The opinion of the court was delivered by: OBERDORFER
MEMORANDUM ON ATTORNEYS' FEES
Plaintiff, Samuel G. Kooritzky, is an attorney specializing in immigration matters. He also sought to employ an alien for whom he was seeking certification as an "employment-based" immigrant. Plaintiff brought an action against the Secretary of Labor ("DOL") to bar enforcement of a regulation which would have stopped a pre-existing practice whereby an "employment-based" immigrant applicant could be certified for admission as a substitute for another. See 305 U.S. App. D.C. 156, 17 F.3d 1509 (D.C. Cir. 1994). The defendant prevailed in this court. Kooritzky v. Martin, 1992 U.S. Dist. LEXIS 9401, 1992 WL 172572 (July 1, 1992) (D.D.C. 1992). The Court of Appeals reversed on the ground that DOL had adopted the new regulation without adequate notice and comment. Kooritzky v. Reich, 305 U.S. App. D.C. 156, 17 F.3d 1509 (D.C. Cir. 1994). The plaintiff, himself an attorney, prosecuted this claim pro se, assisted from time to time by four other attorneys, principally Christopher Teras. Substantial assistance was also rendered by law clerk James Moore, who was "reading" for the Virginia bar exam under the supervision of an attorney at plaintiff's law firm.
Plaintiff claims compensation for himself and his colleagues in the amount of $ 485,334.43, pursuant to the Equal Access to Justice Act, 28 U.S.C. § 2412(b) ("the Act"). A July 17, 1996 Order referred to Magistrate Judge Alan Kay for recommendation the question of "whether plaintiff is entitled under the Equal Access to Justice Act . . . to compensation for legal services and expenses and, if so, the amount thereof." After conducting seven days of hearings, Magistrate Judge Kay has filed a careful and thorough Report and Recommendation ("R&R") that plaintiff receive an award of $ 31,798.71.
Both parties have filed objections to Magistrate Judge Kay's Report and Recommendation. The defendant attacks his legal conclusions; plaintiff challenges other legal premises of the Report and many of the findings of fact. The accompanying Order adopts some of the recommendations and reconfigures others.
The parties' objections trigger de novo review by this Court. See FRCP 54(d); FRCP 72(b); Local Rule 504(c). Several are without merit. As a preliminary matter, plaintiff contends that the magistrate judge exceeded his jurisdictional authority in issuing the Report and Recommendation. Federal Rule of Civil Procedure 54(d)(2) authorizes a court to "refer a motion for attorneys' fees to a magistrate judge under Rule 72(b) as if it were a dispositive pretrial matter." Rule 72(b), codified at 28 U.S.C. § 636(b)(1), is the federal analog to Local Rule 504, which permits magistrate judges to respond to dispositive motions with recommendations, but not orders.
More substantively, defendant objects that plaintiff's status as a pro se litigant precludes him from obtaining any attorneys' fees. However, circuit law establishes that an attorney who represents himself and, in the words of the Act (28 U.S.C. § 2412(d)(1)(A)) is "the prevailing party . . . in any civil action" is entitled to an award of "fees and other expenses" unless the court finds that the position of the United States was substantially justified or that special circumstances make an award unjust. See Jones v. Lujan, 281 U.S. App. D.C. 105, 887 F.2d 1096, 1097 (D.C. Cir. 1989). Cases construing other fee-shifting statutes have not overruled Lujan. Compare Kay v. Ehrler, 499 U.S. 432, 113 L. Ed. 2d 486, 111 S. Ct. 1435 (1991) (FOIA); Benavides v. Bureau of Prisons, 301 U.S. App. D.C. 218, 993 F.2d 257 (Civil Rights Act); see also Burka v. Department of Health & Human Services, Civ. A. No. 92-2636, Memorandum and Order of March 21, 1997 (D.D.C. 1997), appeal filed May 15, 1997 (FOIA). Moreover, plaintiff has presented a persuasive argument that the Act differs in both language and purpose from the attorneys' fee provisions of the Civil Rights Act and the Freedom of Information Act. See Plaintiff's Reply To and Clarification of Defendant's Notice to the Court Regarding Recent Case Law (137-1); Spencer v. NLRB, 229 U.S. App. D.C. 225, 712 F.2d 539, 550 (D.C. Cir. 1983) (enumerating purposes of the Equal Access to Justice Act).
The Jones v. Lujan ruling seems particularly germane to the situation here, where plaintiff attempted on several occasions to obtain other counsel, but the attorneys he approached were either unwilling to assume responsibility for the case, or demanded fees beyond his means. For example, attorney Christopher Teras testified that Kooritzky asked him to serve as lead counsel in the case, but that "I had my own obligations in my office, and I just didn't feel that I could make a commitment to be lead attorney as such." Hrg. Tr. of Jan. 24, 1997 at 24. Teras did agree to assist plaintiff as much as he was able. Id. Kooritzky also testified that he approached other attorneys who declined to take on the case. Hrg. Tr. of Jan. 15, 1997 at 30-31. Kooritzky also informed the court that
a limited number of attorneys were willing to take his case. However, these attorneys demanded a retainer in addition to the attorney fees that would be recouped under 28 U.S.C. § 2412. . . . Moreover, the attorneys that were willing to accept the case advised the Plaintiff that it would take a considerable amount of time to collect their legal fees if they won the case, which caused them to state they wanted higher fees than those allowed by statute and much higher than those being requested by the Plaintiff herein.
Lastly, the attorneys that were willing to take the case demanded their fees in advance, and the Plaintiff could thereafter recoup the legal fees and expenses from the Government. Furthermore, these attorneys demanded their legal fees paid whether or not they won the case."
Resp. to Def's Opp. to Atty. Fees (55-1) at 6-7. As our Court of Appeals recognized in Spencer v. NLRB, the purpose of the Act was not only not "provide relief to victims of abusive governmental conduct," but to "induce [government] administrators to behave more responsibly in the future," and "to foster greater precision, efficiency and fairness . . . in the formulation and enforcement of governmental regulations." 712 F.2d at 550. By presenting this suit, Kooritzky clarified for the Labor Department its obligations under the notice and comment requirements of the Administrative Procedures Act; the fact that he himself was the only attorney willing to challenge the Department makes him no less entitled to compensation for the legal work required to do so.
As stated in the Report and Recommendation, the Act entitles plaintiff to an award of attorneys' fees only if (1) he was the "prevailing party"; (2) he "incurred" the expenses; (3) his net worth is below the statutory ceiling; and (4) the position of the United States in the underlying litigation was not "substantially justified." R&R at 3. Magistrate Judge Kay correctly concluded that plaintiff was the prevailing party, in that the Court of Appeals agreed that DOL had violated the Administrative Procedure Act by issuing the disputed regulation without appropriate notice and comment. Moreover, without saying so in the precise language of the statute, the Court of Appeals' acerbic comments on the merits must mean that they thought the DOL position was not substantially justified. As the Panel put it:
Because the 'logical outgrowth' formulation may be merely another way of asking how much notice is enough, . . . answering the question may prove difficult in some cases. This is not one of them.
The . . . interim final rule does not even come close to complying with the notice requirement . . . .
17 F.3d at 1513. See Oregon Natural Resources Council v. Madigan, 980 F.2d 1330, 1332 (9th Cir. 1992) (No substantial justification where the government "lost on an issue of statutory interpretation that the previous panel did not consider close."); Estate of Smith v. O'Halloran, 930 F.2d 1496, 1502 (10th Cir. 1991) (". . . the fact that a district court has upheld the agency's decision does not establish that the agency's position was substantially justified.")
There is no dispute that plaintiff meets the net worth requirements of the Act. See R&R at 5. The remainder of the objections--from the plaintiff--concern the analysis and calculation of fees and expenses "incurred."
Plaintiff played a dual role in this litigation. Although he conceded that he had no litigating experience, he participated in the advocacy role of an attorney, albeit for himself. See Jones v. Lujan, supra. For that he is entitled to a fee award measured by the statutory and judicial standards applicable to fee shifting. He also participated as an expert in immigration law as a supporter of his colleagues in the "study . . . and analysis" of the specialized immigration law and policy issues presented by this litigation. Section 2412(d)(2)(A) entitles him to an award of the "reasonable cost of any study . . . and analysis necessary for the preparation of the party's case and reasonable attorney fees." (Emphasis added.)
While the magistrate judge recommended that plaintiff be compensated for his own work on the case, he concluded that the fees attributed to other attorneys are not compensable under the Act, on the grounds that they were not "incurred" by plaintiff. Specifically, the Report and Recommendation noted the absence of any formal agreement between plaintiff and his colleagues concerning fees for legal services rendered. "Because Kooritzky incurred no expense or obligation to pay for [their] work, he may not recover any fees from the government for that work." R&R at 34. The arrangements between plaintiff and his colleagues, as described in the Report and Recommendation, are unusual. Christopher Teras "declined to act as lead counsel, but agreed to assist when he could. . . . Kooritzky incurred no expense or obligation to pay for Teras's work." R&R at 33. With respect to Margot Champagne, the Report & Recommendation cites plaintiff's testimony that "'there was no formal agreement, written or even formally verbal . . . on how they would get paid, or if they would get paid. Nobody expected to get paid.'" R&R at 39. As for Ronald Von Neumann, "Kooritzky had no arrangement to pay . . . for his services . . . . According to Plaintiff . . . '[Von Neumann] was happy to contribute something.'" R&R at 39.
As plaintiff notes, neither a written agreement nor the payment of fees is necessarily required to establish an attorney-client relationship. See Plaintiff's Supplement to Objections; Matter of Lieber, 442 A.2d 153 (D.C. App. 1982); Va. St. S. Ct.. Pt. 6 § I(B). Nor, under theories of implied contract or quantum meruit, is a written contract necessary to create a legal obligation to compensate one's attorney. 10 Williston on Contracts § 1285A (3d ed. 1967) ("In situations where an express agreement is lacking . . . the attorney is entitled to reasonable compensation for services performed on a quantum meruit basis"). Plaintiff argues that he had "contingent contract" relationships with three of his four colleagues; such "contingent contracts" have also been held to compensable under the Act. See Phillips v. General Services Adm'n, 924 F.2d 1577 (Fed. Cir. 1991) (granting award to plaintiff whose retainer agreement provided that she owed no additional fees to her attorney unless she obtained a statutory fee award).
However, it is unnecessary to analyze plaintiff's legal obligations (if any) to his colleagues, because the existence of such obligations does not necessarily determine whether a party has "incurred" fees and expenses under the Act. Our Court of Appeals has squarely addressed the question, and held that "the mere non-existence of liability for legal fees between client and counsel does not automatically disqualify a plaintiff from recovering attorneys' fees." American Ass'n of Retired Persons v. EEOC, 277 U.S. App. D.C. 189, 873 F.2d 402, 406 (D.C. Cir. 1989). In AARP, the court awarded attorneys' fees under § 2412 to plaintiffs represented by pro bono counsel, i.e., where there was an express agreement that the parties were not obliged to pay their attorneys. As the Court of Appeals noted in Unification Church v. I.N.S., 246 U.S. App. D.C. 98, 762 F.2d 1077 (D.C. Cir. 1985), such an award finds support in the legislative history of the Act: "computation of attorney fees should be based on prevailing market rates without reference to the fee arrangements between the attorney and client." 762 F.2d at 1083, citing H. Rep. No. 96-1418 (1980) at 15. Cf. Covington v. District of Columbia, 313 U.S. App. D.C. 16, 57 F.3d 1101, 1107 (D.C. Cir. 1995) ("the prevailing market rate method heretofore used in awarding fees to traditional for-profit firms and public interest legal services organizations shall apply as well to those attorneys who practice privately and for profit but at reduced rates reflecting non-economic goals."); Save Our Cumberland Mtns, Inc. v. Hodel, 857 F.2d 1516, 1521 (D.C. Cir. 1988) ("It is not inconsistent with the avoidance of windfalls to pay attorneys at rates commensurate with prevailing community standards of attorneys of like expertise doing the same sort of work in the same area").
It is not disputed that these three attorneys performed legal work on behalf of plaintiff. Cf. American Ass'n of Retired Persons v. EEOC, 277 U.S. App. D.C. 189, 873 F.2d 402 (D.C. Cir. 1989) (denying plaintiff's fee request for attorneys who served as lead counsel, but who were counsel of record only for co-plaintiff). Nor is this a case where a third party assumed financial responsibility for plaintiff's attorney fees and costs. Cf. United States v. Paisley, 957 F.2d 1161 (4th Cir. 1992) (defendants did not "incur" expenses that were indemnified by their former employer).
Teras, Champagne and Von Neumann assisted plaintiff in his successful challenge to a government regulation; as such, they are entitled to compensation under the Act.
Plaintiff's fourth colleague, Sean Purcell, was a contract attorney paid by Teras to work on plaintiff's case. The Report & Recommendation disallowed Purcell's fees on the grounds that they were incurred by Teras, not Kooritzky. R&R at 40, 38. Having now established that Teras's fees ...