
USCA1 Opinion

	




          March 4, 1993     UNITED STATES COURT OF APPEALS                                FOR THE FIRST CIRCUIT                                 ____________________          No. 92-1763                                ANTONIA PARIS, ET AL.,                                Plaintiffs-Appellants,                                          v.                            U.S. DEPARTMENT OF HOUSING AND                              URBAN DEVELOPMENT, ET AL.,                                Defendants-Appellees.                                 ____________________                     APPEAL FROM THE UNITED STATES DISTRICT COURT                           FOR THE DISTRICT OF RHODE ISLAND                     [Hon. Ernest C. Torres, U.S. District Judge]                                             ___________________                                 ____________________                                        Before                              Torruella, Circuit Judge,                                         _____________                            Bownes, Senior Circuit Judge,                                    ____________________                              and Stahl, Circuit Judge.                                         _____________                                _____________________               John W. Dineen,  with whom  Yesser, Jessup &  Green, was  on               ______________              _______________________          brief for appellants.               Herbert E. Forrest, Federal Programs Branch, Civil Division,               __________________          Department  of Justice,  with  whom Stuart  M. Gerson,  Assistant                                              _________________          Attorney General,  Lincoln C. Almond, United  States Attorney and                             _________________          William G. Kanter, Attorney, Appellate  Staff, were on brief  for          _________________          appellee U.S. Department of Housing and Urban Development.               Nora J.  Mann, with  whom Leigh  A.  McLaughlin and  Gilman,               _____________             _____________________      _______          McLaughlin  &  Hanrahan,  were  on brief  for  appellee  Corcoran          _______________________          Management Co., Inc.                                 ____________________                                    March 4, 1993                                 ____________________                    TORRUELLA, Circuit  Judge.  This case  requires that we                               ______________          decide whether a party who loses on the only litigated claim, but          achieves   the  relief   sought  as   a  result   of  intervening          congressional action prior to  a ruling by the district  court on          the remaining grounds in  the complaint, can nevertheless recover          attorney's  fees.   We  hold  that,  in  appropriate  cases,  the          district court may award  attorney's fees.  Because we  find this          to be  such a case, we  reverse the district court  ruling to the          contrary, and remand for action consistent with this opinion.                                          I                                       BACKGROUND1                                     BACKGROUND                                     __________                    Appellants,  a  group  of  very  low  income  families,          challenged a  tenant selection  scheme at  the Chad Brown  public          housing  project in Providence, Rhode Island.  In the late 1970s,          the Department of Housing  and Urban Development ("HUD") and  the          Providence  Housing Authority  ("PHA") hired  Corcoran Management          Co.,  Inc. ("Corcoran")  to  supervise the  modernization of  the          project.    In  order to  achieve  an  economic  mix of  tenants,          Corcoran, with HUD's approval, attempted to implement a plan that          would  skip-over very low income families on the waiting list and          settle higher income families first.                      In 1986, appellants  sought declaratory and  injunctive          relief against both HUD and Corcoran.  The complaint alleged that          HUD's adoption  of the income  mixing scheme violated  the United          States Housing Act of 1937  ("Housing Act"), 42 U.S.C.   1437  et                                                                         __                                        ____________________          1  The facts underlying this case are detailed at  Paris v. Dept.                                                             _____    _____          of  Housing &  Urban Development,  843 F.2d  561 (1st  Cir. 1988)          ________________________________          ("Paris I").              _______          seq. (Supp. 1992); the Fair Housing Act, 42 U.S.C.   3601 et seq.          ____                                                      __ ____          (1977 & Supp.  1992); and  the Due Process  and Equal  Protection          Clauses of  the Constitution of  the United  States.   Appellants          also  brought a claim against Corcoran under 42 U.S.C.   1983 for          violation  of  their  civil  rights  on  the same  statutory  and          constitutional grounds.  The district court granted a preliminary          injunction  based  on  the  Housing  Act  claim.    We  reversed,          expressly leaving  the other  issues open for  resolution by  the          district court.  Paris I, 843 F.2d at 574 n.20.                             _______                    In the  summer of 1988, Congress passed  the Stewart B.          McKinney Homeless  Assistance Amendments Act  of 1988.   This law          prohibited public  housing agencies from by-passing  the order of          the  waiting  list for  the  purpose of  assisting  higher income          families first.2  The Conference Report stated that, "[w]hile the          conferees affirm  the principle of income mix in assisted housing          projects,  this  amendment (which  is necessary  in light  of the                                      _____________________________________          decision in Paris v. HUD, 843 F.2d 561) makes it clear that lower          ______________________________________          income families  on a  waiting list  may not be  skipped over  in                                        ____________________          2  The act provided in relevant part:                        Sec.  1001.     Income  Eligibility   for                      Assisted  Housing.   (b) CLARIFICATION.--                      Section 6(c)(4)(A) of  the United  States                      Housing   Act   of   1987    (42   U.S.C.                        1437d(c)(4)(A)) is amended by inserting                      before  the  semicolon  at  the  end  the                      following:   "and shall not permit public                      housing agencies to  select families  for                      residence in an order different  from the                      order on the waiting list for the purpose                      of  selecting  relatively  higher  income                      families for  residence."   Pub.  L.  No.                      100-628,   1001(b), 102 Stat. 3263.                                         -3-          order to help a higher income family first."  H.R. Conf. Rep. No.          1089,  100th Cong.,  2d  Sess. 91-92  (1988),  reprinted in  1988                                                         ____________          U.S.C.C.A.N. 4450, 4475-76 (emphasis supplied).  HUD and Corcoran          amended  the income  mixing plan  to conform  to  these statutory          changes.    Appellants moved  for  a  voluntary dismissal  having          achieved  their goal.    The district  court  dismissed the  suit          without reaching the other legal issues in the case.                    In 1990,  appellants moved for an  attorney's fee award          against  HUD under the Equal  Access to Justice  Act ("EAJA"), 28          U.S.C.     2412(d)(1)(A), and  the  Fair Housing  Act,  42 U.S.C.            3613(c)(2).   Appellants  similarly sought  fees from  Corcoran          under the Civil  Rights Attorney's  Fees Awards Act  of 1976,  42          U.S.C.    1988, and  the Fair  Housing Act.   The  district court          rejected  the claim under  the EAJA finding  that appellants were          not "prevailing  parties" and  that the government's  position in          the  litigation  was  "substantially   justified."    It  refused          recovery under the Fair Housing Act and   1988, reasoning that it          could  not award fees pursuant to those statutes unless the party          prevails on those claims.  Since appellants voluntarily dismissed          the action  before the court  considered those issues,  the court          denied the fee request.                                           II                                      EAJA CLAIM                                      EAJA CLAIM                                      __________                    A party seeking  attorney's fees under    2412(d)(1)(A)          of the EAJA must demonstrate that it is  a "prevailing party" and                                         -4-          that   the   government's   position   was   not   "substantially          justified."3   The  prevailing party  inquiry under  the EAJA  is          consistent with that  under other federal fee-shifting  statutes.          Texas State  Teachers Ass'n v. Garland  Independent School Dist.,          ___________________________    _________________________________          489 U.S. 782, 784 (1989); Guglietti v. Secretary of HHS, 900 F.2d                                    _________    ________________          397, 398 (1st  Cir. 1990).  In general, the  court looks for some          "material alteration of the legal relationship  of the parties in          a  manner which Congress sought  to promote in  the fee statute."          Texas Teachers, 489 U.S. at 792-93; see also Farrar v. Hobby, 113          ______________                      ________ ______    _____          S. Ct. 566, 572-73 (1992).   We have identified two main  avenues          by which a party may  demonstrate the changed legal relationship.          The party either must enjoy bottom-line success in the litigation          or  act  as   a  catalyst  in  causing  the  desired  alteration.          Guglietti,  900 F.2d at 400-01; Nadeau v. Helgemoe, 581 F.2d 275,          _________                       ______    ________          278-79 (1st  Cir. 1978).  Unlike other fee-shifting statutes, the          EAJA  presents   the  additional  hurdle  of   showing  that  the          government's position was  not substantially justified.   Compare                                                                    _______          42 U.S.C.   1988(b) (Civil Rights Attorney's Fees Awards Act) and                                                                        ___          42  U.S.C.    3613(c)(2)  (Fair Housing  Act)  with 28  U.S.C.                                                            ____                                        ____________________          3  28 U.S.C.   2412(d)(1)(A) (Supp. 1992) provides:                      Except as otherwise specifically provided                      by  statute, a  court  shall  award to  a                      prevailing  party  other than  the United                      States  fees and  other expenses,  in any                      civil action (other  than cases  sounding                      in   tort),  including   proceedings  for                      judicial review of agency  action, unless                      the court finds that the position  of the                      United States was substantially justified                      or  that  special  circumstances make  an                      award unjust.                                         -5-          2412(d)(1)(A) (EAJA).                     We  review the  district court's  prevailing party  and          substantial  justification  determinations  under  the  abuse  of          discretion  standard.  Pierce v.  Underwood, 487 U.S. 552, 558-63                                 ______     _________          (1988)  (substantial justification);    McDonald v.  Secretary of                                                  ________     ____________          HHS, 884 F.2d 1468 (1st Cir. 1989) (prevailing party).   When the          ___          district  court  errs  with  respect  to a  purely  legal  issue,          however, our  review is de novo.  Domegan v. Ponte, 972 F.2d 401,                                  __ ____   _______    _____          406-07 (1st Cir. 1992); see also Guglietti, 900 F.2d at 399.                                  ________ _________                    For the  moment we shall postpone  consideration of the          district  court's  finding  on  prevailing  party status  because          appellants'  claim under the EAJA is  dispensed with easily under          the  substantial  justification  prong  of  the  EAJA  fee  award          inquiry.  Appellants predicate their EAJA claim  on their alleged          success  on  the  substantive Housing  Act  claim.    Because the          Housing  Act  does  not  have  its  own  fee-shifting  provision,          appellants were  forced to  seek fees under  the general  federal          fee-shifting statute, the EAJA.  HUD and Corcoran's position with          respect to the  Housing Act  was clearly justified  prior to  the          McKinney  Amendments.    Indeed,  this court  agreed  with  their          interpretation  of the Housing Act  in Paris I.   Congress' later                                                 _______          action does not alter  our conclusion.  Thus, the  district court          did not abuse its discretion in denying attorney's fees under the          EAJA.                                         III                          FAIR HOUSING ACT AND SECTION 1988                          FAIR HOUSING ACT AND SECTION 1988                          _________________________________                                         -6-                    Unlike the  EAJA, neither  the Fair Housing  Act's fee-          shifting provision,4  nor section 1988,5 require  that appellants          demonstrate that the government's position  was not substantially          justified.   The  district court  rejected appellants'  arguments          reasoning that success  on these  claims, by which  it must  have          meant--judicial  consideration prior  to success that  mooted the          court  proceedings--was  the sine  qua non  of  an award  of fees                                       ____  ___ ___          pursuant  to  these   statutes.    HUD  and  Corcoran   make  the          superficially appealing argument that fees cannot be awarded to a          party  who lost  on the only  issue that  was litigated.   We are          unpersuaded.                    In Maher  v. Gagne, 448  U.S. 122  (1980), the  Supreme                       _____     _____          Court considered whether  a party that sued state officials under          the Social Security Act, 42  U.S.C.    402(a)(7), 602(a)(7),  and          the Equal  Protection and Due  Process Clauses of  the Fourteenth          Amendment of the United States Constitution, but settled the case                                        ____________________          4    The  Fair  Housing Act  fee-shifting  provision,  42  U.S.C.            3613(c)(2) (Supp. 1992) provides in relevant part:                      [T]he court, in its discretion, may allow                      the  prevailing  party,  other  than  the                      United  States,  a reasonable  attorney's                      fee and costs.   The United States  shall                      be liable for such  fees and costs to the                      same extent as a private person.          5  42 U.S.C.   1988 (b) (Supp. 1992) provides:                        In any action or proceeding  to enforce a                      provision of section[]  . . . 1983  . . .                      the court, in  its discretion, may  allow                      the  prevailing  party,  other  than  the                      United  States,  a reasonable  attorney's                      fee as part of the costs.                                         -7-          by  entry of  a  consent decree  prior  to determination  by  the          district  court of  whether  her constitutional  rights had  been          violated,  could  recover attorney's  fees  under  section 1988.6          The  court held that the district court's power to award fees was          not  conditioned  on  "full litigation  of  the  issues  or on  a          judicial  determination  that the  plaintiff's  rights have  been          violated."   Maher, 448  U.S.  at 129.    The Court  stated  that                       _____          "Congress   intended  fees   to  be   awarded  where   a  pendent          constitutional claim is involved, even  if the statutory claim on          which the plaintiff  prevailed is  one for which  fees cannot  be          awarded  under the  Act."7   Id. at  132 n.15.   The  Maher court                                       ___                      _____          recognized that such a policy provided a perfect  balance between          the  congressional  policy  of  encouraging  suits  to  vindicate          constitutional rights and the policy against unnecessary decision          of constitutional questions.  Id. at 133.                                        ___                    The  Court  did  not  intend that  the  district  court          litigate the merits of the claims once the case had been resolved                                        ____________________          6  In Maine v. Thiboutot, 448 U.S. 1, 9-10 (1980), the Court held                _____    _________          that    1988 provides a basis  for awards for any    1983 action,          including those based  on statutory, rather  than, constitutional          violations.   In Maher, as here, the unlitigated claims were both                           _____          statutory and constitutional.           7  The legislative history accompanying H.R. 15460, a bill almost          identical to  that passed stated:   "if the claim  for which fees          may  be awarded meets  the 'substantiality' test,  see Haggans v.                                                             ___ _______          Lavine,  [415 U.S. 528 (1974)]; United Mine Workers v. Gibbs, 383          ______                          ___________________    _____          U.S. 715 (1966), attorney's  fees may be allowed even  though the          court declines to enter judgment for the plaintiff on that claim,          so long as the plaintiff prevails on the nonfee claim arising out          of a 'common nucleus  of operative fact.' United Mine  Workers v.                                                    ____________________          Gibbs, supra, at 725."  Maher, 448 U.S. at 133 n.15 (quoting H.R.          _____  _____            _____          Rep. No. 1558, 94th Cong., 2d Sess. 4 n.7 (1976)).                                         -8-          in order to decide the fee issue.  On the contrary, the Court has          cautioned  against such  wasteful  secondary  litigation.   Texas                                                                      _____          Teachers, 489  U.S. at 791.   In Haggans v. Lavine,  415 U.S. 528          ________                         _______    ______          (1974), the Court  developed a "substantiality" test to aid lower          courts in determining when it is appropriate for them to exercise          jurisdiction over  statutory  causes  of  action  that,  although          pendent  to  constitutional  claims  over  which  the  court  has          jurisdiction, have  no independent jurisdictional basis.   Id. at                                                                     ___          542.   Applied in this different context, the Haggans test serves                                                        _______          as a proxy for determination on the merits of the claims once the          litigation is resolved to establish  that an attorney's fee award          is  justified.   The  threshold "substantiality"  test  conserves          judicial  resources while  continuing to require  that plaintiffs          demonstrate that their success is sufficiently related to a civil          rights victory before receiving fees under a fee-shifting regime.                    In  Smith v. Robinson, 468 U.S. 992 (1984), the Supreme                        _____    ________          Court clarified principles implicit  in Maher, by explaining that                                                  _____          "plaintiffs may not rely simply on the fact that substantial fee-          generating claims were made during the course of the litigation."          Id.  at  1007.   Further  examination  of  the  claims and  their          ___          relationship  is required.   The  Court specifically  stated that          there was  nothing  wrong with  seeking  relief under  a  certain          statute,  or amending a complaint,  to include a  claim for which          attorney's  fees are available.   Id.  at 1009  n.12.   The court                                            ___          concluded,  however,  that  where  petitioners   "have  presented                                         -9-          distinctly  different  claims  for  different  relief,  based  on          different  facts and legal theories, and have prevailed only on a          nonfee claim, they are not entitled to a fee award simply because          the other claim was a constitutional claim that could be asserted          through   1983."  Id. at 1015.                              ___                    This case  does not  present that situation;  the facts          arise from a common  nucleus of operative fact, and  the theories          are  but different  statutory  avenues to  the  same goal.    The          appellants are victims of a  happenstance that the district court          opted  to decide on the basis of  the Housing Act claim, and that          the  appeal proceeded as it did, before Congress intervened.  Nor          are  we presented  with  the situation  in  Smith, in  which  the                                                      _____          Supreme  Court  held  that  one  of  the  several  statutory  and          constitutional  claims  was  the  exclusive  avenue  of  redress,          thereby  barring  recovery  under  another  fee-shifting  statute          alleged in the complaint.8                    On  the contrary, we think that the principles of Maher                                                                      _____          clearly apply to the  present case.  Maher considered  one manner                                               _____          in  which  cases  are  resolved without  formal  adjudication  or                                        ____________________          8  In Smith, plaintiffs asserted  claims based on state law;  the                _____          Education of the Handicapped Act (EHA), 84 Stat. 175, as amended,          20 U.S.C.   1400 et seq.;  section 504 of  the Rehabilitation Act                           __ ____          of  1973, 87 Stat. 394, as amended, 29  U.S.C.   794; and the Due          Process and Equal Protection Clauses of the Fourteenth Amendment.          The  Court  concluded  that  where  a  remedy  was  provided with          "clarity  and  precision"  under the  EHA,  a  plaintiff  may not          circumvent  that exclusive  avenue by  appeal to  other statutory          schemes.  Smith, 468 U.S. at 1021.  Congress subsequently altered                    _____          the Court's specific holding under the EHA to provide fees in the          Handicapped  Children's Protection Act  of 1986, Pub.  L. No. 99-          372, 100 Stat. 796, codified at 20 U.S.C.   1415 (Supp. 1992).                                          -10-          decision  by a  court  on  all  issues  raised  by  the  parties.          Voluntary dismissal is but another way in which a plaintiff saves          judicial resources once it has achieved its desired goal.                      After a  case is  resolved, by  whatever method, and  a          party requests attorney's fees, we look for  a "prevailing party"          within  the meaning  of  term as  spelled  out in  the case  law.          Appellants are not  a "prevailing  party" under  the merits  test          since  the court  never considered  the merits  of the  claims in          issue.  Langton v. Johnston, 928 F.2d 1206, 1224 (1st Cir. 1991);                  _______    ________          Coalition for Basic Human Needs v.  King, 691 F.2d 597, 599  (1st          _______________________________     ____          Cir. 1982) (merits  test "states  the obvious, that  a party  has          prevailed if it wins the litigation").  Appellants,  however, are          a catalyst under Guglietti,  900 F.2d at 401-02, and  Nadeau, 581                           _________                            ______          F.2d at  279-80.  To be a catalyst the party must demonstrate (1)          a causal  connection between the litigation and the relief sought          and (2) that the success was not obtained by a gratuitous gesture          of the  fee-target.  Guglietti, 900  F.2d at 401.   The suit need                               _________          not be the sole cause  but must play a "provocative" role or be a          "competent producing cause."  Id.                                          ___                    The district court summarily determined that appellants          were not  catalysts because it  believed that  Congress, not  the          litigation, caused defendants to  change their income mix policy.          We think this argument is incorrect.                    The  fact  that   Congress  delivered  the  plaintiffs'          requested relief rather than the parties  sued, HUD and Corcoran,          provides no  relevant distinction.   Corcoran, HUD,  and Congress                                         -11-          are  manifestations of the same  entity, the government.   HUD is          simply an instrument  of Congress' will, and  Corcoran does HUD's          bidding.                    The  district  court also  relied  on  our decision  in          Guglietti,  900 F.2d  397,  to deny  appellants prevailing  party          _________          status  under the  catalyst  theory.   In Guglietti,  plaintiff's                                                    _________          Social Security disability benefits  were terminated.   Guglietti          sought  review of  the determination.   While  on appeal  to this          court, Congress  amended the statute  and directed that  cases on          appeal,  such as  Guglietti's,  be remanded  for a  determination          under  the new  statutory  standard.   Under  that standard,  his          benefits  were reinstated.    Guglietti obtained  attorney's  fee          under the EAJA in the district court.  On appeal, we reversed the          award.   Guglietti, 900  F.2d at 403.   We  reasoned that because                   _________          plaintiff  was  just  one of  thousands  of  similar  claims, the          relationship between the litigation  and Congress' action was too          tenuous to be considered  the "provocative" cause of legislation.          Id. at  401 (relying on Hendricks  v. Bowen, 847  F.2d 1255, 1258          ___                     _________     _____          (7th Cir.  1988); Truax  v. Bowen,  842 F.2d  995, 997  (8th Cir.                            _____     _____          1988)).                    This  case is  clearly distinguishable  from Guglietti,                                                                 _________          however.   Here the Congressional change was wrought by one case,          Paris I.    The Conference  Report specifically  states that  the          _______          amendments were necessary to  change the result in Paris I.  H.R.                                                             _______          Conf. Rep.  No. 1089  at  91-92, see  ante at  p.  3.   Guglietti                                           ___  ____              _________          recognized that  assigning a  particular case among  thousands in                                         -12-          the context  of social securities benefits strains  the notion of          provocative cause.   To read Guglietti to  prevent attorney's fee                                       _________          in the present case is to negate the possibility of ever granting          attorney's fees when Congress amends or clarifies legislation and          thereby   secures  plaintiff's  requested   interpretation  of  a          statute.  Plaintiffs would be forced to choose between litigation          and pursuing legislative changes via lobbying activities, or risk          losing  an  award of  fees.   Such  an insurmountable  barrier to          recovery  would  contravene  Congress' intent  in  enacting  fee-          shifting  statutes.   Texas Teachers,  489 U.S.  at 793.   In any                                ______________          event, this case  sits at the opposite  end of the spectrum  from          Guglietti since  Congress specifically mentioned the  case in the          _________          legislative  history as  being the  "necessary" force  behind its          enactment.                      Appellants' suit  is, thus,  fairly characterized  as a          catalyst of Congress'  amendment.   The district  court erred  in          holding  to the contrary.  As such, appellants' law suit affected          a "material alteration  of the legal relationship  of the parties          in a manner which Congress sought to promote" in the fee-shifting          provisions  of  the   Fair  Housing  Act  with   respect  to  the          government,  and in     1988 with  respect  to Corcoran.    Texas                                                                      _____          Teachers, 489 U.S. at 792-93.            ________                    Unfortunately this case is  not at an end.   On remand,          the  district court must determine two matters.  First, the court          must   decide  whether   appellants   raised   statutory   and/or          constitutional  claims that  pass  the "substantiality"  test  of                                         -13-          Maher  and Haggans in order to recover under the alternative fee-          _____      _______          shifting regimes  pursuant to  unlitigated claims.9   Second, the          district  court  must  determine  the  amount  of  fees to  which          appellants are entitled  under Hensley v. Eckerhart, 461 U.S. 424                                         _______    _________          (1983), as "the degree of the plaintiff's overall success goes to          the  reasonableness of  the  award  under  Hensley,  not  to  the                                                     _______          availability of a fee award  vel non."  Texas Teachers,  489 U.S.                                       ___ ___    ______________          at 793.                      Reversed and  remanded for action consistent  with this                    _______________________________________________________          opinion.           _______                                        ____________________          9  As we have not heard argument on those claims we cannot answer          that question.                                         -14-
