Amicus Curiae Brief — Burlington v. Dague

RAR 12 1992

No. 91-810 FFICE UF THE vent |

IN THE

SUPREME COURT OF THE UNITED STATES

Ocroser Term, 1991

CITY OF BURLINGTON,

Petitioner,

Vv.

ERNEST DAGUE, SR.; ERNEST DAGUE, JR.;

BETTY DAGUE; and ROSE A. BESSETTE,

Respondents.

ON WRIT OF CERTIORARI TO THE

UNITED STATES COURT OF APPEALS

FOR THE SECOND CIRCUIT

BRIEF OF THE WASHINGTON LEGAL

FOUNDATION AND THE ALLIED EDUCATIONAL

FOUNDATION AS AMICI CURIAE

IN SUPPORT OF PETITIONER

DANIEL J. POPEO

RICHARD A. SAMP

(Counsel of Record)

WASHINGTON LEGAL

FOUNDATION

1705 N Street, N.W.

Washington, DC 20036

(202) 857-0240

~ Date: March 12, 1992

a ee

STATEMENT OF THE CASE

CONCLUSION

TABLE OF CONTENTS

INTERESTS OF THE AMICI CURIAE ........

DELAWARE VALLEY II ESTABLISHED THAT

REGARDLESS WHETHER CONTINGENCY

ENHANCEMENTS UNDER FEDERAL FEE-

SHIFTING STATUTES ARE EVER APPROPRI-

ATE, THEY SHOULD NEVER BE BASED ON

THE PLAINTIFF’S LIKELIHOOD OF SUC-

ee ee ee ee ee ee

RESPONDENTS HAVE FAILED TO ESTAB-

LISH THAT THIS IS ONE OF THOSE RARE

CASES IN WHICH CONTINGENCY EN-

HANCEMENT IS APPROPRIATE ........

. CONTINGENCY ENHANCEMENTS '- ARE

NEVER APPROPRIATE UNDER FEDERAL

FEE-SHIFTING STATUTES ............

7. oe re ee ee ee lll Oe ee ee oe ee ee oe ae le 2k a

il

TABLE OF AUTHORITIES

Cases:

Bernardi v. Yeutter, 942 F.2d 562 (9th Cir. 1991) .. 16

Blanchard v. Bergeron, 109 S. Ct. 939 (1989) . 11, 12

Blum v. Stenson, 465 U.S. 886 (1984) ......... 1]

Craig v. Secretary, Dep’t of Health and Human

Servs., 864 F.2d 324 (4th Cir. 1989) ....... 16

Friends of the Earth v. Eastman Kodak Co.,

834 F.2d 295 (2d Cir. 1987) ............ 4

Hensley v. Eckerhart, 461 U.S. 424 (1983) .... 7, 10

King v. Palmer, 950 F.2d 771

(D.C. Cir. 1991) (en banc) .... 2, 6, 13, 14, 16

Leroy v. City of Houston, 831 F.2d 576 (5th Cir. 1987),

cert. denied, 486 U.S. 1008 (1988) ........ 16

Pennsylvania v. Delaware Valley Citizens’

Council for Clean Air [Delaware Valley 1},

478 U.S. 346 (1986) . 1. ce eee es 11, 12

Pennsylvania v. Delaware Valley Citizens’

Council for Clean Air [Delaware Valley IT},

GSD UB. TH0 Glpeee cc eect csheenns passim

Smith v. Freeman, 921 F.2d 1120 (10th Cir. 1990) . 16

Sullivan v. Crown Paper Board Co., 719 F.2d

AL: S| ree ee 15

United States Dep’t of Labor v. Triplett,

Ge U.S. Faw Gepeee + 66 6 cue eens eee 13

Venegas v. Mitchell, 110 S. Ct. 1679 (1990) .. 14, 15

Venegas v. Skaggs, 867 F.2d 527 (9th Cir. 1989),

aff'd sub nom. Venegas v. Mitchell,

a: Ss ft wererrrrcce.. 15

Wilmington v. J.I. Case Co., 793 F.2d 909

oe | re 15

Statutes:

Civil Rights Act of 1964, Title VT ........... 18

Clean Air Act

§ 304(d), 42 U.S.C. § 7604(d) .. 2... 2... 7

- h. ££. wevrerecrr: 3

33 U.S.C. § 1365(d) ....... ererwer er. 3

Conservation and Recovery Act ............. 3

USS. GUPED + 0 6 ces thee 3

42 U.S.C. § 1988 .

Miscellaneous:

Office of Program Operations, EEOC,

ANN. REP. (1989)

14. 15

. 18

IN THE

SUPREME COURT OF THE UNITED STATES

Octoser Term, 1991

CITY OF BURLINGTON,

Petitioner,

Vv.

ERNEST DAGUE, SR.; ERNEST DAGUE, JR.:

BETTY DAGUE; and ROSE A. BESSETTE,

Respondents.

ON WRIT OF CERTIORARI TO THE

UNITED STATES COURT OF APPEALS

FOR THE SECOND CIRCUIT

BRIEF OF THE WASHINGTON LEGAL

FOUNDATION AND THE ALLIED EDUCATIONAL

FOUNDATION AS AMICI CURIAE

IN SUPPORT OF PETITIONER

INTERESTS OF THE AMICI CURIAE

The Washington Legal Foundation (WLF) is a non-

profit public interest law and policy center with more than

120,000 members and supporters nationwide. While WLF

engages in litigation and the administrative process in a

variety of areas, WLF devotes a substantial percentage of

its resources to advancing the interests of the free

enterprise system. To this end, WLF has appeared as

amicus curiae before this Court as well as other state and

federal courts in cases affecting business.

2

WLF believes that our nation’s free enterprise system

has suffered greatly in recent decades as a result of the

litigation explosion that has clogged both state and federal

courts. While WLF fully supports enforcement of our

nation’s environmental and civil rights laws, WLF believes

that the chief result of providing contingency enhancements

to the attorney fees awarded to prevailing plaintiffs in

environmental and civil rights cases will be to line the

pockets of the nation’s lawyers at the expense of taxpayers

and to increase the quantity of unmeritorious lawsuits

clogging our courts.

The Allied Educational Foundation (AEF) is a non-

profit charitable and educational foundation based in

Englewood, New Jersey. Founded in 1964, AEF is dedi-

cated to promoting education in diverse areas of study,

such as law and public policy, and has appeared as amicus

in the federal courts on a number of occasions. AEF

believes that the public interest is best served by a legal

system that does not overcompensate lawyers and does not

provide too many incentives for the filing of lawsuits.

Amici are particularly eager to file their brief in order

to dispel any notion -- that might arise due to the antici-

pated filing of several amicus briefs by attorney groups on

behalf of Respondents -- that lawyers as a group support

the award of contingency enhancements as a part of attor-

ney fees awarded under federal fee-shifting statutes. Many

lawyers, including those at WLF, share the public’s dis-

taste for the large attorney fees often awarded under those

statutes. Indeed, WLF has had a policy of never seeking

an award of attorney fees as the prevailing party in

litigation.

Both WLF and AEF appeared as amici in King v.

Palmer, 950 F.2d 771 (D.C. Cir. 1991)(en banc), arguing

that lodestar fees awarded under federal fee-shifting

statutes should not be enhanced to compensate the plain-

tiffs attorney for assuming the risk of nonrecovery.

Neither WLF nor AEF has any financial interest in the

outcome of this case and thus can assist the Court by pro-

3

viding a perspective that is distinct from that of either

party.

Amici submit this brief on behalf of Petitioner with the

written consent of both parties. The written consents are

on file with the Clerk of the Court.

STATEMENT OF THE CASE

In the interests of judicial economy, amici hereby

adopt by reference the Statement of the Case set forth in

Petitioner's brief.

In brief, Respondents (owners of land adjacent to a

landfill operated by Petitioner City of Burlington,

Vermont) brought suit in federal district court against

Burlington, alle ping that the city was operating the landfill

in violation of a variety of federal and state laws.

Respondents retained William W. Pearson to represent

them in the lawsuit, under an arrangement that called for

the payment of no attorney fees unless Respondents

prevailed.

Following a bench trial, the district court entered

judgment for Respondents on some, but not all, of their

claims. Pet. App. 59-115. The district court subsequently

awarded attorney fees to Respondents pursuant to 42

U.S.C. § 6972(e) and 33 U.S.C. § 1365(d) -- the fee-

shifting provisions of the Resource Conservation and

Recovery Act (RCRA) and the Clean Water Act, respec-

tively. Pet. App. 130-134.' The court awarded Responc-

ents their “lodestar” fee ($198,027.50) and then added a

25% contingency enhancement ($49,506.87) that was in-

' The two provisions are identically worded; they provide for an

award of “reasonable attorney and expert witness fees" to any party,

whenever appropriate.

* The computation of Respondents’ “lodestar” fee (the reasonable

number of hours worked by Respondents’ attorneys multiplied by a

reasonable hourly fee) was not disputed.

4

tended to compensate Respondents’ attorney for having

assumed the risk that he would receive nothing had

Respondents not prevailed. The district court explained its

decision to award a contingency enhancement by stating

that Respondents’ “risk of not prevailing was substantial

under the facts here" (Pet. App. 132) and that “absent an

Opportunity for enhancement, [Respondents] would have

faced substantial difficulty in obtaining counsel of

reasonable skill and competence in this complicated field

of law." Pet. App. 133.

Burlington appealed the entire judgment, including the

award of attorney fees, to the United States Court of

Appeals for the Second Circuit. On June 12, 1991, the

Second Circuit affirmed the decision of the district court in

all respects. Pet. App. 1-37. With respect to the contin-

gency enhancement issue, the Second Circuit held that the

“critical inquiry" was "‘whether without the possibility of

a fee enhancement . . . competent counsel might refuse to

represent clients thereby denying them effective access to

the courts."" Pet. App. 37 (quoting Friends of the Earth

v. Eastman Kodak Co., 834 F.2d 295, 298 (2d Cir.

1987)). Applying that standard, the appeals court upheld

the district court’s decision to award a contingency

enhancement. /d.

Respondent subsequently filed motions seeking addi-

tional attorney fees for work performed in the appeals

court and for work performed in the trial court for the

period following October 1989. Burlington did not

respond to either motion.’ The Second Circuit awarded

‘Respondents asserted in their opposition to the petition for

certiorari that Burlington had in some way waived its objection to all

attorney fee awards by failing to respond to the two subsequent fee

requests. Resp. Br. at 22. That assertion is without merit. Burlin

objected to the district court's initial attorney fee award (including a

specific objection to the contingency enhancement) at all appropriate

opportunities before the Second Circuit and this Court, including in its

petition for certiorari. See Pet. at 25-27. Regardless whether

(continued...)

5

appellate fees but declined Respondents’ request for a

contingency enhancement above the lodestar amount, stat

ing, "The ‘risk’ involved in defending an appeal is not

significant and in the circumstances of this case, calls for

no enhancement of the ‘lodestar’ amount." Pet. App. 38

39. The district court's supplemental attorney fee award

covering the period October 1989 to October 1991 in-

cluded a 25% contingency enhancement (amounting to

$6,028.00) based on the court's "previous findings"

regarding the need for enhancement. Pet. App. 137-138.

On November 18, 1991 Burlington filed its petition

for a writ of certiorari, seeking review of all aspects of the

Second Circuit's June 12, 1991 decision. The Court

granted the petition, limited to the question whether the

district court had acted properly in awarding a contingency

enhancement in excess of the lodestar amount.

SUMMARY OF ARGUMENT

The district court based its award of a contingency

enhancement to a significant degree on its finding that

Respondents, at the time they filed suit, faced a substantial

risk of not prevailing. While this Court has been divided

on the issue of whether contingency enhancements should

ever be awarded, it has been unified in holding that the

plaintiff's likelihood of success at the time suit is filed is

irrelevant in determining whether a contingency enhance-

ment is justified. Accordingly, regardless how the Court

ultimately rules regarding the availability of contingency

enhancements, the 25% enhancement awarded in this case

should be overturned because it was based in part on the

Court’s evaluation of Respondent's likelihood of success.

* (...continued)

Burlington has preserved its rights to appeal from subsequent fee

awards, there is no basis for asserting that failure to preserve such

rights constitutes a waiver of the rights that clearly were preserved

6

Moreover, even assuming that the Court rules that

contingency enhancements are appropriate in some excep-

tional circumstances, this case is not one of those

circumstances. Respondents have not even alleged that

their attorney would not have taken the case but for the

prospect of a contingency enhancement; in the absence of

such an allegation, enhancement is never appropriate,

because the sole justification for awarding contingency

enhancements is to ensure that plaintiffs with meritorious

claims are not left without representation. Also, the fact

that Respondents were suing for money damages makes

their case that much more attractive to potential lawyers

and, therefore, that much less likely a candidate for

contingency enhancement.

Finally, although the Court need not reach this issue

in order to rule for Burlington, amici submit that contin-

gency enhancements are never appropriate in suits brought

under federal fee-shifting statutes. The lodestar amount

awarded in such cases should adequately compensate the

plaintiff. Amici submit that the plurality opinion in

Pennsylvania v. Delaware Valley Citizens’ Counsel for

Clean Air [Delaware Valley IT], 483 U.S. 711 (1987), and

of the D.C. Circuit in King v. Palmer, 950 F.2d 771

(D.C. Cir. 1991)(en banc), are persuasive in demonstrat-

ing that contingency enhancements are inappropriate. It

may be that some lawyers will suffer hardship in the

absence of contingency enhancements, but the purpose of

the federal fee-shifting statutes is to ensure the vindication

of the federal-law rights of individuals, not to provide full

employment for lawyers.

—

7

ARGUMENT

I. DELAWARE VALLEY II ESTABLISHED THAT

REGARDLESS WHETHER CONTINGENCY EN-

HANCEMENTS UNDER FEDERAL FEE-SHIFT-

ING STATUTES ARE EVER APPROPRIATE,

THEY SHOULD NEVER BE BASED ON THE

PLAINTIFF’S LIKELIHOOD OF SUCCESS

Any discussion of the award of contingency enhance-

ments to prevailing plaintiffs in cases brought pursuant to

Statutes containing fee-shifting provisions must begin with

the Court’s decision in Pennsylvania v. Delaware Valley

Citizens’ Council for Clean Air [Delaware Valley II], 483

U.S. 711 (1987), the only prior occasion on which the

Court has dealt directly with the contingency enhancement

issue.“ Unfortunately, guidance available from that

decision is extremely limited due to the absence of any

opinion that commanded the support of a majority of the

members of the Court. But the Second Circuit was not

justified in concluding that the splintered nature of

Delaware Valley II gave it license to ignore the decision

altogether; in doing so, the Second Circuit ended up

applying a standard for the award of contingency enhance-

ments that no member of the Delaware Valley II court

would have been willing to accept.

The justices split into three groups in the Delaware

Valley II decision. Five justices (Chief Justice Rehnquist

and Justices O’Connor, Powell, Scalia, and White) held

that the prevailing plaintiffs had failed to establish an

entitlement to attorney fees in excess of the lodestar fee as

compensation for the risk that they would have been

awarded no fees if they had not prevailed (referred io

“While Delaware Valley II involved a federal fee shifting statute

not at issue here (§ 304(d) of the Clean Air Act, 42 U.S.C. §

7604(d)), the Court has said that its standards for determining

"reasonable" fees apply to all federal statutes awarding "reasonable"

attorney fees to a “prevailing party." Hensley v. Eckerhart, 461 U.S.

424, 433 n.7 (1983).

8

herein as a “contingency enhancement"). Four of those

five justices held (in a plurality opinion written by Justice

White) that contingency enhancements are never warranted

under federal fee-shifting statutes because those statutes

provide only for payment of a "reasonable" fee, and the

lodestar fee is a presumptively reasonable fee. Jd. at 727-

28.° The fifth justice (Justice O’Connor) stated that while

in some cases contingency enhancements may be appropri-

ate, the plaintiffs in Delaware Valley II were ineligible for

such enhancements because they failed to show: (1) that

contingency enhancements "were necessary to attract com-

petent counsel in the relevant community"; and (2) that in

the absence of the prospect of a contingency enhancement,

the applicant would have faced "substantial difficulties" in

obtaining counsel. Jd. at 733-34 (O’Connor, J., concur-

ring in part and concurring in the judgment). Justice

O’Connor made clear her belief that contingency enhance-

ments are not to be the norm by concurring in the judg-

ment of the Court that the plaintiffs were not even entitled

to a remand for purposes of establishing their entitlement

to a contingency enhancement under the standards enunci-

ated in Delaware Valley II.

Four dissenters (Justices Blackmun, Brennan,

Marshall, and Stevens) stated that contingency enhance-

ments should be available under some circumstances. The

dissenters would have remanded the case for a redetermi-

nation of any contingency enhancements, to be based

primarily on a determination of the extent to which the

relevant legal market compensated for contingency. Jd.

at 754 (Blackmun, J., dissenting).

All nine justices appear to have been in substantial

agreement on that last point -- that any contingency en-

hancement should focus primarily on market-wide condi-

* Justice White’s plurality opinion went on to state that even if

contingency enhancements were ever appropriate, in no event should

they be awarded except in “exceptional cases" where without

contingency enhancement the plaintiff “would have faced substantial

difficulties in finding counsel." /d. at 728, 731.

9

tions rather than on an individual plaintiff's circumstances.

See id. at 731 (O’Connor, J., concurring in part and con-

curring in the judgment)("I also agree [with the dissent]

that compensation for contingency must be based on the

difference in market treatment of contingency fee cases as

a class, rather than on an assessment of the ‘riskiness’ of

any particular case"); id. at 731 (pluralty opinion)(focus of

risk enhancement determination should be difficulty faced

by "poor clients with good claims" in finding counsel with-

in the local legal market, not “the risk of winning or

losing in a specific case").

The Second Circuit, in choosing to ignore Delaware

Valley II, has adopted a standard that cannot be squared

with any of the three opinions in that case. The Second

Circuit endorsed the district court’s conclusion that a

contingency enhancement was appropriate in this case in

part because "the risk of not prevailing was substantial."

Pet. App. 37. The district court’s reliance on a factor

considered irrelevant by all nine Delaware Valley Il

justices requires reversal. Even if the Court ultimately

decides that contingency enhancement is appropriate in

certain situations, the Court at least should remand the

case with directions that the contingency enhancement

issue be considered anew -- this time without reference to

Respondents’ likelihood of success at the start of the

litigation.

The reasons why a particular plaintiff's likelihood of

success should play no role in the contingency enhance-

ment decision are readily apparent. Perhaps most impor-

tantly, permitting consideration of likelihood of success

would have the perverse effect of giving the strongest

incentives for litigation to those with the weakest claims,

since those with the weakest claims would be able to com-

mand the highest contingency enhancements if they ulti-

mately prevailed. The only justification for such a rule

would be a determination that all those contemplating suit

under a statute with a fee-shifting provision (regardless

whether their claim is strong is weak) should have an

equal opportunity to retain lawyers to press their claims.

10

There is no indication that Congress ever made such a

determination. To the contrary, Congress adopted fee-

shifting statutes to permit the vindication of statutory

rights, not to promote speculation in litigation. Society is

best served by a legal system that facilitates the filing of

highly meritorious claims but that does nothing to encour-

age highly doubtful claims. If clients and their lawyers

wish to bring highly doubtful claims, they ought to be

willing to assume for themselves the risk that they will not

prevail.

Moreover, the issue of whether a contingency

enhancement should be awarded will only arise after a

plaintiff has prevailed. Once counsel and the trial judge

know the outcome of the case, it is highly unlikely that

they can objectively evaluate the plaintiff's chances of

success from the perspective of an attorney first

considering whether to take on the case. See Delaware

Valley II, 483 U.S. at 722 (plurality opinion).

Finally, this Court has long recognized that fee award

disputes should not be permitted to turn into lengthy satel-

lite litigation. See, e.g., Hensley, 461 U.S. at 437. To

permit parties disputing fee awards to litigate the strength

of the plaintiff's case as of the start of the litigation (a

dispute in which, ironically, the roles would be reversed,

each party stressing the weaknesses in his own case) would

be an open invitation to such satellite litigation.

In sum, the Second Circuit erred in upholding a con-

tingency enhancement that was based in substantial part

on the district court’s determination that, at the start of the

litigation, the plaintiff's risk of not prevailing was

substantial. That error requires reversal; at the very least,

Burlington is entitled to a remand for a redetermination of

the contingency enhancement issue undertaken without re-

gard to Respondent's likelihood of success at the start of

the litigation.

11

Il. RESPONDENTS HAVE FAILED TO ESTABLISH

THAT THIS IS ONE OF THOSE RARE CASES

IN WHICH CONTINGENCY ENHANCEMENT IS

APPROPRIATE

Although Delaware Valley I/ indicates that the justices

have been closely divided on the question of whether con-

tingency enhancements are ever permissible, a solid major-

ity of the Court has held that any enhancement of attorney

fees above the lodestar amount is to be the exception

rather than the rule. Thus, in Blum v. Stenson, 465 U.S.

886 (1984), the Court stated that the reasonable number of

hours worked times a reasonable hourly rate (the lodestar

amount) "is presumed to be the reasonable fee contem-

plated" by a federal fee-shifting provision and that only in

a “rare case" will an upward adjustment to that “presump-

tively reasonable fee" be appropriate. Blum, 465 U.S. at

897, 901 n.18. Similarly, in Pennsylvania v. Delaware

Valley Citizens’ Council for Clean Air [Delaware Valley

I}, 478 U.S. 546 (1986), the Court cited the language from

Blum quoted above, stated that there is a "strong presump-

tion" that the lodestar figure is the statutorily prescribed

“reasonable” fee, and concluded, "Although upward adjust-

ments of the lodestar figure are still permissible, . . . such

modifications are proper only in certain ‘rare’ and ‘excep-

tional’ cases, supported by both ‘specific evidence’ on the

record and detailed findings by the lower court." Dela-

ware Valley I, 478 U.S. at 565 (quoting Blum, 465 U.S.

at 898-901). The Court has made clear that the fee appli-

cant “bears the burden of entitlement to an award."

Hensley, 461 U.S. at 437.

Supreme Court decisions issued since Delaware Valley

II employ equally strong language in holding that upward

adjustment of the lodestar figure is to be reserved for rare

and exceptional cases. For example, in Blanchard y.

Bergeron, 109 §S. Ct. 939, 945 (1989), the Court cited

Delaware Valley I for the proposition that there exists a

"strong presumption" that the lodestar figure is the fee to

be awarded under a fee-shifting provision. Nothing in

12

Blanchard suggests that the Court believed that Delaware

Valley II had affected that presumption in any way.

While the aforementioned case law does not absolutely

rule out the award of a contingency enhancement in this

case, it does make clear that Respondents face a monu-

mental task in overcoming the presumption that the

lodestar figure is the fee to be awarded in this case and in

convincing the Court that this is one of those "rare" and

"exceptional" cases in which an upward adjustment of the

lodestar figure is warranted.

The record in this case indicates that the upward

adjustment of Respondents’ fee award was unwarranted.

Delaware Valley I requires that, at a minimum, any

contingency enhancement award be supported by "detailed

findings by the lower court." Delaware Valley I, 478

U.S. at 565. The district court’s conclusion that

Respondents would have faced substantial difficulty in

obtaining counsel of reasonable skill and competence

absent an opportunity for contingency enhancement is not

supported by any “detailed findings," but solely by a vague

reference to “memoranda and affidavits" on file. Pet.

App. 133.

The affidavits submitted by Respondents consisted of

statements by Mr. Pearson and other attorneys to the effect

that no attorney besides Mr. Pearson would have taken

Respondents’ case. But the affidavits no where suggest

that Respondents would have had any difficulty in obtain-

ing counsel absent the availability of contingency enhance-

ments. For example, Mr. Pearson does not state that he

would not have accepted the case but for the a,

for contingency enhancement.’ In the absence of suc

* Mr. Pearson’s affidavit is devoted primarily to establishing his

special skill in handling complex environmental litigation and that he

was one of the few qualified attorneys in Vermont willing to handle

such litigation on an other-than-hourly-rate fee basis. Mr. Pearson's

skills should be reflected in the district court’s lodestar fee

(continued...)

13

evidence, Respondents have not even begun to establish

that this is one of those ‘rare" and “exceptional” cases in

which an upward adjestment of the lodestar amount is

warranted.

Moreover, even if Mr. Pearson had claimed that he

would not have accepted the case but for the opportunity

for contingency enhancement, that type of evidence should

be viewed with an extremely critical eye. As the D.C.

Circuit has explained in declining to accord weight to such

attorney affidavits:

We do not think that we can accept such evidence

as meeting the substantial difficulties test [estab-

lished in Delaware Valley II\. Without in any

way denigrating the bona fides of these lawyers,

we cannot blink the fact that they are obviously

self-interested. We think it is indisputable that if

such evidence were treated as determinative, or

even weighty, the substantial difficulties test

would be so easily met as to become a mere for-

mality. The Supreme Court has itself recently

disparaged such anecdotal evidence from attorneys

unconnected with the case in the context of

attorney's fees disputes. See United States Dep't

of Labor v. Triplett, 494 U.S. 715 (1990)(holding

such evidence to be “blatently insufficient" to

raise a constitutional doubt about federal limits on

attorney's fees, “even if entirely unrebutted").

King v. Palmer, 950 F.2d at 779.

Also, to permit reliance on such attorney affidavits

would be in effect to allow in evidence of the strength or

weakness of the fee applicant's claim at the time of filing

suit, a factor that all nine justices in Delaware Valley II

* (...continued)

determination, but they are irrelevant to the contingency enhancement

issue.

14

said should not be considered in contingency enhancement

determinations. That is so because “surely the principal

reason a lawyer will turn down a case under a fee-shifting

statute” is his/her belief that the case is unlikely to prevail

-- rather than an aversion to taking any non-fee-paying

cases. Id. at 780. Thus, courts should not rely on such

attorney affidavits in making contingency enhancement de-

terminations, because "[i]f the courts cannot. . . directly

{consider the risks undertaken by an individual fee appli-

cant], how can it be appropriate to do so vicariously

through the eyes of lawyers who declined the case?" /d.

Finally, Respondents’ complaint included a claim for

mone dame. There a a little justification for

suantion contingency enhancements in cases, as here, in-

volving significant claims (as opposed to cases

where the only claims are for injunctive relief). Such

cases are particularly attractive to lawyers because any

judgment recovered could be earmarked for the payment of

attorney fees. Any attorney who did not believe that the

prospect of recovering a lodestar fee was sufficient

incentive to take Respondents’ case could have increased

the incentive by entering into a fee agreement with Re-

spondents whereby Respondents would agree to pay as an

attorney fee a percentage of whatever recovery they

received (in addition to whatever fee might be ordered by

the court).

The Supreme Court unanimously held that such con-

tingency agreements are fully enforceable by attorneys,

even = &. the fee award as computed under a contingency

agreement far exceeds any award that the attorney could

have hoped to receive from the court. Venegas Vv.

Mitchell, 110 S. Ct. 1679 (1990). Even before the

’ In Venegas, the district court awarded fees of $117,000 under 42

U.S.C. § 1988. of which $75,000 was attributable to work done

Mitchell, the plaintiff's first lawyer. Mitchell had entered into

contingency fee agreement with the plaintiff calling for Fee

40% of the gross amount of any recovery. ns obtained .

a

of

15

Supreme Court’s decision, the enforceability of such

agreements was not open to serious question; most of the

courts of appeals that had addressed the issue had ruled

that such agreements were fully enforceable. See Venegas

v. Skaggs, 867 F.2d 527 (9th Cir. 1989); Wilmington vy.

JI. Case Co., 793 F.2d 909, 923 (8th Cir. 1986): Sullivan

v. Crown Paper Board Co., 719 F.2d 667, 669-70 (3d

Cir. 1983). Consequently, an attorney reviewing Respond-

ents’ case at the time they were seeking to file suit would

have had more than sufficient financial incentive to agree

to take the case, even in the absence of the prospect of

contingency enhancements.

In sum, regardless whether contingency enhancements

are ever properly awardable in cases brought under federal

statutes with fee-shifting provisions, this case clearly is not

one of those “rare” and “exceptional” cases that are the

only conceivable candidates for the award of contingency

enhancements. There simply is no evidence” that Respond.

ents would not have been able to find competent counsel

but for the prospect that a contingency enhancement could

be recovered.

Il. CONTINGENCY ENHANCEMENTS ARE NEVER

APPROPRIATE UNDER FEDERAL FEE-SHIFT-

ING STATUTE”

In light of the Court's inability to speak with a clear

voice in Delaware Valley II regarding the availability of

” (...continued)

judgment in his favor of $2.08 million. The Supreme Court held that

Mitchell was entitled to full enforcement of the contingency fee

agreement, even though the fee due under that agreement was many

times the "reasonable" fee awarded pursuant to 42 U.S.C. § 1988 by

the district court to the plaintiff for work performed by Mitchell. /d.,

110 S. Ct. at 1682-84.

* Other than the evidence that R ’ risk of not prevailing

was substantial at the time suit was filed; as noted above, Delaware

Valley Il makes clear that such evidence may not properly be

considered.

16

contingency enhancements under federal fee-shifting sta-

tutes, the courts of appeals have had to fend for them-

selves in resolving that issue. Not surprisingly, they have

reached conflicting results.

A few circuits, such as the Second Circuit in this case,

have been relatively liberal in the award of contingency

enhancements and by and have left such decisions to

the sound discretion of the district courts. Such circuits

have routinely approved contingency enhancements of as

much as 100% of the lodestar amount. See, é.g.,

Bernardi v. Yeutter, 942 F.2d 562, 565-66 (9th Cir. 1991).

Other circuits have recognized the possibility that

contingency enhancements could be awarded under

pone moe | circumstances but have established sufficiently

high barriers to such awards that in practice contingenc

enhancements are almost never awarded. See, e.g., Smit

v. Freeman, 921 F.2d 1120, 1123 (10th Cir. 1990); Craig

v. Secretary, Dep’t of Health and Human Servs. , 864 F.2d

324, 327 (4th Cir. 1989); Leroy v. City of Houston, 831

F.2d 576, 583 (Sth Cir. 1987). The D.C. Circuit has

joined the Delaware Valley II plurality in finding that

contingency enhancements are never available. King v.

Palmer, 950 F.2d 771 (D.C. Cir. 1991)(en banc).

Amici submit that the D.C. Circuit decided the issue

correctly. Amici subscribe fully to that court’s well-

reasoned decision and thus will not repeat each of the

court’s arguments here. Nonetheless, WLF wishes to

stress several points.

First, as a practical matter there is no middle ground

beiween routinely awarding contingency enhancements or

not awarding them at all. aed Ses Cae es 8

icular market requires contingency

Coun ae plaintiffs to obtain adequate legal

representation, then every attorney in that market will be

entitled to upward adjustments from the lodestar amount.

Judicial resources are simply too scarce to permit the issue

of whether a particular legal market requires contingenc

enhancements to be relitigated every time a plaint

17

prevails in a suit brought under a fee-shifting statute.

Given a choice between always awarding enhancements or

never doing so, this Court's prior pronouncements that the

lodestar fee is a presumptively reasonable fee and that it

should be adjusted upward only in “rare” and “excep-

tional” cases suggests that the Court opt for never

awarding contingency enhancements.

Second, the only type of evidence readily available to

attorneys seeking contingency enhancement has been affi-

davits from other lawyers stating that they do not take

cases on a non-fee-paying basis or that they would not

have taken the plaintiff's case without any prospect of

contingency enhancements. As noted above, the essen-

tially self-serving nature of all such affidavits, plus the fact

that they ask attorneys to speculate what they would have

done under h ical circumstances long since past,

deprive such affidavits of virtually all of their evidentiary

value. Moreover, such evidence inevitable requires district

courts to delve into the strength of the plaintiff's case at

the time the complaint was filed, an inquiry that all nine

Delaware Valley II justices condemned. Accordingly,

rather than —s district courts to continue to under-

take these types of factual inquiries, the Court should

— declare that contingency enhancements are never

aval '

Third, once one accepts the propriety of contingency

enhancements, there is no limiting principle that would

place a cap on the level of permissible enhancements. It

is undoubtedly true that the higher the level of permissible

i y enhancements, the stronger will be the en-

forcement of the civil rights and environmental laws that

contain fee-shifting provisions. If 100% contingency

enhancement leads to strong enforcement of the civil

rights/environmental laws, then surely 200% contingency

enhancement would lead to even stronger enforcement, and

1000 % i y enhancement would result in a plain-

tiffs civil ri environmental law attorney opening up

is akrcady sol block. Amici believe that American society

is suffering from an overabundance of lawyers and

litigation. Given the degree to- which the business

18

community is being overburdened by the costs of defend-

ing nonmeritorious civil rights and enviromental law

complaints,” the last thing we need to be doing is thinking

up ways to encourage more lawyers to get involved in

bringing civil rights/environmental lawsuits, at least in the

absence of evidence that significant numbers of plaintiffs

with meritorious claims have been unable to retain legal

counsel.

Finally, the Court should not lose sight of the fact that

the federal fee-shifting statutes are intended to assist

private citizens in asserting their rights, not to provide a

full-employment scheme for lawyers. Much of the focus

of those who support contingency enhancements has been

on why it is uneconomical for lawyers to take civil rights

and environmental cases on other than an hourly-fee basis.

Amici respectfully suggest that those who focus on the

plight of attorneys trying to make a go of a civil rights or

environmental law practice are focusing on the wrong

parties. If one focuses instead on those wishing to assert

claims, it becomes immediately apparent that there is no

shortage of lawyers willing to take their cases on a non-

fee-paying basis -- how else can one explain the large

number of fee award disputes now flooding the federal

courts? Whether lawyers take such cases because they

wish to provide a money-losing public service, or because

they have not yet figured out what the American Bar

Association keeps trying to tell them (that one cannot make

a go of a civil rights or environmental law practice in the

absence of contingency enhancements), or because (just

maybe) they would not have available sufficient fee-paying

” For example, one indication that a claim filed under Title VII of

the Civil Rights Act of 1964 may have merit is a finding by the Equal

Employment Opportunity Commission that there is cause to

believe that a Title VII violation has occurred. The makes such

a finding in only a small fraction of its investigations. In its fiscal

year 1989, the EEOC determined the merits of 66,209 c that had

been filed with it, and found merit in only 11,516 (16.8%) of those

charges. Office of Program Operations, EEOC, Annual Report for

Fiscal Year 1989, at B2.

19

business to keep themselves fully occupied if they stopped

taking civil rights and environmental law cases, the fact

remains that many very competent lawyers regularly take

such cases on a non-fee-paying basis.

In sum, the federal fee-shifting statutes provide for the

award of "reasonable" attorney fees to prevailing parties,

and there is no valid reason for concluding that award of

the lodestar amount does not provide a "reasonable" fee,

even in cases where the plaintiff's attorney has assumed

the risk of non-recovery of fees in the event that his client

does not prevail.

CONCLUSION

For all the foregoing reasons, amici curiae

Washington Legal Foundation and Allied Educational

Foundation respectfully request that the Court reverse that

portion of the decision of the United States Court of

Appeals for the Second Circuit that affirmed the award to

Respondents of a 25% contingency enhancement to their

lodestar fee award.

Respectfully submitted,

Daniel J. Popeo

Richard A. Samp

(Counsel of Record)

WASHINGTON LEGAL

FOUNDATION

1705 N Street, N.W.

Washington, DC 20036

(202) 857-0240

Counsel for amici

March 12, 1992