|Judith Yogman is a former assistant attorney general and is an adjunct professor at Suffolk University Law School.
Two years ago, the United States Supreme Court held that a statute authorizing courts to award attorney's fees to the "prevailing party" does not permit courts to award fees to "a party that has failed to secure a judgment on the merits or a court-ordered consent decree, but has nonetheless achieved the desired result because the lawsuit brought about a voluntary change in the defendant's conduct."1
In so doing, the Court rejected the "catalyst theory" of fee recovery, which had previously been recognized by most courts of appeals, including the First Circuit,2
and by the Massachusetts Supreme Judicial Court.3
Instead, the Court held that to be eligible for a fee award in the absence of a judgment on the merits, a party must have obtained a "judicial imprimatur
" on the defendant's change in conduct,4
which "create[s] [a] 'material alteration of the legal relationship of the parties.'"5
Although this decision is good news for defendants, who, before this case, had often agreed to pay or been held liable for attorneys' fees absent a judicial decision on the merits or any judicially enforceable settlement agreement, it also raises some legal questions, which have generated substantial litigation in the lower courts.6 Although no definitive answers to these questions are yet available, particularly in the First Circuit and the Massachusetts appellate courts, this article will identify some of the questions and describe how some courts have resolved them. In light of Buckhannon and its still-developing progeny, this article will then provide some practical advice on whether, when and how to settle cases so as to minimize fee liability.
Unresolved legal questions
Does the Court's rejection of the catalyst theory apply to fee statutes other than the ones at issue in Buckhannon?
Although the Buckhannon case involved two particular fee statutes, the Fair Housing Amendments Act and the Americans with Disabilities Act, both of which contain the term "prevailing party,"7 the Court referred to a list of other fee-shifting statutes, some of which use different language, and indicated that all such statutes should be interpreted consistently.8 Accordingly, lower courts have held Buckhannon's rejection of the catalyst theory applicable to various other statutes, including some that do not contain the term "prevailing party."9 However, some courts have found Buckhannon inapplicable to statutes more generally authorizing fee awards "where appropriate."10
What kinds of judicial relief constitute a "judgment on the merits" for purposes of triggering fee liability?
Although Buckhannon indicates that obtaining a "judgment on the merits" is sufficient to confer "prevailing party" status,11 what kinds of judicial action constitute such a judgment remains unclear. The Court characterizes its previous decisions as denying fees where the judicial action does not entail a finding of liability, e.g., reversal of a directed verdict,12 or "a judicial pronouncement that the defendant has violated the Constitution unaccompanied by 'judicial relief.'"13 Relying on those characterizations, lower courts have allowed fees where the court issued a declaration that the defendant violated the Constitution.14 But courts have denied fees where the trial court encouraged but did not compel the defendant to revise the challenged regulations;15 orally acknowledged the merits of plaintiff's claim but declined to grant any relief;16 granted partial summary judgment for the plaintiff but did not require any action by the defendant;17 granted a preliminary injunction preserving the status quo without finally resolving the merits of plaintiffs' claims;18 or issued only a procedural order rather than "relief on the merits."19 Additionally, some courts have found a court order remanding a case to an administrative agency to be a sufficient alteration of the legal relationship between the parties to trigger fee liability if the remand is based on a finding or concession of legal error at the administrative level but not where the remand is based on a change in the law or on newly discovered evidence.20
Does a court judgment in defendant's favor render the defendant a 'prevailing party' for purposes of obtaining attorney's fees under Buckhannon?
Although, before Buckhannon, courts applied a more stringent standard in awarding attorney's fees to defendants than to plaintiffs,21 after Buckhannon, some courts have applied the same prevailing party test to defendants as to plaintiffs. In Maine School District No. 35, the First Circuit held that parent defendants who "won a clear-cut victory on the sole issue in the case" were "prevailing parties" for purposes of obtaining fees from the plaintiff school district under IDEA.22 In Miles v. State of California, the court found that dismissal of plaintiff's claim on Eleventh Amendment grounds rendered the defendant state a "prevailing party" for purposes of awarding costs under Rule 54(d) of the Federal Rules of Civil Procedure.23 Thus, Buckhannon may make it easier for defendants to obtain court-awarded fees under various fee-shifting statutes.
What kinds of settlements are sufficient to "create the 'material alteration of the legal relationship of the parties' necessary to permit an award of attorney's fees"?
In Buckhannon, there was no settlement agreement at all. Rather, while the case was pending, the state legislature eliminated the provision that the plaintiffs were challenging, and the court therefore dismissed the case as moot.24 Under those facts, the Court held that the necessary "judicial imprimatur" was absent and contrasted that nonjudicial remedy with "court-ordered consent decrees[, which] create the 'material alteration of the legal relationship of the parties' necessary to permit an award of attorney's fees."25
The question remains, however, whether a settlement agreement that does not take the form of a court-ordered consent decree may be sufficient to trigger fee liability. Although the majority opinion in Buckhannon consistently uses the language "consent decree" to describe the kind of settlement that could properly form the basis for a fee award,26 dicta in that opinion suggests that settlement agreements that are judicially enforceable may also give rise to fee liability, even if they do not take the form of a consent decree.27
The concurring opinion puts "court-approved settlements" in the same category as consent decrees28 and also speaks of "an enforceable 'alteration of the legal relationship of the parties'";29 and the dissent characterizes the majority opinion as requiring only a "court-endorsed settlement."30
Lower courts that have considered this question in the wake of Buckhannon have reached differing conclusions. On the one hand, in Oil, Chemical & Atomic Workers International Union, the court held that a judicial order approving the terms of the parties' settlement agreement was not the requisite "judicial imprimatur" triggering fee liability but was, instead, "merely a formality," which did not alter the legal relationship of the parties.31 Similarly, in Christina A. v. Bloomberg, the court found judicial approval of a class action settlement and the availability of non-contempt enforcement mechanisms insufficient to trigger fee liability under Buckhannon.32 Other factors that courts have relied on in declining to find fee liability include the absence of continuing judicial oversight in enforcing the agreement and the trial court's characterization of the agreement as not a consent decree.33
On the other hand, in American Disability Association v. Chmielarz, the court held that judicial approval of a stipulation of voluntary dismissal and retention of jurisdiction to enforce the parties' settlement agreement were "the functional equivalent of the entry of a consent decree" triggering fee liability under Buckhannon.34 Similarly, in National Coalition for Students with Disabilities v. Bush, the court held that a final judgment ordering the parties to abide by their settlement agreement and retaining jurisdiction to enforce the agreement had the same force and effect as a consent decree for purposes of fee liability.35 Other factors that have led courts to find fee liability include the agreement's mandatory language, its caption as an "order" and its execution by the court rather than by the parties' counsel.36 Some courts have found it sufficient that the settlement agreement be enforceable by any means in state or federal court and that the court retain jurisdiction to resolve attorney's fees issues.37 Several courts have also found accepted Rule 68 settlement offers to be the functional equivalent of consent decrees for purposes of fee liability under Buckhannon.38
Courts have also disagreed about whether a settlement at the administrative level is sufficient to trigger fee liability. For example, some courts have found settlements of IDEA claims at the administrative level to trigger fee liability;39 while others have found such settlements to lack the requisite "judicial imprimatur."40
In light of Buckhannon, rather than settle cases, should defendants' counsel advise clients to take unilateral action to moot the case and then move to dismiss on mootness grounds?
Not necessarily. As Justice Scalia pointed out in Buckhannon, moving to dismiss on mootness grounds will not always succeed: "'It is well settled that a defendant's voluntary cessation of a challenged practice does not deprive a federal court of its power to determine the legality of the practice' unless it is 'absolutely clear that the allegedly wrongful behavior could not reasonably be expected to recur.'"41 If a motion to dismiss on mootness grounds is denied and the case proceeds to disposition on the merits, plaintiff may prevail and thereby obtain "prevailing party" status.42 Therefore, if it seems likely that plaintiff would prevail on the merits and, if so, that the court would be likely to grant greater relief than the parties might otherwise agree to, it still makes sense to settle a case.
If defendants do agree to settle a case, should they agree to pay attorneys' fees as part of the settlement?
Even though, under Buckhannon, a settlement agreement may not give rise to fee liability, such liability is still a possibility, depending on how the court characterizes the settlement agreement, as discussed above. Also, if plaintiffs will not agree to settle the case without an agreement on fees, defendants would face the prospect of an adverse decision on the merits, resulting in greater fee liability based on the additional time plaintiffs spent litigating the case. For these reasons, it usually makes sense to agree to pay attorney's fees as part of a settlement.
How should settlement agreements be structured to avoid fee liability?
As discussed above, it remains unclear what forms of settlement, short of a consent decree, will suffice to trigger fee liability under Buckhannon.
However, the following factors may lead a court to conclude that a settlement agreement is the functional equivalent of a consent decree and should therefore be avoided if the goal is to avoid fee liability.
• The agreement is entitled a "consent decree" (while the absence of this title is not dispositive, its presence may be).
• The agreement is incorporated into astipulation of dismissal or other document filed in court.
• The agreement is approved by the court (this may be unavoidable in a class action);
• The agreement is incorporated in a court order.
• The parties expressly intended the agreement to beenforceable by contempt (as evidenced by the agreement itself, other documents or oral representations).
• The court intended any order incorporating the agreement to be enforceable by contempt.
• The court retained jurisdiction for purposes of enforcing the settlement agreement.
In conclusion, while Buckhannon is generally good news for defendants seeking to avoid court-ordered attorney's fees when cases are mooted or settled, how it will be applied in particular situations is still uncertain, particularly in this jurisdiction. Therefore, it may still be advisable to agree to pay fees rather than litigate fee liability in many cases.
1. Buckhannon Board & Care Home, Inc. v. W. Va. Dep't of Health & Human Resources, 532 U.S. 598, 600 (2001).[back]
2. See, e.g., Stanton v. S. Berkshire Reg'l Sch. Dist., 197 F.3d 574, 577 n.2 (1st Cir. 1999).[back]
3. See, e.g., Handy v. Penal Insts. Comm'r of Boston, 412 Mass. 759, 764 (1992).[back]
4. Buckhannon, 532 U.S. at 605.[back]
5. Id. at 604.[back]
6. A recent computer search for state and federal cases discussing Buckhannon revealed more than 250 decisions.[back]
7. Buckhannon, 532 U.S. at 601.[back]
8. Id. at 603 & n.4.[back]
9. See, e.g., Oil, Chem. & Atomic Workers Int'l Union v. Dep't of Energy, 288 F.3d 452, 455 (D.C. Cir. 2002)(FOIA); Richardson v. Miller, 279 F.3d 1, 4 (1st Cir. 2002) (42 U.S.C. ß 1988); Perez-Arellano v. Smith, 279 F.3d 791, 794 (9th Cir. 2002) (EAJA); J.C. v. Reg'l Sch. Dist. 10, 278 F.3d 119, 124 (2d Cir. 2002) (IDEA and Rehabilitation Act); Crabill v. Trans Union, L.L.C., 259 F.3d 662, 666-67 (7th Cir. 2001) (Fair Credit Reporting Act); Doe v. Boston Pub. Schs., 264 F. Supp. 2d 65, 72-72 (D. Mass. 2003) (IDEA); Bruce v. Weekly World News, Inc., 203 F.R.D. 51, 55 (D. Mass. 2001) (Copyright Act); cf. Maine Sch. Admin. Dist. No. 35 v. Mr. & Mrs. R., 321 F.3d 9, 15 n.4 (1st Cir. 2003) (declining to decide whether Buckhannon applies to IDEA). But see TD v. La Grange Sch. Dist. No. 102, 222 F. Supp. 2d 1062, 1065 (N.D. Ill. 2002) (finding Buckhannon inapplicable to IDEA).[back]
10. See, e.g., Loggerhead Turtle v. County Council of Volusia County, Fla., 307 F.3d 1318, 1325(11th Cir. 2002) (Endangered Species Act); Conservation Law Found. v. Evans, 2003 WL 1559940 (D. Mass. Mar. 24, 2003) (same); Sierra Club v. EPA, 322 F.3d 718, 725-26 (D.C. Cir. 2003) (Clean Air Act). [back]
11. Buckhannon, 532 U.S. at 600.[back]
12. Id. at 606.[back]
13. Id.; see also id. at 641 (dissenting opinion) (characterizing previous cases as holding that "[t]o qualify for fees in any case, . . . relief must be real[,] . . . i.e., more than a favorable 'judicial statement that does not affect the relationship between the plaintiff and the defendant").[back]
14. See, e.g., Homier Distrib. Co. v. City of New Bedford, 188 F. Supp. 2d 33, 37 (D. Mass. 2002).[back]
15. New England Reg'l Council of Carpenters v. Kinton, 284 F.3d 9, 14 (1st Cir. 2002).[back]
16. Brickwood Contractors, Inc. v. United States, 288 F.3d 1371, 1380 (Fed. Cir. 2002), cert. denied, 123 S. Ct. 871 (2003).[back]
17. Thomas v. Nat'l Science Found., 330 F.3d 486, 494-94 (D.C. Cir. 2003).[back]
18. Smyth v. Rivero, 282 F.3d 268, 277 (4th Cir.), cert. denied, 537 U.S. 825 (2002); Thomas, 330 F.3d at 493; John T. v. Del. County Intermediate Unit, 318 F.3d 545, 558-59 (3rd Cir. 2003); Race v. Toledo-Davila, 291 F.3d 857, 858 (1st Cir. 2002); cf. Maine Sch. Dist. No. 35, 321 F.3d at 16-17 n.6 (holding that denial of temporary restraining order that was "sole object" of plaintiff's suit rendered defendants "prevailing parties"). But see Watson v. County of Riverside, 300 F.2d 1092, 1096 (9th Cir. 2002) (holding that obtaining preliminary injunction rendered plaintiff "prevailing party").[back]
19. Oil, Chem. & Atomic Workers Int'l Union, 288 F.3d at 458-59; see also Pitchford v. Oakwood Mobile Homes, Inc., 212 F. Supp. 2d 613, 618 (W.D. Va. 2002).[back]
20. Former Employees of Motorola Ceramic Prods. v. United States, 336 F.3d 1360 (Fed. Cir. 2003); Lynom v. Widnall, 222 F. Supp. 2d 1, 5 (D.D.C. 2002).[back]
21. See, e.g., Olitsky v. O'Malley, 597 F.2d 303, 305-06 (1st Cir. 1979) (prevailing defendant not entitled to fees under Section 1988 where plaintiff's claim was not frivolous, unreasonable, groundless or brought in bad faith).[back]
22. Maine School District No. 35, 321 F.3d at 16. However, the court did indicate that the trial court could deny fees if "special circumstances" warranted. Id. [back]
23. 320 F.3d 986, 988-89 (9th Cir. 2003).[back]
24. Buckhannon, 532 U.S. at 601.[back]
25. Id. at 604.[back]
26. Id. at 600, 604, 605.[back]
27. Id. at 604 n.7 (contrasting consent decrees with private settlements, which "do not entail the judicial approval and oversight involved in consent decrees" and that are not judicially enforceable "unless the terms of the agreement are incorporated into the order of dismissal"); id. at 607 (distinguishing cases in which the court "retain[ed] jurisdiction over the matter for a reasonable period of time to insure the continued implementation of the [defendant's] policy"). [back]
28. Id. at 618.[back]
29. Id. at 620 (emphasis added).[back]
30. Buckhannon, 532 U.S. at 622.[back]
31. Oil, Chemical & Atomic Workers International Union, 288 F.3d at 457. [back]
32. Christina A., 315 F.3d 990, 992-94 (8th Cir. 2003).[back]
33. Toms v. Taft, 2003 WL 21757483 (6th Cir. 2003).[back]
34. 289 F.3d 1315, 1317 (11th Cir. 2002).[back]
35. 173 F. Supp. 2d 1272, 1278 (N.D. Fla. 2001).[back]
36. Truesdell v. Phila. Hous. Auth., 290 F.3d 159, 165 (3rd Cir. 2002).[back]
37. See, e.g., Barrios v. Cal. Interscholastic Fed'n, 277 F.3d 1128, 1134 n.5 (9th Cir.), cert. denied, 537 U.S. 820 (2002); Goss v. Killian Oaks House of Learning, 248 F. Supp. 2d 1162, 1167 (S.D. Fla. 2003).[back]
38. See, e.g., Utility Automation 2000, Inc. v. Choctawhatchee Elec. Co-op, Inc., 298 F.3d 1238, 1248 (11th Cir. 2002); Aynes v. Space Guard Prods., Inc., 201 F.R.D. 445, 450 (S.D. Ind. 2001).[back]
39. See, e.g., Johnson v. District of Columbia, 190 F. Supp. 2d 34, 44-46 (D.D.C. 2002).[back]
40. See, e.g., Doe v. Boston Pub. Schs., 264 F. Supp. 2d at 72-73; Shaw v. District of Columbia, 238 F. Supp. 2d 127, 143 (D.D.C. 2002); Matthew V. v. DeKalb County Sch. Sys., 244 F. Supp. 2d 1331, 1343 (N.D. Ga. 2002); P.O. v. Greenwich Bd. of Educ., 210 F. Supp. 2d 76, 85 (D. Conn. 2002); J.S. v. Ramapo Central Sch. Dist., 165 F. Supp. 2d 570, 576 (S.D.N.Y. 2001).[back]
41. Buckhannon, 532 U.S. at 609 (concurring opinion) (quoting Friends of Earth, Inc. v. Laidlaw Envtl. Servs. (TOC), Inc., 528 U.S. 167, 189 (2000)); see also Homier, 188 F. Supp. 2d at 36 (declining to dismiss case as moot although defendant had rescinded challenged ordinance).[back]
42. See Buckhannon, 532 U.S. at 609 (concurring opinion).[back]