Amicus Curiae Brief — Buckhannon Board & Care Home, Inc. v. West Virginia Dept. of Health and Human Resources

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No. 99-1848

IN THE SUPREME COURT

OF THE UNITEDSTATES

BLCKHANNON BOARD AND CARE HOME,

INC... ET AL., PETITIONERS

WEST VIRGINIA DEPARTMENT OF

HEALTH AND HUMAN RESOURCES, ET AL..

RESPONDENTS

VRIT ¢ CERTIORAR:

’ Y STATES COURT ¢ {P

)R YURTH CIR

BRIEF FOR THE ALLIANCE OF

ALTOMOBILE MANUFACTURERS, INC.

AMICUS CURLAE SUPPORTING RESPONDENTS

CHARLES A. NEWMAN

Counsel of Record

KATHY A. WISNIEWSKI

JEROME H. BLOCK

Brvan Cave LLP

One Metre politan Square

Suite 3600

St. Louis, Missourt 63102

(314) 259-2000

EST AVAILABLE COPY

QUESTION PRESENTED

Whether, under a federal fee-shifting statute, attorneys’

fees are recoverable when the plaintiff's claims did not result

in a judgment, settlement, or consent decree?

TABLE OF CONTENTS

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SPOR MERU GE BEB ALLIANCE 200000cccccccccsscssccsscsscsssces l

PRB MET GI BEMIS CABG occcscccecccsrcssccsscesscsscesoscesees 5

INTRODUCTION AND SUMMARY OF

Er 6

a 8

I. ITIS PROBLEMATIC TO ALLOW FEES

WITHOUT A JUDGMENT, CONSENT

om | | Me Fg) B | :, ) Seen 9

Il. EVEN IF UPHELD UNDER THE FHAA

AND THE ADA, THE “CATALYST”

THEORY DOES NOT APPLY UNDER

ALL FEE-SHIFTING STATUTES. ..............c000c00000 17

Ill. “CATALYST” FEES SHOULD BE

ALLOWED ONLY UNDER SPECIFIC

ill

TABLE OF AUTHORITIES

FEDERAL CASES

Aetna Casualty and Surety Co. v. Liebowitz,

ee ee cntenitsniineneniitiniinmnanniiiitsiinn 18

Alyeska Pipeline Service Co. v.

Wilderness Society,

gee 4

Baumgartner v. Harrisburg Housing Authority,

Se Ny CI, CI rciesniciniiitiatcnasininintiariateadaieen 20

Brown v. Brotherhood of Electrical Workers,

Se Ce ee: Ce cirtarccenertmintcrimnenintnniaiit 21

Chin v. Chrysler Corp.,

182 F.R.D. 448 (D.N.J. 1998)... 10, 11, 15, 26

Chin v. Chrysler Corp.,

Civ. No. 95-5569-JCL (December 15, 1999)

ieunineinantinemuninnanaianatans 3, 10, 11, 12, 13, 15, 16, 19, 20, 26

Christiansburg Garment Co. v. Equal

Employment Opportunity Commission,

Re NIT 2

Commissioners Court of Medina County v.

United States,

a ee ies Gi Be certccresretsertemennemnnitin 22

Davis v. Carl Cannon Chevrolet-Olds, Inc.,

FG Re 5,7

Farrar v. Hobby,

SS eee reere 9,12, 16

Fogerty v. Fantasy, Inc.,

8 ee 17, 18

Folsom v. Heartland Bank.

No. Civ. A. 98-2308,

2000 WL 718345 (D.Kan.2000) .......0.00... etal. 19

Foreman v. Dallas County,

kp ee 25

Freightliner Corp. v. Myrick,

ee iasictininicnincerinnsiieniiipiiialtaieastinlegiialnigitate 26

In re General Motors Corp. Pickup Truck Fuel Tank

Products Liability Litigation,

46 F.Supp. 330 (E.D.Pa. 1993),

vacated on other grounds, 55 F.3d 768

all eS a ED Re ee 2

Hall v. Cole,

eer eee 21

Harris Trust and Savings Bank v.

Salomon Smith Barney Inc.,

- U.S. -- 120 S. Ct. 2180 (2000)... eee eeeeeeees 17

Hensley v. Eckerhart,

EL a a 13

Klamath Siskiyou Wildlands Center v. Babbitt,

105 F. Supp. 2d 1132 (D.Or.2000).0..000.0occcccccecceeeeeee. 18

Langton v. Johnston,

928 F.2d 1206 (Ist Cir. 1991) oo... cece ccccceseeseceseeees 24

Marek v. Chesney,

| a 8

Morris v. City of West Palm Beach,

194 F.3d 1203 (11th Cir. 1999)... 22, 25, 26

Nadeau v. Helgemoe,

381 F.2d 275 (ist Cir. 1978) oo... cccecccceecececceeeeseees 25

Owner-Operator Independent Drivers

Association, Inc. v. Bissell,

Pe 25

S-1 v. State Board of Education of

North Carolina,

6 F.3d 160 (4th Cir.1993),

rev'd, 21 F.2d 49 (4th Cir. 1994)... 12, 14

Schwartz v. Folloder,

4, » |) enainncencinagiaisinnmmnbvesitintiininsiaiiaisiia 16

Stomper v. Amalgamated Transit

Union, Local 241,

27 F.3d 316 (7th Cir.1994) 0... cccccececceeeeeeeeeeees 18, 21

Walsh v. Ford Motor Co..,

130 F.R.D. 260, 267 (D.D.C. 1990)... 2,12

Wisnewski v. Champion Healthcare Corp.,

No. Civ. A3-96-72,

2000 WL 1474414 (D.N.D. 2000) ..000.. oe. 20, 21

Wood v. General Motors Corp.,

865 F.2d 395 (1st Cir. 1988),

cert denied, 494 U.S. 1065 (1990). 0000. ]

FEDERAL STATUTES AND RULES

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15 U.S.C. § 1640(a)(3)........... iccmecenenceiniadieshiisaammesiiiibeiiiiead 19

BD WR © ie OF BID ccceccccncencesrecsnccsensecensccmeuens 4.10, 19

15 U.S.C. § 2310(d)(2)............. inatsinleentmaiall 8, 11, 19, 20

tee Ob NI iiscistsiterisicieinittieinasncesiinctionesaintniinl 19

ag iicareerisnicihtiissniitietinitninninialiaeitiaaeatat ail 20

Se a TIT sthiciinssenesensnniantnsiinnatiicineenenmmsesciiitticatimesiill 8, 20

TT 21

Ee 8, 16, 17, 18, 19, 20, 21

ne 5,6

vill

42 UBL. § UZBRD -00000.0000000000 memmventicienibagitnntunegnesanensscantint 5,6

ie ls Oe I hncictensccmsecittiisiteinnccvensecsenesstnctames l

BUS. & SOUT «2000000000000. anere sdaeaneiibiiaiaieaitnete imninen 2

GOL TEE.. 0 FIG OD cicnccccescccnessimmmcsttibitestenidemmmunnniemenabiciennee 2

49 U.S.C. § 30118(a)....... vosissesehapieinatiinaeamasienmceinillitidinsiiits 3

49 U.S.C. § 30118(b) .............. mepeentangennctneibniantas 3, 26

AUS... § FOU LRE).......2..ccrnceecenveee pnamamnennainupnestasiontai 3

49 U.S.C. § 30120(a)(1 (A) .......... eee ssenupitnenninidiibineanein 2

ee cerccnnnenscrcanmncssettancenimndl peecinneampptenmeness 16

——— eee _-

MISCELLANEOUS

Black's Law Dictionary (West 7th ed. 1999) ..0.........ccccc00e 24

Hearing of the Courts and Intellectual Property

Subcommittee of the House Judiciary Committee;

Subject: Mass Torts and Class Action Lawsuits,

statement of Richard Thornburgh, former

Governor of Pennsylvania, Attorney General

of the United States, and Under Secretary of

the United Nations (March 9, 1998) ..0.........:cccccccceeeeeees 7

10 J.W. Moore, Moore's Federal Practice,

§ 54.101[3], 54-158 (3d ed. 2000) 0.0.0... ecceccceeeeeeeees 16

Rand Institute for Civil Justice, Class Action

Dilemnas: Pursuing Public Goals for Private

Gain Executive Summary 9 (1999) .........cccccccccceceveevoeeves 5

INTEREST OF THE ALLIANCE”

The Alliance of Automobile Manufacturers, Inc. (“the

Alliance”)” is a non-profit, national, trade association

committed to improving motor vehicle safety. It serves as a

leading advocacy group for the automobile industry on

public policy matters. The members of the Alliance are

subject to the Motor Vehicle Safety Act, 49 U.S.C. § 30101,

et seq., (“the Act”), which authorizes the Secretary of

Transportation to commence proceedings related to alleged

motor vehicle defects.” The Act’s sweeping provisions vest

jurisdiction in the Secretary over all safety-related defects.

“Letters from the parties consenting to the filing of this brief have

been lodged with the Clerk of this Court pursuant to Rule 37.3. In

compliance with Rule 37.6, the Alliance of Automobile Manufacturers,

Inc. states that no counsel for a party has authored this brief in whole or

in part, and that no person or entity other than the Alliance of

Automobile Manufacturers, Inc. and its counsel has made a monetary

contribution to the preparation of this brief.

>The members of the Alliance manufacture and sell motor vehicles:

BMW Group; DaimlerChrysler Corporation; Fiat Auto S.P.A.; Ford

Motor Company; General Motors Corporation; Isuzu Motors America,

Inc.; Mazda North American Operations; Mitsubishi Motor Sales of

America, Inc.; Nissan North America, Inc.; Porsche Cars North America,

Inc.; Toyota Motor North America, Inc.; Volkswagen of America, Inc.;

and Volvo Cars of North America, Inc.

The National Traffic and Motor Vehicle Safety Act, recodified as

the Motor Vehicle Safety Act, was passed by Congress in 1966 in

response to the “soaring rate of death and debilitation on the Nation’s

highways.” S.Rep. No. 1301, 89th Cong., 2d Sess. I, reprinted in 1966

U.S.C.C.A.N. 2709. The Act reflects Congress’s “intention that the

primary responsibility for setting standards regulating the national

automobile manufacturing industry rested upon the federal government,

not the states.” Wood v. General Motors Corp., 865 F.2d 395, 397 (lst

Cir. 1988), cert denied, 494 U.S. 1065 (1990).

49 U.S.C. §30111. The Act authorizes the Secretary to

investigate and to determine whether any motor vehicle

contains a defect, and, if it does, to require the manufacturer

to “remedy such defect” by repairing the vehicle, replacing

the vehicle, or refunding, less depreciation, the purchase

price of the vehicle. 49 U.S.C. §§ 30118, 30120(a)(1)(A).

The Secretary has delegated authority to effectuate the Act to

the National Highway Traffic Safety Administration

(“NHTSA”). 49 C.F.R. §§ 501.1, 501.2. NHTSA has the

exclusive authority to enforce motor vehicle safety standards,

to investigate possible safety-related defects, and to make >

non-compliance and defect determinations.“ 49 C.F.R.

§ 554.1.

Because of NHTSA’s expertise in motor vehicle safety

issues, courts considering civil claims alleging motor vehicle

defects have invoked the doctrine of primary jurisdiction and

deferred to that agency’s expertise. See, e.g., Walsh v. Ford

Motor Co., 130 F.R.D. 260, 267 (D.D.C. 1990) (indicating

that courts should “avoid entanglement with a regulatory

scheme designed and intended to empower principally the

Department of Transportation, rather than the courts, to order

and oversee motor vehicle recalls”); Jn re General Motors

Corp. Pickup Truck Fuel Tank Products Liability Litigation,

846 F.Supp. 330, 343-44 (E.D.Pa. 1993), vacated on other

grounds, 55 F.3d 768 (3d Cir. 1995) (court refused to issue

“While NHTSA is the “chosen instrument” for investigating and

remedying vehicle defects, a civil plaintiff is “the chosen instrument of

Congress” to enforce civil rights statutes. Christiansburg Garment Co. v.

Equal Employment Opportunity Commission, 434 U.S. 412, 418 (1978).

This distinction, in and of itself, clearly counsels against a uniform

interpretation of all federal fee-shifting statutes to allow for “catalyst”

fees.

1 ae

injunctive relief ordering manufacturer to recall vehicles

because “NHTSA, rather than the court, provides the more

appropriate forum for any possible recall/retrofit remedy”).

Even absent any court involvement, however, vehicle

manufacturers are required to cooperate fully with NHTSA’s

Office of Defect Investigation (“ODI”), which is responsible

for conducting investigations concerning the “identification

and correction of safety-related defects in motor vehicles.”

49 C.F.R. § 554.5.

The ODI’s investigations are public. First, the

information compiled by the ODI can be easily accessed by

the public at NHTSA’s Internet site (www.nhtsa.dot.gov),

which contains an “Investigations Database.” Second, if the

ODI makes an “initial decision” that a safety-related defect

exists, it must publish notice of its determination in the

federal register. 49 U.S.C. § 30118(a); 49 C.F.R. § 554.10.

Third, if the vehicle manufacturer contests the ODI’S initial

decision, the matter proceeds to a public hearing which may

result in NHTSA’s final determination and an order for a

recall, if warranted.” 49 U.S.C. § 30118(b); 49 C.F.R.

§ 554.11.

Although a private party (or that party’s counsel) can

petition NHTSA to commence a vehicle safety investigation

and seek a recall, 49 C.F.R. § 552.3, few do. Rather, the

publication of NHTSA’s actions is often the starting gun for

the race to the courthouse and the ensuing jockeying for lead

plaintiffs’ counsel status. For example, in Chin v. Chrysler

Corp., Civil Action No. 95-5569-JCL (D.N.J.) -- a

“At any time during this process, a manufacturer may elect to

initiate a voluntary recall. 49 U.S.C. § 30118(c).

nationwide putative class action alleging a motor vehicle

defect -- plaintiffs’ counsel are presently pursuing an award

of “catalyst” attorneys’ fees® under the Magnuson-Moss

Warranty Act, 15 U.S.C. § 2301, et seg., based on a theory

that they were the “catalyst” to the defendant’s voluntary

recall of the allegedly defective vehicle. The claim for

“catalyst” fees is being pursued although: (1)a NHTSA

investigation predated the civil action; (2) Chrysler

announced and completed a voluntary recall of the affected

vehicles; (3) plaintiffs’ unsuccessfully sought an injunction

to prevent the voluntary recall (although their complaint

suught a recall); (4) some claims were dismissed by motion;

(5) the court denied class certification; (6) the plaintiffs

dismissed their remaining individual claims; and (7) the vast

majority of the relief sought was never granted or

accomplished.

This type of scenario is repeated all-too-often and aided

substantially by the courts of appeal, (except for the Fourth

Circuit). These judicially-enabled practices assault the

“American Rule” -- a fundamental hallmark of our

jurisprudence on attorney’s fees -- which mandates that even

a “prevailing litigant” not “collect a reasonable attorneys’ fee

from the loser” in the absence of a statute authorizing such

an award. Alyeska Pipeline Service Co. v. Wilderness

Society, 421 U.S. 240, 247 (1975).

“As used herein, the “catalyst” theory and “catalyst” fees refer to

attorneys’ fees sought by plaintiffs’ counsel when there has been neither

a settlement of the case, nor a judgment or a consent decree entered on

the merits of the plaintiff's claims.

The members of the Alliance seek to preserve their

freedom to make decisions regarding the safety and

satisfaction of their customers, without fear that they will

incur “penalties” in the form of paying enormous “catalyst”

attorneys’ fees to attorneys who file strategically-timed

lawsuits. Although this case directly involves only the

attorneys’ fee provisions of the Fair Housing Amendments

Act and the Americans with Disabilities Act, 42 U.S.C.

§ 12205; 42 U.S.C. § 3613(c)(2), this case is important to the

Alliance and its members who are all-too-often targets of

catalyst claims under other federal fee-shifting statutes.

Members of the Alliance face a mounting volume of class

actions asserting that vehicles are defective, and seeking

damages for “diminution in value,” class certification and, of

course, attorneys’ fees. The “fuel” for these vehicle cases,

despite the regulatory schema, is the expectation of class

counsel that they can obtain a large award of “catalyst” fees.

Indeed, the economic self-interest of many plaintiffs’ counsel

has been judicially noticed, Davis v. Carl Cannon Chevrolet-

Olds, Inc., 182 F.3d 792, 796 (11th Cir. 1999), and is

especially pronounced in consumer class actions that are

often “virtual-plaintiff’ cases and attorney-driven. See Rand

Institute for Civil Justice, Class Action Dilemnas: Pursuing

Public Goals for Private Gain Executive Summary 9 (1999)

(“When class action lawsuits are successful, they may yield

enormous fees for attorneys... So, attorneys have

substantial incentives to seek out opportunities for litigation,

rather than waiting for clients to come to them”’).

STATEMENT OF THE CASE

After Petitioners (residents in a private care facility)

filed a lawsuit challenging the validity of specified state

statutes relating to residential care facilities, the State of

West Virginia amended the laws to delete the offending

provisions. The State then sought an involuntary dismissal

of Petitioners’ claims on the ground that they were moot.

The attorneys for Petitioners then requested that the

court enter an award of “catalyst” fees. Petitioners sought

the fees under the fee-shifting provisions of the Fair Housing

Amendments Act (“FHAA”) and the Americans with

Disabilities Act (“ADA”), both of which provide for an

attorney fee award to a “prevailing party.” 42 U.S.C.

§ 12205; 42 U.S.C. § 3613(c)(2). Petitioners argued that

they “prevailed” in the litigation (even without a judgment,

consent decree, or settlement) because, through the

defendants’ voluntary action, they obtained “all” of the relief

they sought in their complaint.

The district court granted the defendants’ motion to

dismiss, finding that the Petitioners’ claims were moot. The

district court then denied Petitioners’ request for attorneys’

fees holding that a party who does not obtain relief through a

formal judgment, consent decree, or settlement cannot be a

“prevailing party” under the FHAA or the ADA. The Fourth

Circuit Court of Appeals affirmed the district court’s order

on the attorneys’ fee issue.

INTRODUCTION

AND SUMMARY OF THE ARGUMENT

Allowing the recovery of “catalyst” fees in product

liability cases -- in the absence of any formal judgment,

consent decree, or settlement -- is fraught with mischief.

And the problems inherent in allowing an award of “catalyst”

<= SEES se

fees are exponentially greater in class-actions which are often

nothing more than an “entrepreneurial” venture “created” to

secure attorneys’ fees. See, e.g., Davis v. Carl Cannon

Chevrolet-Olds, Inc., 182 F.3d 792, 796 (11th Cir. 1999)

(noting that plaintiff class action lawyers are merely

““entrepreneurs’ who take a case in the expectation of

making money from it”); Hearing of the Courts and

Intellectual Property Subcommittee of the House Judiciary

Committee; Subject: Mass Torts and Class Action Lawsuits,

statement of Richard Thornburgh, former Governor of

Pennsylvania, Attorney General of the United States, and

Under Secretary of the United Nations (March 9, 1998)

(commenting that lawyers “have lately perverted the class

action device into their own personal litigation lottery’).

Would-be class counsel -- knowing that attorneys’ fees are

available under a “catalyst” theory even if they do not

shepherd the litigation to a final conclusion -- are motivated

to “create” lawsuits regarding matters that could be

addressed without litigation, and to abandon those lawsuits

when the time is most ripe for their own personal

profitability. And, it is net unheard of for a majority of the

fees sought by those attorneys (and thus the court’s

expenditure of resources) to be attributable to the actual

pursuit of fees, rather than to the resolution of the claims

made in the complaint. These persistent and all-too-common

problems cry out for abolishment of any “catalyst” theory

that would allow the recovery of attorneys’ fees without a

judgmenit, consent decree, or settlement.

If any “catalyst” theory is recognized that allows for the

recovery of attorneys’ fees in the absence of a judgment,

settlement, or consent decree, it should be based only on a

statute-by-statute analysis. A broad pronouncement could

render all of the more than 100 fee-shifting statutes found in

federal law susceptible to such a “catalyst” theory. See

Marek v. Chesney, 473 U.S. 1, 43-51 (1985). Some of the

federal fee-shifting statutes contain language distinct from

that found in statutes such as the FHAA and the ADA, and

expressly provide that, in order to be entitled to an award of

attorneys’ fees, a party must first obtain an enforceable

“judgment”. See, e.g., 15 U.S.C. § 2310(d)(2); 29 U.S.C.

§ 216(b). Neither Congress, nor the statutes, contemplated

an award of attorneys’ fees without a judgment, consent

decree, or settlement.

Finally, a “catalyst” theory for recovery of attorneys’

fees should be recognized, if at all, only when specific,

stringent standards are met. A plaintiff who seeks such fees

should be required to show that the defendant’s voluntary

acts have rendered the plaintiffs claims moot in their

entirety, that the defendant would not have acted “but for”

the plaintiffs filing of his lawsuit, and that the relief

provided by the defendant would have been “required by

law” if the plaintiff succeeded on his claims.

ARGUMENT

Virtually every federal fee-shifting provision requires

that a plaintiff “prevail” in order to be entitled to an award of

attorneys’ fees. See, e.g., 42 U.S.C. § 1988 (“the court, in its

discretion, may allow the prevailing party ... a reasonable

attorney’s fee’ (emphasis added)); 15 U.S.C. § 2310(d)(2)

(“[{i]f a consumer finally prevails in any action . . . he may be

allowed by the court to recover as part of the judgment” his

reasonable attorneys’ fees (emphasis added)). And, this

Court has made a clear and unequivocal pronouncement as to

when a plaintiff can claim to have “prevailed” in a case:

[T]o qualify as a prevailing party, a civil rights

plaintiff must obtain at least some relief on the

merits of his claim. The plaintiff must obtain an

enforceable judgment against the defendant from

whom fees are sought, or comparable relief

through a consent decree or settlement. Whatever

relief the plaintiff secures must directly benefit him

at the time of the judgment or settlement.

Farrar v. Hobby, 506 U.S. 103, 111 (1992) (citations

omitted) (emphasis added).

Farrar precludes the notion that a plaintiff can be

deemed to have “prevailed” without a judgment, settlement,

or consent decree. Jd It would be an unwarranted and

unreasonable extension of Farrar to sanction an award of

fees without any of the prerequisites pronounced by this

Court. All the more so, since most fee-shifting provisions

are operative, either by their terms or interpretively, only in

favor of a “prevailing party” which this Court has defined as

including only those who obtain a judgment, settlement, or

consent decree. Indeed, awarding attorneys’ fees without a

judgment, settlement, or consent decree is an invitation to

federalize and prolong every case which can possibly be pled

under any of the more-than-100 fee-shifting statutes.

I. IT IS PROBLEMATIC TO ALLOW FEES

WITHOUT A JUDGMENT, CONSENT DECREE,

OR SETTLEMENT.

Both Petitioners and their amici argue that an award of

attorneys’ fees under a “catalyst” theory should be

recognized if a plaintiff merely “achieves” “some relief” and

benefits from that relief, regardless of how the case at issue

is disposed of. This boundless proposition is unworthy of

adoption.

The many problems inherent in awarding “catalyst” fees

are illustrated by the case of Chin v. Chrysler Corp., Civil

Action No. 95-5569-JCL (D.N.J.). In Chin, the sole

remaining issue of “catalyst” fees has been before the court

for more than one year.” Filed as a putative nationwide class

action on October 27, 1995, the Chin complaint alleged that

certain Chrysler* vehicles equipped with a Bendix 9 or 10

antilock braking system were “dangerously defective.” Chin

"The Chin case is one of several “catalyst” cases currently pending

against members of the Alliance. It is discussed at length herein because

it best highlights most of the problems inherent in a “catalyst” theory

which would allow for the recovery of attorneys’ fees even in the

absence of a judgment, settlement, or consent decree. The court in Chin

has already held that the “catalyst” theory is applicable to that case. Chin

v. Chrysler Corp., Civ. No. 95-5569-JCL (December 15, 1999) (The

Chin opinion regarding the “catalyst” issue is unpublished, and is thus

attached in the appendix hereto). The parties have continued to litigate

whether the plaintiffs’ claims were a “substantial cause” of the

defendant's alleged “voluntary” conduct.

“Chrysler Corporation is now known as DaimlerChrysler

Corporation and is one of the thirteen automobile manufacturers

Tepresented by the Alliance.

v. Chrysler Corp., 182 F.R.D. 448, 451 (D.NJ. 1998).

Plaintiffs’ claims included, inter alia, breach of warranty

under the Magnuson-Moss Warranty Act, 15 U.S.C. § 2301,

et seq., which contains a “fee-shifting” provision (i.e., a

consumer who “finally prevails” can recover attorneys’ fees

“as part of the judgment”). 15 U.S.C. § 2310(d)(2).

The filing of the Chin case came only after NHTSA had

initiated an inquiry and investigation into the Bendix 10

antilock braking system.” Chin, 182 F.R.D. at 451-52. After

the filing of Chin, Chrysler, with the oversight of NHTSA,

announced that it would voluntarily recall all vehicles

equipped with Bendix 9 and 10 antilock braking systems.'®

Id. The final voluntary recall (involving the Bendix 9

system) was announced in October, 1996. Jd., at 452.

Despite Chrysler’s voluntary recalls, and NHTSA’s

oversight of them, the plaintiffs in Chin continued to

prosecute their claims for two more years. 182 F.R.D. 448.

The plaintiffs’ counsel moved the court to certify a

nationwide class of owners of Chrysler-manufactured

vehicles equipped with the subject antilock braking systems.

Id. It was only after the court denied the plaintiffs’ request

for certification that the plaintiffs’ counsel decided to

abandon all of their clients’ claims, assert “victory” based on

the recalls, and seek attorneys’ fees under the “catalyst”

*NHTSA’s inquiry and investigation into the Bendix 9 antilock

braking system was not instituted until after the filing of Chin.

‘The plaintiffs’ counsel in Chin sought an injunction to preclude

the voluntary recall, but the court denied their motion.

theory. Chin v. Chrysler Corp., Civ. No. 95-5569-JCL

(December 15, 1999) (Appendix A).

Chin is illustrative of at least four problems inherent in

awarding “catalyst” fees absent a judgment, settlement, or

consent decree: (1) the proliferation of litigation; (2) the

prolonging of litigation; (3) the discouraging of voluntary

corrective action; and (4) the lack of objective standards

leading to inconsistent results.

Proliferation of litigation. Recognition of the “catalyst”

theory would further encourage the immediate initiation of a

lawsuit whenever a lawyer learns of a pending investigation

by NHTSA or a voluntary investigation by a manufacturer.

It would discourage lawyers -- and the consumers they

purport to represent -- from seeking, or waiting for, a

satisfactory outcome without litigation. As such, it frustrates

the regulatory scheme enacted by Congress which entrusts

NHTSA with primary jurisdiction for investigating and

remedying alleged vehicle defects. See, e.g., Walsh, 130

F.R.D. at 267. A lawyer knows that running to the

courthouse before a regulatory resolution is achieved will

provide a basis upon which he can claim “victory.” Witness

Chin: an inquiry was started by NHTSA into an automotive

defect; before the NHTSA investigation was completed and

before NHTSA and Chrysler came to a resolution, a lawsuit

was filed; plaintiff's counsel, after successive strategic

failures, then claimed “victory” based on that recall, and

sought fees arguing that they obtained “some relief” (even

though that relief occurred in the context of the pending

NHTSA investigation). See also See S-1 v. State Board of

Education of North Carolina, 6 F.3d 160, 172 (4th Cir.

1993), rev'd, 21 F.2d 49 (4th Cir. 1994) (Wilkinson, J.

-_ ~

dissenting) (noting that the “catalyst theory provides

incentives for filing marginal, even frivolous, lawsuits. Any

change in conduct by the defendant, for whatever reason,

may offer a promising payout to attorneys who file a

complaint, whether or not that complaint has any ultimate

legal merit’”’).

Prolonging of litigation. The issues as to the propriety

of an award of “catalyst” fees can survive long after the

plaintiff's claims have been resolved. Courts become

enmeshed in the quagmire of developing and reviewing a

factual record to decide: whether the voluntary relief

provided by the defendant is the equivalent of “some” of the

relief originally sought by the plaintiff; whether the plaintiff

benefited from that relief; whether the plaintiff's filing of a

lawsuit was the cause of the defendant’s voluntary action;

and what amount of attorneys’ fees is reasonable. These

issues make for a case-within-a-case, and consume more

judicial resources than were spent on the substantive issues

of the plaintiff's claims -- a result that runs counter to this

Court’s prior admonishment that “[a] request for attorney’s

fees should not result in a second major litigation.” Hensley

v. Eckerhart, 461 U.S. 424, 437 (1983). This case is a prime

example. Although it has been pending for more than four

years, it is undisputed that the Petitioners’ claims became

moot seventeen months into the litigation; the last two years

and six months (and still counting) have focused solely on

Petitioners’ counsel’s claim to attorneys’ fees under a

“catalyst” theory. More time has been spent on the

“catalyst” issue than on the substantive claims underlying the

litigation. See also Chin, Civ. No. 95-5569-JCL (December

15, 1999) (Appendix) (unresolved issue of “catalyst”

attorneys’ fees pending over one year).

Discouraging voluntary corrective action. Once cuit has

been filed, the risk of an attorneys’ fee award based on the

value of the supposed “results” achieved poses a strong

disincentive to voluntary remedial action. If a defendant will

be confronted with a claim for thousands of dollars in

attorneys’ fees even if he voluntarily remedies a problem, he

may conclude that the risk of such a payment outweighs the .

benefits of a voluntary corrective action. Thus, by

discouraging voluntary action, the catalyst theory harms the

very class of people that it purports to benefit. See S-/, 6

F.3d at 172 (Wilkinson, J. dissenting) (noting “catalyst”

theory discourages voluntary action).

Lack of objective standards leading to inconsistent

results. There are no objective standards to ensure consistent

results if an award of “catalyst” fees is allowed based on a

plaintiff obtaining “some relief.” Take a typical case in

which the relief sought in the complaint includes cessation of

offensive conduct, remedial action to correct conditions

resulting from that offensive conduct, compensatory

damages, and punitive damages. If the defendant voluntarily

ceases the offending conduct, and the plaintiff abandons all

claims for remedial action and compensatory and punitive

damages, one court is free to find the “some relief” standard

is satisfied, while another court is free to find otherwise.

This consequential problem is particularly evident in class

actions when multiple claims are pending in different

jurisdictions based on the same alleged product defect. And,

even if an objective standard is applied to the “some relief”

criteria so that it is mandated that a court find it is met so

long as a plaintiff obtains even just one of the types of relief

originally sought, the amount of the attorneys’ fees to be

awarded is yet another issue which is not prone to any

consistent result.

Other problems inherent in the “catalyst” theory, while

less obvious, are equally compelling. A “catalyst” theory

under which a plaintiffs attorney is entitled to fees if he

shows that he obtained “some relief’ sought in a complaint

leaves that plaintiff's attorney with an inherent ethical

conflict: should a client’s arguably meritorious claims be

sacrificed when a defendant provides “some relief” originally

sought by the client in order to optimize his counsel’s chance

of recovering attorneys’ fees? This dilemma becomes more

pronounced the less likely the chance of obtaining any

additional relief on the other claims because if the plaintiff's

counsel continues to litigate the claims after the defendant

provides “some relief” and ultimately loses on those claims,

how could he ever claim to be a “prevailing” party? Again,

Chin is illustrative. The Chin plaintiffs sought various types

of relief, including a recall of the allegedly defective vehicles

and compensatory damages for lost resale value. 182 F.R.D.

at 451. The defendant voluntarily conducted a recall of the

vehicles within months of the filing of the lawsuit, but the

plaintiffs’ counsel continued to prosecute their clients’

claims (believing that those claims were not moot and that

the plaintiffs were entitled to additional damages and relief).

Id., at 448. Only after the court denied class certification did

the plaintiffs decide to abandon their claims through a

voluntarily dismissal. Chin v. Chrysler Corp., Civ. No. 95-

5569-JCL (December 15, 1999) (Appendix A). The

plaintiffs’ counsel then opted to seek an award of attorneys’

fees under the “catalyst” theory based on the voluntary recall

conducted two years earlier. /d. But this strategy abandoned

the individual claims of the named plaintiffs that the

plaintiffs’ counsel apparently believed to be meritorious even

after the recall.

Furthermore, in the context of class action litigation, an

award of “catalyst” fees entered as to the claims of the

putative class members is inherently unfair. It subjects a

defendant to the payment of attorneys’ fees on a class-wide

basis while that defendant remains susceptible to ongoing

litigation by putative class members whose claims are not

barred because there has been no judgment, settlement, or

consent decree extinguishing their claims. See, e.g., Chin,

No. 95-5569-JCL (Appendix A) (voluntary dismissal taken

as to named plaintiff only since class certification had been

denied).

Finally, the notion of an award of “catalyst” fees is at

odds with Fed.R.Civ.P.54. When a plaintiff voluntarily

dismisses his claims with prejudice the defendant is deemed

to be the “prevailing party” under Rule 54(d)(1), and, as

such, is entitled to an award of costs. See, e.g., Schwartz v.

Folloder, 767 F.2d 125, 130-31; 10 J.W. Moore, Moore's

Federal Practice, § 54.101[3], 54-158 (3d ed. 2000). But, a

“catalyst” theory would permit a plaintiff to turn the

“prevailing party” label on its head by requiring a defendant

who is a “prevailing party” for purposes of costs to pay

attorneys’ fees under a notion that the plaintiff is the

“prevailing party” under the applicable fee-shifting statute.

Clearly, Congress did not intend for one party to “prevail”

for purposes of costs and the other party to “prevail” for

purposes of fees. See Farrar, 506 U.S. at 118 (O’Connor, J.,

concurring) (because 42 U.S.C. § 1988 authorizes fees “as

part of the costs ... when a court denies costs, it must deny

—_—_—_—— ee eee

fees as well; if there are no costs, there is nothing for the fees

to be awarded “as part of”).

Thus, it is clear that there are numerous problems if

“catalyst” fees are allowed without a judgment, settlement,

or consent decree. These problems cry out for abolition of

any “catalyst” theory that allows fees without a judgment,

settlement, or consent decree.

II. EVEN IF UPHELD UNDER THE FHAA AND THE

ADA, THE “CATALYST” THEORY DOES NOT

APPLY UNDER ALL FEE-SHIFTING STATUTES.

Even though this case involves only the FHAA and the

ADA, Petitioners and amici suggest that all of the more than

100 federal fee-shifting statutes should be treated uniformly.

See Petitioners’ Brief, p. 20; Brief for Public Citizen and the

American Civil Liberties Union, pp. 3-5; see also Brief for

the United States, p. 2 (“this case... will likely provide

guidance on the availability of fees under a wide variety of

federal fee-shifting statutes”). However, this Court’s

maxims for statutory interpretation clearly counsel that the

issue of whether “catalyst” attorneys’ fees are permitted is

one of statutory interpretation which necessarily must

“begin{] with the language of [each specific] statute.” Harris

Trust and Savings Bank v. Salomon Smith Barney Inc., --

USS. --, 120 S.Ct. 2180, 2191 (2000).

Indeed, this Court has recognized the need to analyze

fee-shifting statutes individually, according to their own

words and purposes. For example, in Fogerty v. Fantasy,

Inc., 510 U.S. 517, 523-24 (1994), this Court refused to

interpret the fee-shifting provision in the Copyright Act

coextensively with 42 U.S.C. § 1988 because, although the

provisions shared similar language, the “goals and objectives

of the two Acts are likewise not completely similar.” /d., at

524; see also, Stomper v. Amalgamated Transit Union, Local

24], 27 F.3d 316, 318 (7th Cir. 1994) (“Any tendency to

treat all attorneys’ fees statutes as if they were insignificant

variations on § 1988 was squelched by Fogerty... which

holds that even a statute with the same text as § 1988 does

not necessarily have the same meaning . . . Different statutes

receive individual analysis, with principal focus on their

language ...””); Aetna Casualty and Surety Co. v. Liebowitz,

730 F.2d 905, 907-08 (2d Cir. 1984) (“Nothing in the

statute’s language indicates an intent to authorize an

attorney’s fee award... for a plaintiffs successfully

negotiating a settlement of his claim”).

Adoption of a statute-by-statute approach to the issue of

“catalyst” fees is consistent with Fogerty, which noted that

courts must be “mindful that Congress legislates against the

strong background of the American Rule” (i.e. “unless

Congress provides otherwise, parties are to bear their own

attorneys’ fees”). 510 U.S. at 533. And, such an approach

assures that Congressional intent will be honored and that

litigants will be able to rely on the plain-language of a

particular fee-shifting statute when that language is clear.

A disturbing trend has emerged. Courts, relying solely

on cases interpreting civil rights statutes, have been

extending the catalyst “theory” well beyond its civil nghts

roots without any analysis of the specific fee-shifting

provision at issue. See, e.g., Klamath Siskiyou Wildlands

Center v. Babbitt, 105 F.Supp.2d 1132, 1135 (D.Or. 2000)

(without analysis of wording of statute at issue, and relying

— — rm em la ie

exclusively on cases interpreting civil rights statutes as

allowing the recovery of attorneys’ fees under a “catalyst”

theory, court held “catalyst” theory was viable under the

Endangered Species Act, 16 U.S.C. § 1531, et seq. (citing

Sablan v. Dept. of Finance of the Commonwealth of the

Northern Mariana Islands, 856 F.2d 1317 (9th Cir. 1988)));

Folsom v. Heartland Bank, No. Civ. A. 98-2308, 2000 WL

718345 *2 (D.Kan. 2000) (court concluded that, because

plaintiffs were “prevailing parties” as interpreted in cases

applying the fee-shifting provisions of 42 U.S.C. § 1988,

they were entitled to an award of “catalyst” fees under the

Truth-in-Lending Act fee-shifting provision, 15 U.S.C. §

1640(a)(3), even though the words “prevailing party” appear

nowhere within the provisions of that Act (citing Ellis v.

University of Kansas Medical Center, 163 F.3d 1186, 1194

(10th Cir. 1999); Foremaster v. City of St. George, 882 F.2d

1485, 1488 (10th Cir. 1989))). The moral weight and

imperatives of many compelling civil rights cases have often

led a court to award “catalyst” fees in a vastly different

statutory scheme, without regard to the specific language of

the statute at issue or the intent behind it.

Take, for example, the Magnuson-Moss Warranty Act,

15 U.S.C. § 2301, et seq., a statute of particular interest to

the Alliance. The fee-shifting provision of that Act provides

that “[i]f a consumer finally prevails in any action . . . he may

be allowed by the court to recover as part of the judgment”

his reasonable attorneys’ fees. 15 U.S.C. § 2310(d)(2)

(emphasis added). Despite the statutory language requiring a

party to “finally” prevail before being awarded attorneys’

fees, and the express statutory language indicating that

attorneys’ fees can only be recovered as “part of the

judgment,” the court in Chin v. Chrysler Corp., Civ. No. 95-

5569-JCL (December 15, 1999) (Appendix A), held that the

Magnuson-Moss Act permits recovery of “catalyst” fees

even when a plaintiff voluntarily dismisses his claims. In

reaching its conclusion, the court relied heavily on

Baumgartner v. Harrisburg Housing Auth., 21 F.3d 541 (3d

Cir. 1994) -- a case holding that the “catalyst theory” applies

to 42 U.S.C. § 1988. Jd. Yet, the Magnuson-Moss Act,

unlike 42 U.S.C. § 1988, precludes an award of attorneys’

fees in the absence of an enforceable “judgment” of which

attorneys’ fees can be made a “part.” 15 U.S.C.

§ 2310(d)(2). And, the Magnuson-Moss Act, unlike 42

U.S.C. § 1988, requires the plaintiff to “finally prevail[{]” in

the lawsuit. 15 U.S.C. § 2310(d)(2) (emphasis added).

Taking § 2310(d)(2) on its face, nothing short of a final

judgment (i.e., a “judgment” in which the plaintiff “finally

prevails”) could support an award of attorneys’ fees under

the Magnuson-Moss Act; yet, relying on civil rights cases,

the Chin court found that a “catalyst” theory applied.

The members of the Alliance, like other employers, are

also subject to the Fair Labor Standards Act, 29 U.S.C.

§ 201, et seg. It provides that a court must “in addition to

any judgment awarded to the plaintiff or plaintiffs, allow a

reasonable attorney’s fee...” 29 U.S.C.§ 216(b) (emphasis

added). Notwithstanding the fact that this fee-shifting

provision explicitly indicates that an award of any attorneys’

fees is to be made only as an “addition to any judgment,” the

court in Wisnewski v. Champion Healthcare Corp., No. Civ.

A3-96-72, 2000 WL 1474414 *8 (D.N.D. 2000), held that a

plaintiff can recover attorneys’ fees under a “catalyst” theory

even without a judgment. Indeed, the Wisnewski court

expressly acknowledged that the plaintiffs in that case had

“not received actual relief on. the merits of their claim

through a judgment, consent decree, or settlement.” 2000

WL 1474414 *9. Nonetheless, the court made an award of

attorneys’ fees to the plaintiffs’ counsel on the basis of the

defendant’s “voluntary” act of correcting its formula for the

computation of overtime. 2000 WL 1474414 *10. The court

in Wisnewski did not analyze the “in addition to any

judgment” language of the Fair Labor Standards Act, but,

rather, relied solely on cases interpreting a civil rights statute

-- 42 US.C. § 1988. Id, at *8-9 (citing Tyler v. Corner

Constr. Corp., 167 F.3d 1202, 1205 (8th Cir. 1999)).

Many Alliance members are also covered by the

provisions of the Labor-Management Reporting and

Disclosure Act, 29 U.S.C. § 401, et seg. (“LMRDA”). The

expansion of the “catalyst” theory, without careful

consideration of the statutory provision at issue, is nowhere

more clear than in the cases interpreting the LMDRA.

Although one court has held that Title I] of the LMRDA

prohibits an award of “catalyst” attorneys’ fees because its

express language indicates that fees are to be awarded only

“in addition to any judgment,” Stomper v. Amalgamated

Transit Union, Local 24], 27 F.3d 316, 318-20 (7th Cir.

1994) (emphasis added), another has held that the “catalyst”

theory applies to Title I of the LMRDA, even though that

part of the statute has no fee-shifting provision, whatsoever.

Brown v. Brotherhood of Electrical Workers, 76 F.3d 762,

770-71 (6th Cir. 1996). Relying on this Court’s

pronouncement in Hail v. Cole, 412 U.S. 1, 9 (1973),

authorizing a court to use its “equitable power” to shift fees

under Title I of the LMRDA to a prevailing union member

whose lawsuit produces a “common benefit” for the union

members at large, the court in Brown determined that, in a

Title I LMRDA action, a plaintiff need not prevail on the

merits for such fee-shifting to occur. The court based its

analysis solely on case law finding that “catalyst” fees are

available in civil rights cases, despite the fact that there is a

complete absence of any statutory authority for such fees

within the LMRDA. 76 F.3d at 770 (citing Hewitt v. Helms,

482 U.S. 755, 760 (1987); Maher v. Gagne, 448 U.S. 122,

129 (1980)).

‘As these cases document, there is a near-cavalier attitude

toward expanding the “catalyst” theory to all fee-shifting

statutes without regard to, and indeed in spite of, express

statutory language.

Ill. “CATALYST” FEES SHOULD BE ALLOWED

ONLY UNDER SPECIFIC STANDARDS.

If this Court determines that “catalyst” fees are

recoverable without a judgment, settlement, or consent

decree, it should set forth specific, stringent standards for

determining when such fees will be awarded. The standards

currently applied vary from circuit to circuit producing

inconsistent results. Compare, e.g., Morris v. City of West

Palm Beach, 194 F.3d 1203, 1210 (llth Cir. 1999)

(requiring three elements: (1)the plaintiff achieved

“substantial success” in which there has been a “material

alteration of the legal relationship of the parties”; (2) the

lawsuit was a “substantial factor” in obtaining the relief; and

(3) the defendant’s voluntary remedial action would have

been “required by law”) with Commissioners Court of

Medina County v. United States, 683 F.2d 435, 442 (D.C.

Cir. 1982) (requiring just two elements: (1) the plaintiff

“substantially received the relief sought”; and (2) the lawsuit

was a “substantial factor in attaining the relief”).

The Alliance suggests a tripartite test to determine

whether a party is entitled to an award of “catalyst” fees:

(1) the plaintiffs’ claims must be completely moot, and thus

lack any legal basis; (2) the plaintiff must prove that “but

for” the filing of the lawsuit, the defendant would not have

taken the remedial action; and (3) the plaintiff must show

that the remedial action would have been “required by law”

if he had succeeded on the merits of his claims.

First, a plaintiff should be required to show that the

defendant’s action rendered the plaintiff's lawsuit moot in its

entirety, and that he thus has no legal basis to pursue any of

the claims filed against the defendant.'” Without a showing

of complete mootness, the “catalyst” theory is inapplicable

because the plaintiff's claims can still be adjudicated thereby

clearly answering the “prevailing party” question. Further,

requiring a finding of mootness lessens the ethical dilemmas

inherent in a system that would allow a plaintiff's

meritorious claims to be abandoned in favor of secking

immediate “catalyst” fees. In short, the “catalyst” theory

should not apply unless the defendant’s voluntary remedy

puts the plaintiff out of court.

'’Such a requirement is implicitly acknowledged by Petitioners

and their amici. See, e.g., Petitioners’ Brief, p. 18 (arguing that the

plaintiff is entitled catalyst attorneys’ fees “when a case is rendered moot

as a result of the plaintiff catalyzing the defendant into making changes

consistent with the relief requested by the plaintiff’ (emphasis added));

Brief for the United States, p. 20 (arguing that the plaintiff is entitled to

the plaintiff's demand for relief[,] eliminates the basis for the plaintiff's

legal challenge, moots the plaintiff's legal action, and relieves the parties

of their obligation to litigate the suit” (emphasis added)).

Second, the plaintiff must bear the burden to prove that

the defendant would not have taken the remedial action “but

for” the plaintiffs lawsuit. This standard was aptly

characterized in Langton v. Johnston, 928 F.2d 1206, 1224-

25 (1st Cir. 1991):

The catalyst test... is invoked in those cases in

which plaintiffs do not receive a favorable

judgment, yet claim to have succeeded in bringing

about a beneficial change in defendants’ conduct or

in the conditions complained of -- a change which

would not have occurred but for the institution of

the suit. The critical inquiry is whether the suit

prompted defendants to take action to meet

plaintiff's claim . . . In this inquiry, the litigation’s

provocative role is a sine qua non”... If the

defendant acted other than in response to the spur

of plaintiffs’ lawsuit, the catalyst theory does not

apply.

(emphasis added) (internal quotations and citations omitted)

(interpreting Nadeau v. Helgemoe, 581 F.2d 275 (lst Cir.

1978)'*).

'YA “but for” test contemplates that the plaintiffs’ lawsuit is the

sine qua non for the defendant’s voluntary action. See Black's Law

Dictionary (West 7th ed. 1999) (defining sine qua non as an

“indispensable condition or thing; something on which something else

necessarily depends”).

'“The standards set forth in Nadeau have been cited, with approval,

by Petitioners.

Allowing the recovery of “catalyst” fees under a lesser

standard will act as a strong incentive to litigate first and to

attempt to preempt regulatory processes. Only a “but for”

standard will act to protect defendants who act in good-faith

in response to expressed customer concerns or government

regulation. Only a “but for” standard provides the “safe

harbor” necessary to ensure that defendants will feel free to

act without the fear that a huge attorneys’ fee payment

looms.“

Third, the plaintiff should be required to show that the

remedial action would have been “required by law” had the

plaintiff succeeded on the merits of the lawsuit. See, e.g.,

Owner-Operator Independent Drivers Association, Inc. v.

Bissell, 210 F.3d 595, 598 (6th Cir. 2000) (if the voluntary

relief “is not required by law, then defendants must be held

to have acted gratuitously and plaintiffs have not prevailed in

a legal sense” (citations omitted)); Foreman v. Dallas

County, 193 F.3d 314, 322 (Sth Cir. 1999) (“A defendant

cannot be asked to pay attorneys’ fees for relief which was

never demanded, or even made clear, in the plaintiff's

complaint”); Morris v. City of West Palm Beach, 194 F.3d

1203, 1210 (11th Cir. 1999) (“The third element of the

catalyst test has been expressed as requiring a showing that

the defendant’s conduct was required by law” (quotations

and citations omitted); Nadeau v. Helgemoe, 581 F.2d 275,

281 (ist Cir. 1978) (indicating that a plaintiff does not

“The “substantial factor” approach suggested by Petitioners and

their amici fails to address such concerns because it permits the recovery

of attorneys’ fees, even if the plaintiff's lawsuit was not a sine qua non

(i.e. an indispensable condition) to defendant’s voluntary remedial

action.

“prevail” for purposes of a fee award under the “catalyst”

theory if the defendant’s voluntary conduct “is not required

by law”).

This third essential element assures that plaintiffs will

“not be deemed to be prevailing parties if their claims are

objectively unmeritorious.” Morris, 194 F.3d at 1210. And,

in the context of the automotive industry, the adoption of the

“required by law” element will minimize the number of

unnecessary lawsuits that are filed after publication of

NHTSA regulatory efforts.'”

CONCLUSION

This Court should affirm the decision of the Fourth

Circuit Court of Appeals.

'"For example, in Chin the plaintiffs asserted entitlement to

attorneys’ fees based on the defendant’s voluntary “recall” of allegedly

defective automobiles, one of the many types of relief listed as being

“sought” in their civil complaint. Chin v. Chrysler Corp., 182 F.R.D.

448, 451 (D.N.J. 1998); Chin v. Chrysler Corp., Civ. No. 95-5569-JCL

(December 15, 1999) (Appendix A). However, because the exclusive

authority to order recalls lies with NHTSA, (49 U.S.C. § 30118(b); 49

C.F.R. § 554.11; see also Freightliner Corp. v. Myrick, 514 U.S. 280,

283-84 (1995)), the district court could never have granted such relief.

—_

Respectfully submitted,

CHARLES A. NEWMAN

Counsel of Record

KATHY A. WISNIEWSKI

JEROME H. BLOCK

Bryan Cave LLP

One Metropolitan Square

Suite 3600

St. Louis, Missouri 63102

(314) 259-2000

APPENDIX

UNITED STATES DISTRICT COURT

DISTRICT OF NEW JERSEY

DAVID CHIN, ET AL., :

: Civ.No.95-5569 (JCL).

PLAINTIFFS,

°.

- MEMORANDUM AND

CHRYSLER CORPORATION, ORDER

DEFENDANT.

LIFLAND, District Judge

Presently before the Court is plaintiffs’ appeal of

Magistrate Judge Chesler’s August 24, 1999 Order denying

plaintiffs’ motion for a declaration of their right to attorneys’

fees. Also before the Court are plaintiffs’ motion for further

discovery and defendant’s motion to strike the declaration of

Clarence Ditlow. For the reasons discussed herein, the

Magistrate Judge’s Order will be reversed, plaintiffs’ motion

for discovery will be granted, and defendant’s motion to

strike will be denied.

Plaintiffs brought this action on behalf of themselves

and other buyers and lessees of Chrysler cars and trucks

employing Bendix 9 and 10 anti-lock brakes, alleging

violations of the Magnuson-Moss act, 15 U.S.C. § 2301 et

seq., (“the Act” or “Magnuson-Moss”) and state laws

governing fraud and breach of warranty. Plaintiffs’ motion

A-2

for class certification was denied by this Court on September

11, 1998. See Chin v. Chrysler Corp., 182 F.R.D. 448

(D.N.J. 1998) (providing a more complete account of the

facts preceding the present appeal and motions). This Court

then granted plaintiffs’ motion to dismiss pursuant to FRCP

41(a)(2).

Plaintiffs appeal Magistrate Judge Chesler’s

determination that they are not entitled to attorneys’ fees as

the party that finally prevail[ed]” in accordance with the fee-

shifting provisions of the Act. See 15 U.S.C. § 2310(d)(2).

Magistrate Judge Chesler found that the Act requires a party

to litigate its claim to finality before it may be considered a

prevailing party entitled to attorneys’ fees. Applying a plain

meaning analysis to the statutory words, the Magistrate

Judge determined that the words “finally prevails” in the Act

differentiate it from other fee-shifting statutes that allow a

broad interpretation of “prevailing party” and do not require

a party to litigate his claims to a resolution on the merits to

be eligible for attorneys’ fees. Under many statutes using

“prevailing party” language, court have ruled that a party

may recover attorneys’ fees even if it did not win the case, if

the party can demonstrate that its lawsuit was a catalyst that

brought about the desired relief. Under this “catalyst

theory,” a party may recover attorneys fees even if it dropped

its claim because the lawsuit had been mooted by voluntary

action taken by the other party. The party seeking attorneys’

fees must demonstrate that it received relief that it originally

sought and that there was a causal connection between Ge

lawsuit and attainment of that relief.

Having determined the catalyst theory inapplicable, the

Magistrate Judge did not reach the merits of the factual

dispute as to whether plaintiffs’ lawsuit was a catalyst for

A-3

Chrysler’s recall of vehicles with the Bendix 9 and 10 anti-

lock braking systems or whether that recall was due to an

investigation by the National Highway Traffic Safety

administration (“NHTSA”) or to other factors.

Plaintiffs argue that the catalyst theory is viable under

the Act and request additional discovery from defendant to

prove that their lawsuit was a catalyst for Chrysler’s recall of

vehicles employing the Bendix 9 and 10 anti-lock braking

systems, which was part of the relief originally sought in

their lawsuit. Defendant argues that Magistrate Judge

Chesler was correct in determining that the catalyst theory is

not available under the Act that that plaintiffs, having been

denied class certification and seeking voluntary dismissal of

their lawsuit, cannot be said to have finally prevailed.

STANDARD OF REVIEW

The court may reverse a magistrate’s order only if it

finds the ruling clearly erroneous or contrary to law. See 28

U.S.C. § 636(b)(1)(A); Fed. R. Civ. P. 72(a); L. Civ. R.

72.1(c)(1(A). The district court is bound by the clearly

erroneous rule in findings of fact, while the phrase “contrary

to law” indicates plenary review as to matters of law. See

Haines v. Liggett Group Inc., 975 F.2d 81, 91 (3d Cir. 1992).

When an appellant challenges a magisirate’s interpretation of

specified statutory language, the court’s standard of review is

plenary. See United States v. Hayden, 64 F.3d 126, 129 (3d

Cir. 1995); United States v. Accetturo, 623 F. Supp. 746, 753

(D.N.J. 1985). Because Magistrate Judge Chesler’s opinion

turned on statutory interpretation, this Court’s review is

plenary.

A-4

DISCUSSION

1. The Statute’s Terms

Magnuson-Moss authorizes lawsuits for damages or

other legal or equitable relief by any “consumer who is

damaged by the failure of a supplier, warrantor, or service

contractor to comply with any obligation under this chapter,

or under a written warranty, implied warranty, or service

contract.” 15 U.S.C. § 2310(d)(1). Regarding recovery of

attorneys’ fees, the Act states:

If a consumer finally prevails in any action brought

under [15 U.S.C. § 2310(d)(1)], he may be allowed

by the court to recover as part of the judgment a sum

equal to the aggregate amount of cost and expenses

(including attorneys’ fees based on actual time

expended) determined by the court to have been

reasonably incurred by the plaintiff for or in

connection with the commencement and prosecution

of such action, unless the court in its discretion shall

determine that such an award of attorneys’ fees

would be inappropriate.

15 U.S.C. § 2310(d)(2).

The legal issue is whether Congress’ use of the terms “as

part of the judgment,” “prevails,” and “finally” in the Act’s

fee-shifting provision permits the court to apply the catalyst

theory to award attorneys’ fees. The question is a matter of

first impression. If the catalyst theory is available, then the

factual question remains: whether this action was a catalyst

for Chrysler’s recall.

A-5

The paramount canon of statutory interpretation is that a

court must first direct its inquiry to the statute’s actual

language. See Connecticut Nat’] Bank v. Germain, 503 U.S.

249, 253-54 (1992); Smith v. Fidelity Consumer Discount

Co., 898 F.2d 907, 909-10 (3d Cir. 1990). Where the

statutory language is clear on its fact, a court must give it full

force and effect. See United States v. Menasche, 348 U.S.

528, 520 (1955) (citations omitted). Absent a clear meaning,

a court may seek the meaning of the statutory terms by

looking to other statutes with similar language, legislative

purposes, and underlying policies and may analogize to the

meaning given by courts interpreting those statutes. See

Brown v. Gardner, 513 U.S. 115, 118-19 (1994). The court

also may seek the legislative intent of the statutes from its

legislative history, the policies underlying the statute,

reasonableness, and public policy concerns. See Blanchard

y. Bergeron, 489 U.S. 87, 91 (1989); Montana Wilderness

Assoc, v. United States Forest Serv,, 665 F.2d 951, 955-57

(9th Cir. 1981). The interpretation ultimately accorded to a

statute’s terms must be given in a common sense manner that

advances the legislative purposes of the statute. See United

States v. Brown, 333 U.S. 18, 25-26 (1948) (“The canon in

favor of strict construction is not an inexorable command to

override common sense and evident statutory purpose. It

does not require w.agnified emphasis upon a single

ambiguous word in crder to give it a meaning contradictory

to the fair import of the whole remaining language.”);

Connecticut Nat] Bank v. Germain, 503 U.S. 249, 255

(1992) (Stevens, J., concurring) (quoting Judge Learned

Hand’s opinion in

218 F. 547, 553 (2d Cir. 1914) advising that statutes “should

be construed, not as theorems of Euclid, but with some

imagination of the purposes which lie behind them.”).

A-6

a) “As part of the judgment”

The Act’s fee-shifting provision states that a consumer

may recover attorneys’ fees “as part of the iudgment.” Many

courts have ruled that a final adjudicaticn of the merits of the

case is not required to trigger the provision. For example, a

plaintiff who accepts a settlement offer can be considered a

“prevailing party” entitled to attorneys’ fees under

Magnuson-Moss. See McGinty v. Sunbird Boat Co.. Inc.,

1998 WL 544953 (E.D. Pa. Aug. 26, 1998) (plaintiffs who

settled for a replacement for defective boat may still be the

prevailing party); Anderson v. Ford Motor Co., 1997 Wi

158133, at *1 (E.D. Pa. Apr. 1, 1997); Allen v. Chrysler

Corp., 1997 WL 117015, at *1 (E.D. Pa. Mar. 13, 1997);

Rivera v. Ford Motor Co., 1996 W.L. 383306, at *1 (E.D.

Pa. July 3, 1996); lanelli_ v. Chrysler Corp., 1996 WL

368317, at *1 (E.D. Pa. June 24, 1996); Stitsworth v. Ford

Motor Co., 1996 WL 67610, at *1 (E.D. Pa. Feb. 13, 1996)

(“A party accepting a settlement offer may be considered the

‘prevailing party.””); Taylor v. Chrysler Corp., 1995 WL

635195, at *1 (E.D. Pa. Oct. 24, 1995); DeVries v. Pitts

Pontiac GMC-Tmucks. Inc. 545 N.Y.S.2d 1009, 1013 (City

Ct., Monroe Co. 1989) (legislative history indicates that a

settling consumer can be the “prevailing party”).

Furthermore, a plaintiff who accepts an arbitration

award can be a prevailing party eligible for attorneys’ fees

under the Act. See Elder v. Chrysler Corm., 1997 WL

734036 (E.D. Pa. Nov. 5, 1997). Such is the case even if the

plaintiff achieved only limited success in the arbitration,

although the limited degree of success may decrease the total

amount of the attorneys’ fees award. See Hines v. Chrysler

Corp., 971 F. Supp. 212, 214 (E.D. Pa. 1997) (“Although

plaintiff only achieved limited success at the arbitration of

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this matter, she is still considered a ‘prevailing party’ for

purposes of the Magnuson-Moss Act and may be entitled to

attorneys’ fees.”); Gibbs v. Hyundai Motor Am., 1997 WL

325788 (E.D. Pa. June 4, 1997).

The New Jersey courts have allowed consumers

accepting rescission as to a faulty product to recover

attorneys’ fees as a prevailing party under the Act even in the

absence of a judgment for any damages. See Ventura v. Ford

Motor Corp., 173 N.J. Super. 501 (Ch. Div. 1980), aff'd 180

N.J. Super. 45 (App. Div. 1981). The New Jersey courts

have focused on whether consumers received any relief

rather than on the amount received when awarding attorneys’

fees under the Act, holding that a limited amount of damages

does not necessarily limit the fees to be awarded to a

Jankowitz, 230 N.J. Super. 555 (App. Div. 1989). These

cases have underscored that the trial judge is not “slavishly

bound under Magnuson-Moss” when considering whether

and to what degree to award attorneys’ fees, but may award

attorneys’ fees to the party who has “properly sought and

received relief’ under the Act regardless of whether a

damages award was entered. See id, at 560.

Thus, courts that have considered the issue have found

that litigating a case to trial is not required. Rather, a

consumer who obtains a settlement or even a partial victory

through arbitration can still be said to have prevailed

sufficiently to warrant attorneys’ fees. Such an interpretation

is consistent with the legislative history of the Act. See

Senate Committee on Commerce, Magnuson-Moss

Warranty-Federal Trade Commission Improvement Act, S.

Rep. 93-151, at 22-24 (1973) (discussing the private

remedies available under the Act, particularly “reasonable

A-8

attorney’s fees available if successful in the litigation

(including settlement)’’).

In the cases discussed above, the courts did not resolve

the merits of the claims, but they did enter judgments

involving either settlement, an arbitration award, or

rescission of the contract. In most of these cases, attorneys’

fees were awarded “as part of the judgment” in accordance

with the Act. The Court finds that it is not necessary for a

Magnuson-Moss piaintiff to receive a damages award or to

litigate to a decision on the merits of its claim in order to be

eligible for attorneys’ fees as part of a judgment. A

dismissal of a lawsuit and a court-ordered award of

attorneys’ fees would be a judgment that is both enforceable

and appealable. The Court has already dismissed plaintiffs’

claims in the present matter. If the Court were to find after

discovery on the catalyst issue that an award of attorneys’

fees is warranted, it would enter a judgment awarding such

fees. That would be sufficient to meet the Act’s requirement

that fees be awarded “as part of the judgment.”

b) “Prevails”

What it means to “prevail” has a broad meaning

under many fee-shifting statutes, with a great many courts

finding under the catalyst theory that a party can still be said

to prevail even if his cause of action has been mooted by

some voluntary action of the opposing party. For example,

the fee-shifting statute applicable to federal civil rights

claims, 42 U.S.C. § 1988, provides that “the court, in its

discretion, may allow the prevailing party, other than the

United States, a reasonable attorney’s fee as part of the

costs.” 42 U.S.C. § 1988(b). Courts interpreting the term

“prevailing party” in § 1988 have construed it to include

Oe ee eee ee le

A-9

parties who prevail through settlement. See, ¢.g., Maher v.

Gagne, 448 U.S. 122, 129 (1980) (“The fact that respondent

prevailed through a settlement rather than through litigation

does not weaken her claim to fees.”). Courts applying the

catalyst theory have found that civil rights litigants have

prevailed “if they succeed on any significant issue in

litigation which achieves some of the benefit the parties

sought in bringing suit.” See Hensley v. Eckerhart, 461 U.S.

424, 433 (1983); see also Hewitt v. Helms, 482 U.S. 755,

760 (1987) (“[R]elief need not be judicially decreed in order

to justify a fee award under §1988.”). The Supreme Court

explained the jurisprudential underpinnings of the catalyst

theory in Hewitt v. Helms, in which it noted:

[a] lawsuit sometimes produces voluntary action by

the defendant that affords the plaintiff all or some of

the relief he sought through a judgment - e.g., a

monetary settlement or a change in conduct that

redresses the plaintiff's grievances. When that

occurs, the plaintiff is deemed to have prevailed

despite the absence of a formal judgment in his

favor... . In all civil litigation, the judicial decree is

not the end but the means. At the end of the rainbow

lies not a judgment, but some action (or cessation of

action) by the defendant that the judgment produces -

the payment of damages, or some specific

performance, or the termination of some conduct.

482 U.S. at 760-01.

The Third Circuit has specifically adopted the catalyst

theory in civil nghts cases. See Baumgartner v. Harrisburg

Housing Auth., 21 F.3d 541 (3d Cir. 1994); Institutionalized

Juveniles v. Secretary of Pub. Welfare, 758 F.2d 897, 910

A-10

(3d Cir. 1985); Sullivan v. Commonwealth of Pa. Dept. of

Labor & Indus., 663 F.2d 443, 452 (3d Cir. 1981). Of

relevance to the present motion, the Third Circuit in

Baumgartner found that the catalyst theory could apply even

in a case in which plaintiffs did not litigate their claims to

completion but voluntarily dismissed the case, as long as

plaintiffs could prove that their lawsuit accomplished its

objectives. See Baumgartner, 231 F.3d at 545. The

Baumgartner court noted that the Supreme Court has held

that a “catalyst” plaintiff cannot recover attorneys’ fees based

on a purely moral victory but must secure some enforceable

judgment, and then held that the catalyst theory could still

apply in a case in which a plaintiff did not seek solely money

damages and realized significant benefits sought by the

lawsuit. See id, at 545-46 (citing Farrar v. Hobby, 506 U.S.

103, 112 (1992)). The Third Circuit recognized the

continuing viability of the catalyst theory, noting that all the

circuit courts to have considered the theory’s applicability

under prevailing party statutes have adopted it. See id, at

544-45 (“This firmly-entrenched doctrine has also been

recognized by each of the other eleven courts of appeals to

have considered the issue.”’) (citing cases from each circuit).

Not all fee-shifting provisions are alike and the case law

history of the civil rights statute’s attorney-fee provision is

not applied across the board. See Stomper v. Amalgamated

Transit Union, Local 241, 27 F.3d 316, 318 (7th Cir. 1994).

(“Any tendency to treat all attorneys’ fees statutes as if they

were insignificant variations on § 1988 was squelched by

Fogerty v. Fantasy, Inc., 510 U.S. 517 (1994), which holds

that even a statute with the same text as § 1988 does not

necessarily have the same meaning... . Different statutes

receive individual analysis, with principal focus on their

language.”). But several other federal statutes that provide

A-11

that the party who prevails may recover attorneys’ fees have

been interpreted to embrace the catalyst theory.

Accordingly, the Court will review the language of various

attorney-fee provisions to determine whether those statutes

are interpreted to support the catalyst theory.

The catalyst theory has been applied to the fee-shifting

provision of the Individuals with Disabilities Education Act

(“IDEA”), which allows attorneys’ fees the “parents or

guardian of a child or youth with a disability who is the

prevailing party.” See Kathleen H. v. Massachusetts Dep’t

of Educ,, 154 F.3d 8, 14 (1st Cir. 1998) (quoting 20 U.S.C. §

1415(e)(4)(B)); B.K. v. Toms River Bd. of Educ., 998 F.

Supp. 462, 474 (D.N.J. 1998); Cf, Combs v. School Bd. of

Rockingham County, 15 F.3d 357, 361 (45th Cir. 1994)

(finding plaintiff not entitled to fees, but leaving open

whether fees are recoverable under catalyst theory absent

judgment, consent decree, or settlement).

The Third Circuit has applied the catalyst theory to the

Education of the Handicapped Act (“HA”), which allows a

court to “award reasonable attorney’s fees as part of the costs

to the parents or guardian of a handicapped child or youth

who is the prevailing party.” Wheeler v. Towanda Area

Schi. Dist., 950 F.2d 128, 132 (3d Cir. 1991) (quoting 20

U.S.C. § 1415(e)(4)(B)).

The catalyst theory also has been applied under the

Equal Access to Justice Act (“EAJA”). See Dunn v.

Sullivan, 794 F. Supp. 133, 135, 137 (D. Del. 1992). The

EAJA states that a court may award reasonable attorneys’

fees to “the prevailing party in any civil action brought by or

against the United States....” See 28 U.S.C. § 2412(b).

Of relevance, the catalyst theory was applied in Dunn v.

A-12

Sullivan to Social Security benefits claimants seeking

attorneys’ fees under EAJA even after their lawsuit had been

dismissed as moot. See Dunn, 794 F. Supp. at 135 (finding

that a dismissal is a “finai judgment” under EAJA and can

entitle a prevailing party to recover attorneys’ fees).

The catalyst theory has also been applied to the Fair

Housing Act (“FHA”), which states that “the court, in its

discretion, may allow the prevailing party, other than the

United States, a reasonable attorney’s fee and costs.” 42

U.S.C. §3613(c)(2); see Oxford House-A v. City of

University City, 87 F.3d 4 1022, 1024 (8th Cir. 1996). Some

statutes, such as the FHA, define the term “prevailing party”

according to § 1988. See 42 U.S.C. §3602(0) (“Prevailing

party’ has the same meaning as such term has in section 1988

of this title”). In other cases, courts have applied the catalyst

theory even in the absence of “prevailing party” language in

the statute. For example, the catalyst theory has been applied

under the Labor-Management Reporting and Disclosure Act

(“LMRDA”), which provides that “[t]he court in such action

may, in its discretion, in addition to any judgment awarded to

the plaintiff or plaintiffs, allow a reasonable attorney's fee to

be paid by the defendant, and costs of the action.” See

Brown v. Local 58, 76 F.3d 762, 773 (6th Cir. 1996)

(quoting 29 U.S.C. § 431(c)). Butsee Stomper, 2’ F.3d at

318 (Seventh Circuit finding that LMRDA requires a

plaintiff to prevail by formal judgment rather than settlement

to be eligible for attorneys’ fees).

The catalyst theory has not been applied to the fee-

shifting provision of the Racketeer-Influenced and Corrupt

Organizations (“RICO”) Act, which provides that the

victorious plaintiff may recover treble damages and which

allows recovery of attorneys’ fees only as part of that

A-13

damages award. See Aetna Cas, & Sur. Co. v. Liebowitz,

730 F.2d 905, 906 (2d Cir. 1984) (citing 18 U.S.C. §

1964(c)). The civil RICO statute has been interpreted as

requiring a plaintiff to obtain a judgment for damages before

being eligible for attorneys’ fees, since the statute does not

contain the “considerably broader and more flexible”

language found in “prevailing party” statutes and instead

allows a plaintiff to “recover threefold the damages he

sustains and the cost of the suit, including a reasonable

attorney’s fee.” Jd. at 907.

The statutory language of the Clayton Anti-Trust Act is

instructive because it contains different fee-shifting

provisions for different types of lawsuits, one allowing

recovery of attorneys’ fees only as part of a treble damages

award and two others containing “prevailing party” language

which do not require a damages award for recovery of

attorneys’ fees. See 15 U.S.C. § 15(a) (allowing an injured

party to recover “threefold the damages by him sustained,

and the cost of suit, including a reasonable attorney’s fee”);

15 U.S.C. § 26 (providing that a party suing for injunctive

relief may recover attorneys’ fees if he “substantially

prevails”); 15 U.S.C. §4304 (providing that any

“substantially prevailing claimant under the antitrust laws”

may be awarded attorneys’ fees in a lawsuit based on a joint

venture). Courts interpreting 15 U.S.C. § 15(a) have held

that a party must secure a damage award before it may be

eligible for attorneys’ fees. See City of Detroit v. Grinnell

Corp., 495 F.2d 448, 459 (2d Cir. 1974) (“The provision for

recovery of attorneys’ fees contained in Section 4 of the

Clayton Act [15 U.S.C. § 15(a)] is dependent upon recovery

of a judgment.”). The Clayton Act was later amended to

include “prevailing party” language, a change that resulted in

courts adopting the catalyst theory to allow recovery of

A-14

attorneys’ fees under these sections by plaintiffs who did not

win a damages award but who achieved success on other

aspects of their claims. See F. & M. Schaeffer Corp. v. C.

Schmidt & Sons, Inc., 476 F. Supp. 203, 207 (S.D.N.Y.

1979) (construing 15 U.S.C. § 26).

These examples suggest that when Congress ties

attorneys’ fees to treble damage awards, it means to exclude

a catalyst theory of recovery. But when Congress inserts

terminology regarding the party who prevails, it intends that

attorneys’ fees may be awarded absent adjudication of the

merits of the lawsuit. Preemptively, Congress is aware of the

way in which courts have interpreted the “prevailing party”

language of fee-shifting statutes. See Aetna Cas. & Sur. Co.,

730 F.2d at 908 & n.3 (citing the various statutes in which

“prevailing party” or similar terms are used as evidence that

Congress is knowledgeable regarding how to permit the

award of attorneys’ fees to a plaintiff who does not litigate

his claim through to trial). Hensley plainly states that the

catalyst theory applies to all prevailing party fee-shifting

statutes. See Hensley, 461 U.S. at 433 n.7. The Third

Circuit has firmly endorsed the catalyst theory as well.

Tiais Court concludes that the use of prevailing party

language in Magnuson-Moss suggests that attorneys’ fees are

not tied to damages award and that the catalyst theory is

available. Accordingly, a party whose lawsuit causes a

defendant to take remedial action that the plaintiff sought in

his lawsuit is the party who “prevails” under Magnuson-

Moss.

A-15

c) “Finally”

The Magistrate Judge found that a plain-meaning

reading of Magnuson-Moss’ fee-shifting provision precluded

application of the catalyst theory because the statute used the

term “finally” to modify “prevails,” rather than simply

saying “prevailing party.” Although “finally prevails” may

suggest that a consumer must win the litigation in order to

merit attorneys’ fees, the cases discussed above demonstrate

that is not always the case. The parties have not alerted the

Court to, nor is the Court aware of, any judicial opinion that

directly addresses the meaning of the term “finally” under

Magnuson-Moss. In view of the cases discussed above, this

Court concludes that the term “finally” does not exclude the

catalysi theory.

None of the cases allowing recovery of attorneys’ fees

after settlement, rescission, or arbitration placed any special

emphasis on the word “finally.” In fact, all of the courts that

considered awarding attorneys’ fees under Magnuson-Moss

treated it simply as a “prevailing party” statute governed by

Hensley. See e.g., McGinty, 1998 WL 544953; Elder, 1997

WL 734036; Hines, 971 F. Supp. at 214 (E.D. Pa. 1997);

Allen, 1997 WL 117015 at *1; Rivera, 1996 WL 383306 at

*1; Estel_v. Chrysler Corp., 1996 WL 208375 (E.D. Pa.

1996); Stitsworth, 1996 WL 67610 at *1. Likewise, the New

Jersey courts in Ventura and Jankowitz did not placed any

emphasis on the term “finally” when considering whether the

consumers could be prevailing parties under the Act.

The court sees nothing talismanic about the word

“finally” which would suggest that the fee-shifting provision

of Magnuson-Moss has a meaning any more or less

restrictive than the term “prevailing party” in similar fee-

A-16

shifting provisions of other statutes. Rather, the Court

believes the word “finally” means that a party may not

recover attorneys’ fee until the litigation is over. Congress

thus differentiated Magnuson-Moss from fee-shifting statutes

that allow interlocutory awards of attorney’s fees, such as the

Criminal Justice Act. See 18 U.S.C. §3006A. Thus,

attorneys’ fees are available under Manguson-Moss only

when a case is concluded.

As the Supreme Court noted in Hewitt, the desired end

of litigation is not always a court’s judgment, but rather

cessation or effectuation of some conduct by a party. When

a defendant accedes to a plaintiff's demands and a lawsuit is

thereby mooted and must be dismissed, that lawsuit can be

said to have reached finality even in the absence of a court’s

resolution of the merits. At the time Magistrate Judge

Chesler considered the catalyst issue, plaintiffs’ case was still

being litigated and had not reached finality. Now, the case

has been dismissed at the request of the plaintiffs. Dismissal

is a “final” order that satisfies the finality requirement of the

Act.

>. Levislative Intent and Public Poli

Allowing a catalyst theory is consistent with the

legislative history and public policies underlying Magnuson-

Moss. The Act authorizes consumers to commence civil

actions for damages or other relief for the breach of any

express or implied warranty or service contract by the

provider of consumer goods. See Alperin & - Chase,

Consumer Law, § 258 at 431-32. The Act is remedial in

nature and meant to provide “exceedingly broad”

enforcement power for consumers. See id. Amount the

goals of the Magnuson-Moss Act were “to make warranties

A-17

on consumer products more readily understood and

enforceable” and to enhance consumer protection. See H.R.

Rep. 93-1107.

Congress intended “to make the pursuit of consumer

rights involving inexpensive products economically feasible”

by allowing consumers to act as private attorneys general and

to recover attorneys fees when their efforts vindicate the

rights of consumers. See S. Rep. 93-151, 23-24 (1973); see

also Derfner & Wolf, Court Awarded Attorney Fees, §

5.03[4] (noting that “[t]he fee shifting measures contained in

consumer protection laws . . . are decidedly pro-plaintiff”

and discussing Magnuson-Moss as an example of a statute

meant to assist consumer enforcement of congressional

policies). Commentators have deemed the Act’s fee-shifting

provisions to be the most important aspect of the Act. See

Bixby, “Judicial Interpretation of the Magnuson-Moss

Warranty Act,” 22 Am. Bus. L.J. 125, 154 (1984). It is

perhaps only because of the fee-shifting provision that the

Act has become a useful consumer tool to enforce product

warranties. See id. at 162 (“It is largely because of the

attorneys’ fees provision that the Act has been able partially

to fulfill its purpose.”). Without the opportunity to recover

attorneys’ fees, the high cost of litigation would outweigh the

benefits of consumer enforcement of warranties for less-

costly goods. See id. (“The ‘lemon-aid’ Congress intended

to serve consumers by enacting the Magnuson-Moss

Warranty Act would be unaffordable without the routine

awarding of attorneys’ fees to successful plaintiffs.”’).

Courts have found under other statutes authorizing

consumers to act as private attorneys general that awarding

attorneys’ fees is essential to enforcement and that allowing a

defendant to avoid attorneys’ fees by taking voluntary action

A-18

to moot the controversy would defeat legislative intent. See

e.g., Southwest Marine, Inc. v. Campbell Indus., 732 F.2d

744 (9th Cir. 1984) (applying catalyst theory under amended

fee-shifting section of Clayton Act). The Third Circuit

clearly expressed such concerns in Baumgartner when it

stated: “[F]rom a policy standpoint, if defendants could

deprive plaintiffs of attorney’s fees by unilaterally mooting

the underlying case by conceding to plaintiffs’ demands,

attorneys might be more hesitant about bringing these . . .

suits, a result inconsistent with Congress’ intent... .”

Baumgartner, 21 F.3d at 548 (applying catalyst theory under

§ 1988). This Court believes that ruling out the catalyst

theory under Magnuson-Moss could encourage defendants

who find that their case is going poorly to take voluntary

action to moot the case and thereby deprive plaintiffs of the

opportunity to recover attorneys’ fees. This could deter

consumers from bringing meritorious claims because they

could risk being left with a large bill for attorneys’ fees.

That is inconsistent with the civil enforcement rationale of

the Act and the legislative policy goals of compensating

injured consumers and encouraging a safer marketplace.

Allowing defendants to escape from meritorious claims and

leave consumers with legal bills would work against

Congress’ purpose that the Act should “make the pursu‘t of

consumer rights involving imexpensive products

economically feasible.” S. Rep. 93-151, 23-24 (1973).

The Third Circuit has applied the catalyst theory under §

1988, IDEA, EHA and EAJA, while other circuits have

applied it under the LMRDA and the FHA. All are citizen-

protection statutes meant to encourage individuals to act as

private attorneys general in the public interest and the

catalyst theory serves those interests. For similar reasons,

the New Jersey courts found that the legislative and public

A-19

policies underlying Magnuson-Moss are served allowing the

catalyst theory. See Ventura, 180 N.J. Super. at 66 (“The

award of counsel fees fulfills the intent of the Magnuson-

Moss Warranty Act. Without such an award consumers

frequently would be unable to vindicate warranty rights

accorded by law.”’).

This Court believes that Baumgartner guides its analysis

of the viability of the catalyst theory for attorneys’ fees under

Magnuson-Moss. The Act is intended to enforce consumer

warranties and thereby protect consumers and public at large

from unsafe consumer products. As stated earlier, a court’s

construction of a statute should not place “magnified

emphasis upon a single ambiguous word in order to give it a

meaning contradictory to the fair import of the whole

remaining language.” United States v. Brown, 333 U.S. 18,

25-26 (1948). In this court’s view, it would not serve the

legislative intent of Magnuson-Moss or public policy to

construe its “finally prevails” language as meaning

something more restrictive than the “prevailing party’

language in many similar fee-shifting provisions with similar

legislative purposes. For the policy reasons set out by the

Third Circuit in Baumgartner, the Court finds that the

legislative intent and the public policies underlying

Magnuson-Moss are best served by recognizing a catalyst

theory for recovery of attorneys’ fees. Thus, a plaintiff who

can demonstrate the lawsuit was a catalyst for the change

sought can be deemed a prevailing party eligible for an

award of attorneys’ fees.

3. Summary

For the reasons discussed above, this Court finds that

terms “finally, “prevails,” and “as part of the judgment” in

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the attorneys-fee provision of Magnuson-Moss do not

preclude application of the catalyst theory to determine if a

consumer plaintiff is eligible for a recovery of attorneys’

fees. Rather, the Court finds that a plaintiff who can

demonstrate a change in legal status between himself and the

defendant and a causal link between his lawsuit and that

change can be said to have “prevailed” under Magnuson-

Moss. Such a prevailing plaintiff would be eligible for

attorneys’ fees when the action is “final,” meaning that the

lawsuit is concluded, because interlocutory fees are not

available. The prevailing plaintiff may recover attorneys’

fees “as part of the judgment” entered by the Court upon

termination of the case, including a dismissal, regardless of

whether the plaintiff has secured an award of damages or

litigated to a decision on the merits. Permitting the catalyst

theory under the fee-shifting provision of Magnuson-Moss

serves the legislative intent of the Act as well as the policies

underlying it. Accordingly, this Court will reverse the

Magistrate Judge’s determination that the language of the

Act precluded application of the catalyst theory.

4. Test for Prevailing Party

Determining that the catalyst theory is available does not

guarantee that a party claiming victory will be awarded

attorneys’ fees. See Hewitt, 482 U.S. at 760 (recognizing the

vitality of the catalyst theory, yet denying recovery of

attorneys’ fees to civil rights litigants); Hines, 971 F. Supp.

at 214 (noting that an award of attorneys’ fees to the

prevailing party under Magnuson-Moss is not automatic;

rather, the party seeking fees bears the burden of proof);

Kathleen H., 154 F.3d at 14 (acknowledging that a plaintiff

can demonstrate that she prevailed by showing that she acted

as a catalyst for a change in the legal relationship of the

A-21

parties, but denying plaintiffs’ fee application). A party

seeking attorneys’ fees still has the burden of proving

causation before it is entitled to recovery. See B.K., 998 F.

Supp. at 474 (plaintiffs can demonstrate prevailing party

status by establishing causation under the catalyst theory);

Brown v. Local 58, 76 F.2d at 773 (noting that while the

catalyst theory applied under LMRDA, plaintiffs’ action was

not in fact causally related to the union’s subsequent

amendment of its bylaws).

The Third Circuit laid out the two-part test for a

prevailing party to recover under the catalyst theory in

Baumgartner. A court considering an attorney-fee request

should ask: “{1] whether plaintiffs achieved relief and [2]

whether there is a causal connection between the litigation

and the relief from the defendant.” Baumgartner, 21 F.3d at

546 (citing Wheeler, 950 F.2d at 131). The first prong may

be satisfied by a plaintiff who achieves “some of the benefit

sought in a lawsuit, even through the plaintiff does not

ultimately succeed in securing a favorable judgment.” Id.

The second prong of the test, causation, may be established

either by obtaining a judgment, consent decree or a

settlement that ‘change[s] the legal relations of the

parties such that defendants [are] legally compelled

to grant relief’ or through a ‘catalyst’ theory, where

even though the litigation did not result in a

favorable judgment, the pressure of the lawsuit was a

material contributing factor in bringing about

extrajudicial relief.

Id. (citing Wheeler, 950 F.2d at 131). Plaintiffs must show

that they received “some of the benefit sought” and that “the

pressure of the lawsuit was a material contributing factor in

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bringing about extrajudicial relief.” Baumgartner, 21 F.3d at

546; see also Metropolitan Pittsburgh Crusade for Voters v.

City of Pittsburgh, 964 F.3d 244, 250 (3rd Cir. 1992)

(finding that the inquiry under the catalyst theory is “whether

plaintiff achieved some of the benefit sought by the party

bringing suit” and that the lawsuit was a “material

contributing factor” to the attainment of the relief).

Defendant argues that applying the catalyst theory

under Magnuson-Moss will cause increased litigation

because plaintiffs’ attorneys will piggyback on consumer

products investigations by governmental agencies and file

lawsuits hoping to recover attorneys’ fees if regulatory action

results. This is a false fear. Applying the Baumgartner test

will defeat “piggyback” claims because the causation prong

requires plaintiffs to demonstrate that their lawsuit was, in

large part, responsible for the action taken. The test requires

plaintiffs to prove that they actually caused the result, not

just that they were along for the nde.

5. Discovery on Catalyst Issue

Plaintiffs have argued that extended time for

discovery is needed so that they can prove that their lawsuit

was a catalyst for the recall of the Bendix 9 and 10 braking

systems and that plaintiffs thus qualify as the prevailing

party. Plaintiffs claim that despite a 19-month investigation

of the Bendix 10 braking system by the NHTSA, defendant

showed no interest in recalling the system until plaintiffs

filed their lawsuit. Additionally, plaintiffs state that their

lawsuit called for a recall of the Benedix 9 braking system a

year before the NHTSA began its inquiry into that system.

Plaintiffs argue that each of these occurrences suggests that

their lawsuit was a motivating factor in the recalls and that

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discovery of internal Chrysler memoranda will enable them

to prove these claims.

Defendant argues that additional discovery is not

needed because plaintiffs cannot be said to have prevailed in

their lawsuit. Specifically, defendant notes that plaintiffs

failed to gain class certification, that they originally sought

money damages and received none, that they continued to

litigate the case for two years after the recall of the braking

systems, and that the recalls were prompted by the NHTSA

investigation, not plaintiffs’ lawsuit.

The facts that plaintiffs continued to litigate their case

after the recall was announced and sought but not receive

money damages are immaterial to the question of whether

plaintiffs’ lawsuit was a catalyst for the recall. Plaintiffs

need not have obtained all of the relief they sought in order

to qualify as the prevailing party, nor need they have

abandoned the lawsuit when they received part of the relief

they were seeking. Plaintiffs also need not prove that their

lawsuit was the sole cause of Chrysler’s action.

The timing of Chrysler’s recall, following filing of

this lawsuit, raises a question of whether the lawsuit was a

material contributing factor in Chrysler’s decision to recall

the Bendix 9 and 10 braking systems. Also at issue are

whether the NHTSA investigations were the superseding

motivating factors. Deciding these issues will require the

Court to analyze the chronology of events and the

circumstances under which defendant decided to recall the

braking systems. Further discovery into the factors that

contributed to Chrysler’s recall could help the Court decide

the ultimate issue of whether plaintiffs’ lawsuit was a

catalyst for the recall. Accordingly, the Court will grant the

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plaintiffs’ motion for further discovery into the motivations

and decision-making process for Chrysler’s remedial actions.

The question of whether plaintiffs should be awarded

attorneys’ fees will be remanded to Magistrate Judge Chesler

for consideration in accordance with this opinion.

6. Defendant’s Motion to Strike Ditlow Declaration

Defendant has moved to have this Court strike the

declaration of Clarence Ditlow in support of plaintiffs’

motion for attorneys’ fees. Defendant argues that the Ditlow

declaration contains primarily legal arguments and opinions

rather than statements of fact within the personal knowledge

of the affiant as required by Local Rule 7.2(a). This Court’s

consideration of plaintiffs’ appeal of Magistrate Judge

Chesler’s Order involved statutory interpretation, which is

wholly a question of law. The Court did not rely on

affidavits submitted because the fact question of plaintiffs’

right to attorneys’ fees was not before the Court. Therefore,

defendant’s motion to strike the Ditlow declaration is moot

at this point and will be denied.

Accordingly, IT IS on this [14th] day of December

1999 ORDERED that Magistrate Judge Chesler’s August

24, 1999 Order is reversed and the matter is remanded for

further consideration consistent with this opinion.

IT IS FURTHER ORDERED that plaintiffs’

motion for further discovery pertaining to the catalyst issue

is granted.

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IT IS FURTHER ORDERED that defendant’s

motion to strike the declaration of Clarence Ditlow is denied

as moot.

John C. Lifland

United States District Judge

This is a copy of a public record, reproduced as it was published. It is not legal advice, and it may not be the version a court would rely on. Check the official source before you cite it.