A unanimous Supreme Court upheld the ability of plaintiffs and their attorneys to recover fees for civil rights violations, while setting a difficult test for award of enhanced fees.
Recognizing the pervasiveness and devastating effect discrimination had on the nation, the federal Civil Rights Act encourages the vigorous prosecution of discrimination cases in part by allowing successful plaintiffs to recover their legal fees from wrongdoers — a major departure from the American legal system where, generally, each party bears its own costs of litigation including attorneys' fees.
Most civil rights attorneys' fee awards are determined by a "lodestar" methodology (reasonable number of hours worked multiplied by reasonable hourly rate). In some jurisdictions, the courts have adopted a matrix that further refines this formula by allocating a sliding scale of fees for attorneys based on attorney experience (for instance, in Washington, D.C., this sliding scale is based on the year the attorney graduated from law school). The goal is to make a reasonable fee award under all circumstances.
The lodestar methodology has its benefits in setting a known and knowable standard on which to base compensation and generally compensates attorneys fairly and reasonably. But in cases where attorneys go above and beyond their traditional work to secure a superlative outcome for victims particularly wronged, holding fast to a traditional model of compensation may not yield the results intended by Congress — such an award may be unreasonable based on all the circumstances.
And as law firms move from traditional per-hour billing rates to flat fees, retainers and various types of contingency compensation, the lodestar becomes more complicated. Moreover, a problem with the lodestar from the beginning is that reasonable minds may differ greatly in their opinions on how many hours it is "reasonable" to spend working on a given case. A lodestar such as that in Washington, D.C., which enhances fees based on years since graduation whether or not an attorney even practiced in that area of the law during that time, can obviously result in some discrepancies. If, for example, an attorney who litigated nothing but civil rights cases for five years since graduation is considered far less compensable than one who graduated from law school 20 years ago and practiced nothing but tax law since then and won her first civil rights case, the result might be unreasonable given all the circumstances.
A section of the Civil Rights Act (known as Section 1988) allows courts to adjust fees that are otherwise considered "reasonable." Use of Section 1988 to enhance awards for superlative attorney work was upheld by the Supreme Court decades ago, though the court has limited its application in cases of "complexity" and "novelty" and insisted upward adjustments be for only truly exceptional work by individual attorneys toiling on the case.
The ability of Section 1988 to be used for any upward adjustment came under attack in litigation that sought to enforce the rights of foster children in Georgia, a case that involved years of complicated wrangling, extensive research and fact-finding, and intricate legal maneuvering.
In Perdue v. Kenny A., a federal district court had enhanced plaintiffs' attorneys' fees based on the attorneys' outstanding work that brought justice to thousands of children languishing in a deteriorating foster care system.
Attorneys represented a class of 3,000 children in two counties and alleged systemic deficiencies in the state's system, devoting more than 30,000 hours of labor over five years. The end result was a 47-page consent decree that provided sweeping relief and benefits to the children, including 31 outcome measures the state agreed to meet. In the words of the district court: "After 58 years as a practicing attorney and federal judge, the Court is unaware of any other case in which a plaintiff class has achieved such a favorable result on such a comprehensive scale." The court went on to note that "plaintiffs' counsel brought a higher degree of skill, commitment, dedication, and professionalism to the litigation" than the court had seen in any other case.
While agreeing to the consent decree that ended the case, the state objected to the enhanced attorneys' fees and challenged the ability to adjust fees upward under Section 1988. The case came before the U.S. Supreme Court.
Attorneys with AARP Foundation Litigation filed AARP's amicus brief, in conjunction with a number of civil rights organizations.
The brief noted that the ability to adjust fees upward from the lodestar is in line with prior precedents, as well as with the intent of Congress. Prohibiting judges from upwardly adjusting fee awards would violate the intent of Congress in enacting the Civil Rights Act. When Congress set Section 1988 in place, it noted that "[i]f successful plaintiffs were routinely forced to bear their own attorneys' fees, few aggrieved parties would be in the position to advance the public interest by invoking the injunctive powers of the federal courts." Congress noted that fee-shifting ensured that the costs of civil rights violations were borne by the violators, not the victims.
The brief pointed out that Congress has had ample opportunity to change Section 1988 since the Supreme Court upheld that provision 26 years ago — and has not done so. Moreover, the brief argued, the ability to adjust beyond the lodestar is needed in today's changing legal market.
The Court's Ruling
The court ruled that there is a "strong presumption" that the lodestar figure is reasonable, but presumption can be overcome in "rare circumstances." Some of these circumstances include a finding that the hourly rate employed in the lodestar calculation does not adequately measure the attorney's true market value; the attorney incurred an "extraordinary outlay of expenses" and the litigation was "exceptionally protracted"; or there was an "exceptional delay" in payment of fees.
The court then looked at the fees awarded in this specific case and disagreed with the District Court's determination, sending the dispute back down to the lower court for a redetermination of fees. A four-justice partial dissent agreed with the majority but would have upheld the lower court's award in this case, and would have allowed the higher recovery articulated by the trial court on the grounds that the trial court had all the evidence properly before it and was in the best position to make that decision.
The ruling is a victory for civil rights advocates in establishing once and for all that they can recover for their time and expenses in bringing critical litigation that enforces hard-won rights. The decision is not a slam dunk, however, as the test for actually receiving enhanced awards remains a difficult one — and in the instant case, in fact, the court rejected the initial determination and sent the award back to a lower court for recalculation.