Reply Brief — Venegas v. Mitchell

No. 88-1725 —

i

In the Supreme Court

OF THE

United States

OcTOBER TERM, 1989

JUAN FRANCISCO VENEGAS,

Petitioner,

vs.

MICHAEL R. MITCHELL,

Respondent.

On Writ of Certiorari to the United States

Court of Appeals for the Ninth Circuit

REPLY BRIEF FOR THE PETITIONER

MICHAEL S. BROMBERG

Box 2112, Hampton Street

Sag Harbor, New York 11963

(516) 725-0641

{Counsel of Record]

RICHARD M. Mosk

Sanders, Barnet, Jacobson,

Goldman & Mosk,

A Professional Corporation

1901 Avenue of the Stars

Suite 850

Los Angeles, California 90067

(213) 553-8011

Counsel for Petitioner

Bowne of Los Angeles, Inc.. Law Printers (213) 742-6600

ty

TABLE OF CONTENTS

I.

Respondent’s Statement of the Case Is Selective and

ee

Il.

Respondent’s Exclusive Reliance on the Language of

§ 1988 Ignores Proper Implementation of the Stat-

DP Sete RUE ERGEAECNEREREE G6 005006 6b eee cesses

Ill.

Respondent’s Position Does Not Logically Follow

From the Cases or the Purposes of the Statute ..

IV.

The Legislative History of § 1988 Does Not Support

I ED ono 5a 0 605 obs coevesvecess

Petitioner’s Position Will Not Make It More Difficult

To Obtain Representation In Civil Rights Cases

VI.

Respondent’s Reliance on Inadequate Lower Court

EP

ES ra

z

10

14

‘3

TABLE OF AUTHORITIES

Cases

Page

Aleyska Pipeline Service Co. v. Wilderness Society,

421 U.S. 240 (1975) .....ccccccccccccccscees 12

Blanchard v. Bergeron, 109 S.Ct. 939 (1989) ..... 6, 7,8

Blum v. Stenson, 465 U.S. 886 (1984) ..........- 5

Brobeck, Phleger & Harrison v. Telex Corp., 602

F.2d 866 (9th Cir. 1979) .......-- cece ee eeees 5

Burke v. Mesta Mach. Co., 79 F.Supp. 588 (W.D. Pa.

TY 6

City of Riverside v. Rivera, 477 U.S. 561 (1986) .. 9,10

Cooper v. Singer, 719 F.2d 1496 (10th Cir. 1983) 8,14

Crawford Fitting Co. v. J.T. Gibbons, Inc., 482 U.S.

437 (1087) ...cccccccccccccccscsssceseeeens 13

Dunn v. H.K. Porter Co., Inc., 602 F.2d 1105 (3d

Civ. 1978) ...cccccccccccessesseseeueen eeene 4

Evans v. Jeff D., 475 U.S. 717 (1986) ......----- 5, 14

Fracasse v. Brent, 6 Cal.3d 784, 494 P.2d 9 (1972) 19

Hamner v. Rios, 769 F.2d 1404 (9th Cir. 1985) ... 9

Harrington v. Empire Const. Co., 167 F.2d 389 (4th

Cir. 1048) 2... cccccccccccccscnseeueeeeeenee 6

Hensley v. Eckerhart, 461 U.S. 424 6) ee 5, 8, 10

Hewitt v. Helms, 482 U.S. 755 (1987) ........--- 20

International Paper Co. v. Ouellette, 479 U.S. 481

(1987) 2... ccccccccccccscssesesseeeseeeeeeee 6

Pennsylvania v. Delaware Valley Citizens’ Counsel

for Clean Air, 488 U.S. 711 (1987) .....-- 5, 7, 8,9, 15

Pharr v. Housing Authority of Prichard, 704 F.2d

1216 (11th Cir. 1983) .... 2... cece eee eee eees 9

iii

TABLE OF AUTHORITIES

CASES

Schlesinger v. Teitelbaum, 475 F.2d 137 (3d Cir.

EE

Skidmore v. John J. Casale, Inc 16

‘ ’ ., 160 F.2 ,

a —

‘teven v. Fidelity & Casualty Co., 58 Cal.2a

% .2d 862, 3:

I sd

Sullivan v. Crown Paper Bd. Co., Inc

. Co., Inc., 716 Fs

Ee saa

Venegas v. Wagner, 704 F.2d 1144 (9th Cir. 1983)

Walters v. National Ass’n of Radiati

tion Surviv

473 U.S. 305 (1985) —

Statutes

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"= Teese eo BPC CeCe BECO eb E

“ee «

ee, sn cs. ae

29 U.S.C. § 216

“ee

Pere eeese eee eeee oe eeese

“ee

38 U.S.C. § 3404(e), (d)

42 U.S.C.

*-*

"Seweesese ee eeseeeeae ee eed

“ee

"™"@eeeese eee eeoeseeeveses

*-*

#

13

iv

TABLE OF AUTHORITIES ,

Other Authorities

Page

Brickman, Contingent Fees Without Contingencies:

Hamlet Without the Prince of Denmark?, 37

U.C.L.A. L. Rev. 29, 39 n.42, 55-56 (1989)

a ce sawenngecenceeseabeanaaaeeeenee 5, 15, 16, 17, 18

C. Wolfram, Modern Legal Ethics 498 (1986) .... 5

1 G. Hazard & W. Hodes, The Law of Lawyering

ii 5 5 ere 7

2A Sutherland Stat. Const. § 51.01, p.450 (4th ed.) 13

Awarding of Attorneys’ Fees; Hearings Before the

Subcomm. on Courts, Civil Liberties, and the Ad-

ministration of Justice of the House Comm. on the

Judiciary, 94th Cong. 1st Sess. 49 (1975) ..... 12,16

123 Cong. Ree. S1478 .....cccccccccscccccccens 11

123 Comg. Ree. 31487 ... 2. ccccccccccccccccces 11

123 Comm. Roe. SIGBD .....cccsccccccscsccccves 11

122 Cong. Ree. 31850 ....... ccc cccccccccccecs 11

122 Cong. Ree. 31861 .......cccccccccccesesecs 11

122 Cong. Ree. 32389 ........ cc cccccccccccces 11

122 Cong. Rec. 33314... ...... ccc ccececeeces 6, 7,12

Thompson, In The 1980s, Lawyers Took The Spot-

1976 U.S. Code Cong. and Admin. News 2572, 2579 13

No. 88-1725

In the Supreme Court

OF THE

United States

OCTOBER TERM, 1989

JUAN FRANCISCO VENEGAS,

Petitioner,

vs.

MICHAEL R. MITCHELL,

Respondent.

On Writ of Certiorari to the United States

Court of Appeals for the Ninth Circuit

REPLY BRIEF FOR THE PETITIONER

I.

RESPONDENT'S STATEMENT OF THE CASE IS SE-

LECTIVE AND OMITS IMPORTANT FACTS

The facts in this case are important for two reasons.

First, the facts demonstrate the wisdom of the rule that a

civil rights court-awarded legal fee limits the amount

payable by a client to an attorney. This rule udvanced by

Petitioner (“Venegas”) would eliminate the type of dis-

putes between the lawyers and the client which have

arisen in this case.

Second, the facts show that under the circumstance of

this case, as a matter of law, the client, Venegas, should

not be required to pay his attorney, Respondent (‘‘Mitch-

ell”), the amount sought by the attorney. Thus, for these

reasons, it is important to correct any incorrect impres-

sions that might arise from the factual assertions in

Respondent’s Brief.

Mitchell asserts that Venegas has not paid any of the

court-awarded fee to Mitchell. That sum, along with the

entire disputed amount, is, as Mitchell acknowledges, in

an escrow account, pending resolution of this dispute.

Brief For The Respondent (“BR”) p. 7, n. 13. Venegas

agreed to permit Mitchell to have a lien on the amount of

the court-awarded fee (RT October 20, 1986, p. 11), and

even agreed to assign that amount to Mitchell. Jd. at pp.

12-13. Moreover, at the outset Venegas paid Mitchell a

$10,000 non-returnable retainer. R 260 p. 13, § 2. The

sums in escrow are earning interest.

Mitchell refers to the court-awarded fee of $117,000

and his claim for $406,000. The total court award for all

attorneys was $117,000, but the total amount that would

be due to the attorneys under the contingent fee agree-

ment is in excess of $800,000. Mitchell entered into the

2

contingent fee contract and then brought in additional

counsel, who were to share in his fees. In addition, prior

attorneys whose fees are covered by the court award are

seeking substantially more than awarded them ($98,000

even though the court awarded them $15,000). Mitchell

and his eo-counsel are seeking in addition to $800,000,

approximately $180,000 because Venegas settled the case

with the City after they withdrew and without their

consent. Brief For The Petitioner (“BP”) p. 7 n. 4.

With regard to the question of risk of non recovery at

the outset, certain facts are important. Mitchell’s time

records show that he first met with Venegas on September

18, 1985, v-hen he spent 1% hours with him. It is noted in

that time record that he prepared the substitution of

attorneys that day. R 236, Ex. 1 to Mitchell Declaration.

That is the day that the contingent fee agreement is

shown to have been executed. Mitchell’s time records

indieate that it was not until the next day that Mitchell

even began to examine the file. As Mitchell concedes, all

of the pretrial pleadings and discovery had already taken

place. Legal issues had already been Resolved, for the case

had been up to the Court of Appeal. Venegas v. Wagner,

704 F.2d 1144 (9th Cir. 1983).

As the ease had been tried before, all of the witness

testimony was available and jury instructions had already

been prepared. There is no indication that Mitchell had to

research any difficult areas of law.

The reason why Mitchell so promptly obtained the

contingent fee agreement is obvious. A case which had

already resulted in a $1,000,000 jury verdict was fully

prepared and ready for trial. At the time there was

already a deposition of a witness who testified that the

police induced him to perjure himself at Venegas’ murder

trial. RT Vol. 4 pp. 4, 15-18. For relatively little work over

et EO ES

3

a brief period of time, Mitchell gained $10,000 and stood

to gain at least $400,000 (assuming a $1,000,000 recov-

ery) and likely substantially more. In fact, the trial itself

lasted only six days, with jury instructions and delibera-

tions thereafter. For this Mitchell claims that under his

contingent fee agreement the attorneys are now entitled

to over $800,000. With the additional claims, plus inter-

est, the attorneys’ claims are in excess of $1,000,000.

Moreover, Venegas had to retain a new attorney for the

appeal to achieve a recovery.

Mitchell points to the fact that he obtained a $2,000,000

judgment which was more than the earlier $1,000,000

state court verdict. Whatever the value of Mitchell's

services, it was reflected fully in the trial court’s award,

which awarded him substantially more fees than the

“lodestar” and more than he requested. All the attorneys

only requested a total of $86,760 (Mitchell requested

$37,870) (R 236, 235) and failed to disclose to the court

the amount that would result from the contingent fee

agreement. In doing so, the attorneys, under their theory,

assumed that Venegas would have to pay a larger portion

of his award to them. This failure to disclose the amount

of the contingency agreement to the court and the failure

to seek a greater fee award from the defendants was

certainly not in Venegas’ interest.

The contingent fee agreement provided that it “covers

one trial only” and that the parties are not obligated to

continue the employment “[i]n the event there is a mis-

trial or an appeal.” R 260 p. 13. Venegas understood this

to mean that if he lost the trial, the $10,000 did not

obligate Mitchell to appeal. R 254, Venegas Decl. 1. If he

won the trial, defending any appeal is an obvious require-

ment to effecting a recovery. Indeed, paragraph 8 specifi-

eally refers to the attorney’s right to a fee award made by

4

“any appellate court,” suggesting that defending an ap-

peal was part of the services to be rendered. Mitchell

eoneedes he demanded an additional 10% of the judgment

for the appeal. That is over $200,000. The court-awarded

fee for the appeal was $33,000. Order of the Ninth Cirenit

of April 11, 1988. Mitchell does not and cannot deny that

the record shows that his disclosure to Venegas regarding

the availability of a §1988 award was less than

informative.

It should be noted that Mitchell filed his n.vtion for a

lien while he was still counsel of record for Venegas and

still purporting to act on behalf of Venegas. RT October

20, 1986, p. 16; R 269 There is no indication that at the

time a substitution had been signed by both parties.

I.

RESPONDENT'S EXCLUSIVE RELIANCE ON THE

LANGUAGE OF § 1988 IGNORES PROPER IMPLE-

MENTATION OF THE STATUTE

Mitchell argues that § 1988 does not specifically cover

attorney-client arrangements ard therefore such arrange-

ments should be enforceable. Mitchell fails to deal ade-

quately with the point that regardless of any specific

interpretation of § 1988, the Court, in exercising supervi-

sory power, should limit the fee to that awarded by the

eourt under § 1988. Mitchell concedes that federal courts

have the authority, and have exercised that authority, to

regulate attorney-client agreements. RB 29-30; see, ¢.g.,

Schlesinger v. Teitelbaum, 475 F.2d 137, 141 (3d Cir.

1973). As the court said in Dunn v. H.K. Porter Co., Inc.,

602 F.2d 1105, 1108 (3d Cir. 1979), “B ause contingency

fee agreements are of special concern o the courts and

are not to be enforced on the same basis as are ordinary

commercial contracts... courts have the power to moni-

5

tor such contracts either through rule making or on an ad

hoc basis.” See Brickman, Contingent Fees Without Contin-

gencies: Hamlet Without the Prince of Denmark?, 37

U.C.L.A. L. Rev. 29, 39 n.42, 55-56 (1989) (“Brickman’’);

C. Wolfram, Modern Legal Ethics 498 (1986) (“Courts

commonly state that contingent fee contracts... are sub-

ject to stricter scrutiny than other types of contracts

..”)' By virtue of the authorities and judicial power,

§ 1988 awards supersede contingent fee agreements.

In addition, § 1988 itself is a basis for such a rule.

Although § 1988 says nothing about how to compute the

fee award or whether the fee is recoverable even if no fees

are actually incurred by the plaintiff or whether the fee

ean be waived by the client, or other such issues, this

Court has nevertheless rendered opinions deciding such

issues in a way to carry out or implement the purposes

and intent of the statute. See, e.g., Pennsylvania v. Dela-

ware Valley Citizens’ Ccuncil for Clean Air, 483 U.S. 711,

730 (1987) (refers to “desirable and appropriate applica-

tion of the statute”); Evans v. Jeff D., 475 U.S. 717

(1986); Blum v. Stenson, 465 U.S. 886 (1984); Hensley v.

Eckerhart, 461 U.S. 424 (1983). In these cases the Court

has fashioned rules to implement § 1988 even though the

statute itself does not have explicit language on the

issues.

In Fair Labor Standards Act litigation involving a fee-

shifting provision (29 U.S.C. § 216), a panel including

Judges Learned and Augustus Hand said, “We have

considerable doubt as to the validity of the coniingent fee

agreement; for it may well be that Congress intended that

‘Courts may give less consideration to contingent fee contracts

entered into by large corporate clients represented by connsel, such

as in Brobeck, Phleger & Harrison v. Telex Corp., 602 F.2d 866 (9th

Cir. 1979). Wolfram, supra at 499.

6

an employee’s recovery should be net, and that therefore

the iawyer’s compensation should come solely from the

employer.” Skidmore v. John J. Casale, Inc., 160 F.2d 527,

531 (2d. Cir. 1947) (Frank, J.). In Harrington v. Empire

Const Co., 167 F.2d 389, 392 (4th Cir. 1948), the court

said, “we are clearly of the opinion that an agreement by

an employee, in case he succeeds in the District Court, to

pay his attorney a sum in addition to the counsel fee

allowed by the court is contrary to the purpose of the

statute and therefore invalid.” Accord, Burke v. Mesta

Mach. Co., 79 F.Supp. 588, 615 (W.D. Pa. 1948).

The contingent fee contract is based on a federal civil

rights claim. The implementation of § 1988 does not

displace state law, for state law does not guarantee a

contingent fee recovery. But even if there were a preemp-

tion issue, contrary state law would interfere with the

methods by which § 1988 was designed to reach its goals.

See International Paper Co. v. Ouellette, 479 U.S. 481, 491-

494 (1987) (preemption though act silent on issue).

Ill.

RESPONDENT’S POSITION DOES NOT LOGI-

CALLY FOLLOW FROM THE CASES OR THE

PURPOSES OF THE STATUTE

Mitchell contends that Blanchard v. Bergeron, 109 S.Ct.

939 (1989) shows that statutory awards and attorney-

client fee contracts are independent.

The purpese of § 1988 was to insure that the successful

civil right plaintiff did not have to pay for vindicating a

publie right. 122 Cong.Ree. 33314 (Sen. Kennedy). There

are two ways to accomplish this. Either the fee that a

client has agreed to pay a lawyer is shifted fully to the

7

losing party or the court determines the reasonable com-

pensation for the plaintiff's lawyer for all purposes.

Blanchard v. Bergeron ruled out the first option when

the Court stated, “The defendant is not, however, re-

quired to pay the amount called for in a contingent fee

contract if it is more than a reasonable fee calculated in

the usual way.” 109 S.Ct. at 944. The second option is the

one left to accomplish the purpose. The attorney is enti-

tled, whether directly or indirectly, to the court awarded

fee, “no more and no less.” Jd. As Senator Kennedy

stated, the lawyer’s “fee is contingent not only upon his

success, but also upon the discretion of the judge before

whom he appears... his rate of compensation is fixed not

by a grateful client, but by a disinterested judge.” 122

Cong.Ree. 33314.

Under Mitchell's theory, if the fee awarded by the court

is higher than the contract amount, the plaintiff should be

able to pay the contract amount and keep the balance — a

“perhaps surprising result.” 1 G. Hazard & W. Hodes,

The Law of Lawyering 72.5 (1989 Supp.) Also, under this

theory, when a public interest firm handles a case for a

eivil rights plaintiff without a fee arrangement, or if an

attorney uandles a civil rights case on a pro bono basis,

the plaintiff could keep the § 1988 award and pay nothing

to the public interest attorneys.

Mitchell’s assertion that eight justices in Pennsylvania

v. Delaware Valley Citizens’ Counsel for Clean Air, supra,

488 U.S. 711, recognized contingent fees for attorneys in

excess of the § 1988 awards is not persuasive. That issue

was not before the Court. The plurality, in pointing out

that fee enhancements are not necessary in certain kinds

of cases, included as an example “a damages case that

competent lawyers would take in the absence of fee

shifting statutes.” Jd. at 726. This does not mean that

8

contingent fee contracts are necessarily enforceable in

civil rights eases. It means that if the case is sufficiently

strong so that an attorney would have taken it without a

fee-shifting statute, no such enhancement is necessary.

The dissent’s reference to contingent fee contracts was in

the context of determining enhancement in a number of

situations in which the risk of compensation is mitigated.

Id. at 749. T) e dissent does not address directly the issue

in the instant ease. In his dissent in Hensley v. Eckerhart,

461 U.S. 424, 445-446 (1983), Justice Brennan (joined by

the dissenters in Delaware Valley) observed that Con-

gress, by enacting § 1988 intended to enforce civil rights

laws “by continuing to rely on the private bar and by

making the defendanis bear the full burden of paying for

their civil rights obligations.” (Emphasis added). Cer-

tainly, the remarks in Delaware Valley are less indicative

of judicial intent than the Court’s statement in the near

unanimous opinion in Blanchard v. Bergeron that § 1988's

purpose was “that a plaintiff's recovery will not be re-

duced by what he must pay his counsel.” 109 S.Ct. at 944.”

The cireuit courts are not “virtually unanimous,” as

suggested by Mitchell. Cooper v. Singer, 719 F.2d 1496

(10th Cir. 1983) was an en banc opinion, and in Wheatley

v. Ford, 679 F.2d 1037, 1041 (2d Cir. 1982), the court

eould not have been clearer: “we hold that, to the extent

counsel receives payment of the section 1988 statutory

award, his claim for services rendered under his contin-

geney fee arrangement with his client shall be deemed

“In his brief before this Court in United Statee Dep’t of Labor v.

Triplett and Committee on Legal Ethics v. Triplett, Nos. 88-1671, 88-

1688, the Solicitor General notes that any assumption that under the

fee-shifting provision in Delaware Valley plaintiffs were not barred

from entering into supplementary fee arrangements with their coun-

sel “is by no means certain.” p.27 n.12.

9

paid and satisfied.” The other circuit cases generally

differ as to the rights of client and attorney.’ By dealing

directly with the attorney-client arrangement (including

enforcement thereof), these cases show that § 1988 can-

not be divorced from such arrangements.

Mitchell contends that Venegas’ argument would lead

to the invalidation of fixed retainers and hourly fee

charges if they exceed the statutory award. BR 22. But

this is highly theoretical because the statutory fee is a

reasonable fee, and an attorney cannot charge a client

more than a reasonable fee.

Mitchell suggests that contingent fees are different

than regular fees and therefore may exceed what would be

considered a reasonable fee. BR 26-28. But the § 1988 fee

is also contingent. There is no reason to differentiate

between what should be a reasonable fee under § 1988 and

under any agreement between attorney and client, even if

the fee is contingent. The determination of “reasonable”

in Delaware Valley, supra, 483 U.S. 711, is applicable to a

determination of what is a reasonable fee between attor-

ney and client in the civil rights context. See City of

Riverside v. Rivera, 477 U.S. 561, 581, 586 (1986) (Pow-

ell, J. concurring) (“asserted analogy to personal injury

claims impersuasive in this context”). Also, unlike the

normal tort ease, the ~‘vil rights client has a risk, for if he

°E.g., Hamner v. Rios, 769 F.2d 1404, 1409 (9th Cir. 1985) (court

has discretion to compel prevailing party to pay the difference

between the awarded fee and the contract amount); Sullivan v. Crown

Paper Bd. Co., Inc., 719 F.2d 667, 670 (3d Cir. 1983) (counsel

receives contingent fee or awarded fee, whichever is greater, although

opinion did not exclude attorney receiving both); Pharr v. Housing

Authority of Prichard, 704 F.2d 1216, 1217-18 (11th Cir. 1983)

(defendant should pay the difference even if it exceeds what might

normaily be awarded under § 1988).

10

loses, under certain circumstances, he could be responsi-

ble for the defendant’s expenditures.

Mitchell argues that under Venegas’ position, private

fee contracts would be nullified in “antitrust cases and

other coramercial contexts.”” BR 22. The Court need not

reach the issue for non civil rights cases. This Court has

recognized that civil rights eases are not comparable to

other types of cases. City of Riverside v. Rivera, supra,

477 U.S. 561, 574. Repeatedly throughout its opinion in

the City of Riverside ease, the plurality stressed the

importance of the fact that it was reviewing an award of

attorneys’ fees in a civil rights case. Id. at 574-579 (“the

enforcement of civil rights laws cannot be entrusted to

private sector fee arrangements.” Jd. at 579.). The legisla-

tive history of § 1988 and case law emphasize the impor-

tant policy of encouraging private litigants to act as

private attorneys general to vindicate civil and constitu-

tional rights. See Hensley v. Eckerhart, supra, 461 U.S. at

443 n.2 (dissent) (“Civil rights plaintiffs with meritori-

ous claims ‘appear before the court cloaked in a mantle of

public interest.’”). These same considerations are not

present in commercial cases. In commercial, and ev

antitrust eases, the plaintiff acts primarily to further his

own economic interest.

IV.

THE LEGISLATIVE HISTORY OF § 1988 DOES NOT

SUPPORT RESPONDENT'S POSITION

As noted in Petitioner's Brief, the legislative history

shows that the purpose of §1988 was to insure that

suecessful civil rights plaintiffs would incur no expense

for attorney's fees. This would also have the effect of

attracting civil rights lawyers.

11

Nowhere in the legislative history is there any mention

of preserving attorney-client contingent fee contracts.

Had contingent fee contracts been a significant incentive

for civil rights attorneys, there would have been no need

for § 1988.

Mitchell’s references to the legislative history are ei-

ther inapposite or out of context. For example, Mitchell

refers to remarks of Senator Allen. BR 14 n.17. Senator

Allen vigorously opposed the legislation, See, e.g., 122

Cong.Rec. 31473. His references to contingency fees were

in connection with his chagrin that, in his view, the

availability of such fees was, in effect, permitted in cer-

_ tain instances in the Hart-Scott-Rodino Antitrust Im-

provement Act of 1976. 15 U.S.C. §$§ 15e, g. He further

argued that fee shifting provisions were simply for the

benefit of lawyers. 122 Cong.Reec. 31473, 31487, 31830,

31850 (1976). The reference in the Congressional Record

to a law review article about antitrust laws, to which

Mitchell points, (e.g., BR21 n. 30), is not significant

because, inter alia, that article was inserted by Senator

Thurmond not to support the legislation (122 Cong.Rec.

32389), and there was no real discussion of its substance.

The rebuttal from the proponents of the legislation was

that attorneys will not make substantial sums or windfalls

from civil rights cases. As Senator Kennedy said, “We are

not talking about the kind of attorneys’ fees that were

included in the antitrust bill.” 122 Cong.Ree. 31851. He

disagreed with opponents of the bill who claimed it was ‘‘a

lawyers’ relief bill.” He distinguished civil rights cases

from antitrust and tort cases and noted that with the

enactment of the bill, the attorney’s fee “is contingent not

only upon his success, but also upon the discretion of the

judge before whom he appears.” 122 Cong.Ree. 33314.

12

Other references to the legislative history by Respon-

dent are also either irrelevant or out of context. For

example (BR 20), when Representative Seiberling said

the proposed legislation “certainly is not going to make

attorneys’ fees any less,” he responded to a question as to

whether the legislation would inerease or decrease fees in

civil rights litigation. He added to his comment, “T would

expect there would certainly be more cases where attor-

neys’ fees are awarded.”* What he meant was that as a

result of the Act, overall fees to attorneys will increase.

The remark had nothing to do with fees or contingent fees

in specific cases.”

The fact that other statutes deal specifically with attor-

neys’ fees is not relevant. As pointed out in Aleyska

Pipeline Service Co. v. Wilderness Society, 421 U.S. 240,

252-255 (1975), some statutes have expressly provided

that fee-shifting provisions do not limit the amount of

fees that an attorney and his client might agree upon

between themselves. Thus, the absence of any provisions

dealing specifically with the attorney-client relationship

does not necessarily signify an intent not to cover attor-

neys’ recoveries.

‘4warding of Attorneys’ Fees: Hearings Before the Subcomm. on

Courts, Civil Liberties, and the Administration of Justice of the House

Comm. on the Judiciary, 94th Cong. 1st Sess. 49 (1975) [“House

Hearings’’}.

‘In response to concerns about fees reducing awards in condemna-

tion cases (House Hearings 103-117), one Congressman’s solution

was a proposed fee-shifting provision similar to § 1988. Jd. at 241.

Contrary to Respondent's statement that House Members considered

barring contingent fees (RB 15 n.19), only one Congressman raised a

question about contingent fees in condemnation cases because chere

is always some recovery in those cases. Id. at 116.

13

None of the statutes cited by Mitchell deals with the

subject matter of § 1988, and thus they are not im par-

materia. A number of the acts referred to by Mitchell were

enacted after § 1988 and therefore have no bearing on

§ 1988. See, eg. 42 U.S.C. $300 aa-15(e)(1) (A);

15(e)(3). Moreover, it “is unrealistic to assume that

whenever the legislature passes a statute it has in mind

all prior acts relating to the same subject matter.” 2A

Sutherland Stat. Const. § 51.01, p.450 (4th ed.). Certainly

it did not have in mind prior acts unrelated to the subject

matter.

The National Vaccine Injury Compensation Program,

42 U.S.C. § 300 aa-10 et seq., is hardly comparable, for it

provided for unique procedures, fee awards to non-pre-

vailing parties and limitations on damages. The Hart-

Seott-Rodino Antitrust Improvement Act of 1976 dealt

with these authorized to bring actions on behalf of the

state. 15 U.S.C. § 15e(d) (1); g(1).° Here we deal with

under what circumstances fee agreements are not fully

enforceable. Other statutes cited by Mitchell are not fee-

shifting statutes. E.g., 28 U.S.C. § 2678; 38 U.S.C.

§ 3404(c) and (d). Fee limitation statutes are not rele-

vant. See Walters v. National Ass’n of Radiation Survivors,

473 U.S. 305, 323-324 (1985) (such statutes seek, in part,

to keep the process nonadversarial). Crawford Fitting Co.

v. J.T. Gibbons, Inc., 482 U.S. 437, 442 (1987) is irrelevant

as it deals with items of costs that may be taxed.

“The statute limited the states as to whom they could hire so that

they would “be encouraged to develop their own in-house antitrust

capability.” 1976 U.S. Code Cong. and Admin. News 2572, 2579.

14

V.

PETITIONER’S POSITION WILL NOT MAKE IT

MORE DIFFICULT TO OBTAIN REPRESENTA-

TION IN CIVIL RIGHTS CASES

Mitchell refers to Evans v. Jeff D., 475 U.S. 717 (1986),

in which the Court provided that before the fee award

(and absent a contractual provision precluding a waiver)

the court-awarded fees could be waived.

Mitchell claims that by invalidating the contingent fee

eontract the attorney would be left with nothing. RB 23.

Under Mitchell’s theory, those attorneys representing

civil rights plaintiffs with little damages or the right to

non damage relief can be left without a fee, but those

representing greatly damaged civil rights plaintiffs

should be protected. Moreover, Mitchell ignores Venegas’

diseussion at PB31 regarding the possible role of contin-

gent fee agreements. As noted, it is arguable that by

contract (as in the instant ease), or by law, the contingent

fee cannot be waived by the client prior to the court

award. Whether or not this is so, it is Venegas’ position

that it is the § 1988 award that supersedes the contingent

fee agreement. That it is the plaintiff who is awarded the

fee has no significance. See Evans v. Jeff D., supra, 475

U.S. at 730 n. 19 (1986) (citing Cooper v. Singer, supra,

719 F.2d 1496).

Mitchell argues, without any support in the record, that

without contingent fees, there will not be sufficient civil

rights lawyers. When Congress considered whether to

enact § 1988, supporters cited as a reason that lawyers

were unavailable. Apparently, the availability of contin-

gent fees had little impact. Evans v. Jeff D., supra, 475

U.S. at 756 n.10 (dissent). Amici refer to the “already

severely diminishing number of attorneys willing to han-

15

dle such eases,” (Brief of Amici Curiae 6 (““BAC’’)), an

alleged condition which exists prior to any ruling by this

Court.

The availability of court awarded fees, especially in

light of the ever expanding pool of lawyers,’ was supposed

to alleviate any concerns about the availability of lawyers

to handle meritorious civil rights cases. Amici suggest

that § 1988 has not served its purpose because of an

alleged decline of civil rights filings. (BAC 21). Contin-

gent fee contracts have not prevented any such alleged

decline. Also, as large damage civil rights cases comprise

a small percentage of civil rights cases, the availability of

contingent fee contracts could only benefit a few of the

already high profile lawyers who handle such eases.” In

civil rights cases, unlike tort cases, these lawyers will

profit from § 1988 if the recovery is small and, under

Amici’s theory, from the contingent fee contract if the

recovery is large. See also Pennsylvania v. Delaware Valley

Citizens’ Council, supra, 473 U.S. at 727, (unavailability of

contingency enhancements should not result in the “bar

in general” being “unable to respond that the goal of the

fee-shifting will not be achieved”). Also, the most se-

verely damaged plaintiffs should not bear the burden of

attracting civil rights attorneys.

Justice Marshall has aptly pointed out that fee con-

cepts are not the solution to funding problems for public

interest law. “Thus, support for this broadened range of

"During the 1980s “35,000 to 40,000 new J.D.s flowed out of the

nation’s law schools each year. When the decade ended there were

nearly a quarter-million more practicing attorneys than there were at

the beginning.” Thomp-on, Jn The 1980s, Lawyers Took The Spotlight,

The Los Angeles Daily Journal, Dec. 26, 1989. p.1.

®As to the large profits and windfalls derived from such cases, see

Brickman 76 n.186.

16

activities must come from a permanent, more comprehen-

sive source.” House Hearings 29, 31.

Amici contend that if attorney’s fees are limited to a

reasonable fee, there would be “a setback to the enforce-

ment of civil rights and environmental laws.” BAC 8.

They misconceive the issue. Civil rights and environmen-

tal laws will be set back if the fees to attorney’s come not

from malefactors found guilty of violating laws, but out of

the pockets of the innocent victims.

In his recent study of contingent fees, Professor Brick-

man concludes that the present contingent fee model is

inadequate and unfair and that courts often “are oblivious

to serious abuses by lawyers of their fiduciary obligations

to clients....” Brickman 32. He argues that there should

be “enhanced judicial supervision of contingent fees.” Id.

at 127; see id. at 108, 111-114.

“Contingent fee setting today operates in a milieu

substantially devoid of fiduciary oversight.

Overcharging clients is routine and typically unques-

tioned, especially when the client is unaware of the

degree to which it has oceurred. So pervasive are

these abuses that one may legitimately describe the

current regulatory scheme as ‘rotten’.” Id. at 127-

128.

It is this “rotten” system which Mitchell advocates for the

civil rights area. The insurance driven personal injury

system should not be the model for civil rights.

The transparent plea for freedom of contract by amici

is particularly hollow when it comes to the oppressive

contingent fee agreement exemplified by the instant case.

17

VI.

RESPONDENT’S RELIANCE ON INADEQUATE

LOWER COURT FINDINGS IS MISPLACED.

The trial court, without discussion or findings as to any

of the facts, simply concluded that the contingent fee did

“not constitute a windfall” (Pet.App. A-28), and that the

parties acted “within their rights” with respect to Mitch-

ell not handling the appeal. 7d. at A-29. The Court of

Appeals concluded that the trial court did not abuse its

discretion because Venegas did not present evidence that

a 40% contingent fee was not standard in California for

civil rights eases or that his case posed an unusually low

risk for civil rights cases. Jd. at A-17.° If a 40% econtin-

gency for one trial only is standard, what are standard

percentages for newly retained attorneys for later

proceedings?

Neither court considered such factors as the circum-

stances under which the contract was made, the prior trial!

or the effect of the withdrawal. Neither court explored

factors suggesting that the contract was adhesive.’” More-

over, neither court considered the effect of state law,

which under § 1988, can be applicable to civil rights cases.

Indeed, the Court of Appeals expressly left of »n the issue

*“Courts with an incomplete comprehension of the applicability of

fiduciary prineiples to fee contracts often believe that the reasonable-

ness of contingent fee should be determined by such factors as the

effort expended, the results obtained and the causal relationship

between the attorneys’ efforts and the results.” Brickman 86-87.

The fee contract had all the qualities of an adhesion contract. It

was drafted by the attorney, it involved parties of unequal bargaining

strength, and the party of lesser bargaining strength had no rea!

opportunity to obtain independent advice. Courts have declined to

enforee provisions of adhesion contracts. See Steven v. Fidelity &

Casualty Co., 58 Cal.2d 862, 337 ©.2d 284 (1962).

18

of the validity of the contingent fee agreement under

state law.'’ Venegas contends that all of these factors

should have been considered and that if they were consid-

ered, as a matter of law, the court should have declared

the contingent fee agreement unenforceable. Certainly,

the trial court should not have been able to deem a

contract “reasonable” without considering these factors.

Contrary to the views of the lower courts in this case, it is

the attorney who “must demonstrate that the fee arrange-

ment was fair and equitable, that the services performed

were reasonably worth the amount claimed, and the agree-

ment was voluntarily executed by the client with full

knowledge of the pertinent facts.” Brickman 55 n.96.

Before this Court can defer to a trial court determination

that a contract is reasonable — a contract which involves

an issue of close to $1,000,000 — there should have been a

full and fair hearing and consideration of all of the facts.

This Court should enumerate the factors that should be

considered and apply them in this case. In so doing, it

should deem the contingent fee contract in the instant

ease unenforceable. The idea that attorneys can end up

with close to a million dollars for work which they valued

at $56,710 (R 236, 235) and the court valued at

$102,000 — having refused to handle the appeal or collect

the award without more money — is simply unconsciona-

ble. To foree Venegas to continue to incur legal expense in

federal and state courts over the issue of the enforceabil-

ity of the contract would also be unfair and oppressive. As

recently said, “[{p]ublic regard for lawyers in general

slipped to an all-time low during the 1980s, while the

“At the district court hearing, Mitchell said that any decision

“would have to be without prejudice to whatever occurred regarding

the contingent fee in state court.” The trial judge agreed. RT. Oct. 20,

1986, p. 7.

19

profession’s apologists dwindled in number.”’ Thompson,

supra, The Los Angeles Daily Journal, Dee. 26, 1989 p.1.

This Court should not put its imprimatur on the asserted

right of attorneys to seek and get whatever they demand,

at the expense of their clients. A fee of over $800,000

under these circumstances is per se unreasonable.

Mitchell has supplied no case which approves an ar-

rangement similar to the one in this case. Both under

federal law and state law, a contingent fee agreement is

not enforceable when the attorney withdraws; he is only

entitled, at most, to a quantum meruit recovery.

Mitchell miscited and took out of context a quote from

Fracasse v. Brent, 6 Cal.3d 784, 494 P.2d 9 (1972). That

ease held that under no circumstance is the attorney

entitled to enforce his contingent fee agreement if he is

not the attorney at the time of the recovery. The court did

not say that if the attorney is discharged on the court-

house steps ke can enforce the contingent fee agreement.

Mitchell omitted language from this quote. The court

said, “[t]o the extent such discharge occurs ‘on the

courthouse steps,’ where the client executes a settlement

obtained after much work by the attorney, the factors

involved in a determination of reasonableness would cer-

tainly justify a finding that the entire fee was the reasona-

ble value of the attorney’s services.” Jd., 494 P.2d at 14.

Thus, a courthouse steps settlement just goes to a deter-

mination of a reasonable fee.

Mitchell did not perform all the services he was re-

quired to perform. Even if he did not have to handle the

appeal — a highly questionable proposition — he still had

to effect the recovery of the monies. He was only to be

paid out of the “recovery” he obtained. When he declared

he had completed his services, the recovery was zero.

Forty percent of zero is zero.

20

If one were to construe the contract to mean that it

covers “one trial only,” it would not even cover post trial

motions. This is just as absurd as concluding it does not

cover collection of the monies. Mitchell lost “sight of the

nature of the judicial process. In all civil litigation, the

judicial decree is not the end but the means. At the end of

the rainbow lies not the judgment, but some action... by

the defendant that the judgment produces — the payment

of damages... Redress is sought through the court, but

from the defendant.” Hewitt v. Helms, 482 U.S. 755, 761

(1987).

Clearly under any theory, Mitchell did not perform

fully all of his obligations under the contingent fee agree-

ment, and he withdrew as counsel prior to the occurrence

of the contingency. Thus at best he is entitled to only the

reasonable value of his services, which value the court has

already determined under § 1988.

CONCLUSION

The Court should reverse the judgment below and

grant the relief requested by Petitioner.

Respectfully submitted,

MICHAEL S. BROMBERG RICHARD M. Mosk

Box 2112, Hampton St. 1901 Ave. of the Stars

Sag Harbor, NY 11963 Suite 850

(516) 725-0641 Los Angeles, CA 90067

[Counsel of Record] (213) 553-8011

Counsel for Petitioner