The opinion of the court was delivered by: Paul L. Friedman United States District Judge
This matter is before the Court on a motion for attorneys' fees, costs and expenses by Covington & Burling LLP ("Covington"), counsel for class member Robert E. Holmes, Sr. ("Mot."); an opposition to Covington's motion by the United States Department of Agriculture ("Opp."); Covington's reply ("Reply"), and USDA's surreply ("Surreply").
On October 1, 2007, "Mr. Holmes prevailed against the [USDA] in a Track B arbitration, which was conducted pursuant to the Court's April 14, 1999 consent decree[.]" Mot. at 1-2; see also id., Declaration of Joshua A. Doan, Ex. 1, In Re: Track B Claim of Robert E. Holmes, Sr. (Claim No. 19230, Arb. No. 131) (Oct. 1, 2007) ("Arbitrator's Decision").*fn2 The USDA chose not to appeal the arbitrator's decision, and it became final on January 29, 2008.
In the Track B proceeding, Mr. Holmes alleged that the Farmers Home Administration, an agency of the USDA, discriminated against him in the provision and servicing of farm loans on various occasions between 1985 and 1994. Presumably because they occurred at different times and rested on distinct facts, the arbitrator treated Mr. Holmes' various allegations of discrimination as eleven discrete claims. The arbitrator found in Mr. Holmes' favor with respect to some but not all of his claims. Specifically, the arbitrator found in Mr. Holmes' favor on Claim 1 ("Failure to Provide Limited Resource Interest Rate [Loan in] 1985"); Claim 2 ("Delay in Processing 1986 Loan"); Claim 3 ("Delay in Processing 1987 Loan"), Claim 4 ("Delay in Processing the 1988 Loan"); and two of three allegations in Claim 6 ("Denial of Loans and Loan Servicing in 1990"). The arbitrator did not find in Mr. Holmes' favor on Claim 5 ("Delay in Processing the 1989 Loan and Servicing Request"); one of three allegations in Claim 6; Claim 7 ("Denial of Loans and Loan Servicing in 1991"); Claim 8 ("Denial of Loans and Loan Servicing in 1992"); Claim 9 ("Denial of Loan Servicing in 1993 and 1994"); Claim 10 ("Denial of Loans for Machinery Purposes"); and Claim 11 ("Denial of Farm Ownership Loans"). See Arbitrator's Decision at 21-33. The arbitrator awarded Mr. Holmes a total of $202,290.87 in actual damages and $100,000 in emotional distress damages. Id. at 36. He also directed that any outstanding loan balances in the Operating Loan program dating from 1985 were to be forgiven. Id.
Covington represented Mr. Holmes throughout the litigation of his Track B claim. The firm now seeks $192,180.93 in attorneys' fees, costs and expenses under the Equal Credit Opportunity Act, 15 U.S.C. § 1691e(d) ("ECOA"), and the Equal Access to Justice Act, 28 U.S.C. § 2412 ("EAJA").*fn3 The USDA concedes that Mr. Holmes is a prevailing party for fee- shifting purposes, and thus that the ECOA and the EAJA entitle Covington to reasonable fees, costs and expenses. See Opp. at 1. The USDA contends, however, that Covington's fee should be reduced to account for the fact that Mr. Holmes did not prevail on all of his claims. See id.
The USDA's argument is based on Hensley v. Eckerhart, 461 U.S. 424 (1983), and its progeny. In Hensley, the Supreme Court "defined the conditions under which a plaintiff who prevails on only some of his claims may recover attorney fees" under fee-shifting statutes like the ECOA and the EAJA. George Hyman Construction Co. v. Brooks, 963 F.2d 1532, 1535 (D.C. Cir. 1992).*fn4 In such cases, Hensley prescribes the following two-part inquiry for assessing a plaintiff's "degree of success," Goos v. Nat'l Ass'n of Realtors, 997 F.2d 1565, 1568 (D.C. Cir. 1993), and hence the reasonableness of the fees sought:
First, did the plaintiff fail to prevail on claims that were unrelated to the claims on which he succeeded? Second, did the plaintiff achieve a level of success that makes the hours reasonably expended a satisfactory basis for making a fee award?
Hensley v. Eckerhart, 461 U.S. at 434. If the answer to the first question is "yes," then "no fee may be awarded for services on the unsuccessful claim[s]," because "[t]he congressional intent to limit awards to prevailing parties requires that these unrelated claims be treated as if they had been raised in separate lawsuits[.]" Id. at 435. See also Sierra Club v. EPA, 769 F.2d 796, 801 (D.C. Cir. 1985) (fees should not be awarded for meritless or unsuccessful claims "simply because those unsuccessful claims were brought in a lawsuit that included successful claims").
If, however, the court finds that a prevailing party's unsuccessful and successful claims are "interrelated," then it is instructed "to skip the first Hensley [prong] and move to its second." George Hyman Construction Co. v. Brooks, 963 F.2d at 1537. Under Hensley's second prong, the court must consider "whether the success obtained . . . is proportional to the efforts expended by counsel," George Hyman Construction Co. v. Brooks, 963 F.2d at 1535, and then "award only that amount of fees that is reasonable in relation to the results obtained." Hensley v. Eckerhart, 461 U.S. at 440. In other words, if the successful and unsuccessful claims "share a common core of facts or are based on related legal theories, then a court should simply compute the appropriate fee as a function of degree of success." George Hyman Construction Co. v. Brooks, 963 F.2d at 1537.
The USDA's principal argument is that Covington's fee request should be reduced under Hensley's first prong. Specifically, the USDA contends that Covington is not entitled to fees for its work on Mr. Holmes' unsuccessful claims because those claims are "unrelated" to Mr. Holmes' successful claims. See Opp. at 2; see also id. at 11-13. In the alternative, the USDA argues that if the Court disagrees with its principal argument -- i.e., if the Court concludes that Mr. Holmes' claims are "related" under Hensley's first prong -- then Covington's fee request should be reduced under Hensley's second prong. The USDA asserts that it would be disproportionate and excessive to award Covington fees for its work on all of Mr. Holmes' claims when Mr. Holmes prevailed on only some of those claims. See id. at 16-17.
Covington, of course, disagrees on both points. With respect to the first point, Covington argues that Mr. Holmes' unsuccessful claims were related to his successful claims because all of his claims were formulated as "disparate treatment claims under the Equal Credit Opportunity Act that relied on the McDonnell Douglas framework (because of an absence of direct evidence of racial animus)." Reply at 7; see also id. at 10 (arguing that "Mr. Holmes' successful and unsuccessful claims were closely related because they were brought using related legal theories under the same statute using the same legal framework and relying on the same type of evidence.").*fn5 With respect to the second point, Covington argues that it is entitled to the full fee sought because that fee would reasonably compensate the firm for its work on Mr. Holmes' Track B claim, particularly in light of the excellent results obtained. See id. at 10.
As an initial matter, the Court will accept the USDA's invitation to (1) limit its analysis to the first issue raised by the parties -- that is, whether Mr. Holmes' unsuccessful claims are "related" to his successful claims under Hensley's first prong -- and (2) order the parties to attempt to settle this matter in light of the Court's ruling on that issue. See Opp. at 2, 16; see also Ass'n of Admin. Law Judges, Inc. v. Heckler, Civil Action No. 83-0124, 1988 WL 30760, at *6-7 & n.4 (D.D.C. Mar. 21, 1988) (utilizing this approach). Because "[a] request for attorney's fees should not result in a second major litigation," and "[i]deally . . . litigants will settle the amount of a fee," Hensley v. Eckerhart, 461 U.S. at 437, the Court concludes that it is both wiser and more efficient to give the parties one last chance to ...