A recent Law.com story by Jimmy Hoover, “Justices to Examine Meaning of ‘Prevailing Party’ in Attorney Fee Disputes”, reports that, to those who follow legal news, it’s not uncommon to see parties declaring victory after a court decision that seems to go against them. Texas Attorney General Ken Paxton was criticized last week for doing just that on social media last week after the U.S. Supreme Court allowed takings litigation to proceed against the state over property flooding caused by a highway barrier.
Usually, the stakes of such episodes involve little more than attorneys’ egos and their win-loss records. But an appeal taken up by the Supreme Court shows that deciding after litigation has concluded which side is the “prevailing party” can affect more than just bragging rights but real dollars and cents in the form of attorney fees.
The high court granted certiorari, or review, in Lackey v. Stinnie, an appeal by the Virginia Department of Motor Vehicles, which is now on the hook for potentially more than $1 million in legal fees from plaintiffs who had secured a preliminary injunction against the DMV in a civil rights lawsuit. The agency’s petition raises two questions for the justices, which will hear the dispute next term.
The first is whether a party “must obtain a ruling that conclusively decides the merits in its favor,” rather than just a preliminary injunction, to obtain attorney fees in a civil rights suit under Section 1988 of the 1976 Civil Rights Attorney’s Fees Award Act. The second is whether the parties’ legal relationship must change through a “judicial act” or whether a nonjudicial event mooting the case is enough to obtain fees under the statute.
The case, the DMV has said, could affect who’s eligible for attorney fees in a number of other areas, as well, such as trademark infringement, voting rights and disability discrimination, where fee-shifting laws use the phrase “prevailing party.” In their putative class action against the DMV, a number of plaintiffs with past criminal convictions accused the agency of violating their rights by automatically suspending their licenses over court fees they could not afford to pay.
The plaintiffs won a preliminary injunction from the district court blocking state officials from enforcing the Virginia law against them, as the judge concluding they were likely to succeed on the merits of their procedural due process claim. As the case proceeded to trial, the litigation was delayed and ultimately rendered moot by the Virginia General Assembly, which suspended and later repealed the law in question after public pushback.
The plaintiffs’ original request for attorney fees was rejected, but on appeal, the U.S. Court of Appeals for the Fourth Circuit agreed to rehear the case en banc. The court’s 7-4 ruling held that, “When a preliminary injunction provides the plaintiff concrete, irreversible relief on the merits of her claim and becomes moot before final judgment because no further court-ordered assistance proves necessary, the subsequent mootness of the case does not preclude an award of attorney’s fees.”
In its certiorari petition to the Supreme Court in November, the DMV said the standard for obtaining attorneys’ fees under Section 1988 “presents multiple circuit splits” and the case is one of importance that the Supreme Court should resolve. “[A]ttorney’s fees in civil rights cases often impose substantial financial burdens on state governments,” the DMV wrote in its petition filed by lawyers from the Virginia attorney general’s office and Hunton Andrews Kurth LLP.
“Plaintiffs have already requested an award of more than $767,000 in appellate fees alone,” the petition stated. “Their total fee request likely will run into the millions of dollars, considering the years of litigation in the district court.” Further, the state agency wrote, “the risk of large, unpredictable fee awards will deter States from voluntarily altering allegedly unlawful behavior.”
The term “prevailing party” is also peppered throughout many fee-shifting statutes, so the issue is one that could affect attorneys’ fees in the areas of trademark law, disability discrimination and voting rights, the state added. “[T]he effect of the term’s interpretation is sweeping,” the petition stated.
The plaintiffs had asked the court to pass on the case, denying there was any split “requiring this Court’s resolution.” They wrote that the earlier injunction in the case was “on the merits” and “materially altered the legal relationship between the parties.” “Respondents are prevailing parties and would be in every circuit,” stated the brief in opposition, filed by lawyers at McGuire Woods. Oral arguments have not yet been scheduled in the case. The court is expected to render its decision by the end of June 2025.