North Dakota Farm Bureau, Inc. et al v. Attorney General of North Dakota

Filing 147

ORDER by Chief Judge Daniel L. Hovland granting 134 Motion for Attorney Fees. (MM)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF NORTH DAKOTA
North Dakota Farm Bureau, Inc.,
Galegher Farms, Inc., Brian Gerrits,
Breeze Dairy Group, LLC, North Dakota
Pork Council, and Bill Price,

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ORDER GRANTING PLAINTIFFS’
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MOTION FOR ATTORNEY’S FEES
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AND COSTS
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Plaintiffs,
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vs.
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Wayne Stenehjem, in his official Capacity )
as Attorney General of North Dakota,
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Case No. 1:16-cv-137
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Defendant,
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Farmers’ Educational and Cooperative
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Union of America North Dakota Division, )
d/b/a North Dakota Farmers Union,
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Intervenor-Defendant,
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Dakota Resource Council, a North
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Dakota Nonprofit Corporation,
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Intervenor-Defendant.
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______________________________________________________________________________
Before the Court is the Plaintiffs’ motion for attorney’s fees and costs filed on April 10,
2019. See Doc. No. 134. They seek $250,589.33 in attorney’s fees and $435.00 in costs. The
Defendant, North Dakota Attorney General Wayne Stenehjem (“State”), filed a response in
opposition to the motion on April 24, 2019. See Doc. No. 140. The Plaintiffs filed a reply brief on
May 1, 2019. See Doc. No. 143. The State filed a surreply on May 8, 2019. See Doc. No. 146. For
the reasons set forth below, the motion is granted.

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I.

BACKGROUND
The Plaintiffs brought this action challenging the constitutionality of Chapter 10-06.1 of the

North Dakota Century Code (the “Corporate Farming Law”) in June of 2016. The Corporate
Farming Law regulates and limits ownership of farm and ranch land in North Dakota. The Plaintiffs
specifically challenged N.D.C.C. § 10-06.1-12 (the “family farm exception,”) which allows
corporate entities to own farmland, but only under certain conditions.
The Plaintiffs sued Attorney General Stenehjem in his official capacity, and two non-profit
organizations subsequently joined the litigation as Intervenor-Defendants. The Plaintiffs challenged
the constitutionality of the Corporate Farming Law under three constitutional provisions: the
Commerce Clause, the Equal Protection Clause, and the Privileges and Immunities Clause. All of
the claims were pursued under 42 U.S.C. § 1983.
The litigation proceeded through written discovery and motion practice. On September 21,
2018, the Court granted summary judgment in favor of the Plaintiffs, finding that the family farm
exception violates the dormant Commerce Clause. See Doc. No. 119. The Plaintiffs conceded their
claims under the Privileges and Immunities Clause should be dismissed. As a remedy, the Court
found that the offending language in the family farm exception could be severed, and enjoined the
State from enforcing the family farm exception in a manner which limits its application to only
North Dakota corporations and limited liability companies.
Following the Court’s Order granting summary judgment on the dormant Commerce Clause
claim, the parties stipulated to the dismissal of the Equal Protection claim. See Doc. No. 129. The
Court entered final judgment on March 20, 2019. See Doc. No. 130. In its final judgment, the Court
“permanently enjoined” the State of North Dakota from:
…enforcing or seeking to enforce Section 10-06.1-12 of the North Dakota Century
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Code in a manner which limits its application to only North Dakota corporations and
limited liability companies, and must permit corporations and limited liability
companies organized under the laws of other states to utilize the family farm
exception, so long as they meet the other requirements of the current law which are
not the subject of this litigation.
See Doc. No. 119, p. 39. Neither side appealed. Now before the Court is the Plaintiffs’ motion for
attorney’s fees and costs. See Doc. No. 134.

II.

LEGAL DISCUSSION
The Plaintiffs, as the prevailing party in a lawsuit brought under 42 U.S.C. § 1983, bring this

motion to recover attorney’s fees and costs from the State under 42 U.S.C. § 1988. The State raises
several objections to the motion, each of which the Court will address in turn.

A.

PREVAILING PARTY

The State contends the Plaintiffs are not a prevailing party despite having obtained a
permanent injunction on their dormant Commerce Clause claim prohibiting the enforcement of the
family farm exception in a manner which treats out-of-state corporations and limited liability
companies differently than North Dakota corporations and limited liability companies. The Court
finds the contention unpersuasive.
42 U.S.C. § 1988 permits, but does not require, the award of reasonable attorney’s fees to
the “prevailing party” in an action to enforce a provision of, inter alia, Section 1983. To qualify as
a prevailing party, “a civil rights plaintiff proceeding under § 1983 ‘must obtain at least some relief
on the merits of his claim.’” North Dakota v. Lange, 900 F.3d 565, 567 (8th Cir. 2018) (Colloton,
J., concurring) (quoting Farrar v. Hobby, 506 U.S. 103, 111 (1992)). A plaintiff need not prevail
on every claim or theory as long as it succeeds on “any significant claim.” Texas State Teachers
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Ass’n v. Garland Indep. Sch. Dist., 489 U.S. 782, 793 (1989). An injunction typically qualifies as
a victory granting prevailing party status to the plaintiff. See Lefemine v. Wideman, 568 U.S. 1, 4
(2012).
In this case, the Court found the family farm exception violated the dormant Commerce
Clause.

The Plaintiffs obtained a permanent injunction which materially altered the legal

relationship between the parties by enjoining the State from enforcing the plain language of the
family farm exception. Having obtained a permanent injunction, it is clear that the Plaintiffs are a
prevailing party. See Libertarian Party of Ark. v. Martin, 876 F.3d 948, 952 (8th Cir. 2017)
(plaintiff was a prevailing party because district court “awarded it declaratory relief and deemed the
statutory scheme unconstitutional”); Bishop v. Comm. on Prof’l Ethics & Conduct of the Iowa State
Bar Ass’n, 686 F.2d 1278, 1290-91 (8th Cir. 1982) (plaintiff was a prevailing party because it
obtained declaratory and injunctive relief, even though the case was later rendered moot); Rogers
Group, Inc. v. City of Fayetteville, 683 F.3d 903, 911 (8th Cir. 2012) (finding plaintiff was a
prevailing party because it obtained a preliminary injunction which blocked the defendant from
enforcing the challenged ordinance and thus altered the relationship between the parties).
The State’s suggestion that the Court’s ruling is non-binding and non-authoritative and
therefore did not alter the legal relationship between the parties is confusing at best. It is wellestablished that a district court’s ruling is not binding on other courts. See Mueller v. Allen, 514 F.
Supp. 998, 1000-01 (D. Minn. 1981) (noting that a court “is not irretrievably bound by its own
precedents”); Se. Stud & Components, Inc., v. Am. Eagle Design, 588 F.3d 963, 967 (8th Cir. 2009)
(“one district court is not bound by the holdings of others, even those within the same district”);
Minn. Supply Co. v. Raymond Corp., 472 F.3d 524, 535 (8th Cir. 2006) (finding that when federal
courts interpret state law they are bound by the decisions of the state’s highest court while state
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appellate court decisions offer persuasive authority). That being said, the Court’s ruling is binding
on the parties to this case and it is their relationship that has been altered. See Fed. R. Civ. P.
65(d)(2)(A); 11A Wright, Miller, & Kane, Federal Practice and Procedure § 2956 (3d ed. 2013).
In granting summary judgment in favor of the Plaintiffs, the Court rejected the State’s argument that
its enforcement practices, which gave the term “domestic” a very broad meaning, would protect the
Plaintiffs because that interpretation was contrary to the plain language of the statute. See Doc. No.
119, p. 22. In addition, that policy was subject to change. Thus, there has been a material change
in the legal relationship of the parties. The Court finds the Plaintiffs are prevailing parties under 42
U.S.C. §§ 1983 and 1988, and are entitled to an award of reasonable attorney’s fees and costs.

B.

SPECIAL CIRCUMSTANCES

A prevailing party “should ordinarily recover an attorney's fee unless special circumstances
would render such an award unjust.” Newman v. Piggie Park Enters., Inc., 390 U.S. 400, 402
(1968). The “special circumstances” exception is a judicially created exception that should be
narrowly construed. Hatfield v. Hayes, 877 F.2d 717, 720 (8th Cir. 1989) (finding no special
circumstances existed which would support the denial of reasonable attorney’s fees). If attorney’s
fees under Section 1988 are to be denied a prevailing party, a strong showing of special
circumstances which render the award unjust is necessary. Id. at 721. Absent special circumstances,
a prevailing party is entitled to attorney’s fees under section 1988 “as a matter of course.” Id. at 719.
Good faith, the lack of a public benefit, the simplicity of the case, and the existence of a litigation
fund have all been rejected as special circumstances which would support the denial of attorney’s
fees under Section 1988. Id. at 720.

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The State contends “special circumstances” exist in this case because an award of attorney’s
fees would punish the State, would not serve the purposes of Section 1988, the Plaintiffs gained
nothing in the litigation, the Corporate Farming Law is not enforced in a discriminatory fashion, and
the State succeeded in its severance argument. The State’s attempt to recast the Court’s grant of
summary judgment in favor of the Plaintiffs falls flat.
The Court ruled in favor of the Plaintiffs, found the family farm exception violates the
dormant Commerce Clause, and granted the Plaintiffs a permanent injunction which binds the
parties to this case and their future actions. If the State disagreed with the Court’s grant of summary
judgment it could have appealed. The State regularly enforces the Corporate Farming Law, and
Plaintiffs had a reasonable belief the statute would be enforced against them. See Doc. No. 119, pp.
11 and 13. The award of reasonable attorney’s fees does not punish the State. Rather, it
compensates the Plaintiffs, who incurred significant fees in this lawsuit. The State’s claim that
Plaintiffs “gained nothing” is also incorrect. The Court’s permanent injunction protects the
Plaintiffs and allows them to invest in farming businesses in North Dakota without fear of
unconstitutional restrictions on interstate commerce. Courts regularly award attorney’s fees against
states defending their laws. See North Dakota v. Heydinger, No. 11-cv-3232, 2016 WL 5661926,
at *28 (D. Minn. Sept. 29, 2016) (awarding over $1.3 million in attorney’s fees to North Dakota and
against Minnesota in a case alleging a dormant Commerce Cause violation which resulted in a
permanent injunction), aff’d sub nom. North Dakota v. Lange, 900 F.3d 565 (8th Cir. 2018). There
are no “special circumstances” present in this case which support the denial of attorney’s fees to the
prevailing Plaintiffs.

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C.

REASONABLENESS OF THE REQUESTED FEE

The Plaintiffs seek to recover attorney’s fees in the amount of $250,589.33. The State
contends the request is unreasonable because the number of hours billed and the hourly rates
charged are excessive.
It is well-established that determining the amount of reasonable attorney’s fees to award a
prevailing plaintiff in civil rights litigation is within the sound discretion of the trial court. Hensley
v. Eckerhart, 461 U.S. 424, 437 (1983). The starting point for a determination of reasonable
attorney’s fees is a calculation of the “lodestar figure” which is the product of the number of hours
reasonably expended times a reasonable hourly rate. Burlington v. Dague, 505 U.S. 557, 559
(1992); Blanchard v. Bergeron, 489 U.S. 87, 94 (1989).
In Hensley, the United States Supreme Court defined the role of the lodestar methodology:
The most useful starting point for determining the amount of a reasonable fee is the
number of hours reasonably expended on the litigation multiplied by a reasonable
hourly rate. This calculation provides an objective basis on which to make an initial
estimate of the value of a lawyer’s services. The party seeking an award of fees
should submit evidence supporting the hours worked and rates claimed. Where the
documentation of hours is inadequate, the district court may reduce the award
accordingly.
The district court also should exclude from this initial fee calculation hours that were
not “reasonably expended.” Cases may be overstaffed, and the skill and experience
of lawyers vary widely. Counsel for the prevailing party should make a good faith
effort to exclude from a fee request hours that are excessive, redundant, or otherwise
unnecessary . . . . “Hours that are not properly billed to one’s client also are not
properly billed to one’s adversary pursuant to statutory authority.”
Hensley, 461 U.S. at 433-34 (internal citations omitted) (emphasis in original).
In Hensley, the United States Supreme Court explained that a trial court may consider the
twelve factors identified in Johnson v. Georgia Highway Express, Inc., 488 F.2d 714, 717-19 (5th
Cir. 1974), to adjust the lodestar amount. Id. at 434 n.9. The twelve Johnson factors include the
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following: (1) the time and labor required; (2) the novelty and difficulty of the questions; (3) the
skill requisite to perform the legal service properly; (4) the preclusion of employment by the
attorney due to acceptance of the case; (5) the customary fee; (6) whether the fee is fixed or
contingent; (7) time limitations imposed by the client or the circumstances; (8) the amount involved
and the results obtained; (9) the experience, reputation, and ability of the attorneys; (10) the
“undesirability” of the case; (11) the nature and length of the professional relationship with the
client; and (12) awards in similar cases. Hensley, 461 U.S. at 430 n.3. Trial courts have been
instructed to utilize their own knowledge relating to various aspects of the lodestar. “The trial judge
should weigh the hours claimed against his knowledge, experience and expertise of the time required
to complete similar activities.” Gilbert v. City of Little Rock, 867 F.2d 1063, 1066 (8th Cir. 1989).
As a general rule, a reasonable hourly rate is the prevailing market rate, that is, “the ordinary
rate for similar work in the community where the case has been litigated.” Emery v. Hunt, 272 F.3d
1042, 1048 (8th Cir. 2001). The party seeking an award of attorney’s fees bears the burden of
producing sufficient evidence “that the requested rates are in line with those prevailing in the
community for similar services by lawyers of reasonably comparable skill, experience and
reputation.” Blum v. Stenson, 465 U.S. 886, 895 n.11 (1984). The district court is in the best
position to understand what services are reasonable and what hourly rates are appropriate in the
relevant market. Al-Birekdar v. Chrysler Group, LLC, 499 F. App’x 641, 648 (8th Cir. 2013)
(holding the district court did not abuse its discretion in reducing the requested hourly rates).
The Plaintiffs seek attorney’s fees in the amount of $250,589.33. This represents 842.55
hours of attorney time. See Doc. Nos. 138, ¶ 7 and 139-2, p. 8. It also includes a deduction of $16,
254.50 (6%) for work on issues not raised and an hourly rate adjustment for attorney David Trevor.
See Doc. No. 139-3. Hourly rates ranged from $220-$540 per hour. However, David Trevor’s $540
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hourly rate was reduced to $420 as the Plaintiffs realized $540 per hour was excessive in the North
Dakota legal market. The State complains that too many hours were expended and the hourly rates
were too high. However, they offer no opinion as to how many hours would have been reasonable
or what the going rate for legal work is in North Dakota.
This case involved a successful constitutional challenge to a state law. Such a challenge
requires skilled legal counsel. The Plaintiffs seek compensation for 842 hours of legal work. It is
undisputed that in other corporate farming law challenges far more hours were expended. In Jones,
approximately 1,400 hours were expended. While in Hazeltine, which involved a trial and an
appeal, the plaintiffs’ lawyers expended over 2,500 hours. In Heydinger, the Court awarded over
$1.3 million in attorney’s fees to North Dakota and against Minnesota in a case involving a
successful dormant Commerce Cause challenge to a Minnesota law. Heydinger, No. 11-cv-3232,
2016 WL 5661926, at *28 (D. Minn. Sept. 29, 2016). The case involved 2,745 hours of work at the
district court level and Minnesota hourly rates of $120-$515 per hour. The Eighth Circuit Court of
Appeals affirmed the award. North Dakota v. Lange, 900 F.3d 565 (8th Cir. 2018). The 842 hours
involved in this case, appear modest when compared to Jones, Hazeltine, and Heydinger.
Counsel for the Plaintiffs submitted 131 pages of invoices to substantiate their work. See
Doc. No. 139-1. Much of the work in this case was done by associates who billed at a lower rate
than the partners overseeing the matter. The rates charged by Plaintiffs’ counsel were agreed to and
paid by the North Dakota Farm Bureau throughout the course of the litigation. The Court views this
as a strong indication of reasonableness. Based on the Court’s 40 years of experience in North
Dakota as an attorney in private practice and as a federal judge, hourly rates for associates in the
$200-$300 range and $300-$425 range for partners are not unusual or unreasonable. The Court
finds the number of hours expended and rates charged were reasonable.
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Nevertheless, the Plaintiffs success in this case was limited. The Plaintiffs conceded their
claims under the Privileges and Immunities Clause should be dismissed. The parties stipulated to
the dismissal of the Plaintiffs’ Equal Protection claim. The Plaintiffs sought a declaration that the
entirety of Chapter 10-06.1 was unconstitutional and an injunction prohibiting its enforcement. The
Court found that the offending language in the family farm exception could be severed, and enjoined
the State from enforcing Section 10-06.1-12 in a manner which limits its application to only North
Dakota corporations and limited liability companies. In addition, the Court found the operational
requirements in Section 10-06.1-12(6) did not violate the dormant Commerce Clause. Thus, the
Plaintiffs succeeded in invalidating one section of an entire chapter of the State’s Corporate Farming
Law. Given the Plaintiff’s were partially successful, a reduction of the requested fee is warranted.
Jenkins by Jenkins v. Missouri., 127 F.3d 709, 716 (8th Cir. 1997) (noting that if the prevailing
party’s “success is limited, he is entitled only to an amount of fees that is reasonable in relation to
the results obtained”).

III.

CONCLUSION
For the reasons set forth above, the Plaintiffs’ motion for attorney’s fees (Doc. No. 134) is

GRANTED in part. In the broad exercise of its discretion, the Court awards the Plaintiff North
Dakota Farm Bureau1 attorney’s fees in the amount of $175,000 and costs in the amount of $435.
The result is a total judgment of $175,435.00, to be taxed by the Clerk against Defendant Wayne
Stenehjem, in his official capacity as Attorney General of North Dakota.
IT IS SO ORDERED.

1

All of the Plaintiffs were prevailing parties. However, the North Dakota Farm Bureau paid all costs and attorney’s
fees.

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Dated this 27th day of August, 2019.
/s/ Daniel L. Hovland
Daniel L. Hovland, Chief Judge
United States District Court

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