Missouri v. Jenkins

PETITIONER:Missouri
RESPONDENT:Kalima Jenkins et al.
LOCATION:Kansas City Missouri School District

DOCKET NO.: 88-64
DECIDED BY: Rehnquist Court (1988-1990)
LOWER COURT: United States Court of Appeals for the Eighth Circuit

CITATION: 491 US 274 (1989)
ARGUED: Feb 21, 1989
DECIDED: Jun 19, 1989

ADVOCATES:
Bruce Farmer – Assistant Attorney General of Missouri, argued the cause for the petitioners
Jay Topkis – argued the cause for the respondents

Facts of the case

The Kansas City Missouri School District hired lawyers to argue a major desegregation case against the state of Missouri in federal district court. When the lawyers won the case after years of litigation, they sought compensation from Missouri under the Civil Rights Attorney’s Fees Awards Act of 1976. The district court calculated the amount owed using current market rates for attorney’s fees. Missouri objected to paying the lawyers at current rates for work they performed in the past when rates were lower. The United States Court of Appeals for the Eighth Circuit ruled against Missouri. Missouri alleged that the federal courts violated its Eleventh Amendment sovereign immunity privileges by forcing it to pay higher rates.

Question

Under the Civil Rights Attorney’s Fees Awards Act of 1976, does the Eleventh Amendment prohibit a federal court from requiring a state to pay lawyers at current market rates for past litigation? Can legal assistants be charged at current market rates rather than at their cost to the lawyers at the time of litigation?

William H. Rehnquist:

We’ll hear argument now in No. 88-64, Missouri v. Kalima Jenkins.

Mr. Farmer, you may proceed whenever you’re ready.

Bruce Farmer:

Mr. Chief Justice, and may it please the Court.

This case is here in certiorari to the United States Court of Appeals for the 8th Circuit.

Petitioners are the State of Missouri and its officials found liable in their official capacity.

We present two issues involving the attorney’s field ward arising out of the Kansas City, Mo., desegregation case.

The first is an 11th Amendment immunity issue, this time as it pertains to a Section 1988 fee award that includes prejudgment interest or compensation for delay in payment.

The second issue concerns an issue that was also involved in the Blanchard v. Bergeron case, and that concerns the proper method of compensation for paralegal services.

I would like to briefly address the 11th Amendment issue first, and while the underlying facts in this case have been complex, only a few facts are relevant now.

The Kansas City desegregation case began in 1977.

The fee award, however, went to two groups of attorneys who entered the case later.

Kansas City attorney Arthur Benson and his staff entered the case in 1979 and was awarded $1.7 million in fees and expenses for the period through June of 1986.

The NAACP Legal Defense Fund entered the case in 1982 and were awarded $2.4 million.

The plaintiffs became prevailing parties in September of 1984.

The fee applications were filed in February of 1986.

The fee awards were based on current rather than historical hourly rates.

This was expressly done to compensate for delay in payment.

Out of approximately 18,000 attorney hours compensated, about 85 % were incurred in the years 1983 and 1984.

The record shows that the current hourly rates used were approximately $15 to $20 higher than the historical rates for this period.

Now, the 11th Amendment and the current status of the 11th Amendment is involved in at least two other cases before this Court this term.

Pennsylvania v. Union Gas argued last October and Gilhool v. Muth scheduled to be argued next week.

The issue was also touched on briefly in Wheel v. Michigan State Department of State Police argued in December.

The 11th Amendment has been explored in great detail in previous recent opinions of this Court.

I’m not sure that I can add much to the detailed historical argument.

In this case, it is the State’s position that compensation for delay in payment or prejudgment interest is barred by the 11th Amendment, and we submit that the principles set forth in this Court’s Library of Congress v. Shaw decision can be extended to an 11th Amendment context.

Now, Library of Congress dealt with the fee-shifting provision of Title VII and the federal government’s sovereign immunity In the long-standing no-interest rule.

Sovereign immunity was expressly waived concerning attorneys’ fees and costs, but this Court found that it was not waived concerning the sovereign’s immunity from interest.

We believe it can be extended to the 11th Amendment context because of the numerous similarities between the fee-shifting provision of Title VII and Section 1988.

First, Section 1988, when enacted by Congress, Congress specifically relied on the language of Title VII, the fee-shifting provision of Title VII.

The identical relevant phrase is found in both fee-shifting provisions, that is,

Bruce Farmer:

“a reasonable attorney’s fee as part of costs. “

In analyzing these words, this Court has already determined that they do not include prejudgment interest or compensation for delay.

More Importantly, the standard for finding a Congressional abrogation of the 11th Amendment immunity is just as strict, if not more so, as the standard for finding a Congressional waiver of the United States sovereign immunity.

William H. Rehnquist:

But one of your problems, it seems to me, is to show that this no-interest rule attaches to state sovereign immunity under the 11th Amendment.

You don’t get to whether there’s a clear statement or something like that until you find that that’s an incident of the state sovereign immunity, it seems to me.

Bruce Farmer:

That’s correct.

And we believe It can be extended to the 11th Amendment because of the character of the element we’re talking about here.

Prejudgment interest, or compensation for delay, or whatever term is used to describe the time value of money, is traditionally an element of damages, not cost.

And the 11th Amendment immunity is protective of the state’s liability from elements of damages.

And that’s, the character of prejudgment interest is one of damages.

We do not believe it’s relevant that the Missouri has a general stare statute that has been Interpreted by stare courts to allow prejudgment interest against the state.

This is–

John Paul Stevens:

Of course, Mr. Farmer, this is not really strictly prejudgment interest, is it?

Couldn’t one argue that what’s at stake here is that there’s no sovereign immunity that’s been decided for the liability for fees themselves, and the question is just how one measures the fee that’s due, given the delay in payment?

There’s no separately calculated item of prejudgment, it’s just somehow, it’s mixed up in the Judge’s calculation.

Bruce Farmer:

–Well, it is mixed up in the Judge’s calculation, but it was separately calculated in terms of a, he specifically found that current hourly rates used were $15 or $20 higher than the historical rates, and that was done to compensate for delay.

And compensation for delay is the same as prejudgment interest.

John Paul Stevens:

Except you don’t have an interest rate factor.

He doesn’t say the interest rate is 6 % or something like that.

He just sort of uses a rough method, what he thinks is a reasonable way to come up with a fair fee.

Bruce Farmer:

That’s correct.

It Is a rough method, but It’s a method nonetheless to compensate for the time value of money, and it’s to compensate for a period before the Judgment, so therefore it takes the character of retroactive liability, in that sense.

Because this–

John Paul Stevens:

Well, it’s retroactive just since, until the suit was filed.

Bruce Farmer:

–Well, it’s retroactive in the sense, to the time the attorneys’ fees were incurred, and attorneys’ fees could be incurred before the suit was filed–

Anthony M. Kennedy:

I see.

Your position is that the attorney is fully compensated In economic terms when just the bare fee, without any addition for delay In payment, is the award?

Bruce Farmer:

–Obviously, the fee is going to be a little bit less.

The question under Section 1988 is a reasonable attorney’s fee and does a reasonable attorney’s fee include prejudgment Interest or compensation for delay–

Anthony M. Kennedy:

Well, another way of saying it is a reasonable attorney’s fee, in your view, is less than full compensation for the attorney’s time reasonably expended.

Bruce Farmer:

–But under fee-shifting statutes, attorneys are typically, the standard is not fully compensated.

It’s a reasonable attorney’s fee.

Attorneys and fee-shifting litigation–

Anthony M. Kennedy:

So your position Is that a reasonable fee is less than full and fair compensation.

Bruce Farmer:

–No, your Honor.

That’s… our position Is that a reasonable attorney’s fee, under the statute, would not include prejudgment interest or compensation for delay.

The policy reasons for including prejudgment interest or compensation for delay are reasonable.

I concede that.

They may be persuasive if addressed to Congress.

Those policy reasons apply equally as strong in the Title VII fee-shifting statute, which this Court found that reasonable attorneys’ fees, that also does not include prejudgment interest or compensation for delay.

John Paul Stevens:

Mr. Farmer, if you prevail In this case, do you think it would be permissible for a judge to follow a practice that sometimes Masters would follow, to say require the parties to make a deposit to cover future liability for cost, and then stick the money into an interest-bearing account to earn interest, and then If the State prevailed they get the money back plus Interest, whereas if the plaintiff prevailed they could get their interest in that manner?

Would that violate the 11th Amendment?

Bruce Farmer:

I think there would be serious questions involved in whether you could require the State, prior to any Judgment, to deposit a certain amount in escrow to satisfy any future liability for attorneys’ fees.

I don’t think that would be proper.

I don’t think the 11th Amendment would allow for that.

You’re already requiring the state to commit funds it otherwise would have available for other reasons and to lock them away so they can’t be–

John Paul Stevens:

What if the State at the outset admitted liability and said,

“The only thing we want to fight about is the nature of the decree. “

which is, I guess, what happened here in 1984.

It was pretty clear that there was going to be liability, but there was further litigation.

What if, at that point, in ’84, they had said,

“We now know the plaintiff is going to be a prevailing party and so there’s going to be some liability for fees, so we’ll ask the State to put up $500,000 in an interest-bearing account. “

What would be wrong with that?

Bruce Farmer:

–Certainly the statute, I think, Section 1988 allows for interim fees.

That has been done in this case.

John Paul Stevens:

No, no, I say put in on new ground knowing that there was going to be a lot of litigation over the form of the decree and things of that kind, and which end that the plaintiff is ultimately going to prevail, because it’s been determined that it’s the prevailing party.

What would be wrong with saying that,

“We know you’re going to have to pay these fees, so we don’t want the lawyer to work, just wait for the money when he, all this time, so we’ll require you to make a deposit. “

Why would that violate the 11th Amendment?

And why is that really in substance any different from what’s done here?

Bruce Farmer:

Well, in substance, it’s different than what’s done here because here there was no judgment on the attorneys’ fees until long after the liability order had been issued and the judgment took into account the delay in payment.

If, immediately after the liability order, interim fees had been requested, certainly things may have proceeded differently in the District Court.

Requiring a deposit, I think, is no different than allowing for an award of interim fees, depending on the specific factual circumstances of the case.

So, since an interim fee award would not be barred by the 11th Amendment, requiring a deposit probably would not be, either.

But, I think the better practice would be to provide for an interim fee award, pending resolution of the fees or the remedy, the scope of the remedy.

In this case, this action arose under federal law, and we contend that the payability of prejudgment interest is governed by federal law.

Just last term, in West Virginia v. United States, this Court unanimously held that the question of prejudgment Interest is not controlled by stare statute or local common law.

A single nationwide rule is preferable to one turning on state law.

Now, that case dealt with a claim by the federal government against a state and whether prejudgment interest could be awarded as part of damages on a contractual obligation.

There, the states had no sovereign immunity as against the federal government, but the state is protected by sovereign immunity, the 11th Amendment Immunity, as against private parties.

We submit that this is simply a straightforward application of the principles in Shaw, and that the 11th Amendment prohibits prejudgment Interest as a delay, or, a delay-in-payment factor.

I’d like to turn now to the paralegal issue.

The paralegal hours, in this case, were compensated at a market-based rate, and, again, current hourly rates were used for delay in payment.

Sandra Day O’Connor:

Mr. Farmer, may I ask whether you concede that recovery for paralegal services is Included In attorneys’ fees recovery?

Bruce Farmer:

It’s not necessary for me to concede that in this case.

I recognize that–

Sandra Day O’Connor:

Well, you didn’t challenge that.

Bruce Farmer:

–We did not challenge that in this case.

Sandra Day O’Connor:

You just want to quibble over actual costs or market.

So, I take it that you must accept the fact that recovery may be obtained.

Bruce Farmer:

Well, to be honest, your Honor, In looking at this issue in front of the District Court, we litigated the issue that we felt we could win on.

We did not think we could win on saying that paralegal fees were not separately compensable at all.

I think a reasonable argument could be made to that effect.

We are not making that here because, I think, the record shows–

Sandra Day O’Connor:

Well, what is your position?

Suppose the local market indicates that, generally, paralegal services are billed separately for legal services rendered in cases.

Bruce Farmer:

–And I think that’s what has been shown here.

The record shows that the local market typically bills separately for paralegal services.

So it’s not included in the hourly rate awarded to the attorney.

Sandra Day O’Connor:

So you do concede, in effect, that they are recoverable under those circumstances as a separate item on the bill for attorneys’ fees.

Bruce Farmer:

Under those circumstances, they could–

William H. Rehnquist:

Why do you concede that?

Bruce Farmer:

–Well, in this case, the attorney’s fee, the market rate–

William H. Rehnquist:

You’re conceding the fact that when it says, when the statute provides for the award of a reasonable attorney’s fee, it includes not only a fee for attorneys but for paralegals, too?

Bruce Farmer:

–No.

William H. Rehnquist:

Well, then what are you conceding?

Bruce Farmer:

I think I’m… the statute includes attorneys’ fees, includes compensable items in two separate categories: attorneys’ fees and costs.

If an item, if it is not an attorney doing work, then it’s in the second category.

If it’s not included in the attorney’s hourly rate, then it’s in the second category, the category of costs or expenses.

William H. Rehnquist:

And you’re conceding that costs and expenses, as used in Section 1988, includes charges for paralegal time?

Bruce Farmer:

We didn’t raise that issue in this case–

William H. Rehnquist:

Well, but are you conceding it?

Bruce Farmer:

–Well, I will not concede it as a matter of law.

I think a reasonable argument could be made that it does not–

William H. Rehnquist:

Well, why don’t you make it?

Bruce Farmer:

–Because, in this case, we felt the equitable resolution, and under the particular–

William H. Rehnquist:

Well, why don’t you make it in this Court?

Bruce Farmer:

–Well, in this Court, I will make the argument.

The cost and expenses back in 1976, when Section 1988 was enacted, compensation, separate compensation or separate billing for paralegals was not a widespread practice.

Therefore, an argument could be made, I think, that Congress did not consider–

John Paul Stevens:

But, Mr. Farmer, could that argument be made in this case when it wasn’t made in the lower court and you’re seeking a reversal of the judgment?

Bruce Farmer:

–That’s why we are not making it in this Court, your Honor.

We took the position in the lower courts what we felt was fair and equitable under the specific circumstances of this case.

And that is that the reimbursement of paralegal services should be under the actual cost method, not at a market-based rate.

Sandra Day O’Connor:

What’s the practice, generally, around the country, do you think?

Are paralegal fees billed as attorneys’ fees–

Bruce Farmer:

Well, I think the practice varies.

I think the prevalent practice is to bill separately.

Mr. Topkis may ba able to answer to answer that better than I can, because I’ve spent my entire career in government service.

Some attorneys do not, for example, the plaintiff’s expert in the attorney fee litigation in this case testified that he did not bill separately for paralegal time.

Bruce Farmer:

So I think the practice varies.

The State of Missouri, we’ve looked at this issue very carefully and do not believe that using the actual cost method will increase fees or increase fee litigation.

To begin with, law firms normally are not guaranteed an award of fees in any fee-shifting litigation.

Therefore, they cannot afford to assign attorneys to do paralegal work just on the mere possibility that they will prevail and receive fees.

Likewise, the most senior attorney in the firm is not going to be doing simple, basic legal research that a first-year associate can do, on the chance that the higher rate can be recovered some time down the road if they prevail.

The law firm is going to continue to staff a particular case in the most cost-effective manner, the most efficient manner.

We do not think that this will result in additional fee litigation because scrutiny of attorney hours and paralegal hours already exists.

Courts routinely reduce the hourly rate of eliminate the hours entirely if, for example, senior attorneys are doing work that should have been done by junior attorneys.

If junior attorneys are doing paralegal work, courts routinely reduce the hours or reduce–

John Paul Stevens:

–Mr. Farmer, can I ask a factual question?

The district Court referred to the paralegals at $40 an hour and to law clerks at $35 an hour.

What exactly is a law clerk that he’s talking about, do you know?

Is this a person not admitted to the bar and doing summer work, or is this a junior lawyer or what, do you know?

Bruce Farmer:

–well, the record isn’t clear on that, your Honor.

A law clerk may be, in this case, someone who is not trained as a paralegal.

The district Court also included fees for recent law graduates who are not yet admitted to the bar who also worked on the case.

The whole range of paraprofessionals that were not attorneys, basically, I’ve lumped into one category of paralegals because that’s what they are.

They’re not attorneys, they can’t receive attorneys’ fees, so therefore the fee comes under the paralegal.

Courts also routinely reduce hours or eliminate the hours if paralegals are doing clerical work that should be considered normal office overhead.

We also take the position that fee litigation may actually be reduced, because the dollars at stake are less.

And that thereby reduces the incentive to litigate the fees, particularly when everything you do in fee litigation just generates more fees for the prevailing party.

Now, we concede that Congress was concerned about providing for reasonable attorneys’ fees, but there was also a concern in Congress that Section 1988 not result in windfall to attorneys or become a relief fund for lawyers.

Compensating paralegals at a market-based rate does result in a windfall, particularly in this case, where the paralegals were hired specifically to work on this case.

Antonin Scalia:

Should this be any more so than compensating attorneys at a market-based rate?

Bruce Farmer:

We believe that the attorneys are treated differently under the statute.

It specifically refers to attorneys’ fees and, therefore, the attorneys’ fees get the market-based rate because that also includes overhead and a profit figure.

The other category in the statute, cost or expenses, is treated differently.

I’d like to explore–

Sandra Day O’Connor:

So it depends on whether we treat the paralegal fees as attorneys’ fees or separately as costs, under your argument.

Bruce Farmer:

–Separately as cost or expenses, that’s correct.

Byron R. White:

Well, let me simply say it can’t be an attorney’s fee, under the statute, if it’s work done by non-attorneys.

Bruce Farmer:

That’s correct, your Honor.

It therefore falls into the second category.

I’d like to explore this rationale–

Sandra Day O’Connor:

But doesn’t work by attorneys normally include an amount of overhead for secretarial services and all kinds of things that aren’t “work by attorneys”, that’s incorporated in attorneys’ fees.

What is this?

Is it part of costs or part of attorneys’ fees?

Bruce Farmer:

–Well, we believe it’s part of costs and expenses, an expense to the lawyer that he has to pay for, In, concerning the particular case.

If I can give you an example, let’s just take it one tiny step further.

A legal secretary, like a paralegal, has specialized training, In some cases a college program.

Is that also the type of expense that can be separated out and billed separately?

And we’re talking about billing separately here, not at an actual cost method, but at a rate four or five times the actual cost to the attorney.

Now, again, this does not appear to be a widespread practice now; maybe Mr. Topkis can address that.

But the day may come when that happens.

We don’t believe that that kind of concept was considered by Congress in allowing a reasonable attorneys’ fees and cost and expenses under Section 1988.

We recognize that it is one thing for a law firm to bill separately for those items on the basis of a contractual agreement with the client’s consent.

But we’re talking about fee-shifting statutes, which Congress has allowed the prevailing party to pass attorneys’ fees and costs and expenses on to one’s opponent.

With the concerns that Congress had about windfall, about providing for reasonable attorneys’ fees, we do not believe there–

John Paul Stevens:

Mr. Farmer, can I interrupt you a second?

The judge in this case treated the paralegal time as part of the fee award.

Were not the costs separately itemized and allowed things like transcripts and so forth, and the paralegal time was not included in what the judge called “costs”?

Bruce Farmer:

–Well, yeah, it was not included in what the judge called “costs”, but it was included separately from the award that concerned fees.

The interesting thing about that–

John Paul Stevens:

I thought the judgment gave a big lump sum for fees which had, as a part of it, all the paralegal hours and law clerk hours and attorney hours.

Bruce Farmer:

–Pardon me?

John Paul Stevens:

Well, I thought there was one figure for fees for each of the two firms which included the paralegal time and all that, and that the costs were a separate item, covering things like transcripts and witness fees–

Bruce Farmer:

Oh.

In the final recalculation, or the summary, that’s correct.

But, in listing that way, they were listed separately.

John Paul Stevens:

–I see.

Bruce Farmer:

The interesting thing about that is the cases relied on by Congress in enacting Section 1988, the one case… and only one case even referred to law clerk fees or paralegal fees… that is listed in a whole string of items, of costs.

It’s listed separately from attorneys’ fees and it’s not in its own separate category; it’s listed, including in the whole string of items of costs.

So that’s why we believe that in treating paralegal fees, under the statute, it should be at an actual cost method.

Anthony M. Kennedy:

Your position is that our decision will not affect the way attorneys use paralegals in their practice, in these cases?

Bruce Farmer:

We do not believe it will, your Honor.

Anthony M. Kennedy:

If you’re wrong about that, then your position means that the cost, or the legal bill may ultimately be more because attorneys will be used instead of paralegals.

Bruce Farmer:

That is certainly a possibility, but I think it’s–

Anthony M. Kennedy:

So a large part of your argument seems to rest on a judgment as to whether or not what we say makes any difference to the practice of law in these cases.

Bruce Farmer:

–Well, one would hope that what you do say makes a difference in the practice of law.

[Laughter]

We do not believe that law firms are going to be treating paralegals any differently or staffing cases differently.

To speculate that, ultimately, fee awards may increase, I think, just cannot be shown from the record in this case and would be speculation at best.

Anthony M. Kennedy:

Well, if attorney are used in lieu of paralegals, then it clearly will increase the size of the awards.

Bruce Farmer:

Yes, but, even now, those kinds of hours are scrutinized by District Courts in fee litigations, so if attorneys are doing paralegal work, the hours, District Courts now typically reduce or eliminate the hours entirely.

That’s–

Anthony M. Kennedy:

So you think there should be a legal requirement that paralegals be used?

Bruce Farmer:

–Well, I think there’s a, in determining whether to use paralegals or an attorney, the law firm must staff the case as efficiently as possible.

In deciding what compensation to require one’s opponent to pay, if a work could have been done by a paralegal but was instead done by a lawyer, then District Courts should reduce the fee award appropriately.

Just as now, if work is done by a junior associate, or if work is done by a senior attorney that could have been done by a junior associate, courts routinely reduce those fee awards on that basis.

Unless there are any further questions, I’ll reserve the balance of my time for rebuttal.

William H. Rehnquist:

Thank you, Mr. Farmer.

Mr. Topkis?

Jay Topkis:

Mr. Chief Justice, and may it please the Court.

I’d like to begin, if I may, with some comments on questions that were put to my friend, Mr. Farmer, in the course of his argument.

First, in connection with a question that Justice Stevens put, I must advise the Court that there is no reference whatsoever in the trial court’s opinion, or in the record, to any $15 or $20 differential between historic and current market rates for lawyers.

That’s, I don’t know where Mr. Farmer got that from, but he certainly didn’t get it from the record here.

The fact is that the State chose to offer no proof whatsoever as to historical rates, and now comes before this Court and says,

“We want historical rates to govern. “

It seems to me that the State should have made up its mind some time ago.

Justice Kennedy–

Byron R. White:

There was such mention of compensating for delay, wasn’t there?

Jay Topkis:

–There was, indeed, your Honor.

Byron R. White:

And the judge did compensate for delay.

Jay Topkis:

He said that he was taking, actually, he divided his treatment between the way he treated Mr. Benson and the way he treated everybody else.

In both situations, in varying ways, he did say that he was using current market rates and, in consideration of the fact that there had been delay in com, in payment–

Byron R. White:

Joe, we just don’t know how much compensation there was for delay.

Jay Topkis:

–That is exactly the situation, your Honor.

If I may, there is a sharp distinction between what the Court did here, where he said, looking at everything, I think I have to take the fact that there has been delay into account, without specifying what account he gave it, and what happened in Library of Congress against Shaw, on which my friend relies, where the District Court very deliberately set out to award 10 % per annum by way of interest on–

Antonin Scalia:

It’s better or worse?

Jay Topkis:

–Better or worse for whom?

Antonin Scalia:

Do you prefer the courts to say,

“Well, I’m giving some indeterminate amount of interest here, I don’t know quite how much it is? “

You think that’s good, although, if you said,

“I’m giving exactly 10 % interest. “

it’s bad.

Jay Topkis:

Well, I think I’ve got a two-pronged argument.

As I’m sure your Honor knows from our brief, we take the position that the 11th Amendment has no application here and so on.

But I think that it is perfectly reasonable to say, to draw the dividing line that Judge Ginsberg drew in Library of Congress against Shaw, where she said that if a Court, where she said that she thought interest is bad.

A flat award of 10 % per annum or whatever is forbidden by the 11th Amendment.

But, taking the fact of delay in payment into account, along with all of the other factors appropriate for setting a fee, is permissible under the, under, there she was speaking not of the 11th Amendment, of course.

But we also see a difference between the 11th Amendment and the common-law immunity of the states.

The 11th Amendment… pardon me, of the sovereign… the 11th Amendment, of course, derives from one source, and the no-interest rule derives from a very different one.

Now, the, there’s another point that I wanted to make in response to a question from Justice Kennedy.

Your Honor asked Mr. Farmer what his position was, I’ll make bold to tell the Court what our position is.

Our position is that reasonable compensation means reasonable compensation.

We don’t know, as I said, what the difference is between, was, historical and market rates.

But let’s suppose we were still in a time of 17 %, 18 % annual inflation, which we saw some years ago.

Now let’s suppose that this went on for years.

Would anyone call an award whose value was devalued by 40 % or 50 % or 60 % because of delay “reasonable compensation”?

I can’t imagine it.

Antonin Scalia:

Yes, we would, it the suit were against the United States.

We have held that.

Jay Topkis:

Held that it would be “reasonable compensation”, your Honor?

Antonin Scalia:

Well, the same provisions at issue here, if applied against the United States, would, according to our decision in Library of Congress, be held to preclude an award of interest.

Jay Topkis:

That is true.

In that context, I certainly must agree with you.

Antonin Scalia:

So that must mean that we’re willing to swallow that very large camel, at least in the context where the United States is the defendant.

Jay Topkis:

Well, I think, perhaps, if it came up before the Court in those circumstances, the situation might be different.

But I don’t know.

I don’t attempt to forecast what this Court will do.

I just try in my humble way to influence it.

Antonin Scalia:

I’m just going by what we said in Library of Congress anyway.

And holding there certainly does have that bizarre consequence that you just described.

Jay Topkis:

And I suggest, with all respect, that Library of Congress is not determinative here and that its rule, whatever its merits in that context, calls for no particular attention in this context.

Sandra Day O’Connor:

Its principles may be exactly the same, if we recognize state sovereign immunity.

Jay Topkis:

Yes.

Sandra Day O’Connor:

Yes.

Jay Topkis:

I’m forced to agree with that.

But if you recognize state sovereign immunity, you would have to recognize that you were departing from the roots, the bases of the 11th Amendment.

The 11th Amendment didn’t come out of a concern–

Sandra Day O’Connor:

Well, is that so?

I think the 11th Amendment may have arisen out of a concern for state sovereign immunity, don’t you?

Jay Topkis:

–With all respect, your Honor, I would suggest that the 11th Amendment arose more out of a concern for the federalist system, a concern for the proposition that the states should not be called to account for anything in the federal courts.

Sandra Day O’Connor:

Because the states were sovereign.

Jay Topkis:

Your Honor may hold that view, and I certainly am not going to attempt to do other than put forward the view that it was not because the states were sovereign, having the mystical attributes of the sovereign, the king, the almighty, but because the states were federated, that they were independent entities coming together by consensus to form these United States of America.

Sandra Day O’Connor:

They were sovereign states coming together in a federation.

Jay Topkis:

Sovereign, yes, but not sovereign in the sense of necessarily possessing immunity.

It was because the federal system would work best.

And I think that was Justice Holmes’ phrase, it won’t come to me quite… but it’s important that the system work, we all know that.

And I submit that the 11th Amendment was adopted in order to help attain that objective… not because of any mystical concern with the integrity of the king or anything of the kind, but because it was a deal.

Jay Topkis:

And the deal would never have been made, as so many historians have pointed out.

The deal that was the Constitution of the United States would never have been made had the states not believed that they would never be amenable to suit in the courts of the United States.

Now, there was, if I may pass to another point, there was lurking in the conversation, while Mr. Farmer was up, some reference to the time period that elapsed between the decision on liability and the application for fees.

I would accept no penalty for that, certainly, because the fact is that, after the decision on liability was announced by Judge Clark, he said he was going to hold up on any fee award pending appeal of that liability decision, because, until then, he wouldn’t know who was the prevailing party and it would be a futile exercise to attempt to award fees.

And it’s significant to note that both sides consented to that treatment.

Now, Mr. Farmer said that plaintiff’s expert testified, and this is on the subject of paralegals, he said that plaintiff’s expert… and he was referring to one of our experts, a personal injury lawyer from Kansas City named Max Foust.

He said that our expert, Mr. Foust, testified that he didn’t bill separately for paralegals.

And that is the way the record reads.

What Mr. Foust said was,

“I don’t have any truck with that kind of fancy nonsense. “

“I make contingency arrangements with my clients, 33-1/3 % if I settle, and 40 % if I go to trial. “

“That’s enough for me. “

Mr. Foust said.

It would be enough for most of us, I respectfully suggest.

But in any event, he said also that whatever the practice of personal injury lawyers in Kansas City, he knew very well that the Kansas City law firms that bill on an hourly basis uniformly bill paralegals at $40 to $50 an hour, not at cost, but the $40 to $50 an hour was the market in Kansas City.

The District Court here awarded us the low end of that range.

Another–

William H. Rehnquist:

Mr. Topkis, do you think paralegals come under the head of 1988?

Jay Topkis:

–If I may, your Honor, I would answer that question by saying that the overall thrust of 1988 is to put civil rights plaintiffs on a par with all other plaintiffs in competing for legal services.

And that, in consequence, their lawyers, if they are to have equal access to lawyers, their lawyers must be compensated as lawyers in other cases are compensated–

William H. Rehnquist:

Are you going to answer the question?

Jay Topkis:

–Yes, I will, and I will say, in consequence, it appears to me that market should determine because market is what determines in all other contexts.

William H. Rehnquist:

But I asked you a question which I don’t believe you’ve answered.

Jay Topkis:

I apologize.

William H. Rehnquist:

My question was, do you think attorneys’ fees are recoverable, rather, paralegal fees are recoverable as a part of a reasonable attorney’s fee or as a part of other costs?

Jay Topkis:

I would say, I would say with all respect that I don’t think it makes a great deal of difference–

William H. Rehnquist:

Let’s take reasonable attorney’s fee.

Now, you think that, in addition to all the hours that the attorneys put in and their hourly rate, under the heading “reasonable attorney’s fee”, one can then add paralegal charges.

Jay Topkis:

–I would be quite content to see that–

William H. Rehnquist:

Then you add secretarial charges, too?

Jay Topkis:

–No, because that’s not the way the profession behaves.

It seems to me that when Congress said

“award reasonable attorneys’ fees as part of costs. “

Congress said the legislative history is perfectly plain–

William H. Rehnquist:

Well, Congress said

“reasonable attorney’s fee as part of costs. “

it didn’t say any more, did it?

Jay Topkis:

–That is correct.

That is correct.

Nor did it specify costs, item by item.

William H. Rehnquist:

And you feel that a reasonable attorney’s fee should include a fee not only for attorneys, but for paralegals?

Jay Topkis:

I’ll take it there or I’ll take it as part of costs, but in either event, I want paralegals to be compensated on a par so that the plaintiffs, the civil rights plaintiffs, are not disadvantaged.

Because putting them on a par was exactly where the Congress meant to go.

Antonin Scalia:

Mr. Topkis, it does make a difference to me whether you put it under attorneys’ fees or costs, because you, it is an impossible job to persuade me that you get costs awarded on some basis other than costs.

I mean, it, I cannot go that far.

When you, when I ask you to submit your costs, I mean you submit your costs.

Jay Topkis:

You mean out-of-pocket expenses.

Antonin Scalia:

That’s what “costs” means.

Jay Topkis:

That’s what it does to me, too, your Honor.

Antonin Scalia:

Well, so, you really think it has to be under attorneys’ fees if it’s going to be anywhere.

Jay Topkis:

Well, I would submit again that–

Antonin Scalia:

That is to say, if it’s going to be compensated on market basis.

And that’s all we’re fighting about here.

I can understand your putting it under “costs” if all you’re asking for is out-of-pocket.

But if you want market, then I don’t see how you can possibly get it under “costs”.

So you’re really left with getting it under attorneys’ fees.

Jay Topkis:

–As a logical matter, I am, of course, in total accord with your Honor.

But the reality sometimes is a little different from logic.

And the reality here is that you’ve got to put it somewhere, and if you want me to pick somewhere, all right, I’ll pick it as attorneys’ fees.

But you could easily come back at me by saying,

Jay Topkis:

“One thing we know about paralegals is that they’re not attorneys. “

and–

Antonin Scalia:

Well, I don’t deal with reality, Mr. Topkis, I deal–

[Laughter]

–I deal with statutes.

Jay Topkis:

–I think better of your Honor than that, with all respect.

[Laughter]

Antonin Scalia:

I take it there is no instance, counsel, I take it there’s no instance in which costs are billed at anything other than out-of-pocket.

Jay Topkis:

Oh, I think there are many instances, your Honor.

Very frequently, you–

Anthony M. Kennedy:

What are those?

Jay Topkis:

–The statute allows you a certain cost regardless of what your actual costs have been.

Usually it’s less.

But, but I–

Anthony M. Kennedy:

Well, is there any instance in which it’s more?

Jay Topkis:

–I can’t recall.

I can’t think of any.

No.

My argument on this point, to belabor it, is the argument of parity.

And if you want to single out civil rights plaintiffs and their lawyers as bearing, as required to be some kind of lesser citizens, I don’t think that’s what Congress intended.

Now, the–

Byron R. White:

You don’t, even if the market would say that lawyers in this community do these cases on a contingency, you don’t, you aren’t required to recognize contingency fee arrangements, are you, under 1988?

Jay Topkis:

–Not required to recognize them.

Byron R. White:

In one, it says in a 1983 damages suit, and there’s a recovery and the contingent fee, the contract is, would give him, would give the attorney twice as much as what hours times a reasonable rate would produce.

Can you make the defendant pay that?

Jay Topkis:

Your Honor has the advantage of me in being familiar with this Court’s decision in the Bergeron case, which was announced this morning.

But I would say that I think that a reasonable fee means a reasonable fee.

And I can’t really add very much to that–

Byron R. White:

No matter what the market says.

Jay Topkis:

–I’m sorry?

Byron R. White:

No matter what the market is in Kansas City.

Jay Topkis:

Well, I’m not sure I agree with that, your Honor, because it seems to me that what economists teach us is that barring collusion, the market produces what is reasonable.

That’s what the economists tell us.

But this is an area in which, I confess, I proceed with the greatest hesitancy.

Now, I think it’s important to recognize… to keep in mind, if I may alter it… when we’re discussing the 11th Amendment, that the first question that was presented here is really a misstatement of the issue, and I mean no disrespect, of course, when I say that.

But the first question presented was whether the 11th Amendment prohibits an award of attorneys’ fees against a state based on current hourly rates, which include interest and a delay-in-payment factor.

Well, the current hourly rates here, there’s nothing in this record to suggest that they include interest.

I’ve never heard of a current hourly rate which includes interest.

When your Honors were at the bar, I rather imagine that you didn’t have that concept in mind.

Certainly there’s nothing in this record on it.

And, equally, current hourly rates do not include a delay-in-payment factor.

Most lawyers like to be paid very, very promptly, and they don’t build a delay-in-payment factor into their current hourly rates.

Antonin Scalia:

But they don’t charge the rates of 10 years from now, either.

Jay Topkis:

Ten years prospectively, you mean?

Antonin Scalia:

Right.

I mean, that’s what happens, that is what is happening here.

I mean, by the time recovery is obtained, the rates being charged are the rates of five years after the time the services were performed.

Right?

Jay Topkis:

Well, yeah–

Antonin Scalia:

Whatever the time–

Jay Topkis:

–Whatever the numbers, that is correct.

That is correct.

And Judge Clark said that he was looking at the delay-in-payment factor.

I said before… if I may interrupt myself, Justice Scalia… I said before that he treated Arthur Benson differently from the rest.

He, what he did with Mr. Benson was to say that, on the basis of skill and experience in the Kansas City current practices, Mr. Benson’s current hourly rate ought to be $175, but that he was going to give him an enhancement to $200 an hour because of three factors.

One was the fact that Mr. Benson was precluded during this representation from representing anyone else.

He couldn’t accept any other clients for a period of two and a half years or something like that.

In effect, he bet his professional life on this case and, as the record reveals, he went into debt to the extent of 600 and some-odd thousand dollars.

So, all right, Judge Clark thought that that was a factor appropriate to be recognized.

The next was the unpopularity of the case.

Jay Topkis:

And Judge Clark thought, referred to newspaper editorials and newspaper stories and letters to the press and letters to the court denouncing this case.

Mr. Benson became a pariah and Judge Clark thought that that was a factor that might be taken account of in setting a fair rate.

And, finally, he thought that the delay in payment should be considered.

He didn’t allocate anything for each of these factors particularly.

He just said, taking everything together, he thought $200 was an appropriate fee.

I don’t see that as any award of interest.

If you split the $25, which is 14 % enhancement, three ways to account for the three factors, that would be about 5 % for a delay of several years.

I’ve never seen an interest table that gave you less than 1 % in interest.

On the subject of being a pariah and proper compensation for that factor, let me call to the Court’s attention something that, to me, as a veteran of some class actions, strikes me as significant.

This was a class action.

There were class action plaintiffs available by the, probably, hundreds of thousands, every black school kid in Kansas City was a potential plaintiff.

The extraordinary thing about this litigation is that not one lawyer in Kansas City or anybody else stepped forward to join in this case.

If it had been an antitrust case, or if it had been a, if the Hyatt Hotel had collapsed, if whatever, a Securities Act case, there would have been hoards of lawyers coming in, saying,

“I want a piece of the pie. “

Nobody joined Arthur Benson.

He remained alone until the Legal Defense Fund came to join him.

I think that, too, is worthy of consideration, and so did Judge Clark.

Now, I think that’s about, really, all I have to say, or need to say on the question of the way Judge Clark treated this.

Taking everything into account, he thought $200 was fair.

I don’t see any reason why the 11th Amendment stands in the way of that kind of setting of a reasonable fee.

It seems to me totally responsive to the statutory command.

Now, I think that it might be appropriate to mention that the use of current rates in billing, in the experience of all of us, conforms to the practice of the profession.

I have never seen, I don’t think any member of this Court has ever seen a bill which read something like,

“for services performed in 1987, at 1987 rates, dollars X; for services performed in 1988, at 1988 rates, dollars Y; and for services performed in 1989, at 1989 rates, dollars whatever. “

I might kick myself for having waited so long to render a bill, but I think that the uniform practice of the bar, when it renders bills, is to bill them out at current rates.

John Paul Stevens:

–I’m not sure that’s right, Mr. Topkis.

Say somebody goes into the office and says,

“what do you charge an hour? “

and the lawyer quotes him an hourly rate and nothing else is said.

And then the matter takes four years to conclude.

John Paul Stevens:

Would not the client expect to be billed at the rate he was told when he went into the front door?

Jay Topkis:

I would think, in that case, yes, your Honor.

Absolutely.

Now, one final observation on that point, and that is this.

As I’ve said, while this date… record contains no data specific to Kansas City, it is clear that in the midwest, generally, market rates in the period with which we are concerned did not keep pace with inflation.

Our expert on rates, Mr. Well, testified to that effect without contradiction.

And I said that the circumstances of this case make it particularly appropriate to recognize the delay in payment.

Mr. Benson went into personal debt to the extent of $633,000 to fund this case.

And he paid $113,000 in interest by December 31, 1986.

And he was continuing to pay interest at the rate of $5,000 a month.

For the Legal Defense Fund, the case was a near disaster.

We… I’m proud to be a member of the board of the organization… we experienced deficits which we had never experienced before in 1983 and 1984 because of the burden of this case.

Now, the State says, of course, that we should be happy with historical rates.

But, as I’ve mentioned, the state put in no evidence of historical rates, so we don’t know whether to be happy or not.

And I may say that, so far as the record reveals, that 1987 current market rates, which Judge Clark used, were the same as or higher than rates in ’83 or ’84.

We don’t know.

There’s no evidence.

Now, what the State would apparently like is for this court to remand so that we could have a trial on that issue.

Well, the State had its chance, I respectfully suggest.

This Court has said, and so many of the lower courts have echoed, that we musn’t allow these fee controversies to become second Jarndyce against Jarndyce litigation.

That’s the very real danger with which we deal.

And so I say, on the 11th Amendment, we wind up like this.

There was no award here of interest.

There was no dollar or percentage award or adjustment for delay in payment.

There was only a recognition by the trial judge that there had been great delay in payment, and an attempt to deal with that by using current rather than historical rates to award reasonable fees.

Now, let me, oh, I don’t think I need trouble the Court with a review of the legal authorities.

Your Honors are doubtless infinitely more familiar with them than I am.

Just a final word or two on the question of paralegals.

I, oh, no, if I may stay with the 11th Amendment for just a second.

This Court has often said that the reason for requiring unmistakably clear language, when the Congress sets out to abrogate 11th Amendment protection, is so that enormous fiscal burdens… and I quote…

Jay Topkis:

“shall not be imposed on the states by the Congress without careful thought. “

That’s reasonable enough.

But we have here no enormous fiscal burdens.

As I’ve seen, we don’t know the historical rate that the State will employ.

But the total fee award here for services was only around $3.2 million.

So use of historical figures would save the State, what, hundreds of thousands of dollars?

I don’t know.

To the State–

Antonin Scalia:

A million dollars here, a million… you know, Sen. Dirksen’s line.

First thing you know, it adds up to real money.

[Laughter]

Jay Topkis:

–Right.

Right.

Nice to see a devotee of the classics.

[Laughter]

It adds up to real money to two interests, your Honor.

Not to the State of Missouri, with all respect.

This case, at the very least, is going to involve vast expenditure by the State.

The people to whom these hundreds of thousands of dollars, or this million dollars, will make all the difference in the world, are Arthur Benson and the Legal Defense Fund.

Thank you very much.

William H. Rehnquist:

Thank you, Mr. Topkis.

Mr. Farmer, you have three minutes remaining.

Bruce Farmer:

Mr. Chief Justice, and may it please the Court.

Just briefly, I’d like to respond to Mr. Topkis’ implication that I picked this $15, $20 rate out of the air.

In the District Court’s opinion, on page A-28 of the petition, of the appendix to the petition for cert, the Court says,

“the Court notes that the $80 per hour rate is approximately $15 to $20 higher than the average hourly rate for Kansas City associates in 1982 to 1984. “

Now, he’s talking there about associates of Mr. Benson, but he did specifically find that the hourly rates for the period we’re talking about was $15 to $20 difference.

Other than that, there’s nothing else I need to add other than to say that, in terms of a fiscal impact on the State of Missouri, the part of Missouri I come from, a million dollars still means something, so–

Antonin Scalia:

Mr. Farmer, could I ask you about where you draw the line with respect to the principle you’re talking about, that the 11th Amendment requires us to interpret statutes strictly against state liability.

I mean, I can understand that where the question is, are states covered by this statute or are they not covered.

Antonin Scalia:

But once you know that the state is covered, every single issue of law that comes up in the interpretation of that statute we have to, we have to interpret in favor of the state unless Congress has made its intent unalterably clear?

So, for example, we should interpret attorneys’ fees not to cover fees for counselors at law in those states where they are not called attorneys?

That can’t be right.

I mean–

Bruce Farmer:

–Your Honor, it’s a difficult analysis–

Antonin Scalia:

–So where do you stop?

Why should I go along with you as far as you want to go, to say that you can’t get interest?

Bruce Farmer:

–Well, we think you should go as far as we want to take you in this case because it is almost identical to the situation in Library of Congress v. Shaw.

In that case, Title VII waived the federal government’s sovereign immunity for attorneys’ fees and costs, but not for interest.

And, similarly, in this case, while Section 1988 waives 11th Amendment Immunity for attorneys’ fees and costs, but also not interest.

And Hutto v. Finney applies Section 1988 to the states, but even Hutto recognizes that if you expand the traditional concept of costs, then that analysis would not apply.

I’m not sure there’s any easy answer to your question.

It’s a difficult analysis, but I think in this case the principles in Shaw are completely applicable to the 11th Amendment context.

William H. Rehnquist:

Thank you, Mr. Farmer.

The case is submitted.