GEORGE P. SHULTZ, SECRETARY OF STATE, PETITIONER V. ALISON PALMER, ET AL.; GEORGE P. SHULTZ, SECRETARY OF STATE, PETITIONER V. MARGUERITE COOPER, ET AL. No. 85-50 In the Supreme Court of the United States October Term, 1985 The Solicitor General, on behalf of the Secretary of State, petitions for a writ of certiorari to review the judgment of the United States Court of Appeals for the District of Columbia Circuit in these consolidated cases. Petition for a Writ of Certiorari to the United States Court of Appeals for the District of Columbia Circuit PARTIES TO THE PROCEEDING In addition to the parties named in the caption, named respondents are A. Ellen Shippy, Mary Lee Garrison, Mary C. Finrow, Laurel M. Cooper, Mary Hartman, Mary A. Ryan and JulieAnn McGrath. These respondents represent a certified class composed of women who unsuccessfully applied between 1976 and 1983 to become Foreign Service Officers through the Department of State's Junior Officer Program, who were not subsequently hired as Foreign Service Officers, and who did not also apply to become Foreign Service Officers through mid-level, lateral entry, or reappointment programs. TABLE OF CONTENTS Opinion below Jurisdiction Statute involved Statement Reasons for granting the petition Conclusion Appendix A Appendix B Appendix C Appendix D Appendix E Appendix F OPINIONS BELOW The order of the court of appeals (App., infra, 1a-2a), and the memorandum and order of the district court (App., infra, 18a-19a), are unreported. JURISDICTION The judgment of the court of appeals was entered on February 11, 1985. On May 8, 1985, the Chief Justice extended the time within which to file a petition for a writ of certiorari to June 27, 1985. On June 21, 1985, the Chief Justice further extended the time for filing the petition through July 11, 1985. The jurisdiction of this Court is invoked under 28 U.S.C. 1254(1). STATUTE INVOLVED 42 U.S.C. 2000e-5(k) provides: In any action or proceeding under this subchapter the court, in its discretion, may allow the prevailing party, other than the (Equal Employment Opportunity) Commission or the United States, a reasonable attorney's fee as part of the costs, and the Commission and the United States shall be liable for costs the same as a private person. QUESTION PRESENTED Whether Section 706(k) of the Civil Rights Act of 1964, 42 U.S.C. 2000e-5(k), which makes the United States liable for attorneys' fees "the same as a private person," waives the government's sovereign immunity so as to permit the calculation of an attorney's fee award against the United States on the basis of the attorney's current rates (rather than the "historic" rates charged at the time the work at issue was performed) to compensate the attorney for delay in receipt of payment. STATEMENT 1. In 1976 respondents brought these consolidated actions against the Department of State under Title VII of the Civil Rights Act of 1964, 42 U.S.C. 2000e et seq., alleging that the Department had discriminated on the basis of sex in the hiring and treatment of Foreign Service officers. The merits of the actions were settled in part in October 1983, when the United States District Court for the District of Columbia approved a consent decree providing relief for female junior-level Foreign Service applicants. App., infra, 24a-25a. Respondents then sought attorneys' fees under the Title VII fees provision, 42 U.S.C. Section 2000e-5(k), which states that "the court, in its discretion, may allow the prevailing party * * * a reasonable attorney's fee as part of the costs, and * * * the United States shall be liable for costs the same as a private person." In making this request, respondents maintained that the fee should be calculated on the basis of their attorney's current, rather than their "historic," rates (see App., infra, 32a). /1/ The government opposed this method of fee calculation, maintaining that the use of current reates was equivalent to an award of interest against the United States, which is improper in the absence of a waiver of sovereign immunity (ibid.). /2/ On September 17, 1984, the district court rejected the government's contention. Relying on Murray v. Weinberger, 741 F.2d 1423 (D.C. Cir. 1984), the court held that Section 2000e-5(k) "is a statutory waiver of sovereign immunity" (App., infra, 33a) in "the current rates context" (id. at 33a n.5). The court reasoned that private defendants may be required to compensate the attorneys for prevailing Title VII plaintiffs at current rates, and noted that the statute generally measures the government's liability against that of private defendants. The district court therefore concluded that a fee applicant "may calculate the lodestar according to current rates, or she may rely upon historical rates and seek an adjustment for "delay in payment'" (ibid.). The court accordingly based its fee award for respondents' attorneys on 1984 rates (App., infra, 32a-33a). /3/ On November 7, 1984, the district court issued two interim orders intended to implement its earlier attorneys' fee decision. The first (App., infra, 20a-21a) directed the government to pay the undisputed portion of the fees and costs (based on respondents' attorneys' historic billing rates) within 14 days; the second ordered the government to pay "the difference between the uncontested amount (based on the historical hourly rates of (respondents') counsel when the work was performed) and the amount of fees as calculated based on the use of hourly rates in effect when the Fee Application was filed" (id. at 19a). On the govermment's appeal, the court of appeals summarily affirmed the order mandating payment at current rates (App., infra, 1a-2a). /4/ In its order, the court of appeals explained only that "the correctness of the district court judgments" is "demonstrate(d)" by Shaw v. Library of Congress, 747 F.2d 1469 (D.C. Cir. 1984), petition for cert. pending, No. 85- . . . , which held that Section 2000e-5(k) waived the sovereign immunity of the United States as to awards of interest (App., infra, 2a). /5/ REASONS FOR GRANTING THE PETITION The issue in this case is closely related to the question presented in the pending petition for certiorari in Library of Congress v. Shaw, No. 85- . . . : whether 42 U.S.C. 2000e-5(k) is a waiver of the government's traditional immunity against awards of interest. We submit in our Shaw petition (at 6-17) that the court of appeals' attempt to find such a waiver in the statute cannot be reconciled with the traditional "no-interest rule" long propounded by this Court, which provides that Congress should not be deemed to have permitted interest to run on a substantive recovery against the United States unless it affirmatively desired that result and announced its intention in unambiguous terms. 1. As the District of Columbia Circuit now acknowledges, the propriety of using current rates in calculating an award of Title VII attorneys' fees against the government turns on whether Section 2000e-5(k) waives the "no-interest rule." The court of appeals explained in Shaw that there is no difference, for sovereign immunity purposes, between pure interest and the use of current rates (or any other delay adjustment to the lodestar): "(a)ddition of a delay factor to the lodestar serves only to compensate the attorney for loss of the use of earned money from the time of rendition of services to the time of the receipt of the fee," and therefore functions as "compensation for the use, forbearance or detention of money -- the common understanding of interest." 747 F.2d at 1474 n.41 (Shaw Pet. App. 12a n.41). For this reason, the court declared that it would "feel constrained to treat (such a delay adjustment) as interest for purposes of the sovereign-immunity rule" (ibid.). This view of the issue was reaffirmed in the decision below, which relied on Shaw -- a case involving interest -- in affirming the district court's use of current rates. Although we disagree with the court of appeals' holding that Congress effected a waiver of sovereign immunity as to interest in Section 2000e-5(k), the court's conclusion that interest and current rate adjustments must receive the same treatment for sovereign immunity purposes plainly is correct. The "no-interest rule" is not directed solely at monetary awards expressly denominated as interest; because the doctrine is based on the proposition that "delay or default cannot be attributed to the government" (United States v. Sherman, 98 U.S. 565, 568 (1878)), it uniformly has been applied to prevent plaintiffs from holding the United States liable, absent its explicit consent, on claims grounded on "the belated receipt" of funds. Saunders v. Claytor, 629 F.2d 596, 598 (9th Cir. 1980), cert. denied, 450 U.S. 980 (1981). The courts accordingly have barred claims of all sorts arising out of the delayed payment of substantive recoveries by the United States, whether termed "inflation adjustments" (Blake v. Califano, 626 F.2d 891, 895 (D.C. Cir. 1980); Saunders, 629 F.2d at 598), "compensation for use" (United States v. North American Transportation & Trading Co., 253 U.S. 330, 337-338 (1920)), or something equally euphemistic. See generally United States v. Mescalero Apache Tribe, 518 F.2d 1309, 1322 (Ct. Cl. 1975), cert. denied, 425 U.S. 911 (1976); United States v. Delaware Tribe of Indians, 427 F.2d 1218, 1222-1224 (Ct. Cl. 1970). While there are technical differences between interest and an upward adjustment of the lodestar through the use of current rates, /6/ the latter type of adjustment is expressly designed to compensate "the eventual receipient (for) the value of the use of the money in the meantime" (Copeland v. Marshall, 641 F.2d 880, 893 (D.C. Cir. 1980) (en banc); see id. at 893 n.23), or to "approximate the value today of the historic rates charged at the time when the legal services actually were rendered." Murrary, 741 F.2d at 1433. See National Ass'n of Concerned Veterans v. Secretary of Defense, 675 F.2d 1319, 1328 (D.C. Cir. 1982); EDF v. EPA, 672 F.2d 42, 59-60 (D.C. Cir. 1982). Use of current rates, in other words, is nothing more than an "adjustment() for delay in payment" (Murray, 741 F.2d at 1433), and it was viewed as such by the district court in this case (App., infra, 33a n.5). Because the applicability of the "no-interest rule" therefore should determine the outcome here, it would be appropriate for the Court to hold this case pending disposition of the petition for a writ of certiorari in Shaw. 2. Having said this, we note that there is some authority in the District of Columbia Circuit for the proposition that the use of current rates may not run afoul of the "no-interest rule," even in the absence of a waiver of sovereign immunity as to interest. Several pre-Shaw decisions approved the use of current rates or "delay adjustments" in fee litigation against the government without mentioning sovereign immunity (Copeland, 641 F.2d at 893 & n.23; Concerned Veterans, 675 F.2d at 1328; cf. EDF v. EPA, 672 F.2d at 59-60 (approving delay adjustment in litigation under the Toxic Substances Control Act)); one other decision expressly stated that the "no-interest rule" would be inapplicable to a request for current rates, although the court did not explain whether it reached that conclusion because it found a waiver of the rule in Section 2000e-5(k) or because it believed a waiver to be unnecessary. Murray, 741 F.2d at 1432. /7/ And Judge Ginsburg, dissenting in Shaw, explicitly suggested that the difference between interest and a delay factor "can be more than semantic." 747 F.2d at 1485 (Shaw Pet. App. 38a). Judge Ginsburg explained that a delay factor, in contrast to retrospectively calculated interest, "may figure as a contingency adjustment, applied prospectively to the lodestar. Just as an attorney setting an hourly rate in a contingent fee case may factor in the risk that the cause may not prevail, so too an attorney embarking on services for which he or she anticipates payment ultimately, but not promptly, may factor in the expected delay." Ibid. (Shaw Pet. App. 38a-39a). /8/ In our view, any proposed distinction for sovereign immunity purposes between interest and the use of current rates cannot withstand scrutiny. The suggestion that current rates substitute for what should have been a prospectively applied delay factor is, in this context, wholly fictional, "for an award under a fee-shifting statute benefiting only a party prevailing in litigation can never be made prospectively." Shaw, 747 F.2d at 1474 n.41 (Shaw Pet. App. 42a n.41). Because the rate used in calculation of the lodestar is chosen at the completion of the litigation, allowing the addition of a delay factor (or the use of current rates) simply amounts to a decision that the attorney is entitled to obtain compensation for delay attributed to the United States. In any event, the method used to derive the delay adjustment -- whether it is taken directly from the prevailing interest rate, or from the inflation rate, or from some rougher "prospective" estimate of the likely delay in obtaining reimbursement under a fee-shifting statute -- is not determinative for purposes of the "no-interest rule"; "it is the reason why the fee is adjusted upward that is vital." Shaw, 747 F.2d at 1474 n.41 (emphasis in original) (Shaw Pet. App. 12a n.41). Because current rates are used solely to adjust for delay, basing the lodestar on such rates is improper. Given the confusion in the lower courts on this point, however, the Court may find it appropriate to grant plenary review in this case if it does so in Shaw, in order to fully settle this area of the law. CONCLUSION The petition for a writ of certiorari should be held for disposition in light of Library of Congress v. Shaw, petition for cert. pending, No. 85- . . . . In the alternative, the petition for a writ of certiorari should be granted. Respectfully submitted. CHARLES FRIED Acting Solicitor General RICHARD K. WILLARD Acting Assistant Attorney General KENNETH S. GELLER Deputy Solicitor General CHARLES A. ROTHFELD Assistant to the Solicitor General WILLIAM KANTER A. J. DANIEL, JR. Attorneys JULY 1985 /1/ That is, the attorneys would be compensated for each hour billed during the course of the litigation at current rates, rather than at the rate actually charged by the attorneys at the time that the given hour of work was performed (see App., infra, 32a). /2/ The government also challenged the "prevailing market rate" proposed by respondents and certain claims for expenses (see App., infra, 26a), issues that are not in controversy here. /3/ The 1984 rates relied upon by the district court were hypothetical "prevailing community rates," rather than the attorneys' actual 1984 rates. This method of calculation was successfully challenged by the government on a motion for reconsideration. See note 5, infra. /4/ The court of appeals also affirmed the first district court order directing immediate payment of the uncontested portion of the fees (App., infra, 2a). That portion of the fees has now been paid, and the validity of this first district court order is not in issue here. /5/ On December 21, 1984, the district court, on the government's motion, reconsidered the portion of its original decision (App., infra, 26a-34a) calculating the lodestar on the basis of "prevailing community rates." The court explained that, under Laffey v. Northwest Airlines, Inc., 746 F.2d 4 (D.C. Cir. 1984), cert. denied, No. 84-1655 (June 17, 1985), fees generally should be based on an attorney's actual billing rates, rather than on a hypothetical prevailing rate. The district court accordingly recalculated the lodestar on the basis of respondents' attorneys' actual (current) rates: $80 per hour for partners and $65 per hour for associates (which substituted for the court's original fee schedule of $75 per hour for the most junior associates and $150 per hour for the most senior partner (App., infra, 27a)). Id at 11a. While this adjustment resulted in a substantial reduction in the size of the lodestar, the district court proceeded to readjust the new lodestar upward by 54.75% "(i)n view of (respondents' attorneys') superior services and exceptional success" (id. at 12a). The court also reaffirmed its September 17, 1984 conclusion (see id. at 34a-42a) that the attorneys were entitled to a 20% "contingency adjustment" (id. at 14a). The government's challenge to the propriety of these adjustments currently is pending on appeal. Because the court of appeals -- in the order that is the subject of this petition -- already has determined that the fee may be based on current rates, however, the pending appeal can have no effect on the issue here; the government accordingly will have no opportunity to challenge the use of current reates in this case if it fails to do so now. /6/ In contrast to a flat interest rate applied retrospectively, for example, current rates may more clearly take account of inflationary changes that occurred while payment was pending. Cf. Blake, 626 F.2d at 895 & n.9. At the same time, however, a law firm's rates may be affected by a wide range of factors wholly unrelated to the passage of time, such as changes in the firm's reputation, experience, or expenses. Even if Congress in Section 2000e-5(k) has waived sovereign immunity as to awards of interest, then, it is far from clear that use of a current rate adjustment ever would be an appropriate substitute for interest. /7/ In holding that current rates may be used to compensate for delay, Murray relied on the authority of Copeland (see 741 F.2d at 1432); Copeland, in turn, had relied on a decision involving antitrust claims against a private defendant. 641 F.2d at 893, citing Lindy Bros. Builders, Inc. v. American Radiator & Standard Sanitary Corp., 540 F.2d 102, 117 (3d Cir. 1976). /8/ In drawing this distinction Judge Ginsburg believed herself bound by Murray, which had upheld the use of current rates or a delay adjustment. Shaw, 747 F.2d at 1486 (Shaw Pet. App. 40a-41a). APPENDIX