World Outreach Center, a Christian religious organization, purchased former YMCA building in Chicago. The YMCW had operated as a legal non-conforming use as a community center and 168 single room occupancy units. According to City ordinance, the legal non-conforming use status ran with the land, and World Outreach only had to apply for licenses to operate when it bought the property. In 2005, the City took the position that World Outreach had to apply for a special use permit, and denied the licenses. Litigation followed, and the City ultimately granted the licenses in 2007. Thereafter, the case was about money damages. World Outreach sued for RUILPA violations. More protracted litigation followed, and ultimately World Outreach was granted summary judgment and later accepted the City’s Rule 68 offer of judgment in the amount of $40,000.01, despite the fact that World Outreach had sought substantial money damages at times exceeding $2 million dollars.
World Outreach filed an attorney fee petition in the amount of $1.9 million. The district court modified the lodestar to $1.5 million and then applied an across-the-board 70% reduction, reducing the fees to nearly $468,000. The Seventh Circuit upheld the reduction, finding that the district court had properly exercised its discretion in finding that the $40,000.01 award was a “dismal failure” in contrast to the substantial damages that World Outreach had sought for nearly nine years, and that World Outreach’s attorneys never had a realistic valuation of the case and might have settled much earlier had counsel been less concerned with recovering a large fee award.