Appeals from the United States District Courtfor the Central District of CaliforniaManuel L. Real, Chief District Judge, Presiding No. 95-56639Argued and SubmittedMay 7, 1996--Pasadena, CaliforniaNo. 96-55194Submitted August 27, 1997*Pasadena, CaliforniaFiled February 3, 1998Before: Stephen Reinhardt, Alex Kozinski andMichael Daly Hawkins, Circuit Judges.Opinion by Judge Hawkins; Dissent by Judge Kozinski
______________________COUNSEL Thomas S. Kerrigan, State of California Department of Indus-trial Relations, Los Angeles, California, for the defendants-appellants.Stephen A. Seideman, Levin, Stein, Chyten & Schneider, LosAngeles, California, for the plaintiff-appellee in No. 95-56639.Thomas J. McDermott and Harvey Rochman, Manatt, Phelps& Phillips, Los Angeles, California, for the plaintiff-appelleein No. 96-55194.
_____________________________OPINION HAWKINS, Circuit Judge:This case requires us to decide whether certain CaliforniaLabor Code provisions, authorizing the state to seize moneyand impose penalties for a subcontractor's failure to complywith prevailing wage requirements, violate the Due ProcessClause of the Fourteenth Amendment because no notice orhearing is required before such adverse action is taken. Spe-cifically, Victoria L. Bradshaw, Labor Commissioner of theState of California, and others appeal the district court's ordergranting summary judgment in favor of G & G Fire Sprin-klers, Inc. ("G & G"), the public works subcontractor here,and permanently enjoining Bradshaw from enforcing Califor-nia Labor Code SS 1727, 1730-33, 1775, 1776(g) and 1813against G & G for alleged violations of California prevailingwage laws. We hold that G & G has standing to maintain thisaction and that due process requires either a pre- or post-deprivation hearing, but that the district court's injunctionshould be narrowed to apply only until such time as the statemay adopt by regulation or otherwise appropriate proceduresaffording such hearings.I. FactsA. The PartiesAppellee G & G is a fire protection company that installsfire sprinkler systems. G & G has performed numerous publicworks projects as a contractor or subcontractor. Appellantsare the California Division of Labor Standards Enforcement("DLSE"), Department of Industrial Relations, and officialsthereof (collectively "the state").B. The California Labor CodeThe California Labor Code requires contractors and sub-contractors on public works projects to pay a state-determinedprevailing wage to all their workers. Cal. Lab. CodeS 1771.To enforce this requirement, the body awarding the contract("the awarding body") is allowed to withhold funds from aprime contractor should it determine that the contractor or oneof its subcontractors has violated the prevailing wage law.S 1727. The state is authorized to withhold an amount equalto the total amount that all the workers have been underpaid,as well as up to $50 per day, per worker in fines for eachinstance in which the contractor fails to pay the prevailingwage. S 1775. A withholding order can only be issued after afull investigation by DLSE or the awarding body, unless thewithholding is from the final payment to be made to the primecontractor. S 1727. If the violator is a subcontractor, the primecontractor is authorized to withhold an equivalent amountfrom its payments to the subcontractor. S 1729. All of theseprovisions must be incorporated into all public works con-tracts. Cal. Admin. Code, Title 8, S 16430.A notice to withhold to an awarding body is a standard pro-cedure utilized by DLSE, but no notice or hearing is requiredprior to its issuance. DLSE is not required to produce any evi-dence of a violation of the law, no specific standard is appliedin determining whether to issue a notice to withhold, and noprocedure exists to guard against the issuance of improper orexcessive notices to withhold. Moreover, while DLSE has noformal procedures for conducting investigations, as a generalrule, information from a witness/informant must be verifiedwith an independent source. In addition, recommendations towithhold must be reviewed by a supervisor.The exclusive remedy after withholding is a lawsuit by theprime contractor against the awarding body for recovery ofthe money withheld. SS 1730-33. Such a suit must be filedwithin 90 days of the withholding, and the contractor bearsthe burden of establishing that there was no violation. S 1733.DLSE may defend the lawsuit upon request by the awardingbody. Id. Subcontractors are not given the right to bring suit,although a prime contractor is allowed to assign its right tosue. Id. If a suit is not brought within 90 days, the state dis-burses the withheld funds to the underpaid workers; if a suitis brought within this period, then the money is held in escrowuntil its resolution. S 1731.C. The DisputeThis case arose when DLSE issued three withholdingnotices against G & G for a total of at least $120,000. Thenotices were for three separate projects on which G & G hadserved as a subcontractor.1 The awarding bodies for each ofthe projects have withheld money from the prime contractors,who in turn have withheld payment from G & G. No evidencein the record explains in detail the basis for the state's deci-sion to withhold funds from G & G.The issuance of the notices to withhold has a substantialdetrimental effect on G & G's ability to do business, as theireffect is to reduce, or cut off, payments for work performedand to damage G & G's reputation in the industry. Inasmuchas G & G intends to perform further public works projects inthe future, the issuance of additional improper notices to with-hold also could impair G & G's cash flow and ability to dobusiness.G & G filed this action for declaratory and injunctive relief,claiming that the issuance of the notices to withhold withouta prior hearing constitutes a deprivation of property withoutdue process of law in violation of the Fourteenth Amendment.The state responded with a motion to dismiss, and G & Glater filed a motion for summary judgment. The district courtgranted G & G's motion for summary judgment and deniedthe state's motion to dismiss. The district court's judgmentdeclares sections 1727, 1730-33, 1775, 1776(g) and 1813 ofthe California Labor Code and the state's practices thereunderunconstitutional and enjoins the state from enforcing thesesections against G & G.II. Standing We first address whether G & G has standing to maintainthis action.2 The state argues G & G does not have standingbecause subcontractors lack privity of contract with the stateunder the Labor Code and because the state withheld moniesfrom the prime contractors, not G & G, thus precluding anydirect causal connection between G & G's alleged injury andthe state's conduct.[1] Standing is a question of law that we review de novo.Sahni v. American Diversified Partners, 83 F.3d 1054, 1056(9th Cir. 1996). To establish standing, a federal plaintiff mustshow (1) an injury in fact; (2) a causal connection between theinjury and the conduct complained of; and (3) that it is likely,as opposed to speculative, that the injury will be redressed byfavorable decision. Lujan v. Defenders of Wildlife, 504 U.S.555, 560-61 (1992).[2] To establish injury in fact, a plaintiff must demonstratethat the injury is "concrete and particularized " and that it is"actual or imminent, not conjectural or hypothetical." Id. at560. The injury here is both concrete and actual. As a resultof the state's withholding procedures, G & G has not beenpaid approximately $120,000, to which it claims it is entitled.G & G meets the first requirement for standing.[3] A plaintiff must also show that the injury "fairly can betraced to the challenged action of the defendant " and that itdoes not result "from the independent action of some thirdparty not before the court." Simon v. Eastern Kentucky Wel-fare Rights Org.,
426 U.S. 26, 41
-42 (1976). The SupremeCourt detailed the methodology to be followed in determiningcausation in a case of this type: When the suit is one challenging the legality of gov- ernment action or inaction, the nature and extent of the facts that must be averred (at the summary judg- ment stage) . . . in order to establish standing depends considerably upon whether the plaintiff is himself an object of the action (or forgone action) at issue. If he is, there is ordinarily little question that the action or inaction has caused him injury, and that a judgment . . . will redress it. When . . . a plaintiff's asserted injury arises from the government's alleg- edly unlawful regulation (or lack of regulation) of someone else, much more is needed. In that circum- stance, causation and redressability ordinarily hinge on the response of the regulated (or regulable) third party to the government action or inaction . . . it becomes the burden of the plaintiff to adduce facts showing that those choices [of the third party ] have been or will be made in such manner as to produce causation and permit redressability of injury.Lujan,
504 U.S. at 561
-62 (emphasis in original).The state contends that G & G cannot establish causationbecause this case involves the state's regulation of a thirdparty, the prime contractors, whose own independent choicesare an intervening cause of G & G's injury. Specifically, thestate cites California Labor Code S 1729, which states that"[i]t shall be lawful for any contractor to withhold from anysubcontractor under him sufficient sums to cover any penal-ties withheld from him" (emphasis added), in support of itsargument that the prime contractors were not required to with-hold money from G & G and that their decision to do so wasthe true cause of G & G's injury.[4] This argument elevates form over substance. The state'saction here is targeted at G & G; the prime contractors' onlyrole in the dispute is that of a conduit, not some third partywhose independent choices caused G & G's injury. The stateinvestigated G & G's conduct, not the prime contractors', andthe withholding notices explicitly named G & G as the viola-tor of the California Labor Code. G & G was clearly the"object of the action" as the Supreme Court used the term. Assuch, the state's conduct is the cause of G & G's injury: themoney would not have been withheld but for the state's actions.3That was the intended result of the state's action, in accor-dance with the overarching purpose of its regulatory schemeto ensure that prime contractors and subcontractors pay theirworkers the state-determined prevailing wage.[5] Even if we somehow assume that G & G is not itself theobject of the action, but is indirectly affected by the state'sregulation of the prime contractors, our conclusion would bethe same. That the harm to G & G may have resulted indi-rectly does not in itself preclude standing. As the SupremeCourt stated in Warth v. Seldin,
422 U.S. at 505
: When a governmental prohibition or restriction imposed on one party causes specific harm to a third party, harm that a constitutional provision or statute was intended to prevent, the indirectness of the injury does not necessarily deprive the person harmed of standing to vindicate his rights.Furthermore, G & G can show that the prime contractors'(third party) choices "have been or will be made in such amanner as to produce causation and permit redressability ofinjury." Lujan,
504 U.S. at 562
. Here, the prime contractorshave withheld payment from G & G, completing the causallink between G & G's injury and the state's action and per-mitting redressability. Accordingly, G & G's injury can bedirectly traced to the state's conduct and the second require-ment for standing is also satisfied.[6] To meet the third requirement for standing, a plaintiffmust show that his injury will be redressed if he prevails inhis legal action. In this case, G & G's injury will be redressedby this suit because if G & G prevails, the withheld moneywill be released to the prime contractors, who will be obli-gated by contract to pay it to G & G.[7] That G & G as a subcontractor lacks privity of contractwith the state only bolsters our conclusion. Under California'sLabor Code, subcontractors cannot sue the state for withhold-ing funds; only prime contractors can. A subcontractor theo-retically could sue the prime contractor, but the latter has adefense of withholding the funds pursuant to state law. Inaddition, the Labor Code does not grant subcontractors theright to any type of hearing to contest a withholding. There-fore, if a prime contractor chooses not to contest a withhold-ing or to assign its rights to sue to the subcontractor, thesubcontractor is left holding a quite empty bag. 4[8] G & G has standing to maintain this suit.III. Due Process Claim[9] A due process claim has two elements: (1) a deprivationof a protectible interest, and (2) denial of adequate proceduralprotections. See Goldberg v. Kelly,
397 U.S. 254
(1970). Weconsider each of these elements in turn.A. Protectible Interest[10] To determine whether G & G has suffered a depriva-tion of a protectible interest, we must evaluate (1) what typeof interest has been deprived, and (2) whether that interest isprotected by the Due Process Clause. Board of Regents ofState Colleges v. Roth,
408 U.S. 569
-70 (1972). G & G'sinterest arises from its public works contract; it has a propertyinterest in being paid in full for the construction work it hascompleted. See Sniadach v. Family Finance Corp., 395 U.S.337, 342 (1969) (holding that Wisconsin's garnishment proce-dure allowing wages to be frozen upon request of creditor'slawyer constituted "obvious" deprivation of property). Thestate's withholding of over $120,000 has deprived G & G ofits interest in full payment for services rendered.The state quite properly notes, however, that not all prop-erty interests are protected by the Due Process Clause. Whileboth federal and California law recognize that a contract withthe state can create a constitutionally protected property inter-est, Perry v. Sindermann,
408 U.S. 593, 601
(1972); Walkerv. Northern San Diego County Hosp. Dist., 185 Cal. Rptr.617, 620 (1982), not all public contracts give rise to a protect-ible due process interest. See San Bernardino Physicians'Servs. Med. Group, Inc., 825 F.2d at 1408. Indeed, becauseany breach of contract claim against the state logically can beconstrued as a due process claim, " `we must bear in mindthat the Fourteenth Amendment was not intended to shift thewhole of the public law of the states into the federal courts.' "Id. (quoting Brown v. Brienen, 722 F.2d 360, 364 (7th Cir.1983)). Even though every contract may confer some legal rights under state law, that fact alone need not place all contracts within federal due process protection. Although the underlying substantive interest is cre- ated by an independent source such as state law, fed- eral constitutional law determines whether that interest rises to the level of a legitimate claim of entitlement protected by the Due Process Clause.Id. at 1408-09 (internal quotations omitted).[11] Drawing on these principles, the state asserts thatbecause the withholding procedure at issue is contained inG & G's contract, this case is nothing more than a contractualdispute that does not rise to the level of a constitutional claim.Moreover, the state argues that construing this case to presenta constitutional claim would result in the "federalization" ofstate contract law by giving G & G and all others who con-tract with the state an opportunity to have their grievancesreviewed in federal court when they should be confined totheir contractually bargained-for remedies under state law.This argument, however, misses the mark. Unlike the casescited by the state, this case does not involve a breach of con-tract claim or a challenge to the contract itself. 5 G & G con-cedes that the express terms of the contract grant the state theauthority to withhold funds for wage violations; the withhold-ing is not a breach of contract.6 Instead, G & G challenges theconstitutionality of several provisions of the California LaborCode as violative of its federal due process rights. 7 Those pro-visions, incorporated by state law into all public works con-tracts, authorize the state to withhold payment of money owedto contractors or subcontractors for alleged violations of thestate prevailing wage law. This case thus involves a directconstitutional challenge to these statutes, not a mere contrac-tual dispute.The state, relying on O'Bannon,
447 U.S. at 773
, also con-tends that G & G's property interest is not protectible becausethis case involves the indirect effects of state action. InO'Bannon, the Supreme Court reiterated the principle that"the due process provision of the Fifth Amendment does notapply to the indirect adverse effects of governmental action."
447 U.S. at 789
. Specifically, the Court held that residents ofa nursing home that had its license revoked did not have aright to a hearing because the revocation "did not directlyaffect the patients' legal rights or deprive them of any consti-tutionally protected interest in life, liberty, or property." Id. at790. It further stated, "[T]he fact that the decertification of ahome may lead to severe hardship for some of its elderly resi-dents does not turn the decertification into a governmentaldecision to impose that harm." Id. at 789. In a footnote, how-ever, the Court expressly noted: We of course need not and do not hold that a person may never have a right to a hearing before his inter- ests may be indirectly affected by government action. Conceivably, for example, if the Government were acting against one person for the purpose of punishing or restraining another, the indirectly affected individual might have a constitutional right to some sort of hearing. But in this case the Govern- ment is enforcing its regulations against the home for the benefit of the patients as a whole and the home itself has a strong financial incentive to contest its enforcement decision; under these circumstances the parties suffering an indirect adverse effect clearly have no constitutional right to participate in the enforcement proceedings.Id. at n.22.[12] The state's reliance on O'Bannon is misplaced.8Unlike the nursing home residents in that case, G & G is thetarget of the state's action here. Hence there is no "indirect"governmental action despite the presence of the prime con-tractors in the chain of causation. Even if we were to acceptthe state's contention that its withholding of funds constitutesindirect action, such action would fall within the categoryexpressly left open by the O'Bannon Court -- action taken bythe government against one party for the purpose of punishingor restraining another. Either way, we hold that G & G hassuffered a deprivation of a protectible property interest as aresult of the state's action.B. Process Due[13] We now examine whether the state accorded G & Gdue process when it effected this deprivation. As a generalrule, the Due Process Clause requires that individuals receivenotice and a meaningful opportunity to be heard before thegovernment deprives them of property. United States v. JamesDaniel Good Real Prop.,
510 U.S. 43, 48
(1993). Twenty fiveyears ago, the Supreme Court announced an exception to thisrule for "extraordinary situations where some valid govern-mental interest is at stake." Fuentes v. Shevin,
407 U.S. 67
, 82(1972) (quoting Boddie v. Connecticut,
401 U.S. 371
, 378-79(1971)). More recently, the Court has refined the exception:"An important government interest, accompanied by a sub-stantial assurance that the deprivation is not baseless orunwarranted, may in limited cases demanding prompt actionjustify postponing the opportunity to be heard until after theinitial deprivation." Federal Deposit Ins. Corp. v. Mallen, 486U.S. 230, 240 (1988). Over the years, the Court has broad-ened this exception considerably, frequently holding a post-deprivation hearing to be sufficient. Compare Board ofRegents,
408 U.S. at 570
n.7 (describing use of exception as"rare"), with e.g., Barry v. Barchi,
443 U.S. 55
(1979) (hold-ing that state's interest in preserving integrity of sport of horseracing justifies lack of pre-deprivation hearing), and Mallen,
486 U.S. 230
(holding that state's interest in maintaining pub-lic confidence in bank management justifies post-deprivationhearing for removal of bank manager).[14] Where extraordinary circumstances justify dispensingwith a pre-deprivation hearing, however, a prompt post-deprivation hearing must be provided. See Mallen, 486 U.S.at 242. In determining whether a post-deprivation hearingprocedure is reasonably prompt, a court should "examine theimportance of the private interest and the harm to this interestoccasioned by delay; the justification offered by the Govern-ment for delay and its relation to the underlying governmentalinterest; and the likelihood that the interim decision may havebeen mistaken." Id. [15] In this case, subcontractors like G & G are affordedneither a pre- nor post-deprivation hearing when payments arewithheld. Once the state determines that a violation of the pre-vailing wage law has occurred, it may withhold and disbursemoney directly to the workers and may impose fines bothwithout providing any hearing at which the subcontractormight challenge the validity of the state's finding. Accord-ingly, subcontractors have no opportunity to be heard at ameaningful time in a meaningful manner. See Fuentes, 407U.S. at 80. This scheme violates the Due Process Clause ofthe Fourteenth Amendment.9[16] What specific type of process must be afforded sub-contractors is for the state to decide. We hold only that thestate must provide for either a pre- or prompt post-deprivationhearing when withholding payments and assessing penalties.10IV. Other Issues Raised by the State The state asserts that G & G's summary judgment motionwas premature and hence should have been denied. FederalRule of Civil Procedure 56(a) allows a motion for summaryjudgment to be made any time more than twenty days aftercommencement of the action. G & G's motion complied withthis rule and with the notice requirements under Local Rule7.4.11 Moreover, the state did not file a Rule 56(f) declarationindicating why it needed discovery and the facts it hoped todiscover. Given the state's receipt of adequate notice and anopportunity to respond to the motion, and its failure to file aRule 56(f) declaration, the district court did not err in consid-ering the summary judgment motion.The state also contends that the individual defendants inthis case are entitled to qualified immunity. "Qualified immu-nity is an affirmative defense to damage liability; it does notbar actions for declaratory or injunctive relief. " AmericanFire, Theft & Collision Managers, Inc. v. Gillespie, 932 F.2d816, 818 (9th Cir. 1991) (internal quotation omitted) (empha-sis added). Therefore, the individual defendants cannot claimqualified immunity as an affirmative defense to this actionseeking declaratory and injunctive relief.In addition, the district court did not err in denying thestate's motion to dismiss. The state asserts that defects on theface of the complaint mandated its dismissal, but these allegeddefects relate to issues such as standing, whether G & G wasdeprived of any constitutional right, and the qualified immu-nity defense. To the extent that we have decided all of theseissues in G & G's favor, we affirm the district court's deci-sion.V. The InjunctionThe district court's judgment declared seven separate pro-visions of the California Labor Code unconstitutional andenjoined the state from enforcing any of those provisionsagainst G & G. The state argues that the injunction is over-broad, and we agree.When a federal court holds that a constitutional violationhas occurred, the nature of the remedy it grants must be deter-mined by the nature and the scope of the constitutional viola-tion. Milliken v. Bradley,
433 U.S. 267, 280
(1977); see alsoCalifano v. Yamasaki,
442 U.S. 682, 701
(1979) ("[T]hescope of injunctive relief is dictated by the extent of the viola-tion established . . . ."). In devising a remedy for constitu-tional violations by state agencies or officials, the court "musttake into account the interests of state and local authorities inmanaging their own affairs, consistent with the Constitution."Id. [17] The district court's injunction here was overbroad intwo respects. First, by invalidating all California Labor Codeprovisions relating to the withholding procedure, the districtcourt created a remedy beyond what was required to addressthe constitutional violation -- the state's failure to providesubcontractors like G & G a pre- or post-deprivation hearingas required by the Due Process Clause. Declaring the with-holding provisions to be unconstitutional as applied is suffi-cient relief, as it allows the state to remedy the violation byadopting regulations providing for a pre- or post-deprivationhearing and to manage its own affairs in a manner consistentwith the Constitution. See Milliken,
433 U.S. at 280
.[18] Second, the district court issued a permanent injunc-tion prohibiting the state from enforcing the withholding pro-visions against G & G. The sweeping nature of this reliefsuggests that even if the state were to provide G & G with anextensive hearing procedure, it still would be enjoined frompenalizing G & G for noncompliance and noncooperation,from obtaining the disputed funds from the awarding body,and from disbursing back wages to underpaid workers even ifG & G did not contest the withholding. In short, the districtcourt has simply prohibited the state from enforcing the pre-vailing wage law against G & G. The appropriate course inthis case, given all the circumstances, would be to enjoin thestate from enforcing the withholding provisions againstG & G unless within a reasonable period it chooses to adoptprocedures that afford G & G and others either a pre- or post-deprivation hearing, and to specify the time within which thestate must do so.We vacate the district court's injunction and remand for amodification in the manner stated.VI. Attorney FeesIn a companion appeal that has been submitted on the briefsand consolidated with this case, the state contests the districtcourt's award of attorney fees to G & G following its grant ofa permanent injunction in G & G's favor. Specifically, thestate asserts that the district court abused its discretion in (1)determining that G & G was the prevailing party under 42U.S.C. S 1988; (2) awarding attorney fees in light of G & G'salleged failure to satisfy the applicable criteria for such relief;and (3) awarding attorney fees to G & G for work performedin a previous lawsuit alleging identical claims for reliefagainst the same defendants.A. Procedural HistoryIn December 1994, G & G filed a lawsuit entitled G & GFire Sprinklers, Inc. v. Juan Garza et al., No. CV-94-8542 R("the Garza lawsuit"). G & G's claims in the Garza lawsuitwere the same as those presented in this case. The Garzalawsuit ended in a settlement agreement providing that G & Gcould refile the lawsuit if the state took further action againstG & G, which is precisely what happened. The state's furtheraction -- a subsequent notice to withhold -- prompted G & Gto file the present action.After the district court's grant of the injunction, the statefiled a motion to stay the judgment in this Court, which wasdenied by a motions panel. Next, the district court issued anattorney fees award totaling $25,830.28, which is the subjectof this appeal. Subsequently, we reconsidered our previousdenial of the motion to stay the judgment, granted a staypending appeal, and set the case for an early hearing on themerits.B. Prevailing PartyThe state argues that G & G is not a prevailing party under42 U.S.C. S 1988 because while it received the relief itrequested -- an injunction -- the staying of that injunctionsomehow nullified its legal effect or its mandate that the statealter its unlawful conduct. We reject this argument.[19] In Farrar v. Hobby, the Supreme Court held that to beconsidered a prevailing party, a plaintiff must "obtain anenforceable judgment against the defendant from whom feesare sought, or comparable relief through a consent decree orsettlement."
506 U.S. 103, 111
(1992) (citations omitted). "Inshort, a plaintiff `prevails' when actual relief on the merits ofhis claim materially alters the legal relationship between theparties by modifying the defendant's behavior in a way thatdirectly benefits the plaintiff." Id. at 111-12.[20] Here, G & G obtained an injunction from the districtcourt, which materially altered the legal relationship betweenthe parties by prohibiting the state from depriving G & G ofproperty without any hearing. Certainly that change benefittedG & G and it is the prevailing party. See Herrington v. Countyof Sonoma, 883 F.2d 739, 744 (9th Cir. 1989) (injunction,which appellate court upheld, rendered plaintiffs prevailingparties despite vacatur of damage award); see also Baumgart-ner v. Harrisburg Hous. Auth., 21 F.3d 541, 543 (3d Cir.1994) (plaintiff who has received injunctive relief has pre-vailed for purposes of section 1988). That a stay was issuedafter the district court's grant of the injunction does not alterG & G's status as the prevailing party in the district court, asthe district court's judgment is a statement of the rights of theparties unless and until that judgment is altered by a highercourt. We have decided not to do so.C. General Award of FeesThe state also claims that the district court erroneouslyawarded attorney fees based solely on the declaration of Ste-phen A. Seideman ("Seideman declaration"), G & G's attor-ney in the district court.12 More specifically, the state arguesthat the Seideman declaration fails to discuss many of the fac-tors discussed in Kerr v. Screen Extras Guild, Inc., 526 F.2d67, 69-70 (9th Cir. 1975), to be considered by a district courtin awarding attorney fees. These include: (1) the time andlabor required; (2) the novelty and difficulty of the questions;(3) the skill requisite to perform the legal services properly;(4) the preclusion of other employment due to acceptance ofthe case; (5) the customary fee; (6) the contingent or fixednature of the fee; (7) the limitations imposed by the client orthe case; (8) the amount involved and the results obtained; (9)the experience, reputation, and ability; (10) the undesirabilityof the case; (11) the nature of the professional relationshipwith the client; and (12) awards in similar cases.[21] A district court, however, need not discuss each andevery factor separately in making its decision. Rather, astrong presumption exists that the lodestar (reasonable num-ber of hours times reasonable hourly rate) represents a reason-able fee, and "many of these factors usually are subsumed"within the lodestar calculation. Jordan v. Multnomah County,815 F.2d 1258, 1262 (9th Cir. 1987) (quoting Hensley v. Eck-erhart,
461 U.S. 424, 434
(1983)). Thus, G & G only had toprove that its hourly rate was reasonable and that the totalnumber of hours expended was reasonable. See Dennis v.Chang, 611 F.2d 1302, 1308 (9th Cir. 1980) (award of attor-ney fees properly granted where based solely on skill andexperience of counsel, rates of compensation "typical" ofthose charged by attorneys for comparable service, and rea-sonable amount of time spent).[22] Nevertheless, we agree with the state that G & G didnot satisfy its "burden of producing satisfactory evidence, inaddition to the affidavits of its counsel, that the requestedrates are in line with those prevailing in the community forsimilar services of lawyers of reasonably comparable skill andreputation." Jordan, 815 F.2d at 1263 (emphasis added). Theonly evidence in the record about the hourly rate is Mr. Seide-man's statement in his declaration that "[t]he hourly rateswhich I billed Plaintiff are equal to or less than those gener-ally billed by attorneys in Los Angeles for similar services,"and a similar statement with regard to the paralegal's hourlyrates. These statements constitute an "insufficient basis fromwhich to conclude that the rates requested are `reasonable.' "Southerland v. International Longshoremen's and Ware-housemen's Union, 845 F.2d 796, 801 (9th Cir. 1987). There-fore, while G & G certainly is entitled to fees, we remand tothe district court the issue of whether the claimed hourly ratesare reasonable. On remand, both G & G and the State shouldbe allowed to supplement the record with additional evidenceso that the district court can reevaluate the reasonableness ofthe fees requested.In addition, we do not find persuasive the state's relatedargument that the California Division of Labor StandardsEnforcement ("DLSE") and the Department of IndustrialRelations were not made parties to the present suit until theFirst Amended Complaint on September 7, 1995 and henceshould not be held accountable for any fees incurred prior tothat time. We hold that these parties are jointly and severallyliable for the fees, given that the work involved aided in thepreparation of the case against all the defendants and the casewas not one in which the claims against each defendant variedor one defendant was more culpable than another. See Woodsv. Graphic Communications, 925 F.2d 1195, 1207 (9th Cir.1991) (defendant liable for fees previously incurred wherefees assisted in preparing case against defendant and servedas developmental work for case).D. Award of Fees for Work Performed in Previous LawsuitThe state asserts that the district court should not haveallowed G & G to recoup attorney fees from the Garzalawsuit given that it did not prevail in that lawsuit. We upholdthe district court's decision.In Webb v. Board of Educ.,
471 U.S. 234, 243
(1985), theSupreme Court affirmed a district court's decision to denyattorney fees for time spent pursuing optional administrativeremedies, specifically school board proceedings. But theCourt noted that the petitioner in that case "made no sugges-tion below that any discrete portion of the work product fromthe administrative proceedings was work that was both usefuland of a type ordinarily necessary to advance the civil rightslitigation to the stage it reached before settlement," id.,suggesting that if that had happened, maybe the result wouldhave been different. We followed the Supreme Court's leadin Rock Creek Ltd. Partnership v. State Water ResourcesControl Bd., 972 F.2d 274, 279 (9th Cir. 1992), holding thata sponsor of a hydroelectric project was not entitled to attor-ney fees under SS 1983 and 1988 for administrative proceed-ings before FERC. We reasoned that the FERC proceedingwas not a condition precedent to plaintiff's entry to federalcourt, nor was it a part of a continuing federal court action.Because the FERC proceeding was not related or dependent,it could not form the basis for attorney fees. Id. Cases from other circuits have addressed similar fee issuesin non-administrative contexts. For example, the Third Circuitheld in Keenan v. City of Philadelphia, 983 F.2d 459, 474 (3dCir. 1992), that the district court did not abuse its discretionin including the time spent in labor arbitration in its fee calcu-lation. It based its decision on the following interpretation ofWebb by the Third Circuit: "[F]or the time spent pursuingoptional administrative proceedings properly to be included inthe calculation of a reasonable attorney's fee, the work mustbe `useful and of a type ordinarily necessary' to secure thefinal result obtained from the litigation." Pennsylvania v. Del-aware Valley Citizens' Council for Clean Air,
478 U.S. 546
,561 (1986). In addition, the Eighth Circuit briefly addresseda similar situation in Perkins v. Cross, 728 F.2d 1099, 1100(8th Cir. 1984), an action by picketers against municipal offi-cials for violation of their civil rights. The court held that feescould be awarded for any "time the lawyer spent defendingthe plaintiffs in the original municipal court proceeding to theextent, if any, that research or investigation done in connec-tion with that proceeding proved directly relevant to the suc-cessful prosecution of [their] later civil rights claims." Id. [23] Here, G & G made a showing that the work done inthe Garza lawsuit was directly related to the present action --the allegations in that suit were identical to those made here.Counsel for G & G stated that the legal research and analysisperformed in Garza were necessary for this action andaccordingly saved him from expending more time on this law-suit. Thus, unlike the Rock Creek case, the prior proceedinghere was related to the present action. The two can even beviewed as a continuum of proceedings necessary to achievethe relief finally granted, given that the Garza case ended ina settlement stating that if the state took further action, G & Gcould refile the lawsuit, which is what happened. Moreover,caselaw reveals no requirement that a party must have pre-vailed in a prior proceeding to use that as a basis for attorneyfees in another action.AFFIRMED IN PART, REVERSED AND REMANDEDIN PART. Costs to Appellee G & G Fire Sprinklers, Inc.KOZINSKI, Circuit Judge, dissenting.In San Bernardino Physicians' Services Medical Group v.County of San Bernardino, 825 F.2d 1404 (9th Cir. 1987), weheld that "[i]t is neither workable nor within the intent of sec-tion 1983 to convert every breach of contract claim against astate into a federal claim." Id. at 1408 (footnote omitted).While we recognized that any contract with the state givesrise to what could be characterized as a property interest, weheld that this alone is not a basis for invoking the protectionsof due process. Rather, the interest in question must fallwithin a narrow category that might fairly be characterized asa civil right, id. at 1409, a right in public employment beingthe quintessential example. Id. (citing Board of Regents v.Roth,
408 U.S. 564
(1972) and Perry v. Sindermann, 408 U.S.593 (1972)). San Bernardino said that "construction contracts[and] purely material supply contracts"--contracts like theone we have here--do not create rights protected by the dueprocess clause. Id. at 1410.The majority abandons San Bernardino's nuanced frame-work in favor of a categorical approach that turns every rightto receive payment on a public works contract into a propertyright protected by due process: "G & G's interest arises fromits public works contract; it has a property interest in beingpaid in full for the construction work it has completed." Maj.op. at 1130. The opinion thus conflicts with San Bernardino,as well as the opinions of two other circuits. See Mid-American Waste Systems, Inc. v. City of Gary, 49 F.3d 286,291 (7th Cir. 1995); Walentas v. Lipper, 862 F.2d 414, 418(2d Cir. 1988); S & D Maintenance Co. v. Goldin, 844 F.2d962, 966 (2d Cir. 1988).It is also very bad policy. The state here is engaged in acommercial activity where it holds no special sway over otherparties by virtue of its regulatory powers. In carrying out itsproject, the state has bargained for the construction to be doneaccording to plan, on schedule, and consistent with health andsafety codes; these are ordinary terms just like the ones pri-vate parties put into their construction contracts. The state hasalso bargained for a more exotic term, namely that contractorsand subcontractors pay a prevailing wage to their employees.While this differs from what ordinarily appears in private con-struction contracts, it is not an exercise of the state's regula-tory power; rather, it is a term that any private party couldequally well put into its contract. If the contractor or subcon-tractor doesn't like the term, he can refuse to do business withthe state.1Here the state determined that G & G did not comply withits prevailing wage obligation, and thus withheld payments.This is no different from a builder's refusal to make progresspayments when he discovers (or believes he discovers) a fail-ure of performance on any other term of a standard construc-tion contract, for example, that the plumbing isn't up to code.Withholding payments under such circumstances is the stan-dard remedy. If the subcontractor believes he has met his obli-gations, he may resort to his remedies under his contract withthe general contractor who, in turn, may seek relief from thestate or assign his right to do so to the subcontractor. It's arun-of-the-mill contract dispute just like thousands routinelyhandled by the state courts without federal intervention.In lieu of this common sense solution--which also com-plies with binding precedent--the majority invokes the fullpanoply of federal due process, including the requirement ofa hearing before the state may withhold payments for what itbelieves is defective performance under the contract. Whilethe opinion addresses only the prevailing wage term, its logiccarries much farther: If the state discovers any other type ofbreach--for example, failure to complete the project on timeor to comply with applicable safety codes--it must provide anadvance hearing before it may withhold payment. Thisgravely burdens the state's most potent remedy for dealingwith recalcitrant contractors and subcontractors. 2 Why thestate should be saddled with this yoke when it engages in thepurely commercial activity of construction--a burden not suf-fered by private builders--is beyond me.3 San Bernardinoclearly teaches that commercial contract rights must be vindi-cated in state court using state remedies. By ignoring thisteaching the majority creates not just an intra-circuit andinter-circuit conflict but also a wholly unwarranted burden onthe thousands of states, counties, cities and special use dis-tricts governed by our law. Government is too unwieldyalready; there is no justification for adding this heavy layer ofred tape. I respectfully dissent.
___________________________FOOTNOTES 1 Withholding notices had also been issued on projects on which G & Ghad served as the prime contractor, but those notices were withdrawnbefore this suit ensued.2 We note at the outset that whether a party has standing is a separatequestion from whether a party has an interest protected by the Due ProcessClause - here, a property interest. "Standing to bring a state court claimof deprivation of property rights does not establish a protected propertyinterest." Kim Constr. Co. v. Board of Trustees, 14 F.3d 1243, 1249 (7thCir. 1994). Moreover, that a party has no constitutionally protected prop-erty interest under a statute does not mean that it has no standing to bringa claim under that statute. See id.Accordingly, cases such as O'Bannon v. Town Court Nursing Ctr., 447U.S. 773 (1980), and San Bernardino Physicians' Servs. Med. Group, Inc.v. County of San Bernardino, 825 F.2d 1404 (9th Cir. 1987), which thestate cites to argue that G & G has no standing, are inapposite becausethey address whether parties have protectible property interests, not stand-ing.3 This case differs from those in which the Supreme Court has found therequisite "but for" causation lacking. See, e.g., Asarco, Inc. v. Kadish, 490U.S. 605 (1989) (individual taxpayers and teachers' organization lackedstanding to challenge Arizona land management statute when only allegedinjuries were increased taxes and reduced school funding because ofimpossibility of showing statute had direct causal impact on taxes orschool funding); Simon,
426 U.S. at 26
(plaintiffs lacked standing to suedue to inability to establish causal relationship between IRS ruling andhospitals' decisions not to provide treatment; Warth v. Seldin, 422 U.S.490 (1975) (plaintiffs asserting inability to find homes in city based onexclusionary zoning practices failed to establish causation).4 The state cites Lloyd v. Stewart & Nuss, Inc., 327 F.2d 642, 645-46(9th Cir. 1964), for the proposition that a subcontractor has no propertyright to funds withheld by an awarding body and hence has no standingto challenge such a withholding. We reject this argument for several rea-sons.First, Lloyd is a bankruptcy case holding that amounts withheld from aprime contractor by the state upon request of a trucking service doingwork for a subcontractor did not constitute property owned or possessedby the debtor subcontractor and hence the bankruptcy court had no sum-mary jurisdiction over the property. The case does not even involve consti-tutional issues, let alone due process concerns, and it never discussesstanding. Second, even if we were to deem Lloyd remotely relevant to thiscase, its decision that the subcontractor debtor had no property right in thedebt owed to the prime contractor by the state sheds no light on whethera subcontractor has a protectible property interest in wages withheld fromit pursuant to state law. In fact, Lloyd acknowledges that the subcontractorand the trucking service "both possessed the right to claim against thefund, but only in the event they were not paid by their respective principalobligors." Id. at 646. Here, G & G was not paid by its respective principalobligor, the prime contractor, and it is asking for an opportunity to contestthat deprivation.5 All the cases cited by the state to support its argument that G & G'sinterest is not constitutionally protected involve due process claims arisingfrom an alleged breach of contract. See, e.g., Unger v. National ResidentsMatching Program, 928 F.2d 1392, 1399 (3d Cir. 1991) (termination ofresidency program after plaintiff's acceptance into program failed toimplicate due process rights because contract with university hospital didnot confer protected status and did not include provision of for-cause ter-mination only); S & D Maintenance Co. v. Goldin, 844 F.2d 962, 968-69(2d Cir. 1988) (contractor alleging state breached contract by withholdingfunds pending result of criminal investigation failed to establish due pro-cess claim because neither contract nor state law contained for-cause ter-mination provision or right to prompt payment); San BernardinoPhysicians' Servs. Med. Group, Inc., 825 F.2d at 1406 (physicians'group's challenge to termination of service contract with state did notimplicate due process interest because status of employees dependedentirely upon their contracts with group, not upon contracts between groupand state).6 G & G points out that a prime contractor has none of the usual breachof contract remedies. It may not declare a material breach by the awardingbody for withholding payments and it may not rescind the contract. Theprime contractor must continue to perform, to pay for labor and materials,even if payments have been cut off. The exclusive remedy is a lawsuit.Cal. Labor Code SS 1731-33.7 G & G's complaint seeks declaratory relief from the "facial unconstitu-tionality of state laws."8 The other cases cited by the state are similarly inapposite. See Cas-taneda v. United States Dept. of Agric., 807 F.2d 1478 (9th Cir. 1987)(employee of convenience store who was fired after store was disqualifiedfrom food stamp program did not have right to hearing even thoughemployee's fraudulent conduct was cause of termination); Grove City Col-lege v. Bell, 687 F.2d 684 (3d Cir. 1982), aff'd,
465 U.S. 555
(1984) (stu-dents of college that refused to comply with requirements of federalstudent aid program did not have right to hearing before college's eligibil-ity to receive student aid was revoked).9 Cal. Lab. Code SS 1730-33. The state's argument that due process issatisfied because an aggrieved party may bring a suit on the contract isunavailing. The state relies on Parratt v. Taylor,
451 U.S. 527
(1981),overruled in part on other grounds by Daniels v. Williams,
474 U.S. 327
(1986), and Hudson v. Palmer,
468 U.S. 517
(1984), which held that incertain circumstances, a post-deprivation remedy under state law may ful-fill the requirements of due process. We have stated, however, that "[w]eapply Parratt and Hudson only when the state administrative machinerydid not and could not have learned of the deprivation until after itoccurred, not when state officials acted pursuant to state policy and fol-lowed state procedures they believed were proper. " Knudson v. City ofEllensburg, 832 F.2d 1142, 1149 (9th Cir. 1987) (internal quotations omit-ted). There is no question here, and the state does not contest, that the offi-cials in this case acted pursuant to state policy and followed stateprocedures. Thus, Knudson forecloses the state's argument.Moreover, even if Parratt and Hudson were applicable, they would notalter our conclusion because only prime contractors are granted the rightto bring suit on the contract against the state. Subcontractors may sue onlyif the prime contractor is willing to assign them its right. Therefore, evenif this right to sue could somehow be held to satisfy due process, it wouldnot satisfy due process for the subcontractors who have no such indepen-dent right.10 Contrary to the state's concerns, our decision today does not affect thevalidity of the Davis-Bacon Act, 40 U.S.C. SS 276a et seq., upon whichthe California law was patterned, because the Davis-Bacon Act providesfor an extensive hearing and appeal structure through its implementingregulations. Within 30 days after a withholding, either the prime contrac-tor or the subcontractor may request an administrative hearing to reviewthe findings of the Administrator of the Wage and Hour Division of theDepartment of Labor. 29 C.F.R. S 5.11. The findings and rulings of theadministrator may be appealed to an administrative law judge ("ALJ"),whose decision may be appealed to the Wage Appeals Board. Id.Ultimately, the Board's decision may be appealed to the federal court. 5U.S.C. S 704.11 G & G points out that it had filed essentially the same motion in aprior case, relying on the same authorities cited here. Thus, the state wasaware of G & G's argument and the authorities on which it relied.12 The state does not dispute any specific items, such as the services pro-vided or the hourly rate, or the total amount of fees; it simply asserts thatG & G's evidence was not sufficient to support an award of fees.1 That the prevailing wage term appears in the California Labor Codedoesn't matter. No one is forced to comply unless he agrees to do businesswith the state.2 The right to a predeprivation hearing discourages states from crackingdown on inefficient, incompetent and corrupt contractors, since such con-tractors remain on the job (with a right to continuing payment) until thehearing is completed. "Any gains the agency anticipated from terminatinginefficient or incompetent contractors or from stopping a project that hadlost its value to the state might be consumed by payments during the hear-ing process and related litigation." Leonard Kreynin, Note, Breach of Con-tract as a Due Process Violation: Can the Constitution Be a Font ofContract Law?, 90 Colum. L. Rev. 1098, 1099 (1990).3 We can't always expect the government to act with unbounded com-passion, patience and generosity. Indeed, when the government is actingas a commercial entity, taxpayers cajole it to act with all the ferociousnessthe marketplace demands. Certain limits must always apply: The govern-ment cannot, for example, use public works contracts to discriminate onthe basis of race or sex. But when the government bargains over the com-mercial terms of the contract it should enjoy the same ability as privatebuilders to draw up the deal as it likes and seek the best price and the bestterms the marketplace allows. the end