Ethics

In a 5-4 decision released this morning, the Supreme Court reversed a $4.5 million fee enhancement awarded to attorneys who successfully represented a class of 3,000 children in challenging the conditions of the foster-care system in two suburban Atlanta counties. The opinion in Perdue v. Kenny A. can be found here.

The majority held that the enhancement of an attorney's fee calculated under federal fee-shifting statutes may be permitted "in extraordinary circumstances," but that the district court failed to apply the proper standards for making such an adjustment in this case.  Justice Alito delivered the majority opinion (not surprising, given his comments at oral argument), and he was joined by Roberts, Scalia, Kennedy, and Thomas (Kennedy and Thomas filed concurring opinions as well). 

Justice Breyer, joined by Stevens, Ginsberg, and Sotomayor, wrote an opinion concurring in part and dissenting in part.  Justice Breyer agreed with the majority's conclusion that "when superior attorney performance leads to exceptional success an enhanced award may be justified."  But he would have held that the district court did not abuse its discretion in awarding the enhancement in this case, an issue "which lies beyond the narrow question that [the Court] agreed to consider." 

Perdue is the first opinion in the three fee-shifting statute cases taken up by the Court this term.  Astrue v. Ratliff was argued earlier this year and the Court will hear Hardt v. Reliance Standard Life Insurance Co. next week, on April 26.

In laying out the majority opinion, Justice Alito wrote:

This case presents the question whether the calculation of an attorney's fee, under federal fee-shifting statutes, based on the ?lodestar,? i.e., the number of hours worked multiplied by the prevailing hourly rates, may be increased due to superior performance and results. We have stated in previous cases that such an increase is permitted in extraordinary circumstances, and we reaffirm that rule. But as we have also said in prior cases, there is a strong presumption that the lodestar is sufficient; factors subsumed in the lodestar calculation cannot be used as a ground for increasing an award above the lodestar; and a party seeking fees has the burden of identifying a factor that the lodestar does not adequately take into account and proving with specificity that an enhanced fee is justified. Because the District Court did not apply these standards, we reverse the decision below and remand for further proceedings consistent with this opinion.

In his dissent, Justice Breyer pointed out that the district court would not be prohibited ?from awarding an enhanced fee on remand if that court provides more detailed reasoning supporting its decision.?  But he reached the conclusion that the lower court?s original determination was not an abuse of discretion for four reasons, explaining:

First, the record indicates that the lawyers? objective in this case was unusually important and fully consistent with the central objectives of the basic federal civil-rights statute, 42 U.S. C. § 1983.

Second, the course of the lawsuit was lengthy and arduous.

Third, in the face of this opposition, the results obtained by the plaintiffs? attorneys appear to have been exceptional.

Fourth, and finally, the district judge, who supervised these proceedings, who saw the plaintiffs amass, process, compile, and convincingly present vast amounts of factual information, who witnessed their defeat of numerous state procedural and substantive motions, and who was in a position to evaluate the ultimate mediation effort, ? [found, among other observations] that counsel brought a higher degree of skill, commitment, dedication, and professionalism to this litigation than the Court has seen displayed by the attorneys in any other case during its 27 years on the bench.