United States District Court, District of Columbia
March 16, 2001
OIL, CHEMICAL & ATOMIC WORKERS INTERNATIONAL UNION, AFL-CIO, ET AL. PLAINTIFFS,
UNITED STATES DEPARTMENT OF ENERGY, DEFENDANT.
The opinion of the court was delivered by: Gladys Kessler, United States District Judge
This matter is before the Court on the Motion for Fees and Expenses of
Plaintiffs James K. Phillips and the Oil, Chemical & Atomic Workers
International Union, AFL-CIO (collectively "OCAW"). Upon consideration of
the Motion, Opposition, Reply, and the entire record herein, for the
reasons discussed below, the Motion for Fees and Expenses [#28] is
granted in part and denied in part.
The United States Enrichment Corp. ("USEC") was created in 1992 as a
wholly owned government corporation charged with producing enriched
uranium at two gaseous diffusion plants ("GDPs") owned by the United
States Department of Energy ("DOE").*fn1 Plaintiff OCAW, a labor union
with approximately 85,000 members, was the collective bargaining agent
for approximately 2,000 workers at the two GDPs operated by USEC.
In April 1996, Congress enacted the USEC Privatization Act, Pub.L.
104-134, tit. III § 3101, 110 Stat. 1321-335 (codified at
42 U.S.C. § 2297h-1 et seq.), which directed the USEC Board to
transfer the federal government's interest in USEC to the private
sector.*fn2 By June 1998, the Board was left with three options for
accomplishing that objective: (1) the sale of USEC, through a merger and
to a consortium led by the Carlyle Group; (2) the sale of
USEC, through a merger and acquisition, to a consortium consisting of
Texas Pacific Group and General Atomic; and (3) the sale of USEC stock to
the public in an initial public offering ("IPO"). In early June 1998, the
USEC Board met on three separate occasions to consider these
privatization options. The meetings were closed to the public. At the end
of the final meeting, on June 11, the Board voted unanimously for the IPO
option. On June 29, the Board announced a proposed IPO to the public.
The very next day, Plaintiffs brought the present action (Civ. A. No.
98-1670 (GK)) under the Freedom of Information Act, 5 U.S.C. § 552(a),
requesting that USEC produce all records, not previously produced, that
came within the scope of the Plaintiff Phillips' December 22, 1997, FOIA
request. See supra note 2. Plaintiffs also brought a separate lawsuit
(Civ. A. No. 98-1756 (GK)) two weeks later, on July 14, 1998, under the
Government in the Sunshine Act, 5 U.S.C. § 552b, in which they moved
to enjoin USEC from closing to the public a follow-up Board meeting,
scheduled for July 22. This Court denied Plaintiffs' motion, and allowed
the July 22 meeting to go forward, in which three of the five USEC Board
members voted to confirm the earlier decision to hold an IPO. The IPO was
held July 23 through July 28, 1998, resulting in a transfer of the
federal government's ownership in USEC to the private sector.
Subsequently, USEC moved for dismissal of both cases, contending that it
was now a private entity and that neither FOIA nor the Government in the
Sunshine Act applied to it. In response, the Court dismissed USEC from
both lawsuits, ordered that DOE be substituted for USEC, and directed DOE
to respond to the requests made by Plaintiffs in both lawsuits. See
Memorandum Opinion and Order of March 18, 1999 (Civ. A. Nos. 98-1670 and
Defendant DOE provided Plaintiffs with certain documents in July 1998,
and the parties thereafter entered into a settlement agreement. In
December 1999, both cases were voluntarily dismissed, except insofar as
Plaintiffs wished to seek attorneys' fees and litigation costs.*fn3 The
parties' negotiations to settle Plaintiffs' fees and costs proved
unsuccessful, and on April 17, 2000, Plaintiffs filed the present
Plaintiffs bring a motion for fees and costs, pursuant to
5 U.S.C. § 552(a)(4)(E), to recover their expenses for both
lawsuits.*fn4 Defendant contends that Plaintiffs are not entitled to an
award of fees and costs or, in the alternative, that Plaintiffs are not
entitled to all the compensation that they request. These contentions
will be addressed in turn.
A. Whether Plaintiffs are Entitled to Any Fees and Costs
Analysis of a section 552(a)(4)(E) motion requires a determination of
both eligibility and entitlement to the award. See, e.g., Ralph Hoar &
Assocs. v. NHTSA, 985 F. Supp. 1, 5 (D.D.C. 1997).
Defendant has not contested Plaintiffs' eligibility, the only question
for the Court to consider is whether Plaintiffs are "entitled" to fees
and costs. See Chesapeake Bay Found., Inc. v. United States Dep't of
Agric., 11 F.3d 211 (D.C. Cir. 1993).
To determine entitlement, the Court must consider four factors: "(1)
the public benefit derived from the case; (2) the commercial benefit to
the plaintiff; (3) the nature of the plaintiff's interest in the
records; and (4) whether the Government had a reasonable basis for
withholding requested information." Burka v. United States Dep't of
Health & Human Servs., 142 F.3d 1286, 1288 (D.C. Cir. 1998)(internal
citations and quotations omitted). The second and third factors are
"closely related and often considered together." Cotton v. Heyman,
63 F.3d 1115, 1120 (D.C. Cir. 1995)(quoting Tax Analysts v. United States
Dep't of Justice, 965 F.2d 1092, 1095 (D.C. Cir. 1992)). In determining
a plaintiff's entitlement to attorneys' fees, the Court must balance all
four criteria. Ralph Hoar & Assocs., 985 F. Supp. at 9.
1. The Public Benefit
To determine whether this FOIA action resulted in a public benefit, the
Court asks whether Plaintiffs' victory is "likely to add to the fund of
information that citizens may use in making vital political choices."
Cotton, 63 F.3d at 1120 (quoting Blue v. Bureau of Prisons, 570 F.2d 529,
534 (5th Cir. 1978)). In making this inquiry, it is important to
remember that the "central purpose" of FOIA is "to assist our citizenry
in making the informed choices so vital to the maintenance of a popular
form of government." Blue, 570 F.2d at 533.
It is undisputed that USEC has experienced extreme financial and other
difficulties since its privatization. See, e.g., Pl.'s Mot. at 7-10
(citing testimony of Joseph Stiglitz, Shelby Brewer and numerous
newspaper and magazine articles) & accompanying exhibits. It is also
undisputed that by bringing the present lawsuit and Civ. A. No.
98-1756,*fn5 Plaintiffs have forced the public release of countless
important documents relating to the privatization of USEC, including
information on USEC's corporate organization (i.e., bylaws,
organization chart, and personnel data); the minutes and transcripts of
the June-July 1998 USEC meetings which had been closed to the public;
contracts entered into between USEC and lawyers, investment advisors, and
consultants; and studies of a certain type of technology (referred to as
"AVLIS"), which Plaintiffs allege was projected to be the cornerstone to
USEC's commercial profitability.*fn6 Id. at 17-18.
Defendant argues that these and other documents do not add to the
public fund of
information because they do not reveal the specific "flaws"
in the privatization process which Plaintiffs allegedly point to in their
Motion. See Def.'s Opp'n at 12. Defendant also argues that since the
privatization of USEC is a fait accompli, documents regarding "alleged
defects in the privatization process do not provide any information
relevant to future action." Id. at 16.
The Court finds that the documents obtained by Plaintiffs, and widely
disseminated to the media and the public,*fn7 clearly and overwhelmingly
add to the growing public body of knowledge concerning the privatization
of governmental entities generally, and of USEC specifically.
Accordingly, Plaintiffs are entitled to attorneys' fees and costs under
Cotton and Blue.
The public benefits of Plaintiffs' lawsuits are substantial. For one
thing, the released documents inform the public about what "went wrong"
with privatization in this case, and what procedures and criteria should
be used in the future when other federal entities consider
privatization. The fact that the privatization of USEC is a fait
accompli is of little relevance. Undoubtedly, the question of whether an
agency should be privatized will surface again, and the released
documents in this case will assist our legislators, their respective
constituents, and executive branch officials in "making vital political
choices" regarding how certain government functions should be organized
and how taxpayer money should be spent. See Cotton, 63 F.3d at 1120.
In addition, the released documents have been, and will continue to
be, greatly beneficial to academic and scholarly commentators who are
interested in privatization, "reinvention of government,"
non-proliferation policy, and/or decision-making theory. See Pls.' Mot.
at 30-31; Decl. of Dan Guttman ¶ 14. The transcripts of the closed
Board meetings — especially when viewed in conjunction with the
extraordinarily favorable terms of the contracts between USEC and its
lawyers and advisors — reveal the ways in which bias,
self-interest, and self-dealing can influence the decision-making
process, especially when that process is kept entirely secretive. See
Pls.' Reply to Def.'s Opp'n ("Pls.' Reply") at 8-10.*fn8
Defendant's contention that the USEC Board's deliberations were a
"model of corporate decision-making," Def.'s Opp'n at 15 (citing a
Washington Post article) is patently incorrect. The transcripts of the
June-July 1998 meetings — which were disclosed to the public only
because of Plaintiffs' lawsuits — show that the Board's
deliberations were "model" only insofar as they were a model of what not
to do when considering various options for privatizing a federal entity.
First, Board members were deprived of basic national security
information concerning USEC — despite the fact that they were
charged with ensuring that privatization did not imperil our national
security. The released transcripts of the USEC Board's final meeting, in
which it recommended going forward with the IPO, reveal that at least one
Board member was
repeatedly denied requests for briefing from National
Security staff. See Decl. of Richard Miller ¶ 23 (citing statements
made by Board Member William Burton).*fn9
Second, in deciding whether to go the IPO route to privatization, many
Board members were forced to rely largely upon information provided by
parties with potential conflicts of interest, all of whom strongly, not
surprisingly, recommended the IPO. For example, the investment firm of
J.P. Morgan was consulted as the Board's "independent" financial
advisor, yet it stood to make an additional $7.5 million if the IPO went
forward. Pls.' Mot. at 20. USEC's outside counsel (Skadden, Arps,
Meagher & Flom) was relied upon by Board members as well, even though the
law firm ended up receiving approximately $15 million for services
rendered during the privatization process. Id. at 19 & n. 34. Most
importantly, USEC's CEO, Nick Timbers — who dismissed all concerns
about the viability of the AVLIS technology and strongly pushed the IPO
option*fn10 — ended up receiving for the 1999 year "a $617,625
bonus and stock options valued at $1.7 million." Pls.' Mot. at 9-10,
Ex. 1 (quoting U.S. News & World Report article).
With respect to the public benefit criterion, it is not necessary for
the Court to inquire as to whether the decision-making process was
materially or actually tainted by the influence of the parties named
above (i.e., that the Board would have voted differently but for those
parties' influence). What is important, rather, is that the fruits of
Plaintiffs' lawsuits gave numerous outside parties, including the press
and Congressional watchdogs, access to vital documents that permit those
groups to carefully examine and report to the public on the Board's
decision-making process; these reports, as well as the released documents
themselves, have already added to and will continue to "add to the fund
of information that citizens may use in making vital political choices."
Cotton, 63 F.3d at 1120.
2. The Commercial Benefit/Nature of Plaintiffs' Interest
Defendant argues that Plaintiffs' interest in obtaining documents
relating to USEC's privatization "was the narrow one of saving the jobs
of OCAW members," and that an award of attorneys' fees would therefore be
inappropriate in this case. Def.'s Opp'n at 18.
The Court disagrees with this assessment. Plaintiff OCAW has a long
history of undertaking litigation that benefits the public interest.
See Pls.' Reply at 33-35. While some of its lawsuits may have been
motivated in part by OCAW's concern for its own members' health and
safety, that concern, as in the present lawsuit, is substantially
identical to a concern for the public interest — for the protection
of the environment, workers' safety and government integrity, among other
things. Id. at 13-14; Decl. of Richard Miller ¶¶ 33-36,
Indeed, the related lawsuit that OCAW brought before this Court,*fn11 in
which it made a National Environmental Policy Act challenge to the
Department of Energy's plan for the recycling of hazardous materials,
resulted in a decision by Secretary of Energy Bill Richardson to
significantly restrict the recycling of radioactively contaminated nickel
— which certainly benefitted more than just OCAW's members. Pls.'
Mot. at 35-36; Decl. of Dan Guttman ¶ 26.
Finally, even assuming that Plaintiff OCAW was in part motivated by
concern for its members' livelihood, this motivation is far outweighed by
the enormous public benefit that resulted from the released documents.
See Chesapeake Bay Found., 11 F.3d 211 (noting that the "test of
entitlement involves a balance of several factors")(internal citations
3. The Reasonableness of the Government's Basis for Withholding
This final criterion asks, in part, whether the government "engaged in
obdurate behavior" in withholding the requested documents. See Tax
Analysts, 965 F.2d at 1097. Defendant contends that it was not
obdurate, nor did it otherwise act in bad faith in responding to
Plaintiff's request for documents. On the contrary, Defendant maintains
that "[o]nce [the present] lawsuit began, the government produced with
few exceptions everything that plaintiffs asked for." Def.'s Opp'n at
Defendant's position is somewhat disingenuous. It was not until DOE
was substituted for USEC in this lawsuit that Defendant stopped
consistently withholding numerous categories of documents, including
basic information about USEC's corporate organization, without any legal
basis for doing so.*fn12 See Pls.' Reply at 16. Further, almost
immediately after USEC was privatized, Defendant moved to dismiss both of
Plaintiffs' lawsuits. Moving for dismissal is not the typical way to
signal full compliance with a legitimate document request under FOIA.
In addition, it must be noted that Plaintiffs did not actually obtain
the most important documents they requested (i.e., the transcripts of
Board meetings) until a year after privatization had been completed, thus
preventing Plaintiffs from attempting to use the information in the most
timely and effective fashion to argue before relevant governmental bodies
the importance of delaying or reviewing the privatization of USEC.
In sum, when the four relevant criteria are properly balanced —
and appropriate weight is given to the public benefit criterion —
it is clear that Plaintiffs are entitled to attorneys' fees under
5 U.S.C. § 552(a)(4)(E). See Ralph Hoar & Assocs., 985 F. Supp. at
B. Whether Plaintiffs are Entitled to All the Fees and Costs That They
Defendant makes two general arguments as to why Plaintiffs are not
entitled to all the fees and costs that they seek. First, Defendant
argues generally that Plaintiffs, and especially counsel Dan Guttman, are
not entitled to the compensation
levels set by the Laffey Matrix.*fn13
Second, Defendant argues that certain expenses incurred by Plaintiffs
were not warranted and should not be compensated. Each argument will be
addressed in turn.
A. Whether the Laffey Matrix Should Apply
The Laffey Matrix provides the following hourly rates for the 1999-2000
years: $340/hour for attorneys with 20 or more years of experience (which
would include Dan Guttman); $295/hour for attorneys with between 11 and
19 years of experience (which would include Reuben A. Guttman); $200/hour
for attorneys with between four and seven years of experience (which
would include Traci L. Buschner and Brian P. McCaffrey); and $160/hour
for attorneys with between one and three years of experience (which would
include Charlie V. Firth). See Pls.' Mot. at 48-51; Decl. of Dan
Guttman, Attach. 2; Def.'s Opp'n at 9.
Plaintiffs contend that their counsel have spent a total of 411.05
hours on the two cases before this Court, with the vast majority of those
hours attributed to Dan Guttman.*fn14
Applying the Laffey rates,
Plaintiffs request a total of $136,878 in attorneys' fees*fn15
$3,096 in litigation costs.
Plaintiffs acknowledge that counsel, and particularly Mr. Guttman,
generally charge their clients less than the Laffey rates.
However, Plaintiffs contend that the Laffey Matrix should apply in this
case because their counsel qualify as "attorneys who practice privately
and for profit but at reduced rates reflecting non-economic goals."
Pls.' Mot. at 41 (quoting SOCM, 857 F.2d at 1524).
In response, Defendant argues that the "non-economic goal" exception
spelled out in SOCM and Covington v. District of Columbia, 57 F.3d 1101
(D.C. Cir. 1995), is inapplicable here. Defendant contends that
Plaintiffs' counsel Mr. Guttman has chosen to charge his non pro bono
clients, including OCAW and PACE, an hourly rate substantially lower than
the equivalent Laffey rate, and that Plaintiffs' counsel should not be
entitled to compensation at Laffey rates which are higher than those they
choose to charge their non pro bono clients under ordinary
Our Court of Appeals has indicated that "the private but
public-spirited rate-cutting attorney [should not] be penalized for his
public spiritedness . . ." SOCM, 857 F.2d at 1824. On the contrary, an
attorney who can "show that his or her custom of charging reduced rates
is in fact attributable to `public spiritedness'" is entitled
compensation at prevailing-market (i.e., Laffey) rates. Covington, 57
F.3d at 1108.
Plaintiffs have demonstrated, supported by uncontroverted affidavits
and other evidence, that Mr. Guttman has been motivated by public
spiritedness in charging clients below the prevailing market rate and in
performing numerous legal-related activities entirely for free. See Pls.'
Mot. at 42-48; Decl. of Dan Guttman at 2-8 (listing, among other things,
Mr. Guttman's representation of labor unions, public interest
organizations, municipalities, whistle-blowers and non-profit entities on
either a pro bono or reduced rate basis). Further, Plaintiffs have also
provided evidence, not contested by Defendant, that Mr. Guttman has
represented certain corporate clients at or above prevailing market
rates; consequently, it cannot be said that his "`custom' of charging
rates below the market" derives simply from an inability to "command"
higher rates. See Covington, 57 F.3d at 1108.*fn16 Accordingly, the
Court concludes that, with respect to Mr. Guttman, Plaintiffs are
entitled to an award of fees at the applicable Laffey rate
However, with respect to Plaintiffs' other attorneys, the Court finds
that Plaintiffs have failed to make a sufficient showing that those
attorneys should be compensated at the applicable Laffey rates.
Defendant expressly requested information about these other attorneys, so
that it would be in a position to evaluate their entitlement to Laffey
rates. See Def.'s Opp'n at 28-29. Plaintiffs failed to comply with this
request.*fn18 Accordingly, Plaintiffs have failed to demonstrate that
these attorneys are entitled to compensation at Laffey rates. Id. at
1108 & n. 16 (citing Blum v. Stenson, 465 U.S. 886, 896 n. 11 (1984)).
As Defendant has offered what the Court determines is a reasonable
method of compensating these attorneys, and Plaintiffs have not suggested
an alternative, the Court will accept Defendant's proposal; Plaintiffs'
counsel Reuben A. Guttman shall be
paid at $170/hour, Traci L. Buschner
and Brian P. McCaffrey shall be paid at $115/hour, and Charlie V. Firth
shall be paid at $90/hour. See Def.' Opp'n at 29 n. 8.
B. Whether Certain of Plaintiffs' Costs Should Be Disallowed
Defendant argues that the following requests for compensation should be
disallowed: 31.5 hours for time devoted to Plaintiffs' unsuccessful
motion for a temporary restraining order ("TRO"), 4.5 hours for time
spent on a motion to compel that was not served, and 1.75 hours for an
"SEC FOIA filing." Def.'s Opp'n at 23. In addition, Defendant
challenges 39.8 hours of attorney time which it alleges are not properly
documented in the accompanying billing records. Id. at 23.
Plaintiffs do not offer any response to these challenges, except to
argue that although the motion for a TRO was denied, the 31.5 hours spent
on it should be compensated because the motion was important to
Plaintiffs' ultimate success in obtaining the released documents. Pls.'
Reply at 21 (citing Hensley v. Eckerhart, 461 U.S. 424, 435 (1983)).
In Hensley, the United States Supreme Court stated that "[w]here a
plaintiff has obtained excellent results, his attorney should recover a
fully compensatory fee," which normally encompasses "all hours reasonably
expended on the litigation," even if the plaintiff "failed to prevail on
every contention raised in the lawsuit." 461 U.S. at 435. However,
Plaintiffs' TRO was not so much a failed "contention" as a failed
"proceeding." Plaintiffs have not shown how their motion for a TRO made
their ultimate success any more likely. Accordingly, Plaintiffs' request
for fees relating to the TRO hours will be denied. In addition,
Plaintiffs are also not entitled to compensation for the other improperly
documented 39.8 hours.
Defendant next challenges Plaintiffs' request for $3,096 in litigation
costs. Def.'s Opp'n at 31. The actual total of Plaintiffs' itemized
expenditures is only $2,007.98. See Decl. of Dan Guttman, attach. 2.
Since Plaintiffs have not offered any explanation or documentation as to
why they seek an additional $1,088.02 in costs, this additional amount
will not be considered by the Court. Further, it would appear that in
itemizing the $2,007.98 in costs, Plaintiffs have included "labor costs,"
"costs of equipment," and "costs of space and electricity to house and
maintain the equipment." Def.'s Opp'n at 31, Ex. V at 3. Such costs are
not compensable. See In re Mullins, 84 F.3d 459, 469 (D.C. Cir. 1996).
Accordingly, the Court will reduce Plaintiffs' itemized expenses by
approximately one-half, from $2,007.98 to $1,000.
In addition, Defendant argues that two-thirds of Mr. Guttman's time
entries are listed in whole numbers, which according to Defendant
suggests that Mr. Guttman "did not keep a careful and contemporaneous
record of the time that he spent in this case . . ." Def.'s Opp'n at
24. The Court disagrees. Defendant does not elaborate on why the
practice of using whole numbers, in itself, would suggest the
inappropriate or inaccurate billing of hours. Plaintiffs have produced an
affidavit in which Mr. Guttman states that he "did, and routinely does,
record his hours on the day on which they are incurred." Pls.' Reply at
21-22; Supp. Decl. of Dan Guttman ¶ 2. The Court credits
Plaintiffs' statements, and notes that Defendant has not pointed to
additional entries that seem
excessive or unwarranted. Nor does the
total number of hours billed seem excessive or unwarranted.
Accordingly, the Court finds that Plaintiffs are entitled to full
compensation for Dan Guttman's recorded hours — except to the
extent that certain specific hours have already been disallowed. See
Hensley, 461 U.S. at 433.
Finally, Defendant generally challenges the reasonableness of
Plaintiffs' fees and costs; it contends that they are excessive, given
that they substantially exceed the median fees award in recent FOIA cases
in this Court ($16,575), and that "so little in the way of actual
litigation has taken place" in Plaintiffs' two lawsuits. Def.'s Opp'n at
30-31 (citing Ex. U at 1-4).
The Court finds that the total amount of fees and costs to be awarded
— which will exceed $100,000 — is not unreasonable. As
explained more fully in Sections II.A.1 & 3, the lawsuits brought by
Plaintiffs were hardly run-of-the-mill FOIA or Government in the Sunshine
cases. On the contrary, Plaintiffs' lawsuits constitute complex
litigation which succeeded in obtaining the release of vital information
concerning what has been referred to as the most significant
privatization during the Clinton Administration. See Pls.' Mot. at 9,
Ex. 1 (quoting U.S. News & World Report article). The released documents
led to numerous news articles and Congressional hearings, in which USEC's
privatization was debated, critiqued and studied by lawmakers, academics,
and members of the public. Given the nature of the lawsuits, and the
vitally important public benefits that resulted therefrom, Plaintiffs'
request for fees is well within the range of reasonableness, and the
Court will not reduce Plaintiffs' compensation further than it already
For the reasons stated, Plaintiffs' Motion for Fees and Expenses [#28]
is granted in part and denied in part. In accordance with the rulings
contained in this Opinion, the parties shall, within 15 days of the entry
of this Order, submit a proposed order which calculates the exact amount
of fees and costs to be awarded.
An Order will issue with this Opinion.
O R D E R
This matter is before the Court on Defendant's Motion for Fees and
Expenses [#28]. Upon consideration of the Motion, Opposition, Reply, and
the entire record herein, for the reasons stated in the accompanying
Memorandum Opinion, it is this ______ day of March 2001
ORDERED, that Defendant's Motion for Fees and Expenses [#28] is granted
in part and denied in part; and it is further
ORDERED, that based on the rulings contained in the accompanying
Memorandum Opinion, the parties shall, within 15 days of the entry of
this Order, submit a proposed order which calculates the exact amount of
fees and costs to be awarded.