Opposition Brief — Applegate v. United States, 124 S. Ct. 1145 (2004) (No. 03-552)

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In the Supreme Court of the Gnited States

DON APPLEGATE, ET.AL., PETITIONERS

Vv.

UNITED STATES OF AMERICA

ON PETITION FOR A WRIT OF CERTIORARI

TO THE UNITED STATES COURT OF APPEALS

FOR THE FEDERAL CIRCUIT

BRIEF FOR THE UNITED STATES IN OPPOSITION

THEODORE B. OLSON

Solicitor General

Counsel of Record

THOMAS L. SANSONETTI

Assistant Attorney General

KATHRYN E. KOVACS

DAVID C. SHILTON

Attorneys

Department of Justice

Washington, D.C. 20530-0001

(202) 514-2217

QUESTIONS PRESENTED

1. Whether the Court of Federal Claims erred in

determining what constitutes “reasonable attorneys’

fees” under a settlement agreement by reference to

principles expressed in this Court’s fee-shifting cases.

2. Whether the Court of Federal Claims abused its

discretion in concluding that the attorneys’ fee award

should not be subject to an “exceptional results”

multiplier.

(I)

TABLE OF CONTENTS

Page

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TABLE OF AUTHORITIES

Cases:

Blanchard_v. Bergeron, 489 U.S. 87 (1989) «2.0... sauibiaieae 7

Blum v. Stenson, 465 U.S. 886 (1984) ..ccccccccccccssccscsecsssseees 8,9

City of Burlington v. Dague, 505 U.S. 557 (1992) ......... 5, 7,9

Dutchak v. Central States, S.E. & S.W. Areas

Pension Fund, 932 F.2d 591 (7th Cir, 19° ..cescsecssessseeees 7,8

Gisbrecht v. Barnhart, 535 U.S. 789 (2002) .....ccccccccccceceseee 6

Hensley v. Eckerhart, 461 U.S. 424 (1983) .....ccccscsssssssseees 8

Hyatt v. Apfel, 195 F.3d 188 (4th Cir. 1999)... 10, 11

Pennsylvania v. Delaware Valley Citizens’ Council

for Clean Air, 478 U.S. 546 (1986) ........ccccccccscccccsscsssssssseees 8

Wing v. Asarco Inc., 114 F.3d 986 (9th Cir. 1997) ........... 7,8

Statutes:

Social Security Act § 206(b), 42 U.S.C. 406(b) .....ssssssssseeen 6

Uniform Relocation Assistance and Real Property

Acquisition Policies Act of 1970, 42 U.S.C. 4654(e) ......... 6

(III)

mare,

Jn the Supreme Court of the Gnited States

No. 03-552

DON APPLEGATE, ET AL., PETITIONERS

Vv.

_UNITED STATES OF AMERICA

ON PETITION FOR A WRIT OF CERTIORARI

TO THE UNITED STATES COURT OF APPEALS

FOR THE FEDERAL CIRCUIT

BRIEF FOR THE UNITED STATES IN OPPOSITION

OPINIONS BELOW

The judgment of the court of appeals (Pet. App. 1la-

2a) is not published in the Federal Reporter but is

reprinted in 70 Fed. Appx. 582. The opinion of the

Court of Federal Claims (Pet. App. 3a- 49a) is reported

at 52 Fed. Cl. 751.

JURISDICTION

The judgment of the court of appeals was entered on

July 17, 2003. The petition for a writ of certiorari was

filed on October 14, 2003. The jurisdiction of this Court

is invoked under 28 U.S.C. 1254(1).

(1)

2

STATEMENT

Petitioners are landowners in Brevard County, Flor-

ida, who brought an inverse condemnation action

against the United States. They alleged that the gov-

ernment’s construction, maintenance, and operation of

jetties at Port Canaveral caused erosion of beach hold-

ings south of Cape Canaveral. Pet. App. 4a. The

parties settled the action under an agreement in which

the United States agreed to pay petitioners $5 million

and to provide (contingent on congressional appropria-

tions) beach fill placement in two areas. Jd. at 6a. The

settlement agreement provided that “(t]he United

States shall also pay to Plaintiffs attorneys’ fees” and

that, “[flor purposes of this Settlement Agreement,

Plaintiffs are entitled to recover reasonable attorneys’

fees and costs.” C.A. App. 365. The agreement pro-

vided that if the parties could not agree on the amount

of fees and costs, a reasonable amount would be deter-

mined by the Court of Federal Claims “following the

submission of documentation of said costs and fees.” Id.

at 366.’

Following Congress’s appropriation of funds neces-

sary for the beach fill project, petitioners filed a motion

seeking $1,990,189 in attorneys’ fees, along with ad-

ditional costs and expert fees. Pet. App. 7a. Petitioners

later filed an amended motion seeking a much larger fee

award. C.A. App. 378-396. In the amended motion, pe-

titioners asserted that they were entitled either to fees

1 The settlement agreement does not mention petitioners’ pri-

vate fee agreements with their attorneys. Those contracts provide

that, if the litigation is successful, petitioners would pay costs and

a fee equal to one-third of the value of the benefits obtained by the

suit, or 40% if an appeal is involved, out of their recovery. Pet.

App. 4a.

3

equivalent to 40% of the landowners’ monetary and

non-monetary benefits, which would generate a fee of

more than $12 million, or to fees equivalent to an en-

hanced lodestar amount, which petitioners calculate? to

be more than $6 million. Jd. at 393. The parties were

not able to agree on the proper amount of “reasonable”

attorneys’ fees. After briefing and a two-day

evidentiary hearing, the Court of Federal Claims deter-

mined that reasonable attorneys’ fees amounted to

$1,803,575. Pet. App. 4a, 49a.

In reaching its determination, the court rejected peti-

tioners’ attempts to analogize the case to a “common

fund” case, pointing out that the settlement agreement

did not create an identifiable common fund from which

fees could be taken, but instead required the United

States to pay the fees. Pet. App. 20a-2la. The court

accordingly concluded that it was more appropriate to

draw on statutory fee-shifting principles, which calcu-

late a “lodestar” amount based on hours reasonably

expended on the litigation multiplied by a reasonable

hourly rate. Jd at 23a. The court concluded from con-

temporaneous billing records both the reasonable

number of hours petitioners’ counsel spent on the

matter and reasonable hourly rates, yielding a lodestar

of $1,994,277. Id. at 29a.

The court reduced the lodestar amount by $190,702

as a result of an earlier sanctions order that barred

petitioners from recovering any attorneys’ fees for one

phase of the litigation. Pet. App. 29a-34a. The court

rejected the government’s arguments that other reduc-

tions should be made to the lodestar to eliminate hours

spent on certain unsuccessful arguments and because of

inadequate documentation. Jd. at 34a-4la. The court

also rejected petitioners’ efforts to enhance the lodestar

to compensate for delay in payment and for allegedly

4

“exceptional results,” obtained in the litigation. Jd. at

41a-49a.

The court of appeals affirmed the judgment without

opinion. Pet. App. la-2a.

ARGUMENT

The Court of Federal Claims correctly determined

the amount of “reasonable” attorneys’ fees in accor-

dance with the parties’ settlement agreement. The

court of appeals’ unpublished affirmance of that deci-

sion, which interprets and applies the terms of a par-

ticular agreement, does not conflict with any decision of

this Court or another court of appeals, and it does not

present an issue of broad national significance or one

that is even likely to recur. This Court’s review is not

warranted.

1. Petitioners contend that the Court of Federal

Claims erred because it allegedly “deemed itself bound

by the prohibitions of this Court’s statutory fee-shifting

jurisprudence, limited itself to a severely restricted

lodestar calculation, [and] refused to consider the rele-

vance of Petitioner’s contingent fee agreements.” Pet.

3. Petitioners are mistaken in their characterization of

the lower court’s decision.”

The Court of Federal Claims explained that it was

“evaluating what is ‘reasonable’ within the meaning of

2 There is also no support in the record for petitioners’ state-

ment (Pet. 3) that “undisputed testimony and Respondent’s ad-

missions established that Petitioners’ contingent fee agreements

were reasonable.” Petitioners simply cite their own appellate

briefs in support of that assertion. The petition contains many fac-

tual assertions that are based solely on statements in petitioners’

appellate briefs. See, e.g., Pet. 3, 8, 9, 10 n.9, 18 n.15, 24 n.16, 25

n.17. The Court has no obligation to credit as true statements that

are unsupported by any findings or record evidence.

5

the Agreement.” Pet. App. 8a. It then considered

“cases construing * * * fee-shifting provisions, as well

as those involving the ‘common fund’ doctrine * * * to

harvest the principles for determining what is a ‘rea-

sonable’ fee here.” Jd. at 10a. It considered “whether—

—and to what extent—this case is more appropriately

analogized to a statutory fee case, as opposed to a com-

mon fund case,” id. at 19a, and it ultimately determined

that “this case is most analogous to a fee shifting

matter,” id. at 2la. The court determined that fee

shifting-was the appropriate analogy here because the

settlement agreement called for fees to be paid by the

United States rather than paid out of petitioners’

recovery. Id. at 22a-23a. The court used principles

from statutory fee shifting cases as a guide for deter-

mining a “reasonable” fee, noting that this Court has

found in such cases that there is a “‘strong presump-

tion’ that the lodestar represents the ‘reasonable fee’

promised in most fee-shifting provisions.” Jd. at 26a

(quoting City of Burlington v. Dague, 505 U.S. 557, 562

(1992)).

The Court of Federal Claims plainly did not, as peti-

tioners contend, “hold that this Court’s fee-shifting

cases are binding upon parties to a settlement agree-

ment that incorporates no fee-shifting statute.” See

Pet. 11-12. In mischaracterizing the court’s decision,

petitioners provide no reason to question that court’s

determination that fee-shifting cases provide the most

analogous source of principles for determining a reason-

able fee in this case.°

3 Petitioners ignore a variety of factors, in addition to the

source of the fee payment, that support the court’s determination

to seek guidance from fee-shifting cases. First, had this inverse

condemnation suit been litigated to conclusion and petitioners

6

Petitioners’ claims (Pet. 5) of a “conflict” with deci-

sions of this Court and other circuit courts are without

substance. Petitioners first contend (Pet. 13-16 & n.14)

that Gisbrecht v. Barnhart, 5385 U.S. 789 (2002), re-

quires that a court consider the reasonableness of exist-

ing contingent fee agreements. That decision, which

petitioners never brought to the attention of the Court

of Federal Claims or the court of appeals, is inapposite.

The Court in Gisbrecht examined the fee agreements

because the fee statute at issue “does not authorize the

prevailing party to recover fees from the losing party

* * * [but] authorizes fees payable from the successful

party’s recovery.” 535 U.S. at 802 (citing Social Secu-

rity Act § 206(b), 42 U.S.C. 406(b)). Gisbrecht plainly

does not suggest that a contingent fee arrangement

would be pertinent in a situation, like this case, in which

the defendant agrees to pay a reasonable fee that will

not be taken out of the amount of recovery. Indeed,

prevailed, fees would have been controlledby a fee-shifting statute

—the Uniform Relocation Assistance and Real Property Acquisi-

tion Policies Act of 1970, 42 U.S.C. 4654(c). That fee-shifting

statute formed the backdrop for the negotiation of the settlement

agreement. Second, the settlement agreement required “the sub-

mission of documentation of said costs and fees,” C.A. App. 366,

which is consistent with a fee award based on hours reasonably

expended, rather than on a percentage of recovery. Third, the

agreement said nothing suggesting an intent to incorporate the

contingent fee agreements petitioners had entered into with their-

attorneys. Finally, petitioners’ initial fee application sought fees in

the amount of $1,990,189, reflecting the lodestar approach, rather

than a contingent fee. Pet. App. 7a; see id. at 29a. Hence, peti-

tioners’ own conduct confirms that the parties contemplated use of

a lodestar approach—until petitioners filed an amended fee appli-

cation seeking a dramatically larger award and raising for the first

time the theory that an award should be based on the contingent

fee contracts.

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Gisbrecht supports the Court of Federal Claims’ em-

phasis on the fact that the agreement called for a

payment by the United States rather than out of the

plaintiffs’ recovery in drawing an analogy to fee-

shifting statutes.‘

Petitioners also suggest (Pet. 18-22) that the Court of

Federal Claim’s decision conflicts with Wing v. Asarco

Inc., 114 F.3d 986 (9th Cir. 1997), and Dutchak v.

Central States, Southeast & Southwest Areas Pension

Fund, 932 F.2d 591 (7th Cir. 1991), because those cases

found that the parties’ intent, as expressed in

attorneys’ fee settlement agreements, would prevail

over conflicting guidance from case authority stemming

from either fee-shifting or common fund contexts.

There is no conflict, however, because the court in this

case took the same view of the primacy of the contract.

See, e.g., Pet. App. 23a n.16 (“[T]he court does not rely

on the fact that this case would have been controlled by

4 This Court has consistently stated that contingent fee

contracts should not be considered in the typical fee-shifting

situation, stating, for example:

[W]e have said repeatedly that “(t]he initial estimate of a

reasonable attorney’s fee is properly calculated by multiplying

the number of hours reasonably expended on the litigation

times a reasonable hourly rate.” Blum v. Stenson, 465 U.S.

886, 888 (1984). The courts may then adjust this lodestar cal-

culation by other factors. We have never suggested that a

different approach is to be followed in cases where the pre-

vailing party and his (or her) attorney have executed a con-

tingent-fee agreement.

Blanchard v. Bergeron, 489 U.S. 87, 94 (1989); see Dague, 505 U.S.

at 565-566 (“we have generally turned away from the contingent-

fee model-which would make the fee award a percentage of the

value of the relief awarded in the primary action-to the lodestar

model”) (footnote omitted).

8

a fee-shifting statute had plaintiffs litigated this matter

to completion and prevailed. Rather, the focus here is

on the terms of the Agreement.”). Moreover, the courts

in Wing and Dutchak, like the court in this case, looked

to fee-shifting cases for guidance on what constitutes a

“reasonable” fee. See Wing, 114 F.3d at 989 (citing two

fee-shifting cases, Pennsylvania v. Delaware Valley

: Citizens’ Council for Clean Air, 478 U.S. 546 (1986),

and Blum v. Stenson, 465 U.S. 886 (1984), in deter-

mining that an “exceptional results” multiplier to the

lodestar was warranted)); Dutchak, 932 F.2d at 596-597

(citing Hensley v. Eckerhart, 461 U.S. 424 (1983), in

determining proper lodestar figure).°

A trial court has broad discretion in determining

what constitutes a “reasonable” attorney fee award,

whether under a fee-shifting statute, Hensley v. Ecker-

hart, 461 U.S. 424, 487 (1983), or under a settlement

agreement that confers that authority on the court. The

Court of Federal Claims did not abuse its discretion in

determining that the lodestar approach provided a

“reasonable” attorneys’ fee award for petitioners in this

case.

4 Wing and Dutchak permitted the recovery of fees greater

than the lodestar amount based on provisions of the particular

settlement agreements in those cases that are not present here. In

Wing, the court of appeals concluded that a fee award equal to

twice the lodestar amount was not an abuse of discretion, where

the settlement agreement had expressly contemplated a fee award

of more than twice the amount of the agreed-upon lodestar figure

of $4 million. 114 F.3d at 988. In Dutchak, the court of appeals

upheld a lodestar multiplier to compensate for the contingent

nature of the case, but only because the settlement agreement

specifically adopted as guideposts four lower court decisions that

had approved contingency multipliers. 932 F.2d at 593 n.1, 595-

596. None of these features supporting enhancement of the lode-

star were present in the settlement agreement in this case.

9

2. Petitioners contend (Pet. 22) that even if fee-

shifting principles apply, the CFC “used an improper

and impossible standard” for determining whether an

“exceptional results” multiplier to the lodestar was

warranted. In Dague, this Court stated that:

We have established a “strong presumption” that

the lodestar represents the “reasonable” fee, Dela-

ware Valley I, supra, [478 U.S.] at 565, and have

placed upon the fee applicant who seeks more than

that the burden of showing that “such an adjust-

ment is necessary to th. determination of a reason-

able fee.” Blum v. Stenson, 465 U.S. 886, 898 (1984).

505 U.S. at 562. In Blum v. Stenson, 465 U.S. 886 (1994),

this Court overturned as an abuse of discretion a fee

award that included an “exceptional results” enhance-

ment based upon the complexity of the litigation, the

novelty of the issues, the high quality of representation,

the great benefit to the class, and the riskiness of the

law suit. /d. at 898. The Court found that those factors

were normally reflected in the number of billable hours

claimed and the hourly rates charged. The Court stated

that an enhancement to the lodestar could be justified

on those grounds “only in the rare case where the fee

applicant offers specific evidence to show that the

quality of service rendered was superior to that one

reasonably should expect in light of the hourly rates

charged and that the success was ‘exceptional.’” Jd. at

899. ;

The Court of Federal Claims applied that standard

and, after a comprehensive consideration of petitioners’

arguments, concluded that they had not carried their

burden of showing that this was one of the “rare” or

“exceptional” cases that warrants a multiplier of the

lodestar. Pet. App. 44a-49a. In particular, the court

10

pointed to the facts that: (1) the relief obtained was

simply what the complaint sought (and indeed was less

than the total asked for); (2) the relief with respect to

this project did not affect Corps of Engineers policy

generally; (3) the successful resolution of the case was

attributable to the substantial efforts of the Florida

congressional delegation as well as to the work of

plaintiffs and their attorneys; (4) there was no evidence

that it was customary in the area for attorneys to

charge an additional fee above their hourly rates for an

“exceptional” result; and (5) this was not an unattrac-

tive case, but one that brought the firm significant posi-

tive publicity. Id. at 45a-49a.

Petitioners focus on the first of those five factors,

contending that the court created a “legal standard for

exceptionality” that requires attorneys to obtain relief

beyond what the complaint requests. Pet. 24. The

court did not, however, elevate that particular con-

sideration to the status of a legal standard. That factor

was simply one consideration, among others, that

weighed against a finding that petitioners had carried

their burden of showing that this was a “rare” case

where an enhancement of the lodestar was warranted.

The court properly pointed out, for example, that the

result here—the rebuilding of a single beach—did not

change agency policy or have an impact beyond the

confines of the litigation. Pet. App. 46a. The limited

nature of the relief distinguishes this case from Hyatt v.

Apfel, 195 F.3d 188 (4th Cir. 1999). The court in that

case upheld an enhancement where the litigation had

caused the Social Security Administration to promul-

gate a new nationwide regulation that reversed its past

policy and extended the benefits of the suit to “hun-

dreds of thousands of disability claims.” Jd. at 191-192.

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The Court of Federal Claims plainly did not abuse its

discretion in refusing to award a multiplier in this case.

CONCLUSION

The petition for a writ of certiorari should be denied.

Respectfully submitted.

THEODORE B. OLSON

Solicitor General

THOMAS L. SANSONETTI

Assistant Attorney General

KATHRYN E. KOVACS

DAVID C. SHILTON

Attorneys

DECEMBER 2003