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Category: Fee Statute

Federal Circuit: EAJA Fee Awards Must Use Local Rates

March 16, 2017

A recent Law 360 story by Chuck Stanley, “Fed. Circuit Says EAJA Legal Fees Must Use Local Costs,” reports that awards for attorneys’ fees under the Equal Access to Justice Act (EAJA) must be calculated based on the location where the work was done, a Federal Circuit panel said in a precedential ruling.

The federal circuit rejected a veteran’s widow’s claim that ambiguity in the statute allows her to adjust upward the hourly rate for calculating attorneys’ fees in a benefits suit based on the consumer price index (CPI) in Washington, D.C., where the case was heard but little other work was done.

Instead, the panel ruled that Paula Parrott should have provided individual rates for work done in Dallas, San Francisco and Washington in order to win an adjustment from the statutory rate of $125 per hour, rather than using the CPI for a single city or the national CPI to calculate a single rate.

The decision upheld the Veterans Court’s decision to award Parrott fees based on the statutory rate because she failed to provide rates for each city where work had been done on the case.

“We think the local CPI approach, where a local CPI is available … is more consistent with EAJA than the national approach.  We therefore hold that the Veterans Court did not err in ruling that the local CPI approach represented the correct method of calculating the adjustment in Ms. Parrott’s attorney’s hourly rate,” the decision states.

Parrott had claimed more than $7,200 in legal expenses in a suit over benefits for her husband, a deceased veteran, based on an upward adjustment from the statutory hourly rate based on the cost of living in Washington, D.C.  Language in the EAJA, which provides for an award of attorneys’ fees to victorious parties fighting agency action, stipulates that a $125 cap on hourly rates can be adjusted upward due to an increase in the cost of living.

But Parrott argued the statute is ambiguous regarding the method used to calculate such an increase.  She further claimed the Veterans Court was obliged to accept her cost estimate because ambiguity in a statute related to veterans benefits must be construed in favor of the veteran.

However, the panel ruled the EAJA is not ambiguous because using the national CPI rather than local numbers would incentivize more attorneys to accept cases challenging government agencies in low-cost areas rather than pricier areas.  Further, the panel found Parrott’s claim the Veterans Court was required to side with her is not applicable to the EAJA since it is not a veterans benefit statute, but applies to all litigants against executive agencies.

The case is Parrott v. Shulkin, case number 2016-1450, in the U.S. Court of Appeals for the Federal Circuit.

Attorney Fees Not Subject to Damages Cap in Wage Case

March 8, 2017

A recent Legal Intelligencer story by Zack Needles, “Attorney Fees Not Subject to Damages Cap in Wage Case, Court Says,” reports that attorney fees can be awarded under the Pennsylvania Wage Payment and Collection Law (WPCL), even if they cause the total recovery to exceed a voluntary $25,000 damages cap, the Pennsylvania Superior Court ruled in a case of first impression.

Under Pennsylvania Rule of Civil Procedure 1311.1, a plaintiff can elect to limit the maximum amount of damages recoverable to $25,000 in exchange for looser evidence admission requirements at a trial following compulsory arbitration.  In a published opinion in Grimm v. Universal Medical Services, a three-judge Superior Court panel unanimously ruled that such a cap does not preclude an award of attorney fees under the WPCL that pushes the total recovery above $25,000.

The decision affirmed a Beaver County trial court's award of $43,080.66, comprising an $11,683.92 jury award, plus $2,920.98 in liquidated damages and $28,475.76 in attorney fees and costs under the WPCL.  The appeals court upheld Beaver County Court of Common Pleas Judge James J. Ross' ruling, which reasoned that attorney fees in excess of the damages cap should be permitted because "a prevailing plaintiff in a [WPCL] claim must be made whole and not be required to expend his or her award to pay his or her attorney."

Judge John T. Bender, writing for the Superior Court, agreed with Ross' rationale, noting that Rule 1311.1 is intended to streamline litigation in order to make it more economically feasible for plaintiffs, while the WPCL is meant to allow plaintiffs to collect unpaid wages and compensation without having to spend their entire recovery on legal fees.

"In this way, both Rule 1311.1 and the WPCL aim to make litigation more accessible and affordable to aggrieved litigants, particularly those with meritorious claims," Bender said.  "In this case, we believe we are promoting this overarching policy by interpreting 'damages recoverable' in Rule 1311.1(a) to exclude attorneys' fees under the WPCL."  Bender was joined by Judges Mary Jane Bowes and Carl A. Solano.

In Grimm, plaintiff Jeffrey P. Grimm sued defendants Universal Medical Services Inc. and Roderick K. Reeder, alleging breach of contract against Universal for failure to reimburse business expenses and a WPCL claim against both defendants on the same basis, according to Bender.

The case proceeded to compulsory arbitration, with an award in favor of the defendants.  Grimm appealed to the Beaver County Court of Common Pleas, electing to cap damages at $25,000 under Rule 1311.1, and the case proceeded to a jury trial, Bender said.

The jury awarded damages to Grimm in the amount of $11,683.92 and, finding that Universal acted in bad faith in failing to reimburse him, the court added 25 percent, or $2,920.98, to the jury award, resulting in a total of $14,604.90, according to Bender.  Grimm then sought attorney fees in the amount of $25,946.25 and litigation costs in the amount of $2,529.51 under the WPCL.

While the defendants argued that the phrase "damages recoverable" in Rule 1311.1 encompassed attorney fees, Grimm contended that attorney fees are payments in addition to a jury award intended to make the plaintiff whole.

Bender noted that Ross, in his analysis, looked first at the analogous 2001 Pennsylvania Supreme Court case Allen v. Mellinger, in which then-Justice Ralph Cappy wrote in a concurring and dissenting opinion that delay damages in cases involving bodily injury, death or property damage under Pa.R.Civ.P. 238 should not be subject to the statutory cap of $250,000 when the state is a defendant in a bodily injury claim.

In the 2005 case LaRue v. McGuire, as Ross also noted in his opinion, the Superior Court relied on Cappy's reasoning in Allen to find that delay damages under Rule 238 were not subject to the Rule 1311.1 damages cap.

While the defendants attempted to distinguish Grimm from Allen and LaRue by arguing that delay damages are an extension of compensatory damages intended to make the plaintiff whole, while attorney fees serve no such purpose, Bender disagreed.

"It is clear that the award of attorneys' fees under the WPCL accomplishes the purpose of making a plaintiff whole, just like the delay damages in Allen and LaRue," Bender said.

Judge Denies Fee Award to State AGs in Antitrust Case

March 2, 2017

A recent NLJ story by C. Ryan Barber, “Judge Refuses Fee Award to State AGs in Antitrust Case,” reports that nearly a year after striking down Staples Inc.’s proposed takeover of Office Depot, a federal judge in Washington refused to award $175,000 in legal fees to the Pennsylvania and District of Columbia attorneys general for their role in challenging the office supply chains’ $6.3 billion deal.

The two offices teamed up with the Federal Trade Commission (FTC) in a suit that alleged the proposed deal would hurt competition in the market for office supplies sold in bulk to large corporate clients.  In May, U.S. District Judge Emmet Sullivan sided with regulators and granted a preliminary injunction.  Staples and Office Depot abandoned their merger plans.

Pennsylvania and D.C. argued they were entitled to fees under a provision of the Clayton Act that allows for the reimbursement of legal costs when the plaintiff “substantially prevails.”  Sullivan said there was one problem: Regulators prevailed not under the Clayton Act but the FTC Act, which does not grant legal fees to winning plaintiffs.

"Simply put, moving plaintiffs cannot have it both ways,” Sullivan wrote in a 10-page opinion.  “They cannot ride the FTC’s claim to a successful preliminary injunction under the more permissive [FTC Act] standard and then cite that favorable ruling as the sole justification for fee-shifting under the more rigorous Clayton Act standard."

Pennsylvania and District of Columbia offices had argued that the preliminary injunction directly broke up the merger, allowing them to recoup costs under the so-called “catalyst rule.”  But Sullivan was not persuaded.

As Staples and Office Depot pointed out, Sullivan wrote, “the catalyst rule as a mechanism for obtaining attorneys’ fees in certain circumstances was rejected by the Supreme Court in 2001,” in the case of Buckhannon Board and Care Home, Inc. v. West Virginia Department of Health and Human Resources.

The FTC had taken the lead in the antitrust challenge—a fact Staples and Office Depot raised to belittle the two offices’ role in the case.  The two companies described the work from Pennsylvania and D.C. as duplicative of the FTC’s, poorly documented and “largely spent on non-determinative issues (to the extent it is possible to determine what they worked on with any specificity at all).”

The Pennsylvania attorney general’s office requested $142,548, the District of Columbia $33,547—amounts that, if granted, would have represented an “unprecedented windfall,” Staples and Office Depot argued.  Weil, Gotshal & Manges represented Staples, and Simpson, Thacher & Bartlett represented Office Depot.

Sullivan said Pennsylvania and D.C. “effectively ask this court to take an unprecedented step.”  The choice to challenge the deal under the FTC Act was a “strategic one,” Sullivan wrote.  “Nonetheless, moving plaintiffs cannot bring a petition for fee-shifting under a provision under which they did not prevail,” he wrote.

How to Get Reciprocal Contractual Attorney Fees in California

February 6, 2017

A recent CEBblog article, “How to Get Reciprocal Contractual Attorney Fees,” by Julie Brook, reports on reciprocal attorney fee shifting provisions under California’s § 1717.

This material is reproduced from the CEBblog™, How to Get Reciprocal Cotractual Attorney Fees (https://blog.ceb.com/2017/02/06/how-to-get-reciprocal-contractual-attorney-fees/) copyright 2017 by the Regents of the University of California.  Reproduced with permission of the Continuing Education of the Bar - California.  (For information about CEB publications, telephone toll free 1-800-CEB-3444 or visit our Web site CEB.com).

This article was posted with permission.  The article reads:

It’s like magic: California’s CC §1717 transforms a unilateral attorney fee provision in a contract into a reciprocal one!  When the contract provides for attorney fees to either a particular party or the prevailing party, the prevailing party “on the contract” is entitled to recover reasonable attorney fees regardless of whether that party was the party specified in the contract.  But taking advantage of this statute depends on meeting the following five requirements.

  1. There must be an attorney fees provision.  Section §1717 can convert a one-way attorney fee clause into a mutual and reciprocal clause, but it can’t create an attorney fee provision out of thin air.  The contract at issue must include at attorney fee provision for the statute to have any effect.
  2. Only the prevailing party gets fees.  A party’s right of recovery depends on whether that party is determined by the court to be the prevailing party.  There’s no prize just for participating.
  3. The action must be “on the contract.”  When it comes to CC §1717, courts have construed “on a contract” broadly to apply to any action that involves a contract.  But it doesn’t apply to tort claims such as fraud if the lawsuit doesn’t also seek to enforce or avoid enforcement of the contract.  And it also doesn’t apply to promissory estoppel claims, because they’re based on equitable principles.
  4. The fees recovered must be “reasonable.”  One of the purposes of CC §1717(a) is to assure uniform treatment of attorney fee recoveries in actions on contracts with attorney fee clauses and to eliminate disparities based on whether the recovery was authorized by contract or by statute.  PLCM Group, Inc. v Drexler (2000) 22 C4th 1084.  So §1717(a) limits the amount of fees recoverable to “reasonable” fees as “fixed by the court,” even if the contract clause doesn’t limit recovery to reasonable levels.
  5. Attorney fee clause applies to the whole contract.  If a contract has an attorney fee clause, that provision will be construed to apply to the entire contract unless each party was represented by counsel in the negotiation and execution of the contract and the fact of that representation is specified in the contract. CC §1717(a).

For more on recovery of attorney fees by contract, check out CEB’s California Law of Contracts, chap 9.  And when deciding whether to include an attorney fee provision in a contract, turn to CEB’s Drafting Business Contracts: Principles, Techniques and Forms §§15.18-15.20.

Other CEBblog™ posts you may find useful:

CEB is a self-supporting program of the University of California that is cosponsored by the State Bar of California.  CEB is the go-to source for lawyers on information about the law, and the practice of law, in California.  For more on CEB, visit https://blog.ceb.com/

Florida State Senator Seeks to Limit Attorney Fee Entitlement

December 23, 2016

A recent Florida Record story, “State Senator Makes Second Attempt to Limit Attorney’s Fees,” reports that State Senator Greg Steube (R-Sarasota) gave action to the old adage “If at first you don’t succeed…” when he refiled Senate Bill 80.

SB 80 is intended to provide greater discretion to judges, who preside over public-records cases, on the amounts and types of attorney’s fees that can be awarded.  The version of SB 80 Steube filed was a revised version of one he filed in the last legislative session, when he was a state representative.  That version of the bill passed the Senate, but stalled in the House.

According to floridapolitics.com, the current law states that judges “shall award attorney’s fees” in these cases.  SB 80 makes a key change to the current legislation by amending the current language to “may award attorney’s fees.”

Organizations like the Florida League of Cities have advocated for providing judges with this decision-making power, believing that the change will refocus the number of lawsuits against public officials.  With the elimination of guaranteed fees for attorneys, people may not be as quick to file suit against a public official when an honest, clerical mistake has been made.

On the other side of the argument are organizations like the First Amendment Foundation, which argue that passage of the bill may have negative consequences, such as in cases that involve local governments that purposefully refuse to honor public-records requests.

“This bill seeks to impose a new burden on the right to obtain attorneys fees when a citizen is required to file a lawsuit to view public records," Lawrence G. Walters, an attorney at Walters Law Group, told the Florida Record.  "The attorney's-fee entitlement under existing law is an important element of the public-records regime because it creates an incentive for state agencies to keep government records open to the public.”

Steube told the Bradenton Herald that this change is necessary to curtail those who are looking to work the system.  There have been cases in the past where an individual files one public-records request after another with an agency.  This cycle continues until it becomes an impossibility for the agency to fulfill those requests in a “reasonable amount of time.”  The filer then moves forward with a lawsuit.

Walters wonders about the long-reaching effects of the bill should it pass into law.  “If the bill passes, it may well serve as a model for other states looking to mitigate the consequences for failing to honor certain public-records requests,” he said.

“By requiring a written demand for records before attorneys fees can be awarded, noncompliant state agencies will not face any meaningful consequence if they refuse to provide access to public records upon verbal request," Walters said.  "This may encourage certain officials or agencies to treat verbal requests as less important."