As regular readers know, one of the recurring themes on this blog is litigation under fee-shifting statutes (and for that matter, fee-shifting provisions in contracts).
The federal False Claims Act (and our state version of the FCA, the Virginia Fraud Against Taxpayers Act) are just two such statutes. All totaled there are more than 200 fee-shifting statutes in the United States Code and I am not quite sure how many there are in the Virginia Code.
There is a well-developed body of federal jurisprudence on the topic of fee awards, and I have always been of the opinion that every lawyer in private practice who represents client’s on an hourly basis would do well to review it from time to time.
Far and away the most important opinion to come from SCOTUS in the last twenty years is Perdue v. Kenny A. ex rel. Winn, 130 S.Ct. 1662 (2010). Initially, the opinion received lots of attention as a result of its confirmation of the possibility of a “fee-enhancement” over and above the “lodestar method” for extraordinary work. (The lodestar method consists of a reasonable hourly rate multiplied by a reasonable amount of hours).
Although the holding that attorney’s fee enhancements may be possible in rare and exceptional circumstances is the most frequently discussed element of the opinion, there is an additional angle that received much less attention but was, for most intents and purposes, far more important. In Perdue the district court awarded attorney’s fees to a number of plaintiffs who had prevailed in a § 1983 action challenging the state of Georgia’s foster care policies.
The litigation was grueling by any measure — the case lasted for a number of years (I want to say more than eight years) and for the duration of that time the plaintiff’s lawyers went unpaid.
Moreover the end result was undoubtedly a benefit to society. The quality of foster care services in the state of Georgia was improved and who, after all, could be against helping children who have no place to go?
As a result of these factors, the district court awarded plaintiff’s attorneys an bonus by awarding by 175% of the fees sought.
The state appealed arguing that the fee increase was arbitrary and capricious, and SCOTUS agreed.
What seemed to bother the Court was not the fact that the fees were enhanced, but rather the arbitrary and capricious manner in which they were enhanced. “Why,” Justice Alito wondered, “did the court grant a 75% enhancement instead of the 100% increase that respondents sought? And why 75% rather than 50% or 25% or 10%?”
Indeed, what troubled the majority of the Justices was the fact that the district court “did not employ a methodology that permitted meaningful appellate review.”
And that, I think, is where the Perdue opinion took a turn into greatness. You see, for many years in Virginia’s U.S. District Courts (and especially in the Commonwealth’s Circuit Courts) Judges have been in the habit of arbitrarily reducing attorney’s fee awards based on a whim. My reading of the Perdue opinion is that SCOTUS called it like they saw it — and confirmed that a judicial whim is nothing more than an arbitrary and capricious ruling.
On April 26, 2012, Judge Ellis issued an opinion on an attorney’s fee petition which confirms that random and arbitrary reductions of fee awards are not acceptable. The opinion is Bradford v. v.
HSBC MORTGAGE CORPORATION, 2012 WL 1481505 —F.Supp.2d. — (E.D.Va. 2012).
Furthermore, Judge Ellis has laid the groundwork for other courts to follow, and point out two ways in which the Fourth Circuit’s opinion in Grissom must be altered. And that is the most significant part of the Bradford opinion I think.
Judge Ellis points out that an award of attorney’s fees may only be reduced by a fixed percentage in certain circumstances, namely:
Anyone interested in fee-shifting litigation would do well to read this opinion and I certainly hope state and federal Judges across the Commonwealth take it to heart. 