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When is it reasonable to enhance an attorneys' fee for exceptional results in a federal civil rights class action?

When is it reasonable to enhance an attorneys' fee for exceptional results in a federal civil rights class action? Eleventh Circuit Judge Ed Carnes has today issued what many in the class-action bar, and elsewhere, will find to be a must-read decision calling into question the validity of attorneys' fee enhancements for so-called "exceptional" litigation results.

To quote just one passage from the decision (some additional paragraph breaks added):

A result that obtains more or better relief than plaintiffs are entitled to receive under the law is, to the extent it exceeds their entitlement on the merits, analogous to relief on a meritless claim. Just as Dague instructs us that fee awards should not underwrite efforts to obtain relief where none is due under the law, neither should they underwrite efforts to receive more or better relief than that due under the law. Just as the societal costs for fee awards for non-meritorious claims are too high, so also are they too high for results that exceed what the law allows. Just as encouraging non-meritorious claims cannot have been an objective of the fee-shifting provisions, neither can encouraging results that go beyond what the law allows have been an objective.

To put it in an either-or manner, superb results are either what a fair application of the law produces, which means that they are not truly "superb," or they are results that exceed what the law allows and for that reason are beyond the purpose of the fee-shifting statutes. Those statutes are designed to provide a reasonable fee for a reasonable result, not an extraordinary fee for a result that goes beyond what the law would provide if the claims were litigated to their correct conclusion on the merits.

Look at it this way. A merits-exceeding result for plaintiffs must be the product of one, or some combination, of the following factors: superior lawyering by plaintiffs' counsel, bad lawyering by defendants' counsel, poor decision making by the court, or dumb luck.

The Supreme Court held in Delaware Valley I that superior lawyering by the plaintiffs' counsel is not a proper basis for an enhancement. Delaware Valley I, 478 U.S. at 565-68, 106 S. Ct. at 3098-100. So, the first possible cause of results that go beyond the merits cannot be used to justify an enhancement.

Nor can it plausibly be argued that plaintiffs' attorneys ought to reap a windfall, and defendants ought to have to pay more in fees than they otherwise should, because of bad lawyering on the defense side. Surely a defendant suffers enough from the additional relief granted against it because of inferior representation without making the defendant pay a surcharge to the other side for the privilege of having been the victim of bad lawyering.

Nor can it be argued, with tongue out of cheek, that fees should be increased to reward plaintiffs' attorneys for being on the side that happens to benefit from bad judging or good luck. That exhausts the possible explanations for excessively favorable results, and none supports awarding an enhancement.

Judge Carnes's opinion also contains some insightful criticism of the sort of expert witness affidavits and expert testimony that plaintiffs' attorneys seeking lodestar enhancements tend to present in support of their requests.

Unfortunately for the appellants, due to the so-called "prior panel precedent rule," Judge Carnes's insights are, at least for the time being, little more than dicta, as the three-judge panel unanimously views itself as bound by earlier Eleventh Circuit precedent to affirm the fee enhancement at issue in the case. It will be interesting to see whether those earlier Eleventh Circuit cases will survive possible en banc and/or U.S. Supreme Court review.

Full post as published by How Appealing on July 03, 2008 (boomark / email).