Picking Up the Litigation Tab: Statutory Attorneys Fees

Transcription

1 Chapter 2 Cite as 22 Energy & Min. L. Inst. ch. 2 (2002) Picking Up the Litigation Tab: Statutory Attorneys Fees Timothy W. Gresham 1 Penn, Stuart & Eskridge Abingdon, Virginia Synopsis Introduction The American Rule Fee Shifting Statutes...41 [1] General...41 [2] Environmental Statutes...42 [3] Who Is Eligible?...44 [a] Prevailing Parties...44 [b] Prevailing Defendants...47 [c] Nonenvironmental Plaintiffs...48 [d] Solvent Economically Interested Parties...50 [e] Intervenors...52 [f] Catalysts...52 [4] Appropriateness...58 [5] Reasonable Attorneys Fees Equal Access to Justice Act...62 [1] Purpose...62 [2] Applicability...63 [3] Standards...65 [a] Prevailing Party [b] Excessive Demand [4] Limitations...69 [a] Substantial Justification [b] Special Circumstances [5] Eligible Parties...70 [a] Net Worth [b] Aggregating Net Worth [c] Fees Incurred [d] Adversary Adjudication [e] Hourly Rate Cap Rule Conclusion Shareholder and Director, Penn, Stuart & Eskridge; B.A., Morehead State University; J.D., University of Tennessee.

2 2.01 ENERGY & MINERAL LAW INSTITUTE Introduction. Litigation is expensive business. It becomes even more expensive when someone sues your client and not only wants the court to issue an injunction or award damages, but wants your client to pay his attorney. It becomes frustrating, when eventually you win, but the court cannot make the plaintiff pay your fees. This chapter is intended to provide an overview and discussion of statutory attorneys fee-shifting under various statutes enacted by Congress. It begins with a discussion of the common law rule that each party paid its own attorneys and the traditional exceptions to that rule. It then proceeds on to the principles underlying attorney fee-shifting generally and environmental statutes, specifically. While most statutes also provide for recovery of costs, that is not dealt with in any detail in this chapter. Generally, cost-shifting has been around much longer than fee-shifting and the rules are much more developed. The chapter continues with a discussion and analysis of who is eligible to receive attorneys fees and the nature of the relief a party must obtain to receive an award of attorneys fees. Next is an analysis of the case law on what constitutes a reasonable attorneys fee. The last two parts deal with the Equal Access to Justice Act and Federal Rules of Civil Procedure The American Rule. Under American common law, absent an enforceable contract between the parties or a statute, parties ordinarily bear their own attorney s fees incurred in litigation. 2 This is in contrast to the procedure in England, where statutes since 1278 and 1607 have authorized prevailing plaintiffs and defendants, respectively, to recover attorneys fees from the losing party. 3 2 Alyeska Pipeline Serv. Co. v. Wilderness Soc y, 421 U.S. 240, 245 (1975). 3 Fleischmann Distilling Corp. v. Maier Brewing Co., 386 U.S. 714, 717 (1967). 38

3 STATUTORY ATTORNEY FEES 2.02 However, the American Rule is not without exceptions. The courts have uniformly held that a litigant or a lawyer who recovers a common fund for the benefit of persons other than himself or his client is entitled to a reasonable attorney s fee from the fund as a whole. 4 The common fund doctrine rests on the theory that parties, who obtain the benefit of a successful lawsuit without contributing to its costs, are unjustly enriched. 5 Courts have traditionally awarded attorneys fees as part of the fine in civil contempt actions caused by the willful disobedience of a court order. 6 Courts may also in the exercise of their inherent powers assess attorneys fees to a successful party where his opponent has acted in bad faith, vexatiously, wantonly, or for oppressive reasons. 7 The enactment by Congress of a statute providing for the shifting of attorneys fees does not displace the courts inherent powers under these exceptions. 8 The lower courts had for many years awarded attorneys fees based on an asserted fourth exception to the American rule. Based on a premise that the expense of litigation can create a sometimes insurmountable obstacle to private litigation to enforce important public policies, the courts crafted a private attorney general exception. 9 This fourth exception was brought expressly before the Court in Alyeska Pipeline Service Co. v. Wilderness Society. 10 In Alyeska, the plaintiffs, the Wilderness Society, Environmental 4 Brytus v. Spang & Co., 203 F.3d 238, 242 (3d Cir. 2000)(quoting Boeing Co. v. Van Gemert, 444 U.S. 472, 478 (1980)). 5 Id. 6 Fleischmann, U.S. at F.D. Rich Co. v. United States ex rel. Indus. Lumber Co., 417 U. S. 116, 129 (1974). 8 See, Chambers v. Nasco, Inc. 501 U.S. 32 (1991)(inherent power not displaced by 28 U.S.C or FRCP 11) and Brytus, 203 F.3d at 243 (power to award fees under common fund doctrine, not displaced by attorney fee provision of the Employee Retirement Income Security Act (ERISA), 29 U.S.C. 1132(g)(1)). 9 See F.D. Rich Co., 417 U.S. at 130 (noting the exception, but expressing no view concerning its validity or scope). Congress has created many statutes, where it permits private citizens to assist in the enforcement of the statutes. These so-called private attorneys general are Congress chosen instruments to enforce, through litigation, the important statutory rights. Christiansburg Garment Co. v. EEOC, 434 U.S. 412, (1978). 10 Alyeska Pipeline Serv. Co. v. Wilderness Soc y, 421 U.S. 240 (1975). 39

4 2.02 ENERGY & MINERAL LAW INSTITUTE Defense Fund, Inc., and Friends of the Earth, filed suit to prevent the Secretary of the Interior from issuing permits for the construction of the trans-alaska oil pipeline. 11 After the termination of the litigation 12 plaintiffs requested that the court award their attorneys fees. The court of appeals held that no statutory authorization existed for an award of attorneys fees and then reviewed the exceptions to the American rule, finding none of the traditional exceptions applied. 13 However, the court of appeals held that the suit had vindicated important statutory rights of all citizens and plaintiffs had ensured that the governmental system functioned properly. 14 The court of appeals reasoned that plaintiffs were entitled to an award of attorneys fees, lest the great cost of litigation of this kind, particularly against well-financed defendants... deter private parties desiring to see the laws protecting the environment properly enforced. 15 The Supreme Court reversed. Discussing the long history of the American Rule, the Court found that Congress, while on numerous occasions had enacted provisions for shifting attorneys fees between parties, had never granted roving authority to the Judiciary to allow counsel fees, as cost or otherwise, whenever the Courts might deem them warranted. 16 Additionally, the Court noted that Congress had opted to rely heavily on private enforcement to implement public policy and to 11 Id. at The litigation came to an end when Congress amended Section 28 of the Mineral Leasing Act, 30 U.S.C. 185, allowing the issuance of the permits needed without further action under the National Environmental Policy Act, 42 U.S.C. Sections 4321, et seq U.S. at Id. (quoting 495 F.2d 1026, 1032.). 15 Id. at The court of appeals held that none of the fees could be taxed to the United States and that it would be inappropriate to award any of the fees against the State of Alaska, which had voluntarily participated in the suit. Finally, the court of appeals believed that Alyeska should be made to pay half of the requested attorney s fees to compensate plaintiffs actions as private attorneys general. Id. 16 Id. at 260 (the Court cited 27 statutes or rules, which provided for the payment of attorneys fees by one party to another. Id. at n.33). 40

5 STATUTORY ATTORNEY FEES 2.03 allow counsel fees so as to encourage private litigation. 17 However, the use of the private attorneys general: can in no sense be construed as a grant of authority to the Judiciary to jettison the traditional rule against nonstatutory allowances to the prevailing party and to award attorneys fees whenever the courts deem the public policy furthered by a particular statute important enough to warrant the award. 18 The Court then questioned how the courts would fashion such an exception, if it were to allow the exception. 19 It reasoned that adopting any judicial exception would make major inroads on a policy matter that Congress has reserved for itself and which Congress had addressed by adopting specific exceptions to the American rule. 20 After Alyeska, the law is clear that absent a contract between the parties or an exception to the American Rule, fee shifting does not exist in federal suits unless authorized by an act of Congress Fee Shifting Statutes. [1] General. As the Court noted in Alyeska, Congress has enacted numerous statutes which provide for the shifting of attorneys fees. 22 These statutory provisions cover such diverse and distinct areas as housing, 23 voting rights, 24 labor and employment, 25 civil rights, 26 intellectual property, Id. at Id. 19 Id. at Id. at In response to Alyeska, Congress enacted the Civil Rights Attorneys Fees Act of 1976, 42 U.S.C. Section 1988, that permits an award of attorneys fees to a prevailing party in an action brought under 42 U.S.C. Section Hensley v. Eckerhart, 461 U.S. 424, 429 (1983) U.S. at 260, n See, 42 U.S.C et seq. 24 See, 42 U.S.C l(e). 25 See, 29 U.S.C. 216(b) and 431(c). 26 See, 42 U.S.C See, 17 U.S.C

6 2.03 ENERGY & MINERAL LAW INSTITUTE securities regulation, 28 workers compensation, 29 education, 30 and the environment. 31 In most provisions, especially those enacted as private attorneys general statutes, Congress has used similar language authorizing the courts to award attorneys fees. The Supreme Court has held that when interpreting those fee-shifting provisions, the courts should interpret them in a consistent and similar manner. 32 However, the Court refused to give the fee shifting provision of a Copyright Act 33 the same interpretation given to other fee-shifting provisions with identical language. 34 In Fogerty, the Court held that unlike private attorneys general statutes, Congress did not enact the Copyright Act to encourage private parties to vindicate important statutory rights through litigation. 35 [2] Environmental Statutes. While Congress has provided fee-shifting provisions in many different statutes covering varying subject matter, this chapter concentrates on statutes governing and regulating environmental issues. Virtually every statute enacted by Congress concerning environmental protection and regulation contain provisions permitting private citizens to sue to enjoin alleged violations of the applicable statute or regulations or to sue 28 See, 15 U.S.C. 78i(e). 29 See, 33 U.S.C See, 20 U.S.C See, 33 U.S.C. 1365(d) and 30 U.S.C Northcross v. Memphis Bd. of Educ., 412 U.S. 427, 428 (1973)(per curiam)(20 U.S.C should be interpreted pari passu with 42 U.S.C. 2000a-3(b) ); Hensley v. Eckerhart, 461 U.S. 424, 433 n.7 (1983)(42 U.S.C patterned on and consistent with 42 U.S.C. 1973l(e), 2000a-3(b) and 2000e-5(k))(citing S. Rep. No , p. 4 (1976)); Ruckelshaus v. Sierra Club, 463 U.S. 680, 691 (1983)(the interpretation of appropriate in 42 U.S.C. 7607(f) controls use of same terms in 42 U.S.C. 7604(d)); City of Burlington v. Dague, 505 U.S. 557, 562 (1992)(42 U.S.C. 6972(3) and 33 U.S.C. 1365(d) must be interpreted consistently with 42 U.S.C. 1988, 2000e-5(k) and 7604(d) U.S.C Fogerty v. Fantasy, Inc., 510 U.S. 517 (1994). 35 Id. at

7 STATUTORY ATTORNEY FEES 2.03 government officials or agencies for failing to carry out mandatory duties under the statute and regulations. 36 Congress enacted these statutes and their fee-shifting provisions to encourage the public to participate in the protection of the environment and to provide the public a role in the enforcement of the environmental laws and regulations. 37 In other words, Congress deputized the public as private attorneys general. 38 Virtually all these environmental citizen suit provisions allow the courts to award costs and attorneys and expert witness fees. Several of the environmental statutes allow the courts to award attorneys fees in actions for judicial review of agency actions, including challenges to rulemaking, agency enforcement actions and permitting decisions. 39 Some statutes also permit the award of attorneys fees for administrative actions to review agency actions. 40 Alone among the environmental statutes, SMCRA includes a provision providing a private right of action for damages to persons claiming personal or property damage caused by violations of rules, regulations, orders, or permits. The provision also allows the court to award attorneys and expert witness fees as an element of damages See, Toxic Substances Control Act (TSCA), 15 U.S.C. 2619; Endangered Species Act (ESA), 16 U.S.C. 1540(g); Surface Mining Control and Reclamation Act (SMCRA), 30 U.S.C. 1270; Federal Water Pollution Control Act ( CWA ), 33 U.S.C. 1365; Resource Conservation and Recovery Act (RCRA), 42 U.S.C. 6972; Clean Air Act, (CAA), 42 U.S.C. 7604; and Emergency Planning and Community Right to Know Act, (EPCRA), 42 U.S.C See, Timothy W. Gresham and Eric R. Thiessen, An Overview of Citizen Suits Affecting the Mineral and Energy Industries, 20 Energy & Min. L. Inst., ch. 7 (2000), (hereinafter, Gresham at. ). 38 Alyeska, 421 U.S. at See, 15 U.S.C. 2618(d); 33 U.S.C. 1369(b)(3); 42 U.S.C and See,15 U.S.C. 2605(c)(4)(A) and 30 U.S.C. 1275(e). The Office of Hearings and Appeals of the Department of Interior has promulgated regulations implementing the procedure for awarding attorneys fees under 30 U.S.C. Section 1275(e). 43 C.F.R U.S.C. 1270(f). 43

8 2.03 ENERGY & MINERAL LAW INSTITUTE [3] Who Is Eligible? [a] Prevailing Parties. Most fee-shifting provisions restrict the award of attorneys fees to prevailing or substantially prevailing parties. For example, the CWA restricts awards of attorneys fees to the prevailing or substantially prevailing party. 42 Other provisions allow awards to any party, 43 while other provisions do not even mention parties. 44 The courts for years have struggled with deciding what constitutes a prevailing party and with the degree of success necessary to make one a prevailing party. In Hensley v. Eckerhart, 45 the Court in reviewing the award of attorneys fees pursuant to the Civil Rights Act of held that the degree of success was a crucial element in deciding the proper amount of attorneys fees and that, while attorneys fees need not be reduced for only partial success, hours spent on unsuccessful claims, wholly distinct from the successful ones. 47 In Ruckelshaus v. Sierra Club, 48 the Court dealt with the question of whether a wholly unsuccessful party could receive attorneys fees under the CAA. 49 The Clean Air Act permits the court to award attorneys fees to any party, if an award is appropriate. 50 In a suit challenging regulations promulgated by the Environmental Protection Agency (EPA) pursuant to the authority granted under the CAA, the court of appeals denied all plaintiffs claims, but still awarded plaintiffs attorneys fees, reasoning that plaintiffs actions had contributed to the goals of the CAA and awarding fees in such circumstances was appropriate. 51 The Supreme Court reversed the court U.S.C. 1365(d) and 1369(b)(3). 43 See 42 U.S.C. 7604(d) U.S.C. 7607(f). 45 Hensley v. Eckerhart, 461 U.S. 424 (1983) U.S.C. 1988(b) U.S. at Ruckelshaus v. Sierra Club, 463 U.S. 680 (1983) U.S.C. 7607(f). 50 Id U.S. at , citing Sierra Club v. Gorsuch, 684 F.2d 972 (D.C. Cir. 1982). 44

9 STATUTORY ATTORNEY FEES 2.03 of appeals, holding that the attorneys fee provision of the CAA 52 read in light of the historic principles of fee-shifting required the conclusion that some success on the merits was required before a party was eligible for attorneys fees. 53 Awards of attorneys fees under the CAA must be appropriate. 54 Congress did not define appropriate in the fee-shifting provision of the CAA or other similar statutes, so the Court relied on the general definition. 55 After reviewing the history of fee-shifting, the Court held that requiring a completely successful party to pay the attorneys fees of its completely unsuccessful opponent was not appropriate. A party must achieve some success in its claim before the court may award attorneys fees. 56 After the decision in Ruckelshaus, Congress amended the attorneys fee provisions of the CWA 57 and the RCRA 58 restricting attorneys fees to prevailing or substantially prevailing parties. However, Congress did not amend attorneys fee provisions of the CAA U.S.C. 7607(f) U.S. at U.S.C. 7607(f): In any judicial proceeding under this section, the court may award cost of litigation (including attorney and expert witness fees) whenever it determines that such award is appropriate. 55 Specially suitable: fit, proper. 463 U.S. at 683 (quoting Webster s Third New International Dictionary, 106 (1976)). 56 Id. at The Court noted that the use of appropriate 42 U.S.C. Section 7607(f), which governs awards of fees against the government in actions for judicial review had to be consistently interpreted with 42 U.S.C. 7604(d), which allows awards of attorneys fees in suits against private parties. While Congress might allow fee awards against the government without unambiguous language, the Court held more was needed to award fees against private parties. 463 U.S. at U.S.C. 1365(d) and 1369(b)(3) U.S.C. 6972(e) U.S.C. 7604(d) and 7607(f). In Ruckelshaus, the Court reviewed the legislative history of the 7607(f) considering Congress rejection of the prevailing party standard and held that Congress did not mean that no success was necessary, but that parties could receive attorneys fees who were only partially successful. 463 U.S. at 691. Obviously, Congress agreed with the Court s holding and saw no need to amend 7604(d) and 7607(f). 45

10 2.03 ENERGY & MINERAL LAW INSTITUTE The degree of success, while a crucial issue concerning the reasonableness of the awarded fee, does not determine whether a party is a prevailing party. In Farrar v. Hobby, 60 the Court held that a plaintiff who received only nominal damages in the amount of one dollar in a suit seeking damaged of 17 million dollars was still a prevailing party under 42 U.S.C. Section 1988(b). 61 Building on its decision in Texas State Teachers Ass n v. Garland Independent School Dist., 62 the Court held that a plaintiff prevails when actual relief on the merits of his claim materially alters the legal relationship between the parties by modifying the defendant s behavior in a way that directly benefits the plaintiff. 63 However, mere technical or procedural victories do not materially alter the legal relationship between the parties and do not make one a prevailing party. 64 In PaineWebber Income Properties Three Limited Partnership v. Mobil Oil Corp., 65 the court dismissed plaintiff s citizen suit under the RCRA, 66 as plaintiff failed to provide the required statutory notice. 67 The notice is jurisdictional and failure to provide it requires dismissal of the suit. 68 However, the court denied fees, because the dismissal of the suit did not materially alter the legal relationship between the parties. All 60 Farrar v. Hobby, 506 U.S. 103 (1992). 61 Id. at Texas State Teachers Ass n v. Garland Indep. Sch. Dist., 489 U.S. 782 (1989). Here the Court held that a prevailing party is one who is able to point to a resolution of the dispute which changes the legal relationship between itself and the defendant. Id. at U.S. at See, Ruckelshaus v. Sierra Club, 463 U.S. at 688 n Paine Webber Income Properties Three Limited P ship v. Mobil Oil Corp., 916 F. Supp (M.D. Fla. 1996) U.S.C U.S.C. 6972(b). Most environmental citizen suit provisions require the plaintiff to give the party allegedly in violation and the appropriate governmental agencies 60 to 90 days advance notice of its intent to sue. See, 42 U.S.C. 7604(b)(CAA) and 30 U.S.C. 1270(b)(1)(SMCRA). 68 Meghrig v. KFC Western, Inc., 516 U.S. 479 (1996); Hallstrom v. Tillamook County, 493 U.S. 20 (1985). 46

11 STATUTORY ATTORNEY FEES 2.03 plaintiffs needed to do was to provide the notice under 42 U.S.C. Section 6972(b) and refile its claim. 69 That is not to say that a party cannot be a prevailing party, if it only obtains a procedural victory. In Chemical Manufacturer s Ass n v. EPA, 70 the court of appeals held that a party who obtained a decision holding that EPA violated the notice and comment requirements of the Administrative Procedures Act 71 qualified as a prevailing party. The procedural remedy received remand to the agency for the publication of notice and comment supported an award of attorneys fees under the appropriate statute. 72 [b] Prevailing Defendants. Most statutory provisions authorizing the award of attorneys fees make no distinction between whether a plaintiff or a defendant can request and receive attorneys fees. 73 Statutory provisions do limit which party may request and receive attorneys fees. For example, the Longshore and Harbor Workers Compensation Act restricts awards only to parties seeking benefits under the statute. 74 Additionally, the Fair Labor Standards Act, 75 provides only for attorneys fees to plaintiffs paid for by defendants. While most statutes do not distinguish between plaintiffs and defendants as to who can request and obtain attorneys fees, the courts have adopted a much stricter standard for defendants who seek attorneys fees under private attorneys general statutes. In Christiansburg Garment Co. v. EEOC, 76 the Supreme Court held that a prevailing defendant may receive attorneys fees from the plaintiff only if the suit were frivolous, unreasonable or groundless, or that the plaintiff continued to litigate after it clearly became so. 77 The defendant need not prove that the suit was F. Supp. at Chemical Mfr. s Ass n v. EPA, 885 F.2d 1276 (5th Cir. 1989) U.S.C. 501 et seq F.2d at See, 33 U.S.C and 42 U.S.C U.S.C U.S.C. 216(b). 76 Christiansburg Garment Co. v. EEOC, 434 U.S. 412 (1978). 77 Id. at

12 2.03 ENERGY & MINERAL LAW INSTITUTE brought in subjective bad faith. 78 The Court addressed two strong equitable bases for drawing a distinction between prevailing plaintiffs and defendants. Plaintiffs under the civil rights acts and other private attorneys general statutes were Congress chosen instruments to enforce, through litigation, important statutory rights. Additionally, when the court awards attorneys fees to a prevailing plaintiff, those fees are paid by a defendant, who violated federal law, but the Court noted the converse is not true. 79 Since the courts consistently interpret the statutory attorneys fee provisions, Christiansburg has been applied to virtually all similar attorneys fee statutes. Courts have interpreted other similarly worded attorneys fees provisions as making no distinction between awarding fees to prevailing plaintiffs and prevailing defendants. 80 These statutes do not have the equitable bases supporting the private attorneys general statutes. [c] Nonenvironmental Plaintiffs. In Alabama Power Co. v. Gorsuch, 81 the EPA argued that the CAA did not authorize the court to award attorneys fees to the District of Columbia, because the District s position in the case was not proenvironment and it litigated to protect its economic interests. 82 The court rejected the argument, holding that nothing in the language or legislative history of the fee-shifting provision 83 prohibited an award of attorneys 78 Id. 79 Id. at Fogerty v. Fantasy, Inc., 510 U.S. 517 (1994)(17 U.S.C. 505); Eltech Sys. Corp. v. PPG Indus., Inc., 903 F.2d 805 (Fed. Cir. 1990)(35 U.S.C. 285); Motown Productions, Inc. v. Cacomm, Inc., 849 F.2d 781 (2d Cir. 1988)(15 U.S.C. 1117(a)). In Scotch Whiskey Ass n v. Majestic Distilling Co., 958 F.2d 594 (4th Cir. 1992), the court held that the legislative history of 15 U.S.C. 1117(a) suggested that courts should treat prevailing defendants more favorably than prevailing plaintiffs. 81 Alabama Power Co. v. Gorsuch, 672 F.2d 1 (D.C. Cir. 1982). 82 Id. at U.S.C. 7607(f). 48

13 STATUTORY ATTORNEY FEES 2.03 fees to the District. 84 Noting that Congress intended awards of attorneys fees to encourage litigation which will assure proper implementation and administration of the act or otherwise serve the public interest, 85 the court of appeals held that [w]hen a non-pro-environment entity resolves disputed issues through litigation, its accomplishment has as much potential for realizing these goals as when a pro-environment entity does so. 86 The Supreme Court, in Bennett v. Spear, 87 should have laid to rest the notion that only pro-environment entities can contribute to the proper implementation and administration of environmental or other statutes. In Bennett, the plaintiffs, users of the affected water sources, brought suit against various agencies challenging actions that would result in less water being made available to the plaintiffs. 88 The district court dismissed the action for lack of jurisdiction, holding that the plaintiffs lacked standing, as plaintiffs recreational, aesthetic, and commercial interests did not fall within the zone of interests of the Endangered Species Act (ESA). 89 Affirming the dismissal, the court of appeals held that only plaintiffs who allege an interest in the preservation of endangered species fall within the zone of interests protected by the ESA. 90 Reversing, the Court held that the language of the citizen suit provision of the ESA 91 allowing any person 92 to sue, evinced Congress intent to expand standing under the ESA to the fullest extent allowed under Article III. 93 The Court further held that plaintiffs met all the requirements of standing under Article III, Id. The court expressly did not decide whether a court could properly award fees to a financially able nongovernmental party having no more than its own economic interests at heart. Id. 85 Id. at 5 n.21 (quoting H.R. Rep. No. 294, 95th Cong., 1st Sess. 337 (1977). 86 Id. 87 Bennett v. Spear, 520 U.S. 154 (1997). 88 Id. at Id. at Id. at 161 (quoting Bennett v. Plenert, 63 F.3d 915, 919 (9th Cir. 1995) U.S.C. 1540(g). 92 Id. 93 U.S. Const., Art. III; Bennett, 520 U.S. at Standing under Article III requires (1) that the plaintiff ha[s] suffered an injury in fact an invasion of a judicially cognizable interest which is (a) concrete and 49

14 2.03 ENERGY & MINERAL LAW INSTITUTE and that economic interests, as well as species protection interests, are protected by the ESA. 95 If parties that do not espouse pro-environmental positions have constitutional and prudential standing to challenge governmental action, obviously those same parties should be eligible for attorneys fees under those same provisions. [d] Solvent Economically Interested Parties. The court of appeals in Alabama Power Co. v. Gorsuch 96 left open the question of whether a financially able, nongovernmental entity litigating to protect its own economic interest can receive attorneys fees under the CAA or similarly worded attorneys provisions. 97 The court noted some support in the legislative history that such awards would not be appropriate. 98 In Florida Power & Light Co. v. Costle, 99 the court affirmed an award of attorneys fees to a financially solvent, nongovernmental party. The court cited the legislative history of the attorneys fee provision of the CAA, 100 which stated that the award of fees was intended to discourage frivolous litigation and to encourage litigation that will assure proper implementation and administration of the Act or otherwise serve the public interest. 101 Rejecting EPA s argument that Congress only intended courts to award attorneys fees to public interest groups, the court of appeals found the argument persuasive particularized and (b) actual or imminent, not conjectural or hypothetical; (2) that there be a causal connection between the injury and the conduct complained of the injury must be fairly traceable to the challenged action of the defendant, and the result of the independent action of some third party not before the court; and (3) that it be likely, as opposed to merely speculative, that the injury will be redressed by a favorable decision. 520 U.S. at 167. See, Gresham at 7.04[1][b][iii], at U.S. at and Alabama Power Co. v. Gorsuch, 672 F. 2d 1 (D.C. Cir. 1982). 97 Id. at Id. at 6-7, n Florida Power & Light Co. v. Costle, 683 F.2d 941 (5th Cir. 1982) U.S.C. 7607(f) F.2d at 942 (quoting H.R. Rep , 95th Cong., 1st Sess. 337 (1977). 50

15 STATUTORY ATTORNEY FEES 2.03 from a policy standpoint, but without support in the language of the CAA or its legislative history. 102 In American Petroleum Inst. v. EPA, 103 the court held that an award of attorneys fees to a solvent, nongovernmental plaintiff was appropriate, since the plaintiff prevailed and the litigation furthered the purposes and the proper implementation and interpretation of the Act. 104 EPA did not dispute that plaintiff was entitled to attorneys fees, only whether the fees requested were reasonable. 105 The Court of Appeals for the Ninth Circuit has decided this issue differently. In Western States Petroleum Ass n v. EPA, 106 the court, relying on Alabama Power Co. 107 and the legislative history of Section 19(d) of Toxic Substances Control Act (TSCA), 108 held that Congress did not intend to finance all litigation and did not intend to allow fees to financially able parties, who would litigate in any event to protect their economic interests. 109 It is questionable whether the legislative history of TSCA s judicial review provision evinces Congress intent in the CAA or any other similar fee provision, especially those providing for fees in citizen suits. The legislative history of the CAA relied on in Florida Power 110 postdated the legislative history of TSCA discussed in Alabama Power Co. and Western States Petroleum Ass n. 111 Additionally, if Congress meant for TSCA s legislative history to apply to attorneys fee provisions 102 Id. at 943. The court of appeals did not discuss the legislative history of 19(d) of TSCA, 15 U.S.C. 2618(d), as did the court in Alabama Power Co., and its seeming indication that Congress did not intend to allow attorneys fees to solvent entities suing to protect economic interests, who would litigate whether or not an award of attorneys fees were available. See, 672 F.2d at 6-7 n American Petroleum Inst. v. EPA, 72 F.3d 907 (D.C. Cir. 1996). 104 Id. at Id. 106 Western States Petroleum Ass n v. EPA, 87 F.3d 280 (9th Cir. 1996) F.2d 1, 6-7 n.33 (D.C. Cir. 1982) U.S.C. 2618(d) F.3d at F.2d at F.2d at 6-7 n.33 and 87 F.3d at

16 2.03 ENERGY & MINERAL LAW INSTITUTE contained in other statutes, it could have easily adopted that history in the debates in enacting or amending those provisions. Yet, no other statute s legislative history contains such language. 112 While a few cases exist where financially able parties, protecting their own economic interests, have requested attorneys fees, a split in the circuits does exist. [e] Intervenors. Courts may assess attorneys fees against parties who intervene in litigation to protect their rights, but who are not independently charged with any violation of the applicable statute. However, fees can only be awarded against the intervener if the intervention is frivolous, unreasonable, or without foundation. 113 [f] Catalysts. For many years, courts awarded attorneys fees to parties where the plaintiff received the benefit of its lawsuit, not from receiving a judicial decision, but from the defendant taking some other action. In such situations, the courts generally found the plaintiff was a prevailing party or that the award of attorneys fees was appropriate, if the suit served as a catalyst for the defendant s action. 114 The basic test for determining whether the plaintiff s action served as a catalyst is twofold. First, the plaintiff s suit must have been a necessary and important factor in the defendant taking the subsequent action and the defendant was legally required to take that action. 115 Courts have awarded attorneys fees under the catalyst theory where the plaintiff s 112 TSCA does include a provision, unique to TSCA, that allows the Administrator of the EPA in administrative review and promulgation of rules and regulations to award fees to a participant, if the participant s economic interest is small compared with the cost of effective participation or if without fees, the participant cannot adequately participate. 15 U.S.C. 2605(c)(4)(A)(ii). This provision seemingly addresses the stated congressional concern in the legislative history of TSCA. 113 Independent Fed n of Flight Attendants v. Zipes, 491 U.S. 754 (1989); Natural Resources Defense Council v. Thomas, 801 F.2d 457 (D.C. Cir. 1986). 114 Parham v. Southwestern Bell Tel. Co., 433 F.2d 421, (8th Cir. 1970). 115 Nadeau v. Helgemoe, 581 F.2d 275, 281 (1st Cir. 1978). 52

17 STATUTORY ATTORNEY FEES 2.03 suit resulted in a settlement between the defendant and the EPA. 116 A party received attorneys fees where it established that its suit led to a settlement between the parties, where the settlement provides at least a part of the relief the plaintiff sought. 117 A suit that leads to a consent order or stipulated judgment may support an award of attorneys fees. 118 The more controversial issues arose where the defendant through voluntary and unilateral action modified its behavior in such a way that led to the plaintiff receiving at least a part of what it sought through the suit. Before Farrar v. Hobby, 119 these situations were considered under the same tests as settlements and consent decrees. However, in S-1 and S- 2 v. State Bd. of Education of North Carolina, 120 the majority of the full court of appeals adopted the opinion of Judge Wilkinson dissenting from the panel decision. 121 The court of appeals, relying on language in Farrar v. Hobby 122 holding that a plaintiff did not prevail for purposes of an award of attorneys fees unless the plaintiff obtained an enforceable judgment against the defendant from whom fees are sought... or comparable relief through a consent decree or settlement, 123 held that a person could not receive attorneys fees as prevailing party under 42 U.S.C. Section 1988, unless he or she obtained an enforceable judgment, consent decree, or settlement. 124 The court of appeals held that the catalyst doctrine no longer applied in awarding attorneys fees to parties, whose 116 Armstrong v. ASARCO, Inc., 138 F.3d 382, 387 (8th Cir. 1998). 117 Beard v. Teska, 31 F.3d 942 (10th Cir. 1994). 118 Kilgour v. City of Pasadena 53 F.3d 1007 (9th Cir. 1995). 119 Farrar v. Hobby, 506 U.S. 103 (1992). 120 S-1 and S-2 v. State Bd. of Educ. of North Carolina, 21 F.3d 49 (4th Cir. 1994)(en banc) F.3d at Farrar v. Hobby, 506 U.S. 103 (1992) U.S. at 111. The Court further held that no material alteration in the legal relationship of the parties could occur until the plaintiff becomes entitled to enforce a judgment, consent decree, or settlement against the defendant. Id. at F.3d at

18 2.03 ENERGY & MINERAL LAW INSTITUTE law suits caused or contributed to any unilateral postlitigation changes in the defendant s conduct. 125 The Supreme Court denied certiorari. 126 No other court of appeals adopted the Fourth Circuit s holding or reasoning, 127 although some question the validity of the catalyst doctrine. 128 The Fourth Circuit was again presented with the issue of the catalyst theory in a case where no judicial decision, settlement, or consent decree was entered. In Buckhannon Board & Care Home, Inc. v. West Virginia Dep t of Health and Human Services, 129 the plaintiff brought suit against the West Virginia Department of Health and Human Services after receiving cease and desist orders, requiring the closure of plaintiff s residential care facilities. 130 Plaintiffs sought a judicial declaration that West Virginia s regulations violated the Fair Housing Amendments Act 131 and the Americans with Disabilities Act, 132 and an injunction preventing application of the regulations. 133 While the case was pending, the West Virginia legislature enacted regulations and a statute eliminating the provisions plaintiffs believed violated the FHAA and ADA. 134 Based on the actions of the West Virginia legislature, the district court dismissed 125 Id U.S. 876 (1994). 127 New Hampshire v. Adams, 159 F.3d 680 (1st Cir. 1998); Marbley v. Bane, 57 F.3d 224 (2d Cir. 1995); Baumgartner v. Harrisburg Housing Auth., 21 F.3d 541 (3d Cir. 1994); Brown v. Local 58 IBEW, 76 F.3d 762 (6th Cir. 1996); Zinn v. Shalala, 35 F.3d 273 (7th Cir. 1994); Little Rock Sch. Dist. v. Pulaski County Special Sch. Dist. No. 1, 17 F.3d 260 (8th Cir. 1994); Kilgour v. City of Pasadena, 53 F.3d 1007 (9th Cir. 1995); Ellis v. University of Kansas Med. Center, 163 F.3d 1186 (10th Cir. 1999); Morris v. City of West Palm Beach, 194 F.3d 1203 (11th Cir. 1999). 128 Foreman v. Dallas County, 193 F.3d 314 (5th Cir. 1999); Craig v. Gregg County, 988 F.2d 18 (5th Cir. 1993). 129 Buckhannon Bd. & Care Home, Inc. v. West Virginia Dep t of Health and Human Serv., No , 2000 U.S. App. LEXIS 720 (4th Cir. Jan. 20, 2000)(unpub.). 130 Id. at * U.S.C et seq U.S.C et seq U.S. App. LEXIS 720 at *2-* Id. at *3. 54

19 STATUTORY ATTORNEY FEES 2.03 the case as moot. 135 Plaintiff then sought attorneys fees under the applicable statutes, alleging it was a prevailing party under the catalyst theory. 136 The district court rejected plaintiff s request for attorneys fees, as the catalyst theory no longer applied in the Fourth Circuit. 137 Plaintiff appealed the denial of attorneys fees to the court of appeals and asked the court to reexamine the decision in S-1 and S However, the court of appeals affirmed the decision, holding that because plaintiffs did not bring about the change in West Virginia law through any judgment, decree, or settlement, S-1 and S-2 applied. 139 Plaintiffs appealed and the Supreme Court granted certiorari. 140 The Supreme Court held that Congress in enacting the fee-shifting provisions of the FHAA and ADA chose the term prevailing party, a legal term of art, 141 defined as a party in whose favor a judgment is rendered, regardless of the amount of damages awarded. 142 While the Court stated it had never directly addressed whether the term prevailing party included the catalyst theory, it had addressed aspects of the issue in prior cases. 143 In Hewitt v. Helms, 144 the Court acknowledged the existence of the catalyst theory in the courts of appeals, but specifically held that it need not decide the circumstances, if any, under which this catalyst theory would justify a fee award. 145 Additionally, the Court stated that neither Farrar v. Hobby, 146 nor Friends of Earth v. Laidlaw 135 Id. 136 Id. 137 Id. at *3-*4, relying on S-1 and S-2 v. State Bd. of Educ. of North Carolina, 21 F.3d 49 (4th Cir. 1994) U.S. App. LEXIS 720 at * Id. 140 Buckhannon Bd. & Care Home, Inc. v. West Virginia Dep t of Health and Human Serv., 530 U.S. 304 (2000). 141 Buckhannon Bd. & Care Home, Inc. v. West Virginia Dep t of Health and Human Serv., 532 U.S. 598; 121 S. Ct. 1835, 1839 (2001). 142 Id. at 1839 (quoting, Black s Law Dictionary 1145 (7th ed. 1999). 143 Id. at 1839 n Hewitt v. Helms, 482 U.S. 755 (1987). 145 Id. at Farrar v. Hobby, 506 U.S. 103 (1992). 55

20 2.03 ENERGY & MINERAL LAW INSTITUTE Environmental Services (TOC), Inc., 147 dealt directly with the issue. Farrar v. Hobby did not implicate the catalyst theory,and while the Court mentioned the theory in Friends of the Earth, it did not decide the issue. 148 In response to arguments by those supporting the catalyst theory that the Court had implicitly approved the catalyst theory in several cases, the Court stated that its decision in Hanrahan v. Hampton 149 held that the award of attorneys fees could only be made when a party has prevailed on the merits of at least some of his claims. 150 The Court had also approved of awards of attorneys fees where the case ended in settlement agreements enforced through consent decrees. 151 Synthesizing the holdings in these cases and others, 152 the Court held that to create the necessary material alteration of the legal relationship of the parties a party must receive an enforceable judgment on the merits or a courtordered consent decree. 153 The catalyst theory, according to the Court, cannot make one a prevailing party as no judicially sanctioned change in the legal relationship of the parties occurs. 154 While the Court in Farrar v. Hobby 155 held that a material change in the legal relationship between the parties occurs when the plaintiff obtains some relief on the merits through an enforceable judgment, consent decree or settlement, 156 in Buckhannon, the Court held that [p]rivate settlements do not entail the judicial approval and oversight involved in consent decrees. 157 While most cases concerning awards of attorneys fees decided since Buckhannon have followed its holding, one significant case distinguished 147 Friends of Earth v. Laidlaw Envtl. Serv. (TOC), Inc., 528 U.S. 167 (2000) S. Ct. 1839, n U.S. 754 (1980)(per curiam) S. Ct. at 1839 (quoting 446 U.S. at 758). 151 Id. at 1840 (citing, Maher v. Gagne 448 U.S. 122 (1980)). 152 Texas State Teachers Ass n v. Garland Indep. Sch. Dist., 489 U.S. 782 (1989); Rhodes v. Stewart, 488 U.S. 1 (1988); Hewitt v. Helms, 482 U.S. 755 (1987) S. Ct. at 1840 (quoting Texas State Teachers Ass n, 489 U.S. at ). 154 Id. 155 Farrar v. Hobby, 506 U.S. 103 (1992). 156 Id. at S. Ct. at

21 STATUTORY ATTORNEY FEES 2.03 Buckhannon. In Center for Biological Diversity v. Norton, 158 the Court of Appeals for the Tenth Circuit reviewed the district court s decision, denying attorneys fees to the plaintiff in a case filed under the citizen suit provision of the ESA. 159 The plaintiffs had sued the Secretary of the Interior for failure to list the Arkansas River shiner as an endangered or threatened species. 160 The district court dismissed the suit as moot, when the Secretary of Interior listed the shiner. 161 In considering the plaintiffs request for attorneys fees, the district court applied the catalyst theory, but denied attorneys fees as plaintiff s actions did not serve as the catalyst for the Secretary s action. 162 The court of appeals agreed and affirmed the district court s decision. 163 In affirming the decision, the court of appeals considered and distinguished Buckhannon. 164 The court noted Buckhannon s holding that the prevailing party language of the feeshifting provisions of the FHAA and ADA 165 did not permit the application of the catalyst theory to a request for attorneys fees. 166 However, the court of appeals noted that the ESA fee-shifting provision 167 permitted the court to award attorneys fees to any party, whenever the court determines such an award is appropriate. 168 Thus, the court of appeals held Buckhannon s holding did not apply and the court of appeals declined to address the validity of the catalyst theory to statutes that do not contain the prevailing party requirement Center for Biological Diversity v. Norton, 262 F.3d 1077 (10th Cir. 2001) U.S.C. 1540(g)(4) F.3d at Id. 162 Southwest Center for Biological Diversity v. Babbitt, 108 F. Supp. 2d 1209, (D.N.M. 2000) F.3d at Id. at 1080, n U.S.C. 3613(c)(2) and 42 U.S.C Id U.S.C (g)(4). 168 Id. (Emphasis added). 169 Id. 57

22 2.03 ENERGY & MINERAL LAW INSTITUTE This could be a significant decision, as many attorneys fee provisions do not contain the prevailing party requirement. 170 Because the Supreme Court has held many times, most recently in Buckhannon, 171 that it interprets similar language of attorneys fee provisions consistently, the catalyst theory is not a viable doctrine under those statutes where attorneys fees are limited to prevailing or substantially prevailing parties. 172 Since the Supreme Court based its holding in Buckhannon on Congress s use of the term prevailing party, which required some judicially sanctioned change in the legal relationship of the parties, the catalyst theory could be alive and well in those statutes that do not limit attorneys fees to prevailing or substantially prevailing parties. [4] Appropriateness. Virtually all statutory attorneys fee provisions allow the court to award attorneys fees if appropriate. 173 While the use of appropriate evinces Congress granting of discretion to the courts, the word has also been used in other ways. Awarding fees to a wholly unsuccessful party, is not appropriate, even if the statutory fee petition does not limit fees to prevailing parties. 174 It is appropriate to award fees to a party to the litigation, where the litigation furthered the purposes and the proper implementation and interpretation of the statute. 175 It is not appropriate to award fees to a financially solvent party who would have litigated the issue whether or not fee-shifting was available. 176 [5] Reasonable Attorneys Fees. All statutory attorneys fee provisions allow the court to award the appropriate party a reasonable attorneys fee. The question of how to 170 See, 30 U.S and 1275; 42 U.S.C. 7604(d) and 7607(f) S. Ct. at 1839, n.4, (citing Hensley v. Eckerhart, 461 U.S. at 433, n.7). 172 See, 33 U.S.C. 1365(d) and 1369(b)(3); 42 U.S.C. 1988(b), 2000e-5(k), 6972(e), 7604(d), 7607(f) and 11046(f). 173 See, 30 U.S.C. 1270(d). 174 Ruckelshaus v. Sierra Club, 463 U.S. 680 (1983). 175 American Petroleum Inst. v. EPA, 72 F.3d 907 (D.C. Cir. 1996). 176 Western States Petroleum Ass n v. EPA, 87 F.3d 280 (9th Cir. 1996). 58

23 STATUTORY ATTORNEY FEES 2.03 determine what is reasonable has been developed through many court decisions. 177 The first determination is the number of hours reasonably expended. The party seeking attorneys fees must properly document the hours expended and counsel must exclude from a fee request hours that are excessive, redundant, or, otherwise unnecessary. Hours that are not properly billed to one s client are not properly billed to one s adversary pursuant to statutory authority. 178 Early on, the Court of Appeals for the Fifth Circuit adopted 12 factors to consider in determining a reasonable fee. 179 These factors were adopted by several courts and cited with approval by Congress in enacting the Civil Rights Attorneys Fee Awards Act. 180 However, the Johnson factors, being primarily subjective, gave courts virtually unlimited discretion in deciding the reasonableness of fees. 181 The now almost universal approach to determining a reasonable fee is the lodestar, first developed in Lindy Brothers Builders, Inc. v. American Radiator & Standard Sanitary Corp. 182 The lodestar is calculated by multiplying the hours spent on a case by a reasonable hourly rate of compensation for each attorney involved. 183 The lodestar amount is presumed to yield a reasonable fee. 184 The reasonable hourly rate is generally determined by applying prevailing market rates. 185 Nonprofit lawyers or private, for-profit 177 William Gorton, Attorney Fee Shifting: A Road Map for the Unwary The SMCRA Example, 4 J. Min. L. & Pol y 159, 176 (1988)(hereinafter Gorton at. ). 178 Hensley v. Eckerhart, 461 U.S. 424, 433 (1983)(quoting Copeland v. Marshall, 641 F.2d 880, 891 (D.C. Cir. 1980)(en banc)(emphasis in original)). 179 Johnson v. Georgia Highway Express, 488 F.2d 714 (5th Cir. 1974) U.S.C. 1988; See, Gorton at Gorton at Lindy Bros. Builders, Inc. v. American Radiator & Standard Sanitary Corp., 487 F.2d 161 (3d Cir. 1973). 183 Pennsylvania v. Delaware Valley Citizens Council for Clean Air, 478 U.S. 546, 563 (1986)(Delaware I). 184 City of Burlington v. Dague, 505 U.S. 557, 562 (1992). 185 Blum v. Stenson, 465 U.S. 886, 895 (1984). 59

24 2.03 ENERGY & MINERAL LAW INSTITUTE attorneys, who lower their rates in order to attract public interest litigation, are entitled to prevailing market rates in the relevant community. 186 The relevant community is generally considered the district or the area where the court sits. 187 However, the lack of competent counsel in the local community can justify using the prevailing rates in the community where the chosen attorney practices. 188 Once the lodestar amount is calculated, courts could traditionally adjust that figure based on the contingent nature of the case, reflecting the likelihood that hours were invested and expenses incurred without assurance of compensation and... the quality of the work performed as evidenced by the work observed, the complexity of the issues and the recovery obtained. 189 In Blum v. Stenson, 190 the Supreme Court rejected an argument that upward adjustments for contingency or results obtained were never allowable, but reversed a fifty percent increase in fees awarded by the district court based on such subjective factors as the quality of the representation, the uniqueness of the issues, the litigation s complexity, the great benefit achieved and the risk of loss. 191 No evidence was presented to the district court supporting this enhancement. The Court held that the burden was on the party seeking such adjustments to provide evidence supporting adjustment and the courts must provide reasons for granting adjustments. 192 The Supreme Court next addressed the issues of reasonable attorneys fees in Pennsylvania v. Delaware Valley Citizen s Council for Clean Air. 193 There the Court all but eliminated upward adjustments of the attorneys fees based on the superior performance of counsel. 194 Building on Blum 186 Id. 187 National Wildlife Fed n v. Hanson, 859 F.2d 313, 317 (4th Cir. 1988). 188 Id. 189 Merola v. Atlantic Richfield Co., 515 F.2d 165, 168 (3d Cir. 1975). 190 Blum v. Stenson, 465 U.S. 886 (1984). 191 Id. at Id. at Pennsylvania v. Delaware Valley Citizen s Council for Clean Air, 478 U.S. 546 (1986)(Delaware I). 194 Id. at 569 (Blackmun, J. dissenting). 60