex rel. Virginia State Bar, 377 U.S. 1, 84 S.Ct. 1113, 12 L.Ed.2d 89 (1964); NAACP v. Button, 371 U.S. 415, 83 S.Ct. 328 9 L.Ed.2d 405 (1963).
. See H. Drinker, Legal Ethics 34-38 (1953).
. See ABA Code of Professional Responsibility, supra note 24, Ethical Consideration (EC) 3-1, quoted infra note 37.
. We are afforded no statutory guidance toward the proper level of a fee award here; the pertinent provision of the Privacy Act merely authorizes assessment of “reasonable attorney fees and other litigation costs” against the United States. See note 17 supra.
. Anderson v. United States Dep’t of Treasury, supra note 8, at 3.
. See generally ABA Code of Professional Responsibility, supra note 24, canon 2.
. See UMW v. Illinois State Bar Ass’n, supra note 25, 389 U.S. at 222-225, 88 S.Ct. at 356-358, 19 L.Ed.2d at 430-432.
. ABA Code of Professional Responsibility, supra note 24, Disciplinary Rule (DR) 2-103(D)(4)(a). Cf. Ohralik v. Ohio State Bar Ass’n, 436 U.S. 447, 461-462 & n.19, 98 S.Ct. 1912, 1921 & n.19, 56 L.Ed.2d 444, 456-457 & n.19 (1978).
. ABA Code of Professional Responsibility, supra note 24, DR 3-102.
. Id., DR 3-101(A).
. See, e.g., Georgia State Bar Ass’n v. Lawyers Title Ins. Co., 222 Ga. 657, 151 S.E.2d 718 (Ga.Sup.Ct.1966); Frazee v. Citizens Fidelity Bank & Trust Co., 393 S.W.2d 778 (Ky.1964); Kentucky State Bar Ass’n v. First Fed. Sav. & Loan Ass’n, 342 S.W.2d 397 (Ky.1960); Judd v.
. See American Bar Association, Opinions on Professional Ethics 290 (Opinion 48), 452 (Opinion 180), 648 (Opinion 294) (1967); 1 Informal Ethics Opinions 137-138 (Informal Opinion 544) (1975); Digest of Bar Association Ethics Opinions 647, 1272, 1391, 1429, 2245, 3020, 3304, 3610, 3735 (O.Maru ed. 1970); 1970 Supp. to the Digest of Bar Association Ethics Opinions 5048, 5061, 5190, 5935 (O.Maru ed. 1972); 1975 Supp. to the Digest of Bar Association Ethics Opinions 7509, 9178 (O.Maru ed. 1977).
. The prohibition against the practice of law by a layman is grounded in the need of the public for integrity and competence of those who undertake to render legal services. Because of the fiduciary and personal character of the lawyer-client relationship and the inherently complex nature of our legal system, the public can better be assured of the requisite responsibility and competence if the practice of law is confined to those who are subject to the requirements and regulations imposed upon members of the legal profession.
ABA Code of Professional Responsibility, EC 3-1.
A non-lawyer who undertakes to handle legal matters is not governed as to integrity or legal competence by the same rules that govern the conduct of a lawyer. A lawyer is not only subject to that regulation, but also is committed to high standards of ethical conduct. The public interest is best served in legal matters by a regulated profession committed to such standards. The Disciplinary Rules protect the public in that they prohibit a lawyer from seeking employment by improper overtures, from acting in cases of divided loyalties, and from submitting to the control of others in the exercise of his judgment. Moreover, a person who entrusts legal matters to a lawyer is protected by the attorney-client privilege and by the duty of the lawyer to hold inviolate the confidences and secrets of his client.
Id., EC 3-3 (footnote omitted).
Since a lawyer should not aid or encourage a layman to practice law, he should not practice law in association with a layman or otherwise share legal fees with a layman.
Id., EC 3-8 (footnote omitted).
. Anderson v. United States Dep’t of Treasury, supra note 8, text at note 20.
. Wilderness Soc’y v. Morton, 161 U.S.App. D.C. 446, 457, 495 F.2d 1026, 1037 (en banc 1974), rev’d on other grounds sub nom. Alyes-ka Pipeline Serv. Co. v. Wilderness Soc’y, 421 U.S. 240, 95 S.Ct. 1612, 44 L.Ed.2d 141 (1975).
. Plaintiff’s Opposition to Defendants’ Response to Application for Award of Fees and Expenses, App. 136.
. See cases cited supra note 25.
. See text supra at notes 18-21.
. See Wilderness Soc'y v. Morton, supra note 39, 161 U.S.App.D.C. at 457, 495 F.2d at 1037.
. Copeland v. Marshall, supra note 12, 205 U.S.App.D.C. at 393 n.1, 410, 641 F.2d at 883 n.1, 900.
. Wilderness Soc’y v. Morton, supra note 39, 161 U.S.App.D.C. at 457, 495 F.2d at 1037.
. Neither appellant nor amici have challenged our decision on statutory or constitutional grounds, or suggested that our result will have any anticompetitive effect on the practice of law.
. Appellant’s Supplemental Memorandum in Support of Suggestion for Rehearing En Banc at 2.
. Brief for Amici Lawyers’ Committee for Civil Rights Under Law and the Washington Lawyers’ Committee for Civil Rights Under Law at 2-3.
. See Palmigiano v. Garrahy, 616 F.2d 598, 602 (1st Cir.), cert. denied, 449 U.S. 839, 101 S.Ct. 115, 66 L.Ed.2d 45 (1980); Torres v. Sachs, 538 F.2d 10, 13 (2d Cir. 1976); Rodriguez v. Taylor, 569 F.2d 1231, 1245 (3d Cir. 1977), cert. denied, 436 U.S. 913, 98 S.Ct. 2254, 56 L.Ed.2d 414 (1978); Tillman v. Wheaton-Haven Recreation Ass’n, Inc., 517 F.2d 1141, 1148 (4th Cir. 1975); Fairley v. Patterson, 493 F.2d 598, 607 (5th Cir. 1974); Incarcerated Men of Allen County Jail v. Fair, 507 F.2d 281, 286 (6th Cir. 1974); Hairston v. R & R Apartments, 510 F.2d 1090, 1092 (7th Cir. 1975); Oldham v. Ehrlich, 617 F.2d 163, 168-169 (8th Cir. 1980); Brandenburger v. Thompson, 494 F.2d 885, 887 (9th Cir. 1974).
. ABA Code of Professional Responsibility, supra note 24, DR 2-107.
. See Copeland v. Marshall, supra note 12. 205 U.S.App.D.C. at 409, 641 F.2d at 899.
. Cf. Application of Community Action for Legal Serv., Inc., 26 App.Div.2d 354, 274 N.Y. S.2d 779 (N.Y.Sup.Ct.1966) (corporation may practice law if it is entirely controlled by lawyers, though non-lawyers may sponsor the organization); American Bar Association, Recent Ethics Opinions, No. 334 (Aug. 10, 1974) (lawyers employed by legal services offices must be free to exercise independent professional judgment); H. Drinker, supra note 26, 34-38 (attorney is less likely to engage in unethical conduct because subject to the profession’s ethical rules).
. Rodriguez v. Taylor, supra note 49, 569 F.2d at 1245.
. Palmigiano v. Garrahy, supra note 49, 616 F.2d at 602; Torres v. Sachs, supra note 49, 538 F.2d at 13; Incarcerated Men of Allen County Jail v. Fair, supra note 49, 507 F.2d at 286; Hairston v. R & R Apartments, supra note 49, 510 F.2d at 1092; Oldham v. Ehrlich, supra note 49, 617 F.2d at 168-169.
. Copeland v. Marshall, supra note 12, 205 U.S.App.D.C. at 409, 641 F.2d at 899.
. Pub.L.No. 94-559, § 2, 90 Stat. 2641 (1976), 42 U.S.C. § 1988 (1976).
. New York Gaslight Club v. Carey, 447 U.S. 54, 70-71 n.9, 100 S.Ct. 2024, 2034 n.9, 64 L.Ed.2d 723, 738 n.9 (1980). Among the cases that Congress cited with approval were Fairley v. Patterson, supra note 49, where, with respect to attorneys employed by the Lawyers Committee for Civil Rights Under Law, 493 F.2d at 606 n.12, the Fifth Circuit stated that “[w]hether the attorney charges a fee or has an agreement that the organization that employs him will receive any awarded attorneys’ fees are not bases on which to deny or limit attorneys’ fees or expenses,” id. at 607; and Davis v. County of Los Angeles, 8 E.P.D. § 9444 (C.D.Calif. 1974), where the court declared that “it is not legally relevant that plaintiffs’ counsel . . . are employed by . . . a privately funded non-profit law firm. It is in the interest of the public that such law firms be awarded reasonable attorneys’ fees to be computed in the traditional manner. ...” Id. at §§ 9444-9445. See S.Rep.No. 1011, 94th Cong., 2d Sess. 6 U.S. Code Cong. & Admin.News 1976, p. 5908; H.R. Rep.No. 1416, 93d Cong., 2d Sess. 17. The House expressed its hope that the new fee provision would help to relieve the shortage of resources burdening the “civil rights bar.” Id. at 3.
. See text supra at note 50.
. See text supra at notes 56-57.
. See text supra at note 42.
. In the circumstances here, we need intimate no view in this regard.
. Copeland v. Marshall, supra note 12.
. 205 U.S.App.D.C. at 408-410, 641 F.2d at 898-900.
. See Part I supra.
. Copeland v. Marshall, supra note 12, 205 U.S.App.D.C. at 409, 641 F.2d at 899.
. Id. at 409, 410, 641 F.2d at 899, 900.
. See H.R.Rep.No. 1558, 94th Cong., 2d Sess. 1, 3 (1976); S.Rep.No. 1011, 94th Cong., 2d Sess. 2 (1976).
. Quoted supra note 17.
. See H.R.Rep.No. 1416, 93d Cong., 2d Sess. 17 (1974). See also S.Rep.No. 1183, 93d Cong., 2d Sess. 83 (1974).
. See Anderson v. United States Dep't of Treasury, supra note 8, text at note 44.
Concurrence Opinion
concurring in the result:
Although the court’s holding may be “very narrow,” at 855, I question the creation of a rich vein of dicta for the delight of future prospectors of the law. I concur in the result reached by the court.
On Suggestion for Rehearing En Banc (D.C. Civil Action No. 76-1404).
Before ROBINSON, Chief Judge, and WRIGHT, McGOWAN, TAMM, MacKIN-NON, ROBB, and WILKEY, Circuit Judges
ORDER
Appellant’s suggestion for rehearing en banc, the letter received from counsel for appellee (Justice) pursuant to Rule 28(j), Federal Rules of Appellate Procedure, and appellant’s supplemental memorandum in support of its suggestion for rehearing en banc, having been transmitted to the full Court and no judge in regular active service having requested a vote with respect thereto, it is
ORDERED, by the Court, en banc, that appellant’s aforesaid suggestion for rehearing en banc is denied.