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Attorney's Fees (3 of 3)
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118567604
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Attorney's Fees (3 of 3)
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Records of the Office of Counsel to the President (Reagan Administration)
John Roberts' Subject Files
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Ronald Reagan Presidential Library
Digital Library Collections
This is a PDF of a folder from our textual collections.
Collection: Roberts, John G.: Files
Folder Title: Attorney's Fees (3 of 3)
Box: 5
To see more digitized collections visit:
https://reaganlibrary.gov/archives/digital-library
To see all Ronald Reagan Presidential Library inventories visit:
https://reaganlibrary.gov/document-collection.
Contact a reference archivist at: [email protected]
Citation Guidelines: https://reaganlibrary.gov/citing
National Archives Catalogue: https://catalog.archives.gov/
WITHDRAWAL SHEET
Ronald Reagan Library
DOCUMENT
NO. AND TYPE
SUBJECT/TITLE
DATE
RESTRICTION
1. memo
Roberts to the File, re draft SBA testimony
4/24/85
P5
CCts 12/14/00
COLLECTION:
ROBERTS, JOHN G.: Files
dlb
FILE FOLDER:
Attorneys Fees [3 of 3] OA 12657 10017
3/1/96
RESTRICTION CODES
Presidential Records Act [44 U.S.C. 2204(s)]
Freedom of Information Act [5 U.S.C. 552(b)]
P-1 National security classified information [(a)(1) of the PRA).
F-1 National security classified information [(b)(1) of the FOIA].
P-2 Relating to appointment to Federal office [(a)(2) of the PRAJ.
F-2 Release could disclose internal personnel rules and practices of an agency [(b)(2) of the
P-3 Release would violate a Federal statute [(a)(3) of the PRA].
FOIA).
P-4 Release would disclose trade secrets or confidential commercial or financial
F-3 Release would violate a Federal statute [(b)(3) of the FOIA].
information ((a)(4) of the PRA].
F-4 Release would disclose trade secrets or confidential commercial or financial information
P-5 Release would disclose confidential advice between the President and his advisors, or
[(b)(4) of the FOIA].
between such advisors [(a)(5) of the PRA.
F-6 Release would constitute 0 clearly unwerranted invasion of personal privacy [(B](6) of
P-6 Release would constitute 6 clearly unwarranted invesion of personal privacy [(e)(6) of
the FOIA]
the PRA).
F-7 Release would disclose information compiled for law enforcement purposes [(b)(7) of
the FOIA].
C.
Closed in accordance with restrictions contained in donor's deed of gift.
F-8 Release would disclose information concerning the regulation of financial institutions
[(b)(8) of the FOIA].
F-9 Release would disclose geological or geophysical information concerning wells [(b)(9) of
the FOIA].
WITHDRAWAL SHEET
Ronald Reagan Library
DOCUMENT
NO. AND TYPE
SUBJECT/TITLE
DATE
RESTRICTION
1. memo
Roberts to the File, re draft SBA testimony
4/24/85
P5
COLLECTION:
ROBERTS, JOHN G.: Files
dlb
FILE FOLDER:
Attorneys Fees [3 of 3] OA 12657
3/1/96
RESTRICTION CODES
Presidential Records Act [44 U.S.C. 2204(a))
Freedom of Information Act [5 U.S.C. 552(b)]
P-1 National security classified information [(a)(1) of the PRA).
F-1 National security classified information [(b)(1) of the FOIA].
P-2 Relating to appointment to Federal office [(a)(2) of the PRAI.
F-2 Release could disclose internal personnel rules and practices of an agency [(b)(2) of the
P-3 Release would violate a Federal statute [(a)(3) of the PRA].
FOIAL.
P-4 Release would disclose trade secrets or confidential commercial or financial
F-3 Release would violate a Federal statute [(b)(3) of the FOIA).
information [(a)(4) of the PRA].
F-4 Release would disclose trade secrets or confidential commercial or financial information
P-5 Release would disclose confidential advice between the President and his advisors, or
[(b)(4) of the FOIA].
between such advisors ((a)(5) of the PRA.
F-6 Release would constitute a clearly unwarranted invasion of personal privacy [(B)(6) of
P-8 Release would constitute a clearly unwarranted invasion of personal privecy [(a)(6) of
the FOIA]
the PRA).
F-7 Release would disclose information compiled for law enforcement purposes ((b)(7) of
the FOIA].
C.
Closed in accordance with restrictions contained in donor's deed of gift.
F-8 Release would disclose information concerning the regulation of financial institutions
[(b)(8) of the FOIA).
F-9 Release would disclose geological or geophysical information concerning wells [(b)(9) of
the FOIA].
THE WHITE HOUSE
WASHINGTON
April 22, 1985
MEMORANDUM FOR BRANDEN BLUM
LEGISLATIVE ATTORNEY
OFFICE OF MANAGEMENT AND BUDGET
FROM:
JOHN G. ROBERTS JJR
ASSOCIATE COUNSEL TO THE PRESIDENT
SUBJECT:
DOJ Draft Testimony Concerning the
Award of Attorney's Fees in Tax Cases
Counsel's Office has reviewed the above-referenced draft
testimony, and finds no objection to it from a legal
perspective.
ID #
CU
WHITE HOUSE
CORRESPONDENCE TRACKING WORKSHEET
O - OUTGOING
H . INTERNAL
I . INCOMING
Date Correspondence
Received (YY/MM/DD)
/
/
Name of Correspondent:
James C. murr.
MI Mail Report
User Codes: (A)
(B)
(C)
Subject:
DOJ druft Testimous concerning the
award of attarney's fees in tax cases
ROUTE TO:
ACTION
DISPOSITION
Tracking
Type
Completion
Action
Date
of
Date
Office/Agency
(Staff Name)
Code
YY/MM/DD
Response
Code
YY/MM/DD
CUHOLL
ORIGINATOR
85,04,22
/
/
Referral Note:
CUAT 18
R 85,04,22
5 85,04,23
Referral Note:
4pm
/ /
/
/
Referral Note:
/
/
/
/
-
Referral Note:
/
/
/
/
-
Referral Note:
ACTION CODES:
DISPOSITION CODES:
A Appropriate Action
I Info Copy Only/No Action Necessary
A Answered
C Completed
C Comment/Recommendation
R - Direct Reply w/Copy
B - . Non-Special Referral
S Suspended
D Draft Response
S For Signature
F - Furnish Fact Sheet
X * Interim Reply
to be used as Enclosure
FOR OUTGOING CORRESPONDENCE:
Type of Response = Initials of Signer
Code = "A"
Completion Date = Date of Outgoing
Comments:
Keep this worksheet attached to the original incoming letter.
Send all routing updates to Central Reference (Room 75, OEOB).
Always return completed correspondence record to Central Files.
Refer questions about the correspondence tracking system to Central Reference, ext. 2590.
5/81
EXECUTIVE OFFICE OF THE PRESIDENT
OFFICE OF MANAGEMENT AND BUDGET
THE
WASHINGTON, D.C. 20503
SPECIAL
April 22, 1985
LEGISLATIVE REFERRAL MEMORANDUM
TO:
LEGISLATIVE LIAISON OFFICER
Department of the Treasury - Art Schissel (566-8523)
Small Business Administration - Janine Perrignon (653-7581)
SUBJECT: Department of Justice draft testimony concerning the
award of attorney's fees in tax cases.
The Office of Management and Budget requests the views of your
agency on the above subject before advising on its relationship
to the program of the President, in accordance with OMB Circular
A-19.
Please provide us with your views no later than 4:00 p.m., 4/23/85.
(Note -- A hearing is scheduled before a subcommittee of the House
Ways & Means Committee for 4/25/85.)
Direct your questions to Branden Blum (395-3454), the legislative
attorney in this office.
James Ucm C. Mort for
Assistant Director for
Legislative Reference
Enclosure
cc: Rick Irby
Pat Szervo
Barbara Flickinger
Fred Fielding
Rob Veeder
John Donahue
Roger Greene
Karen Wilson
April 19, 1985
Draft
STATEMENT
OF
GLENN L. ARCHER, JR.
ASSISTANT ATTORNEY GENERAL
CIVIL DIVISION
BEFORE
THE
COMMITTEE ON WAYS AND MEANS
SUBCOMMITTEE ON SELECT REVENUE MEASURE
CONCERNING
THE AWARD OF ATTORNEY'S FEES IN TAX CASES
ON
-MARCH 25, 1985
April
I am pleased to appear at the invitation of the Subcommittee
to discuss the award of attorneys' fees in tax cases. The
operative statutory provision--Section 7430 of the Internal
Revenue--is the subject of a December 31, 1985, sunset provision
and it is important that the Subcommittee familiarize itself with
the effect and impact of Section 7430, as well as with inter-
pretative problems currently in litigation. The primary focus of
my testimony is on tax litigation before the district courts, the
Claims Court and the courts of appeal--the courts in which the
Justice Department represents the United States.
Statutes authorizing the award of attorneys' fees in tax
cases are a phenomenon of the last decade. The two enactments
of greatest significance are the Equal Access to Justice Act
(EAJA) and Internal Revenue Code Section 7430.
The EAJA was enacted in 1980 as the result of a
congressional concern that the cost of litigation deters some
individuals and small businesses from challenging unreasonable
governmental actions. The Congress felt that government
accountability would be promoted by authorizing the courts to
award attorneys' fees. Similar concerns underlay the enactment
of Internal Revenue Code Section 7430 by the Tax Equity and
Fiscal Responsibility Act of 1982.
The EAJA was effective on October 1, 1981, and applied to
cases pending on or filed after that date and prior to October 1,
- 2 -
1984. It currently applies only to cases pending as of September 30,
1984. The Administration supports reauthorization of the EAJA
and President Reagan's veto last year of legislation reauthorizing
the EAJA was based upon objectionable substantive amendments. The
Administration likewise supports the reauthorization of Section
7430 with appropriate clarifying and technical amendments.
The EAJA provides for the award of attorneys' fees to a
prevailing party against the United States unless the court finds
that the position of the United States was substantially
justified or that special circumstances would make an award
unjust. The burden of proof is on the United States. In order
to be eligible for an award, the prevailing party must meet
certain net worth requirements. In general, awards of attorneys'
fees are limited to $75 per hour. The court has authority to
reduce or deny an award because of conduct which unduly and
unreasonably protracted the proceeding. An application for an
award must be filed no later than 30 days after a final judgment
is entered.
While the EAJA authorized attorneys' fee awards in tax cases
litigated before the Article III courts, it did not apply to
cases brought in the Tax Court. During pendency of the EAJA
before the Congress, the tax-writing committees began to study
the implications of authorizing attorneys' fee awards in tax
cases, particularly cases brought in the Tax Court. Concern
- 3 -
was expressed that unless the statute was carefully crafted,
legislation providing for the award of attorneys' fees in the Tax
Court would have a serious adverse impact on the backlog of the
court. Another potential problem having significant implications
involved the IRS system of administrative appeals which results
in the settlement of thousands of cases annually without resort
to litigation.
As a result of these concerns, Section 7430 departs from the
EAJA in several respects because of special problems inherent in
tax litigation, particularly litigation before the Tax Court.
Thus, Section 7430 differs from the Equal Access to Justice Act
by placing the burden of proof on the taxpayer and the applicable
standard is phrased in terms of reasonableness. This approach is
tailored to the Tax Court's stipulation process, which is the
backbone of practice before the Tax Court. Indeed, Tax Court
Rule 232 (b) provides for a conference in 7430 proceedings, the
purpose of which is the same as the stipulation conference--to
reach an agreement concerning the allegations supporting the
claims for attorneys' fees. If the burden of proof remains on
the taxpayer, as it does for practically every substantive tax
issue, taxpayers will have an incentive to work with government
counsel in an effort to resolve issues pertaining to attorney
- 4 -
fee awards expeditiously and with as little court involvement as
possible.
One obvious question is whether any significant difference
in outcome exists as a result of the variations between Section
7430 and the EAJA regarding the applicable standard and the
burden of proof. In our view, the results in the cases litigated
under Section 7430 would likely have been the same under the
EAJA. Little, if any, difference exists between positions that
are "reasonable" and positions that are "substantially
justified." Indeed, the term "substantial justification" has
been defined by reference to reasonableness. Moreover, the
burden of proof generally does not affect the outcome in these
cases; the placement of the burden of proof on the taxpayer under
Section 7430 primarily serves to further the Tax Court's
procedures regarding the stipulation of cases. The general focus
of the courts has been on whether the government is guilty of
overreaching rather than on the niceities of the burden of proof.
A second major difference between Section 7430 and the EAJA
is that Section 7430 requires an exhaustion of administrative
remedies. The exhaustion requirement was enacted to ensure that
taxpayers, in their haste to recover attorneys' fees, would not
ignore opportunities to resolve their disputes administratively.
Thus, in order to prevent widespread avoidance of administrative
settlement procedures, Section 7430 properly requires exhaustion
- 5 -
of administrative remedies as a condition precedent for obtaining
an attorneys' fee award.
A third significant difference involves standards for
eligibility. The Congress believed that eligibility standards
based on net worth would result in factual disputes further
burdening the courts. Inasmuch as taxpayers of modest means can
generally resolve their tax disputes in a relatively inexpensive
manner, Section 7430 does not limit eligibility by reference to
the net worth of the taxpayer, but simply caps the amount
recoverable at $25,000.
Section 7430 was effective on March 1, 1983, for cases filed
on or after that date. Only a small number of cases have been
decided by the trial courts and we have received only two
decisions from the courts of appeals, one of which involved the
narrow issue of whether denial of an award could be appealed in
light of the prohibition on appeal of actions under Code Section
7429 (relating to review of jeopardy determinations).
The most litigated legal issue is whether the focus of the
court in determining "reasonableness" should be on the position
taken in litigation or rather on the position taken by the IRS
prior to the litigation. In Kaufmann v. Egger, 85-1 U.S.T.C.
para. 9278 (decided Mar. 19, 1985) the Court of Appeals for the
First Circuit rejected the holdings of several district courts
and the Tax Court and held that the position of the IRS prior to
- 6 -
litigation must be taken into account. In most cases, it makes
no difference whether one considers the conduct of the IRS before
the trial or the position defended in court. However, looking to
the position of the United States in litigation as the basis for
the determination of reasonableness conserves judicial resources.
The court has merely to review the arguments already made in the
case before it. If the court were required to consider IRS
conduct which was not the subject of the trial or argument before
the court, the attorneys' fees proceeding could become
essentially another trial.
Another significant advantage of considering "reasonableness"
in the context of the litigation posture is that it encourages
settlement. Obviously, the government will be more likely to
settle a case if it can dispose of the case without having to
litigate the merits in an attorneys' fee proceeding. However, if
the court must look behind the settlement and consider the
conduct of the IRS, essentially the entire case will have to be
tried.
In our view, the Kaufmann decision misread Section 7430.
The relevant statutory language is that "the position of the
United States in the civil proceeding was unreasonable." Section
7430 (c) (2) (A) (1). The Congress could hardly have used any
clearer language to indicate that the position taken prior to
the proceeding is not relevant. Nevertheless, in an effort
- 7 -
to eliminate unnecessary litigation over this issue, the
Subcommittee should consider a legislative clarification.
Another issue that deserves attention is of a more technical
nature and involves the time limit in which attorneys' fee
applications must be filed. Section 7430 (e) provides that an
order granting or denying an award of attorneys' fees shall be
incorporated in the judgment or decision in the case, thus
suggesting that an application is untimely if filed after the 10
days in which a motion to amend a judgment may be filed under
Rule 59 (e) of the Federal Rules of Civil Procedure. We have
taken that position in litigation under Section 7430, but have no
decisions to date. The difficulty is that the Supreme Court and
numerous courts of appeal have held that Rule 59 (e) is generally
inapplicable to attorneys' fee awards. E.g., White V. New
Hampshire Dept. of Employment Security, 455 U.S. 445 (1982), ; and
FCC V. League of Women Voters, 52 U.S.L.W. 5008, 5010-5011, note
10 (1984).
In Tax Court cases and refund suits, a significant amount of
time normally elapses between the date of the court's holding on
the merits and the date the judgment is entered in order to make
the necessary computations. In other types of cases, such as
summons enforcement litigation, bankruptcy cases, and injunction
suits, the judgment may be entered at the same time as the case
is decided. To clarify the intent and effect of Section
- 8 -
7430 on the timing issue, we recommend that Section 7430 be
amended to provide that an attorneys' fee application should be
filed in accordance with any applicable court rules, but no later
than 30 days following entry of a judgment from which an appeal
may be taken as a matter of right.
In its press release, the Subcommittee asked for information
about the cases in which awards have been made under Section
7430. Awards have been entered in only
cases handled by the
Justice Department; and amounts awarded have been ranged as low
as
and as high as $25,000. The types of cases in which
awards have been made include refund suits, bankruptcy cases,
proceedings under Code Section 7429 to review jeopardy
assessments, a collection suit, and a suit to enjoin collection
of taxes. In view of the small number of decisions to date, it
is difficult to draw any meaningful conclusions regarding the
types of cases which the government is most vulnerable to an
award.
The Subcommittee also requested information about the costs
of the government in defending claims for attorneys' fees and the
additional time entailed. We do not have information responsive
to that request because we do not isolate the attorneys' fee
segment of litigation as a separate element in our timekeeping
system; nor do we otherwise account in a special manner for
related costs.
- 9 -
Finally, I would like to bring to the attention of the
Subcommittee a somewhat related problem--cases involving the
award of attorneys' fees to the government. Within the last two
or three years, the courts have become increasingly exasperated
over the increasing volume of frivolous suits brought by tax
protestors and others who abuse the judicial system. The
Congress recognized the seriousness of this problem in the Tax
Equity and Fiscal Responsibility Act of 1982 by authorizing the
Tax Court to impose damages of up to $5,000 against persons who
bring frivolous suits. The Tax Court in consonance with the
desire of Congress has shown no hesitation in applying this
sanction in appropriate cases.
The district courts and the courts of appeals are also
aggravated with tax protestor suits, particularly frivolous suits
contesting imposition of the frivolous return penalty, and also
are regularly imposing sanctions to the point where awards are
being made to the government in about five cases a week on
average. The system for collecting amounts awarded as sanctions
by the district courts and the courts of appeal, however, is much
more cumbersome than the system for collecting damages awarded by
the Tax Court under Code Section 6673, in that regular judgment
collection procedures must be followed. We would like to suggest
that the Subcommittee consider an amendment authorizing sanctions
imposed by any court in a tax case to be collected in the same
manner as a tax, as in the case of damages awarded under Rule
6673.
- 10 -
I will be pleased to respond to any questions that the
Subcommittee may have.
THE WHITE HOUSE
WASHINGTON
April 23, 1985
MEMORANDUM FOR BRANDEN BLUM
LEGISLATIVE ATTORNEY
OFFICE OF MANAGEMENT AND BUDGET
FROM:
JOHN G. ROBERTS
ASSOCIATE COUNSEL TO THE PRESIDENT
SUBJECT:
IRS Draft Testimony Concerning the
Award of Attorney's Fees in Tax Cases
Counsel's Office has reviewed the above-referenced draft
testimony, and finds no objection to it from a legal
perspective.
ID #
CU
WHITE HOUSE
CORRESPONDENCE TRACKING WORKSHEET
o . OUTGOING
H . INTERNAL
I . INCOMING
Date Correspondence
Received (YY/MM/DD)
/
/
Name of Correspondent: James mun
MI Mail Report
User Codes: (A)
(B)
(C)
Subject: IRS draft Testimany concerning the
award of attorney's fees in tax cases
ROUTE TO:
ACTION
DISPOSITION
Tracking
Type
Completion
Action
Date
of
Date
Office/Agency
(Staff Name)
Code
YY/MM/DD
Response
Code
YY/MM/DD
CUHOLL
ORIGINATOR 85,04,23
/
/
Referral Note:
CUAT 18
R
85,04,23
S 585,04,23
Referral Note:
COB
/ /
/ /
-
Referral Note:
/
/
/
/
-
Referral Note:
/ /
/ /
-
Referral Note:
ACTION CODES:
DISPOSITION CODES:
A * Appropriate Action
I - Into Copy Only/No Action Necessary
A Answered
C Completed
C - Comment/Recommendation
R - Direct Reply w/Copy
B - Non-Special Referral
S Suspended
D Draft Response
S For Signature
F Furnish Fact Sheet
X . Interim Reply
to be used as Enclosure
FOR OUTGOING CORRESPONDENCE:
Type of Response = Initials of Signer
Code = "A"
Completion Date = Date of Outgoing
Comments:
Keep this worksheet attached to the original incoming letter.
Send all routing updates to Central Reference (Room 75, OEOB).
Always return completed correspondence record to Central Files.
Refer questions about the correspondence tracking system to Central Reference, ext. 2590.
5/81
THE WHITE HOUSE
WASHINGTON
April 24, 1985
MEMORANDUM FOR THE FILE
FROM:
ASSOCIATE COUNSEL 03R TO THE PRESIDENT
JOHN G. ROBERTS
SUBJECT:
Draft SBA Testimony Concerning the
Award of Attorney's Fees in Tax Cases
I advised Branden Blum orally that the draft SBA testimony
was inconsistent with that of Justice and GSA. Blum agreed,
but indicated that those agencies considered it best to go
forward with the SBA testimony, with an appropriate
disclaimer.
ID #
CU
WHITE HOUSE
CORRESPONDENCE TRACKING WORKSHEET
o - OUTGOING
H - INTERNAL
I - INCOMING
Date Correspondence
Received (YY/MM/DD)
/
/
Name of Correspondent:
games C. mum
MI Mail Report
User Codes: (A)
(B)
(C)
Subject: Draft SBA testimony concerning
the amard of attarneips fees in tax
cases
ROUTE TO:
ACTION
DISPOSITION
Tracking
Type
Completion
Action
Date
of
Date
Office/Agency
(Staff Name)
Code
YY/MM/DD
Response
Code
YY/MM/DD
CUHOLL
ORIGINATOR 85,04,24
/
7
Referral Note:
CUAT 18
R 85,04,24
5 85,04,24
Referral Note:
12N
/ /
/
/
-
Referral Note:
/
/
/ /
-
Referral Note:
/
/
/
/
I
-
Referral Note:
ACTION CODES:
DISPOSITION CODES:
A - Appropriate Action
1. Info Copy Only/No Action Necessary
A. Answered
C Completed
C - Comment/Recommendation
R. Direct Reply w/Copy
B - Non-Special Referral
S Suspended
D - Draft Response
S. For Signature
F - Furnish Fact Sheet
X . Interim Reply
to be used as Enclosure
FOR OUTGOING CORRESPONDENCE:
Type of Response = Initials of Signer
Code = "A"
Completion Date = Date of Outgoing
Comments:
Keep this worksheet attached to the original incoming letter.
Send all routing updates to Central Reference (Room 75, OEOB).
Always return completed correspondence record to Central Files.
Refer questions about the correspondence tracking system to Central Reference, ext. 2590.
5/81
THE WHITE HOUSE
WASHINGTON
December 10, 1984
MEMORANDUM FOR FRED F. FIELDING
FROM:
JOHN G. ROBERTS
028
SUBJECT:
Section 1988 -- Liability of Judges
for Attorneys Fees; Pulliam V. Allen
Section 1983 -- Liability of Public
Defenders; Tower V. Glover
Circuit Judge Cecil J. Burrows of the Circuit Court of the
Eighth Judicial Circuit of Illinois has written the Presi-
dent, forwarding a copy of two resolutions passed by the
judges of the Eighth Judicial Circuit. The two thoughtful
resolutions express concern over the Supreme Court decisions
last term in Pulliam V. Allen, 104 S. Ct. 1970 (1984) and
Tower V. Glover, 104 S. Ct. 2820 (1984). In Pulliam a 5-4
Court ruled that judicial immunity does not bar the award of
attorneys fees against judges in Section 1983 actions. In
Tower the Court unanimously ruled that public defenders are
not immune from Section 1983 suits alleging that they
conspired with other state officials to deprive their
clients of Federally protected rights. (The United States
did not participate in either case.) The resolutions call
upon Congress to amend 42 U.S.C. §§ 1983 and 1988 to reverse
the effect of these two decisions.
I recommend referring the resolutions to Justice, and so
advising Burrows. Appropriate drafts are attached.
Attachments
THE WHITE HOUSE
WASHINGTON
December 10, 1984
MEMORANDUM FOR CAROL E. DINKINS
DEPUTY ATTORNEY GENERAL
U.S. DEPARTMENT OF JUSTICE
FROM:
FRED F. FIELDING Orig., signed by FFF
COUNSEL TO THE PRESIDENT
SUBJECT:
Section 1988 -- Liability of Judges
for Attorneys Fees; Pulliam V. Allen
Section 1983 -- Liability of Public
Defenders; Tower V. Glover
Attached for your review and whatever other action you
consider appropriate is a letter to the President from Judge
Cecil J. Burrows. Judge Burrows forwarded two resolutions
adopted by the judges of the Eighth Judicial Circuit of
Illinois, criticizing the Supreme Court's recent decisions
in Pulliam V. Allen and Tower V. Glover. I have also
attached a copy of my response.
Attachments
FFF:JGR:aea 12/10/84
CC: FFFielding/JGRoberts/Subj/Chron
THE WHITE HOUSE
WASHINGTON
December 10, 1984
Dear Judge Burrows:
Thank you for your letter of November 28 to the President.
Along with that letter you forwarded copies of two
resolutions adopted by the judges of the Eighth Judicial
Circuit of Illinois, calling upon Congress to amend 42
U.S.C. §§ 1983 and 1988 to reverse the effect of the Supreme
Court's recent decisions in Pulliam V. Allen, 104 S. Ct.
1970 (1984) and Tower V. Glover, 104 S. Ct. 2820 (1984).
I have taken the liberty of forwarding your correspondence
and the resolutions to the Department of Justice, in order
that the Department may be aware of the concerns of you and
your colleagues as it considers the impact of those decisions.
We appreciate having the benefit of your informed views.
Sincerely,
Orig. signed by FFF
Fred F. Fielding
Counsel to the President
The Honorable Cecil J. Burrows
Circuit Judge, Circuit Court
of the Eighth Judicial Circuit
of Illinois
Pike County Courthouse
Pittsfield, IL 62363
FFF:JGR:aea 12/10/84
bcc: FFFielding/JGRoberts/Subj/Chron
THE WHITE HOUSE
WASHINGTON
December 10, 1984
Dear Judge Burrows:
Thank you for your letter of November 28 to the President.
Along with that letter you forwarded copies of two
resolutions adopted by the judges of the Eighth Judicial
Circuit of Illinois, calling upon Congress to amend 42
U.S.C. §§ 1983 and 1988 to reverse the effect of the Supreme
Court's recent decisions in Pulliam V. Allen, 104 S. Ct.
1970 (1984) and Tower V. Glover, 104 S. Ct. 2820 (1984).
I have taken the liberty of forwarding your correspondence
and the resolutions to the Department of Justice, in order
that the Department may be aware of the concerns of you and
your colleagues as it considers the impact of those decisions.
We appreciate having the benefit of your informed views.
Sincerely,
Fred F. Fielding
Counsel to the President
The Honorable Cecil J. Burrows
Circuit Judge, Circuit Court
of the Eighth Judicial Circuit
of Illinois
Pike County Courthouse
Pittsfield, IL 62363
FFF:JGR:aea 12/10/84
bcc: FFFielding/JGRoberts/Subj/Chron
THE WHITE HOUSE
WASHINGTON
December 10, 1984
MEMORANDUM FOR CAROL E. DINKINS
DEPUTY ATTORNEY GENERAL
U.S. DEPARTMENT OF JUSTICE
FROM:
FRED F. FIELDING
COUNSEL TO THE PRESIDENT
SUBJECT:
Section 1988 -- Liability of Judges
for Attorneys Fees; Pulliam V. Allen
Section 1983 -- Liability of Public
Defenders; Tower V. Glover
Attached for your review and whatever other action you
consider appropriate is a letter to the President from Judge
Cecil J. Burrows. Judge Burrows forwarded two resolutions
adopted by the judges of the Eighth Judicial Circuit of
Illinois, criticizing the Supreme Court's recent decisions
in Pulliam V. Allen and Tower V. Glover. I have also
attached a copy of my response.
Attachments
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CC: FFFielding/JGRoberts/Subj/Chror
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Subject: Section 1988 - Biobility of Judges for
Attorneys Jees Pulliam V. allen
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5/81
CIRCUIT COURT OF THE EIGHTH JUDICIAL CIRCUIT OF ILLINOIS
PIKE COUNTY COURTHOUSE
PITTSFIELD. ILLINOIS 62363
CECIL J. BURROWS
JR-dul AREA CODE 217
TELEPHONE
285-2025
CIRCUIT JUDGE
November 28, 1984
279934 CU
Honorable Ronald Reagan
President of the United States
White House
Washington, D.C. 20013
In re: Section 1988 -- Liability of Judges for Attorneys fees,
Pulliam V. Allen
Section 1983 -- Liability of Public Defenders,
Tower V. Glover
Dear Mr. President:
I am herewith sending to you two resolutions passed by the Judges
of the Eighth Judicial Circuit of Illinois in meeting assembled.
The case of Pulliam V. Allen relative to Judges being liable for
attorneys fees under Section 1988 has received considerable notice
and is of much concern to the judiciary.
The problem created by Tower V. Glover, a recent United States
Supreme Court case, has probably not received as much attention;
and I am, therefore, enclosing a copy of the opinion of Justice
'Connor. The problem created by this Section 1983 interpretation
is particularly onerous to smaller population jurisdictions which
more frequently utilize specially appointed counsel in criminal
cases. In Pike County we have insurance coverage for our Public
Defenders who receive a salary, but not for the others.
With best regards, I remain
Sincerely yours,
Cecil J. Burrows
Circuit Judge
CJB/slb
enc. (3)
I, Cecil J. Burrows, a Judge of the Eighth Judicial
Circuit of Illinois, do hereby certify that the foregoing is a
true and correct copy of a resolution passed by the Judges of the
Eighth Judicial Circuit of Illinois in meeting assembled on the
24th day of October, 1984.
Lgg
DATED: November 28, 1984
RESOLUTION OF THE JUDGES OF THE
EIGHTH JUDICIAL CIRCUIT OF ILLINOIS
WHEREAS, on May 14, 1984, the United States Supreme Court
rendered its decision in Pulliam V. Allen, No. 82-1432, and
therein held that judicial immunity does not bar the personal
liability of Judges for attorney fees under 42 USC 1988, and
WHEREAS, personal liability for attorney fees cannot
meaningfully be distinguished from damages liability in its
threat to judicial independence and impartiality, and
WHEREAS, Pulliam represents a significant departure from
the common laws long standing protection of Judges from personal
financial liability for conduct in their judicial capacity, and
WHEREAS, the availability of attorney fees can serve only to
encourage vexatious and unfounded actions against Judges, and
WHEREAS, the burdens and risks of defending such actions
in and of itself constitutes an unacceptable threat to judicial
independence and impartiality, and
WHEREAS, Pulliam is one of a series of recent decisions by
the Court signifying an accelerating erosion of the protections
afforded Judges by the doctrine of judicial immunity, and
WHEREAS, it is of crucial importance to the public to preserve
the impartiality and independence of its Judges and to relieve
them of burdens of defending vexatious and groundless actions.
NOW, therefore, be it Resolved by the Judges of the Eighth
Judicial Circuit of Illinois in meeting assembled that:
1. Congress amend Title 42 USC Section 1988 so as to
exclude from its provisions members of the judiciary
acting in their judicial capacity.
RESOLUTION OF THE JUDGES OF THE
EIGHTH JUDICIAL CIRCUIT OF ILLINOIS
WHEREAS, on the 25th day of June, 1984, the Supreme Court
of the United States decided the case of Bruce Tower, etc., et al,
Petitioner VS. Billy I. Glover, No. 82-1988, 104 Supreme Court
Reporter 2820, and determined that public defenders are not immune
from liability under Title 42 USC Section 1983 for intentional
misconduct by virtue of alleged conspiratorial actions with state
officials which deprive their clients of federal rights and,
WHEREAS, although the case concerned a public defender of
the State of Oregon, its holding embraces all persons appointed to
represent indigents accused of violations of the Criminal Code, and
WHEREAS, the Court stated that appointed counsel in a state
criminal prosecution does not act "under color of" state law in
the normal course of conducting a defense, citing Polk County VS.
Dodson, 454 U.S. 312, 102 S. Ct. 445, 70 L.E.D. 2nd 509, and other-
wise private person acts "under color" of state law when engaged in
a conspiracy with state officials to deprive another of federal
rights, Dennis VS. Sparks, 449 U.S. 24, 101 S. Ct. 183, 66 L.E.D.
2nd 185, and
WHEREAS, appointed counsel have responsibilities similar to.
those of a Judge or prosecutor, and therefore should enjoy similar
immunities, and
WHEREAS, the threat of Section 1983 actions based on alleged
conspiracies among defense counsel and other state officials may
deter counsel from engaging in activities that require some degree
of cooperation with prosecutors, such as negotiating pleas,
expediting trials and appeals, and so on, and
WHEREAS, many counsel, having in mind the multitude of
frivolous and vexatious proceedings instituted by penitentiary
inmates and the tendency to file every possible action, may not
wish to accept criminal appointments, which are of necessity
partially pro bono publico, unless the abberation to the immunity
doctrine is eliminated,
NOW, therefore, be it Resolved by the Judges of the Eighth
Judicial Circuit of Illinois meeting in meeting assembled that:
1. Congress amend Title 42 USC 1983, to exclude from
its provisions all appointed counsel in criminal cases
in all circumstances.
WHITE HOUSE LAW LIBRARY
ROOM 528 OEOB
(202) 395-3397
Date 6-28-85
To John Rolures
Room No.
From Pat
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To Borrow (Date Due
Per Your Request/Per Our
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FYI
Message:
SUPREME COURT OF THE UNITED STATES
No. 83-1437
JEFFREY MAREK, THOMAS WADYCKI AND LAW-
RENCE RHODE, PETITIONERS v. ALFRED W.
CHESNY, INDIVIDUALLY AND AS ADMINISTRATOR OF
THE ESTATE OF STEVEN CHESNY, DECEASED
ON WRIT OF CERTIORARI TO THE UNITED STATES COURT OF
APPEALS FOR THE SEVENTH CIRCUIT
[June 27, 1985]
JUSTICE REHNQUIST, concurring.
In Delta Airlines V. August, 450 U. S. 346 (1981), I ex-
pressed in dissent the view that the term "costs" in Rule
68 did not include attorney's fees. Further examination of
the question has convinced me that this view was wrong, and
I therefore join the opinion of THE CHIEF JUSTICE. Cf.
McGrath V. Kristensen, 340 U.S. 162, 176 (1950) (Jackson, J.
concurring).
NOTE: Where it is feasible, a syllabus (headnote) will be released, as is
being done in connection with this case, at the time the opinion is issued.
The syllabus constitutes no part of the opinion of the Court but has been pre-
pared by the Reporter of Decisions for the convenience of the reader. See
United States V. Detroit Lumber Co., 200 U. S. 321, 337.
SUPREME COURT OF THE UNITED STATES
Syllabus
MAREK ET AL. v. CHESNY, INDIVIDUALLY, AND AS
ADMINISTRATOR OF THE ESTATE OF CHESNY
CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR
THE SEVENTH CIRCUIT
No. 83-1437. Argued December 5, 1984-Decided June 27, 1985
Petitioner police officers, in answering a call on a domestic disturbance,
shot and killed respondent's adult son. Respondent, in his own behalf
and as administrator of his son's estate, filed suit against petitioners in
Federal District Court under 42 U. S. C. § 1983 and state tort law.
Prior to trial, petitioners made a timely offer of settlement of $100,000,
expressly including accrued costs and attorney's fees, but respondent did
not accept the offer. The case went to trial and respondent was
awarded $5,000 on the state-law claim, $52,000 for the § 1983 violation,
and $3,000 in punitive damages. Respondent then filed a request for
attorney's fees under 42 U. S. C. § 1988, which provides that a prevail-
ing party in a § 1983 action may be awarded attorney's fees "as part of
the costs." The claimed attorney's fees included fees for work per-
formed subsequent to the settlement offer. The District Court declined
to award these latter fees pursuant to Federal Rule of Civil Procedure
68, which provides that if a timely pretrial offer of settlement is not ac-
cepted and "the judgment finally obtained by the offeree is not more fa-
vorable than the offer, the offeree must pay the costs incurred after the
making of the offer." The Court of Appeals reversed.
Held: Petitioners are not liable for the attorney's fees incurred by re-
spondent after petitioners' offer of settlement. Pp. 2-9.
(a) Petitioners' offer was valid under Rule 68. The Rule does not re-
quire that a defendant's offer itemize the respective amounts being ten-
dered for settlement of the underlying substantive claim and for costs.
The drafters' concern was not so much with the particular components of
offers, but with the judgments to be allowed against defendants.
Whether or not the offer recites that costs are included or specifies an
amount for costs, the offer has allowed judgment to be entered against
I
II
MAREK v. CHESNY
Syllabus
the defendant both for damages caused by the challenged conduct and for
costs. This construction of Rule 68 furthers its objective of encouraging
settlements. Pp. 3-5.
- (b) In view of the Rule 68 drafters' awareness of the various federal
statutes, which, as an exception to the "American Rule," authorize an
award of attorney's fees to prevailing parties as part of the costs in par-
ticular cases, the most reasonable inference is that the term "costs" in
the Rule was intended to refer to all costs properly awardable under the
relevant substantive statute. Thus, where the underlying statute de-
fines "costs" to include attorney's fees, such fees are to be included as
costs for purposes of Rule 68. Here, where § 1988 expressly includes
attorney's fees as "costs" available to a prevailing plaintiff in a § 1983
suit, such fees are subject to the cost-shifting provision of Rule 68.
Rather than "cutting against the grain" of § 1988, applying Rule 68 in the
context of a § 1983 action is consistent with § 1988's policies and objec-
tives of encouraging plaintiffs to bring meritorious civil rights suits; Rule
68 simply encourages settlements. Pp. 5-9.
720 F. 2d 474, reversed.
BURGER, C. J., delivered. the opinion of the Court, in which WHITE,
POWELL, REHNQUIST, STEVENS, and O'CONNOR, JJ., joined. POWELL
and REHNQUIST, JJ., filed concurring opinions. BRENNAN, J., filed a dis-
senting opinion, in which MARSHALL and BLACKMUN, JJ., joined.
NOTICE: This opinion is subject to formal revision before publication in the
preliminary print of the United States Reports. Readers are requested to
notify the Reporter of Decisions, Supreme Court of the United States, Wash-
ington, D. C. 20543, of any typographical or other formal errors, in order
that corrections may be made before the preliminary print goes to press.
SUPREME COURT OF THE UNITED STATES
No. 83-1437
JEFFREY MAREK, THOMAS WADYCKI AND LAW-
RENCE RHODE, PETITIONERS v. ALFRED W.
CHESNY, INDIVIDUALLY AND AS ADMINISTRATOR OF
THE ESTATE OF STEVEN CHESNEY, DECEASED
ON WRIT OF CERTIORARI TO THE UNITED STATES COURT OF
APPEALS FOR THE SEVENTH CIRCUIT
[June 27, 1985]
CHIEF JUSTICE BURGER delivered the opinion of the
Court.
We granted certiorari to decide whether attorney's fees
incurred by a plaintiff subsequent to an offer of settlement
under Federal Rule of Civil Procedure 68 must be paid by the
defendant under 42 U. S. C. § 1988, when the plaintiff recov-
ers a judgment less than the offer.
I
Petitioners, three police officers, in answering a call on a
domestic disturbance, shot and killed respondent's adult son.
Respondent, in his own behalf and as administrator of his
son's estate, filed suit against the officers in the United
States District Court under 42 U. S. C. § 1983 and state tort
law.
Prior to trial, petitioners made a timely offer of settlement
"for a sum, including costs now accrued and attorney's fees,
of ONE HUNDRED THOUSAND ($100,000) DOLLARS."
Respondent did not accept the offer. The case went to trial
and respondent was awarded $5,000 on the state-law "wrong-
ful death" claim, $52,000 for the § 1983 violation, and $3,000
in punitive damages.
83-1437-OPINION
2
MAREK v. CHESNY
Respondent filed a request for $171,692.47 in costs, includ-
ing attorney's fees. This amount included costs incurred
after the settlement offer. Petitioners opposed the claim for
post-offer costs, relying on Federal Rule of Civil Procedure
68, which shifts to the plaintiff all "costs" incurred subse-
quent to an offer of judgment not exceeded by the ultimate
recovery at trial. Petitioners argued that attorney's fees are
part of the "costs" covered by Rule 68. The District Court
agreed with petitioners and declined to award respondent
"costs, including attorney's fees, incurred after the offer of
judgment." 547 F. Supp. 542, 547 (ND Ill. 1982). The par-
ties subsequently agreed that $32,000 fairly represented the
allowable costs, including attorney's fees, accrued prior to pe-
titioner's offer of settlement.¹ Respondent appealed the de-
nial of post-offer costs.
The Court of Appeals reversed. 720 F. 2d 474 (CA7 1983).
The court rejected what it termed the "rather mechanical
linking up of Rule 68 and section 1988." Id., at 478. It
stated that the District Court's reading of Rule 68 and § 1988,
while "in a sense logical," would put civil rights plaintiffs and
counsel in a "predicament" that "cuts against the grain of sec-
tion 1988." Id., at 478, 479. Plaintiffs' attorneys, the court
reasoned, would be forced to "think very hard" before reject-
ing even an inadequate offer, and would be deterred from
bringing good faith actions because of the prospect of losing
the right to attorney's fees if a settlement offer more favor-
able than the ultimate recovery were rejected. Id., at
478-479. The court concluded that "[t]he legislators who en-
acted section 1988 would not have wanted its effectiveness
blunted because of a little known rule of court." Id., at 479.
We granted certiorari, 466 U. S.
-
We reverse.
II
Rule 68 provides that if a timely pretrial offer of settlement
is not accepted and "the judgment finally obtained by the
"The District Court refused to shift to respondent any costs accrued by
petitioners. Petitioners do not contest that ruling.
83-1437-OPINION
MAREK v. CHESNY
3
offeree is not more favorable than the offer, the offeree must
pay the costs incurred after the making of the offer." Fed.
Rule Civ. Proc. 68 (emphasis added). The plain purpose of
Rule 68 is to encourage settlement and avoid litigation. Ad-
visory Committee Note on Rules of Civil Procedure, Report
of Proposed Amendments, 5 F. R. D. 433, 483 n.1 (1946);
Delta Air Lines, Inc. V. August, 450 U. S. 346, 352 (1981).
The Rule prompts both parties to a suit to evaluate the risks
and costs of litigation, and to balance them against the likeli-
hood of success upon trial on the merits. This case requires
us to decide whether the offer in this case was a proper one
under Rule 68, and whether the term "costs" as used in Rule
68 includes attorney's fees awardable under 42 U. S. C.
§ 1988.
A
The first question we address is whether petitioners' offer
was valid under Rule 68. Respondent contends that the
offer was invalid because it lumped petitioners' proposal for
damages with their proposal for costs. Respondent argues
that Rule 68 requires that an offer must separately recite the
amount that the defendant is offering in settlement of the
substantive claim and the amount he is offering to cover ac-
crued costs. Only if the offer is bifurcated, he contends, so
that it is clear how much the defendant is offering for the sub-
stantive claim, can a plaintiff possibly assess whether it
would be wise to accept the offer. He apparently bases this
argument on the language of the Rule providing that the de-
fendant "may serve upon the adverse party an offer to allow
judgment to be taken against him for the money or property
or to the effect specified in his offer, with costs then accrued."
(emphasis added).
The Court of Appeals rejected respondent's claim, holding
that "an offer of the money or property or to the specified ef-
fect is, by force of the rule itself, 'with'-that is, plus 'costs
then accrued,' whatever the amount of those costs is." 720
F. 2d, at 476. We, too, reject respondent's argument. We
do not read Rule 68 to require that a defendant's offer itemize
83-1437-OPINION
4
MAREK v. CHESNY
the respective amounts being tendered for settlement of the
underlying substantive claim and for costs.
The critical feature of this portion of the Rule is that the
offer be one that allows judgment to be taken against the
defendant for both the damages caused by the challenged con-
duct and the costs then accrued. In other words, the draft-
ers' concern was not so much with the particular components
of offers, but with the judgments to be allowed against de-
fendants. If an offer recites that costs are included or speci-
fies an amount for costs, and the plaintiff accepts the offer,
the judgment will necessarily include costs; if the offer does
not state that costs are included and an amount for costs is
not specified, the court will be obliged by the terms of the
Rule to include in its judgment an additional amount which in
its discretion, see Delta Air Lines, Inc. V. August, supra, at
362, 365 (POWELL, J., concurring), it determines to be suffi-
cient to cover the costs. In either case, however, the offer
has allowed judgment to be entered against the defendant
both for damages caused by the challenged conduct and for
costs. Accordingly, it is immaterial whether the offer
recites that costs are included, whether it specifies the
amount the defendant is allowing for costs, or for that mat-
ter, whether it refers to costs at all. As long as the offer
does not implicitly or explicitly provide that the judgment not
include costs, a timely offer will be valid.
This construction of the Rule best furthers the objective of
the Rule, which is to encourage settlements. If defendants
are not allowed to make lump sum offers that would, if ac-
cepted, represent their total liability, they would under-
standably be reluctant to make settlement offers. As the
Court of Appeals observed, "many a defendant would be un-
willing to make a binding settlement offer on terms that left
it exposed to liability for attorney's fees in whatever amount
the court might fix on motion of the plaintiff." 720 F. 2d,
at 477.
83-1437-OPINION
MAREK v. CHESNY
5
Contrary to respondent's suggestion, reading the Rule in
this way does not frustrate plaintiffs' efforts to determine
whether defendants' offers are adequate. At the time an
offer is made, the plaintiff knows the amount in damages
caused by the challenged conduct. The plaintiff also knows,
or can ascertain, the costs then accrued. A reasonable
determination whether to accept the offer can be made by
simply adding these two figures and comparing the sum to
the amount offered. Respondent is troubled that a plaintiff
will not know whether the offer on the substantive claim
would be exceeded at trial, but this is SO whenever an offer
of settlement is made. In any event, requiring itemization
of damages separate from costs would not in any way help
plaintiffs know in advance whether the judgment at trial will
exceed a defendant's offer.
Curiously, respondent also maintains that petitioner's
settlement offer did not exceed the judgment obtained by
respondent. In this regard, respondent notes that the
$100,000 offer is not as great as the sum of the $60,000 in
damages, $32,000 in pre-offer costs, and $139,692.47 in
claimed post-offer costs. This argument assumes, however,
that post-offer costs should be included in the comparison.
The Court of Appeals correctly recognized that post-offer
costs merely offset part of the expense of continuing the liti-
gation to trial, and should not be included in the calculus.
Id., at 476.
B
The second question we address is whether the term
"costs" in Rule 68 includes attorney's fees awardable under
42 U. S. C. § 1988. By the time the Federal Rules of Civil
Procedure were adopted in 1938, federal statutes had author-
ized and defined awards of costs to prevailing parties for
more than 85 years. See Act of Feb. 26, 1853, 10 Stat. 161;
see generally Alyeska Pipeline Service Co. V. Wilderness So-
ciety, 421 U. S. 240 (1975). Unlike in England, such "costs"
generally had not included attorney's fees; under the "Ameri-
83-1437-OPINION
6
MAREK v. CHESNY
can Rule," each party had been required to bear its own at-
torney's fees. The "American Rule" as applied in federal
courts, however, had become subject to certain exceptions by
the late 1930's. Some of these exceptions had evolved as a
product of the "inherent power in the courts to allow attor-
ney's fees in particular situations." Alyeska, supra, at 259.
But most of the exceptions were found in federal statutes
that directed courts to award attorney's fees as part of costs
in particular cases. 421 U.S., at 260-262.
Section 407 of the Communications Act of 1934, for exam-
ple, provided in relevant part that, "[i]f the petitioner shall
finally prevail, he shall be allowed a reasonable attorney's
fee, to be taxed and collected as a part of the costs of the
suit." 47 U.S. C. § 407. There was identical language in
Section 153(p) of the Railway Labor Act, 45 U. S. C. § 153(p)
(1934 ed.). Section 40 of the Copyright Act of 1909, 17
U. S. C. § 40 (1934 ed.), allowed a court to "award to the pre-
vailing party a reasonable attorney's fee as part of the costs."
And other statutes contained similar provisions that included
attorney's fees as part of awardable "costs." See, e. g., the
Clayton Act, 15 U. S. C. § 15 (1934 ed.); the Securities Act of
1933, 15 U. S. C. § 77k(e) (1934 ed.); the Securities Exchange
Act of 1934, 15 U. S. C. §§ 78i(e), 78r(a) (1934 ed.).
The authors of Federal Rule of Civil Procedure 68 were
fully aware of these exceptions to the American Rule. The
Advisory Committee's Note to Rule 54(d) contains an exten-
sive list of the federal statutes which allowed for costs in par-
ticular cases; of the 25 "statutes as to costs" set forth in the
final paragraph of the Note, no fewer than 11 allowed for at-
torney's fees as part of costs. Against this background of
varying definitions of "costs," the drafters of Rule 68 did not
define the term; nor is there any explanation whatever as to
its intended meaning in the history of the Rule.
In this setting, given the importance of "costs" to the Rule,
it is very unlikely that this omission was mere oversight; on
83-1437-OPINION
MAREK v. CHESNY
7
the contrary, the most reasonable inference is that the term
"costs" in Rule 68 was intended to refer to all costs properly
awardable under the relevant substantive statute or other
authority. In other words, all costs properly awardable in
an action are to be considered within the scope of Rule 68
"costs." Thus, absent Congressional expressions to the-con-
trary, where the underlying statute defines "costs" to include
attorney's fees, we are satisfied such fees are to be included
as costs for purposes of Rule 68. See, e. g., Fulps V. City of
Springfield Tenn., 715 F. 2d 1088, 1091-1095 (CA6 1983);
Waters V. Heublein, Inc., 485 F. Supp. 110, 113-117 (ND
Cal. 1979); Scheriff V. Beck, 452 F. Supp. 1254, 1259-1260
(D Colo. 1978). See also Delta Air Lines Inc. V. August, 450
U. S., at 362-363 (1981) (POWELL, J., concurring).
Here, respondents sued under 42 U. S. C. § 1983. Pursu-
ant to the Civil Rights Attorney's Fees Awards Act of 1976,
42 U. S. C. § 1988, a prevailing party in a § 1983 action may
be awarded attorney's fees "as part of the costs." Since
Congress expressly included attorney's fees as "costs" avail-
able to a plaintiff in a § 1983 suit, such fees are subject to the
cost-shifting provision of Rule 68. This "plain meaning" in-
terpretation of the interplay between Rule 68 and § 1988 is
the only construction that gives meaning to each word in both
Rule 68 and § 1988.2
Unlike the Court of Appeals, we do not believe that this
"plain meaning" construction of the statute and the Rule will
2 Respondents suggest that Roadway Express, Inc. V. Piper, 447 U. S.
752 (1980), requires a different result. Roadway Express, however, is not
relevant to our decision today. In Roadway, attorney's fees were sought
as part of costs under 28 U. S. C. § 1927, which allows the imposition of
costs as a penalty on attorneys for vexatiously multiplying litigation. We
held in Roadway Express that § 1927 came with its own statutory defini-
tion of costs, and that this definition did not include attorney's fees. The
critical distinction here is that Rule 68 does not come with a definition of
costs; rather, it incorporates the definition of costs that otherwise applies
to the case.
83-1437-OPINION
8
MAREK v. CHESNY
frustrate Congress' objective in § 1988 of ensuring that civil
rights plaintiffs obtain "effective access to the judicial proc-
ess." Hensley V. Eckerhart, 461 U. S. 424, 429 (1983), quot-
ing H. R. Rep. No. 94-1558, p. 1 (1976). Merely subjecting
civil rights plaintiffs to the settlement provision of Rule 68
does not curtail their access to the courts, or significantly
deter them from bringing suit. Application of Rule 68 will
serve as a disincentive forthe plaintiff's attorney to continue
litigation after the defendant makes a settlement offer.
There is no evidence, however, that Congress, in considering
§ 1988, had any thought that civil rights claims were to be on
any different footing from other civil claims insofar as settle-
ment is concerned. Indeed, Congress made clear its concern
that civil rights plaintiffs not be penalized for "helping to
lessen docket congestion" by settling their cases out of court.
See H. R. Rep. No. 94-1558, p. 7 (1976).
Moreover, Rule 68's policy of encouraging settlements is
neutral, favoring neither plaintiffs nor defendants; it ex-
presses a clear policy of favoring settlement of all lawsuits.
Civil rights plaintiffs-along with other plaintiffs-who re-
ject an offer more favorable than what is thereafter recov-
ered at trial will not recover attorney's fees for services per-
formed after the offer is rejected. But, since the Rule is
neutral, many civil rights plaintiffs will benefit from the
offers of settlement encouraged by Rule 68. Some plaintiffs
will receive compensation in settlement where, on trial, they
might not have recovered, or would have recovered less than
what was offered. And, even for those who would prevail at
trial, settlement will provide them with compensation at an
earlier date without the burdens, stress, and time of litiga-
tion. In short, settlements rather than litigation will serve
the interests of plaintiffs as well as defendants.
To be sure, application of Rule 68 will require plaintiffs to
"think very hard" about whether continued litigation is
worthwhile; that is precisely what Rule 68 contemplates.
This effect of Rule 68, however, is in no sense inconsistent
83-1437-OPINION
MAREK v. CHESNY
9
with the congressional policies underlying § 1983 and § 1988.
Section 1988 authorizes courts to award only "reasonable" at-
torney's fees to prevailing parties. In Hensley V. Eckerhart,
461 U. S. 424 (1983), we held that "the most critical factor" in
determing a reasonable fee "is the degree of success ob-
tained." Id., at 436. We specifically noted that prevailing
at trial "may say little about whether the expenditure of
counsel's time was reasonable in relation to the success
achieved." Ibid. In a case where a rejected settlement
offer exceeds the ultimate recovery, the plaintiff-although
technically the prevailing party-has not received any mone-
tary benefits from the post-offer services of his attorney.
This case presents a good example: the $139,692 in post-offer
legal services resulted in a recovery $8,000 less than petition-
er's settlement offer. Given Congress' focus on the success
achieved, we are not persuaded that shifting the post-offer
costs to respondent in these circumstances would in any
sense thwart its intent under § 1988.
Rather than "cutting against the grain" of § 1988, as the
Court of Appeals held, we are convinced that applying Rule
68 in the context of a § 1983 action is consistent with the poli-
cies and objectives of § 1988. Section 1988 encourages plain-
tiffs to bring meritorious civil rights suits; Rule 68 simply
encourages settlements. There is nothing incompatible in
these two objectives.
III
Congress, of course, was well aware of Rule 68 when it en-
acted § 1988, and included attorney's fees as part of recover-
able costs. The plain language of Rule 68 and § 1988 subjects
such fees to the cost-shifting provision of Rule 68. Nothing
revealed in our review of the policies underlying § 1988 con-
stitutes "the necessary clear expression of congressional in-
tent" required "to exempt
[the] statute from the opera-
tion of" Rule 68. Califano V. Yamasaki, 442 U. S. 682, 700
(1979). We hold that petitioners are not liable for costs of
83-1437-OPINION
10
MAREK V. CHESNY
$139,692 incurred by respondent after petitioners' offer of
judgment.
The judgment of the Court of Appeals is
Reversed.
SUPREME COURT OF THE UNITED STATES
No. 83-1437
JEFFREY MAREK, THOMAS WADYCKI AND LAW-
RENCE RHODE, PETITIONERS v. ALFRED W.
CHESNY, INDIVIDUALLY AND AS ADMINISTRATOR OF
THE ESTATE OF STEVEN CHESNEY, DECEASED
ON WRIT OF CERTIORARI TO THE UNITED STATES COURT OF
APPEALS FOR THE SEVENTH CIRCUIT
[June 27, 1985]
JUSTICE POWELL, concurring.
In Delta Airlines, Inc. V. August, 450 U. S. 346 (1981), the
offer under Rule 68 stated that it was "in the amount of $450,
which shall include attorney's fees, together with costs ac-
crued to date." Id., at 365. In a brief concurring opinion, I
expressed the view that this offer did not comport with the
Rule's requirements. It seemed to me that an offer of judg-
ment should consist of two identified components: (i) the sub-
stantive relief proposed, and (ii) costs, including a reasonable
attorney's fee. The amount of the fee ultimately should be
within the discretion of the court if the offer is accepted. In
questioning the form of the offer in Delta, I was influenced in
part by the fact that it was a Title VII case. I concluded
that the "costs' component of a Rule 68 offer of judgment
in a Title VII case must include reasonable attorney's fees
accrued to the date of the offer." Id., at 363. My view,
however, as to the specificity of the "substantive relief" com-
ponent of the offer did not depend solely on the fact that
Delta was a Title VII case.
No other Justice joined my Delta concurrence. The
Court's decision was upon a different ground. Although I
think it the better practice for the offer of judgment ex-
pressly to identify the components, it is important to have a
83-1437-CONCUR
2
MAREK v. CHESNY
Court for a clear interpretation of Rule 68. I noted in Delta
that "parties to litigation and the public as a whole have an
interest-often an overriding one-in settlement rather than
exhaustion of protracted court proceedings." Ibid. The
purpose of Rule 68 is to "facilitat[e] the early resolution of
marginal suits in which the defendant perceives the claim to
be without merit, and the plaintiff recognizes its speculative
nature." Ibid. See also ibid., n. 1. We have now agreed
as to what specifically is required by Rule 68.
Accordingly, I join the opinion of the Court.
atterneys fees
bile
SUMMARIES OF SIGNIFICANT
ATTORNEY FEE AWARD
DECISIONS
Prepared By:
Appellate Policies Division
Office of Employee, Labor, and Agency Relations
U.S. Office of Personnel Management
November 1985
TABLE OF CONTENTS
Page
I.
BASIC AUTHORITY TO AWARD ATTORNEY FEES
A. Judicial Phase of MSPB Appeal: Lizut V. Dept. of the Army
1
B. Frivolous Awards Filed in Court: Moir V. Dept. of the Treasury
1
C. Arbitrator Awards of Attorney Fees: Army and IBEW
2
II.
SERVICES FOR WHICH FEES ARE AVAILABLE
A. Services Provided Prior to an Appeal: McBride V. Agriculture
3
B. Attorney-Client Relationship Required: O'Donnell V. Interior
3
C. Petition For Review: Langenbach V. U.S. Postal Service
4
D. Petition For Attorney Fees: LaMorge V. Agriculture
4
E. Obtaining Enforcement of an MSPB Order: Alfaro V. Transportation
4
III. DETERMINING WHETHER THE APPELLANT IS A
PREVAILING PARTY
A. Definition of Prevailing Party: Hodnick V. FMCS
5
B. Prevailing Party/Interest of Justice Distinction: Sterner V. Army
5
C. As Result of Settlement Agreement: Carpenter V. BATF
6
IV. APPLICATION OF THE INTEREST OF JUSTICE STANDARD
A. Basic Criteria: Allen V. U.S. Postal Service
7
B. Based Independently on PFR: Keely V. MSPB
8
C. Factually Close Cases: Thomson V. MSPB
8
D. Substantially Innocent: Yorkshire V. MSPB
9
E. Failure to Grant Opportunity Period: Grant V. Transportation
9
F. Negligent Case Presentation: Trowell V. U.S. Postal Service
10
V. DETERMINING WHETHER THE FEES REQUESTED
ARE REASONABLE
A. Factors Used: Kling V. Dept. of Justice
11
B. Determination of Market Rate: Mitchell V. HHS
11
C. Union Attorneys: Powell V. Dept. of the Treasury
12
D. Reimbursement for Costs: Bennett V. Navy
12
ALPHABETICAL LISTING OF CASES
13
I. BASIC AUTHORITY TO AWARD ATTORNEY FEES
Introduction - The primary authority under which attorney fees are awarded in cases involving
Federal employees is found at 5 U.S.C. 7701(g) which authorizes MSPB to award fees in any action
which is appealable to the Board. The Board may also award fees under the Back Pay Act (5 U.S.C.
5596). Nevertheless, attorney fees claimed under that statute in adverse action cases are subject to
the same guidelines and limitations as fees awarded under 5 U.S.C. 7701(g). Note also that while
Federal Courts, under various circumstances, may award attorney fees against an employee, 5
U.S.C. 7701(g) only authorizes the Board to award attorney fees in favor of prevailing employees.
A. Fees may be awarded in connection with judicial phase of MSPB appeal
Lizut V. Dept. of the Army, PH07528110266ADD (1985)
Mr. Lizut appealed his removal to MSPB which upheld the agency's action. He then filed an
appeal with the U.S. Court of Appeals for the Federal Circuit which vacated the Board's decision
and remanded his case back to MSPB for further proceedings. On remand, the Board reversed the
agency's action. Mr. Lizut then petitioned for attorney fees. The MSPB presiding official granted
an award of fees incurred in challenging his removal before the Board but denied an award for
services provided in the judicial phase of the appellant's case.
In considering the case on review, the full Board first noted that the Federal Circuit had recently
held that 5 U.S.C. 7701(g) is limited to fees incurred in MSPB proceedings and does not authorize
the Board to award fees for services rendered in connection with judicial review of a Board
decision (Olsen V. Dept. of Commerce, 735 F.2d 558 (1984)). The Board went on, however, to
hold that the Back Pay Act (5 U.S.C. 5596) authorizes an award of fees incurred for the services of
an appellant's attorney before the Court as well as before the Board. Mr. Lizut was therefore
awarded fees for work in obtaining the Court's order vacating the Board's decision which had
upheld his removal. (Further discussion in OPM Significant Cases, No. 49, 9/85.)
B. Frivolous appeals filed in Court may result in fee award against employee
Moir V. Dept. of the Treasury, 754 F.2d 341 (1985)
MSPB originally dismissed Mr. Moir's appeal of his removal pursuant to a stipulation by the
parties that it was being withdrawn to permit Mr. Moir to seek reconsideration of OPM's denial of
his request for disability retirement. The order of dismissal specifically stated that "the appeal
may be refiled within twenty days of a reconsideration by OPM." In July 1982, OPM denied his
application for disability retirement and that decision was upheld in an order which became final
in October 1982. In November 1983, or over a year later, Mr. Moir filed a motion to reinstate his
original appeal of his removal. When MSPB denied that motion as untimely, he filed suit in the
Court of Appeals for the Federal Circuit. The Court stated that "the petitioner has offered no
possible justification for that substantial delay, and we discern none."
Noting that "the petitioner has not even come close to showing that the Board committed a legal
error or abused its discretion," the Court found the appeal to be frivolous and assessed court costs
and fees of $500 in favor of the Government against the appellant and his attorney. (Further
discussion in OPM Significant Cases, No. 45, 3/85.)
As of 11/85
I
C. Arbitrator awards of attorney fees must comply with 5 U.S.C. 7701(g)
Army and IBEW, 14 FLRA 90 (1984)
An arbitrator may award attorney fees in connection with the resolution of an appeal filed under
a negotiated grievance procedure. The authority for such an award is the Back Pay Act (5 U.S.C.
5596). This decision was issued by the Federal Labor Relations Authority (FLRA) in response to
the agency's claim that the arbitrator's award of attorney fees was not authorized. The FLRA
listed the several requirements that must be met in such a case. First, it must be shown that the
grievant has been affected by an unwarranted or unjustified personnel action which has resulted
in the withdrawal or reduction in his pay. Second, any award of attorney fees must be in
conjunction with an award of backpay and both reasonable and related to the personnel action.
Finally, the Authority made it clear that any award must be in accordance with 5 U.S.C. 7701(g)
and cited several key MSPB decisions as providing criteria as to what is permitted. Furthermore,
it was held that arbitrators' awards must contain a "fully articulated, reasoned decision setting
forth the specific findings supporting the determination on each pertinent statutory
requirement." Thus an arbitrator's award of attorney fees is ultimately subject to the guidelines
discussed in the various MSPB cases covered in this issuance.
As of 11/85
2
II. SERVICES FOR WHICH FEES ARE AVAILABLE
Introduction - Fees may normally be awarded for legal services provided at all stages of the
processing of an appeal SO long as the work is performed: 1) within the context of an attorney-client
relationship and 2) in connection with a matter which is appealed to MSPB. The five cases below deal
with application of these two criteria. Cases dealing with specific types of expenses and the degree to
which they may be included in an attorney fee award are provided under Section V., "Determining
Whether the Fees Requested Are Reasonable."
A. An award may compensate for services provided prior to an appeal, so long as they were
provided in connection with an action subject to MSPB jurisdiction
McBride V. Dept. of Agriculture, SF043209006 (1980)
Ms. McBride apparently retained the services of legal counsel prior to the issuance of her agency's
final decision to remove her for unacceptable performance. Upon MSPB reversing her dismissal,
she included in her motion for attorney fees, 15 hours of services provided by her attorney in
contesting the action before the agency issued its decision. The Board overruled the presiding
official's initial addendum decision and stated that it had jurisdiction to award attorney fees for
services rendered prior to issuance of the agency's final decision, SO long as two prerequisites are
met. Those perquisites are: 1) that the Board have jurisdiction over the appeal (5 U.S.C 7701) and
2) that the services rendered were in connection with an appealable agency action.
B. Awards are limited to those fees actually incurred within an attorney-client relationship
O'Donnell V. Dept. of the Interior, NY075299058 (1980)
In this case the Board defined the meaning of the phrase in 5 U.S.C. 7701(g)(1) that provides that
limits awards to those "attorney fees incurred by an employee or applicant". Mr. O'Donnell's
attorney was not retained directly by him but rather by his union in his behalf. The attorney
attested that rather than billing the union at his customary rate which would have resulted in a
charge of $12,829, he billed at a reduced rate which resulted in an actual charge of $6,100. The
presiding official determined that a reasonable award in this case would be an amount midway
between the sum produced by applying the normal rate and that actually billed to the union.
The full Board first considered the potential argument that the fees were not actually "incurred"
by the appellant since counsel was retained by appellant's union and it was undisputed that he
had no contractual obligation to pay his counsel. The Board ruled that the fact that the appellant
was not personally obligated to compensate his counsel did not affect his right to an award. It
stated that "attorney fees are 'incurred' within the ambit of 7701(g)(1) where an attorney-client
relationship exists and counsel has rendered legal services on behalf of the appellant in an appeal
before this Board." It may be useful here to note that the the Board in a number of cases has held
that the requirement of an attorney-client relationship means that representation by a non-
attorney is not covered under 5 U.S.C. 7701(g)(1).
The Board then addressed the question of whether the amount awarded could exceed the fee
actually charged the appellant's union, i.e., $6,100. Noting that fee awards must not provide a
windfall to counsel at the expense of the public treasury, the Board ruled that "where it is agreed
that a specific fee be paid to counsel for services rendered on behalf of an appellant in a case before
the Board, we will presume that the amount agreed upon represents the maximum reasonable fee
which may be awarded."
As of 11/85
3
C. Fees may be awarded for time spent on a petition for review
Langenbach V. U.S. Postal Service, NY07528090142ADD (1982)
In the initial processing of his case, Mr. Langenbach was represented by two individuals who
were not attorneys. After its removal action was reversed in an initial MSPB decision, the agency
filed a petition for review with the full Board. Mr. Langenbach then retained a licensed attorney
who provided legal services in connection with the Board's consideration of the agency PFR. The
Board first noted that since the appellant's first two representatives were not attorneys, no
attorney-client relationship existed and no reimbursement was due for services rendered by those
persons. It then went on to hold that an attorney may be compensated for services in connection
with a petition for review. (Unfortunately for Mr. Langenbach, it was determined that the facts
in his case did not warrant a finding that such a award would be in the "interests of justice.")
D. A fee award may include time spent on a petition for attorney fees
Lamorge V. Dept. of Agriculture, BN075209027 (1981)
In this case, the appellant's attorney submitted a motion for attorney fees which was granted by
the MSPB presiding official. The agency filed a petition for review of this attorney fee award
which the full Board denied, upholding an award of $5,995. In his response to the agency PFR,
the appellant's attorney noted that the fees awarded by the presiding official did not cover the
work done in relation to the agency's objections to that award because the work was done after the
initial fee motion was submitted and it was not clear whether a supplementary motion could be
made. The Board, reasoning that it would not be fair to allow an agency to force an appellant to
respond to general objections to a fee request, stated that time spent on the preparation of a fee
petition and on the successful appeal of a fee award is compensable under 5 U.S.C. 7701(g)(1). The
appellant's attorney was permitted to submit the information necessary to determine what a
reasonable fee would be for work "done in relation to the fee award and the agency's objections
thereto."
E. Fees may be recovered for services provided in obtaining enforcement of an MSPB order
Alfaro V. Dept. of Transportation, NY075281F0428ADD2d (1985)
The agency, after having its removal action reversed (and attorney fees assessed based on their
negligent case preparation), sought a stay of compliance pending a decision on an OPM petition
for reconsideration. MSPB denied the request for a stay and ordered the agency to submit proof of
compliance. Eventually, but not until after the Board had denied OPM's petition for
reconsideration, the agency did submit proof of compliance. In a second addendum decision, the
presiding official awarded additional attorney fees to the appellant's attorney for services
performed during the enforcement proceedings.
The agency argued that such an award was not in the interest of justice since its failure to timely
comply resulted from its attempt to obtain a stay of reinstatement. The Board noted that its
regulations do not provide for a stay of the agency's duty to comply pending disposition of an OPM
petition for reconsideration. Thus it concluded that the agency's stated reason for its delay in
compliance was not persuasive and also noted that the agency further delayed in complying with
the Board's order even after the final denial of its request for a stay. As a result, the Board held
that "counsel for a prevailing appellant may be compensated for time spent working on
enforcement proceedings and in reference to an agency's petition for review of an addendum
decision awarding attorney fees to counsel for enforcement proceedings." (Further discussion in
OPM Significant Cases, No. 45, 3/85.)
As of 11/85
4
III. DETERMINING WHETHER THE APPELLANT IS A PREVAILING PARTY
Introduction - 5 USC 7701(g) allows only those employees who "prevail" to apply for attorney fees.
As applied by MSPB and the Courts, all that is required is that the appellant obtain all or a
significant part of the relief sought and that such relief be related to the initiation of the appeal. As
seen in the several cases below, this definition may be met in situations where an agency cancels its
proposed action, where there is substantial mitigation of the original penalty proposed, or pursuant to
a settlement agreement.
A. An appellant may be a prevailing party if they obtain all or a significant part of the relief
sought
Hodnick V. FMCS, SF531D09004 (1981)
After a hearing on Mr. Hodnick's appeal of the denial of his within-grade increase (WIGI) had
been scheduled, his agency cancelled its action and granted the WIGL The agency indicated that
the cancellation was solely due to procedural errors which occurred during the within-grade
determination process. When Mr. Hodnick subsequently moved for an award of attorney fees, the
agency argued that for him to be a "prevailing party" to whom fees could be awarded, a final
decision must have been entered. In an initial decision, the presiding official agreed, specifically
distinguishing the definition of "prevailing party" in discrimination cases provided for in 5 USC
7701(g)(2) from that in non-discrimination cases covered in 5 USC 7701(g)(1).
The full Board disagreed, reasoning that the same interpretation of "prevailing party" is
applicable under either section of the statute. It held that attorney fees may be awarded if the
appellant obtains "all or a significant part of the relief sought in petitioning for appeal, regardless
of whether a final decision has been issued". It further noted, however, that if an agency grants
all or part of the relief sought before a judgment is entered, it must be shown that relief was
granted as a result of the institution of the appeal. To permit agencies to avoid liability for fees
merely by conceding an appeal before a final decision had been rendered was seen as contrary to
the purpose of the fee provision as well as tending to discourage settlements. It is useful to note,
however, that the Board ultimately denied Mr. Hodnick any attorney fees, finding that although
he was a "prevailing party," he had failed to establish that an award would be "in the interest of
justice." Thus it is clear that "prevailing party" and "interest of justice" are two separate tests
that must be met before an award may be made.
B. Distinction between being a prevailing party and meeting the interest of justice test
Sterner V. Dept. of the Army, 711 F.2d 1563 (1983)
This case is a judicial affirmation of the Board's analysis and conclusion in Hodnick. Mr. Sterner
was removed based on five charges of misconduct, two of which he admitted. In a hearing before
MSPB, the agency was unable to prove the three contested charges and his removal was reduced
to a 16-day suspension. In considering his appeal from the Board's denial of attorney fees, the
Court explicitly set out two prerequisites for an award of attorney fees under 5 USC 7701(g)(1),
for which the employee bears the burden of proof: the employee must be a prevailing party and
the award must be warranted in the interest of justice.
The Court agreed that the first prerequisite is met if an appellant obtains all or a significant part
of the relief sought. It went on to note that "the determination of who prevailed is, after all, only a
threshold test of eligibility; the more difficult question of entitlement is reserved for the second
prerequisite, 'warranted in the interest of justice." Since Mr. Sterner's removal was reversed, he
As of 11/85
5
clearly was a prevailing party. However, as to the second prerequisite, the Court agreed with
MSPB that there was no showing that an award was warranted in the interest of justice and the
Board's denial of any award of fees was affirmed. This case is also cited for two subsidiary points
the Court made: 1) its statement that it will accord the Board's determinations on attorney fees
great deference and 2) its indication that generally speaking, economic hardship is not a relevant
criteria in awarding attorney fees.
C. An appellant may be a prevailing party if as result of a settlement agreement they obtain
the relief sought
Carpenter V. Bureau of Alcohol, Tobacco, and Firearms, 5 MSPB 432 (1981)
Mr. Carpenter appealed his reduction in grade based on misconduct to MSPB. Subsequently, the
Special Counsel intervened, claiming that the agency action constituted or was taken as a result
of a prohibited personnel practice. Following the initiation of a hearing but prior to a
determination on the merits of the action, the parties entered into a stipulated settlement of the
appeal. The settlement agreement provided that instead of being downgraded from GS-13, step 4,
to GS-12, step 1, he would only be downgraded to GS-12, step 10; and that his records would show
that the action was taken for the efficiency of the service. The Board restated its holding in
Hodnick, that a final determination on the merits is not required, so long as the appellant
obtained all or part of the remedy sought. Thus an employee may be the prevailing party as a
result of a settlement agreement. Nevertheless, in Mr. Carpenter's case, the Board found that the
token concession he received in the settlement agreement was insufficient to qualify him as a
prevailing party and his motion for attorney fees was denied.
As of 11/85
6
IV. APPLICATION OF THE INTEREST OF JUSTICE STANDARD
Introduction - Easily the most controversial area in any discussion of attorney fees involves the
interpretation and application of the requirement in 5 U.S.C. 7701(g)(1) that an award may be made
only after a determination that it is "warranted in the interest of justice." Any review in this area
must begin with Allen V. USPS discussed immediately below. Nearly all attorney fee decisions
follow the analytical framework first discussed in Allen and all attorney fee cases involving the
application of the 'interest of justice' standard are ultimately based on one or more of the five
categories of circumstances listed in that case. Recent Court decisions in this area, as seen below,
have tended to broaden the circumstances under which an award may be determined to be "in the
interest of justice."
A. Establishment of criteria under which interest of justice standard is applied
Allen V. U.S. Postal Service, AT075299011 (1980)
The agency's removal of Mr. Allen was reversed after a finding by MSPB that the agency had
failed to establish that his purported falsification of his time card was intentional. Along with
reversing the agency action, the presiding official, in his initial decision, found that "because the
appellant is the prevailing party, he is entitled, in the interest of justice, to reasonable attorney
fees."
In reviewing this decision, the full Board began by setting out the framework under which
attorney fee motions should be analyzed. It stated:
Thus in awarding attorney fees that have been 'incurred' in appeals under
7701(g)(1), the statutory language demands that each of the following
requirements be met: 1. The appellant must be the 'prevailing party; 2. The
award must be 'warranted in the interest of justice'; and 3. The fees must be
'reasonable.'
After reviewing the legislative history of 5 U.S.C. 7701(g)(1), the Board then set out a non-
exhaustive list of circumstances in which the "interest of justice" standard would be met. The
examples listed, which have subsequently come to be referred to as the "Allen categories" are:
1. Where the agency engaged in a 'prohibited personnel practice';
2. Where the agency's action was 'clearly without merit', or was 'wholly
unfounded', or the employee is 'substantially innocent' of the charges
brought by the agency;
3. Where the agency initiated the action against the employee in 'bad
faith,' including:
a. Where the agency's action was brought to 'harass' the employee;
b. Where the agency's action was brought to 'exert improper
pressure on the employee to act in certain ways;'
4. Where the agency committed a 'gross procedural error' which 'prolonged
the proceeding' or 'severely prejudiced' the employee;
5. Where the agency 'knew or should have known that it would not prevail
on the merits' when it brought the proceeding.
As of 11/85
7
The Board then noted that under its regulations, a request for award of attorney fees must be
made by separate motion, with the burden of entitlement to such an award resting on the
appellant. The case was remanded back to the presiding official to determine whether, in light of
the above guidance, an award of attorney fees was "warranted in the interest of justice."
B. An award may be independently based on a finding that an agency's petition for review
is clearly without merit
Keely V. MSPB, 760 F.2d 246 (1985)
Mr. Keely successfully appealed his separation during a reduction-in-force. His agency had
refused to reassign him to another position because he did not meet the requirements of a special
selective factor for that position. The MSPB presiding official found that the selective factor cited
by the agency had not been approved by OPM and reversed the separation action. The agency
petitioned for review, citing newly discovered evidence that OPM had indeed approved the
selective factor in question. The Board denied this petition, indicating that the agency appeal
lacked merit since the documents in question had been the agency's possession for several years
before the hearing.
Mr. Keely's motion for attorney fees was denied by the presiding official who stated that the
agency's initial decision that Mr. Keely could not be reassigned was a narrow but tenable
determination under the circumstances. The full Board subsequently upheld this denial of
attorney fees. Mr. Keely then took his case to the Federal Circuit Court. The Court overruled
MSPB, stating that "the determination of whether an award is warranted
is not limited to
examination of the agency's initial action." It stated that "an award of attorney fees is proper
where an agency brings an appeal that is clearly without merit." In reviewing the facts of the
case, the Court concluded that the agency knew or should have known that it had no chance of
obtaining a rehearing before MSPB on the basis of the supposed new evidence, that its appeal was
therefore without merit, and that an award of attorney fees was warranted from the date the
agency filed its petition for review.
C. Factually close cases do not per se fall into a class in which fees are not available
Thomson V. MSPB, 772 F.2d 879 (1985)
Mr. Thomson's agency sought to remove him for threatening his supervisors and sleeping on duty.
On appeal to MSPB, it was determined, on conflicting evidence, that while there was insufficient
evidence to prove that he had threatened his supervisors, the charge of sleeping on duty was
sustained. The removal action was therefore reversed and a five day suspension imposed. MSPB
subsequently denied Mr. Thomson's petition for attorney fees, holding that: 1) there was no
showing that the agency did not act reasonably in bringing the charges given the evidence before
it and 2) that cases decided primarily on the basis of credibility do not warrant fee awards nor are
the interest of justice served by a fee award in "factually close cases."
The denial of attorney fees was appealed to Federal Court which took exception to both of MSPB's
holdings. The Court noted that in his motion for an award of attorney fees, Mr. Thomson asserted
that he was "substantially innocent" of the charges of threatening his supervisor based on the
evidence presented at the MSPB hearing. The Court restated its holding in Yorkshire that when
considering whether the "substantially innocent" criteria is met, the reasonableness of the
agency's action at the time the removal was taken is "irrelevant." Second, the Court explicitly
rejected the notion that there is any general rule against fee awards either in cases decided
primarily on the basis of credibility or in "factually close" cases. While the closeness of the
As of 11/85
8
evidence can be considered as one factor in determining whether the appellant was substantially
innocent of the charges, there is no automatic denial of fee awards in such cases.
D. If an appellant is determined to be substantially innocent, an award may be made
regardless of the agency's original fault in bringing the action
Yorkshire V. MSPB, 746 F.2d 1454 (1984)
This case focuses specifically on the second Allen category discussed above, when the appellant is
"substantially innocent of the charges brought by the agency." In the initial MSPB decision, the
presiding official found no evidence supporting any of the agency's charges against the appellant
and dismissed the agency's action removing Mr. Yorkshire for striking a patient under his care.
At the hearing, the agency's principal witness had changed her testimony and admitted not
having actually seen the alleged incident, and the testimony of the agency's other witness was
determined to be totally lacking in credibility. In ruling on the motion for attorney fees, the
presiding official determined that nothing in the record suggested that the agency knew or should
have known that its principal witness would change her account of the incident and noted that
further investigation would not necessarily have revealed to the agency that it could not
reasonably expect to prevail on the merits. Therefore Mr. Yorkshire's motion for attorney fees
was denied upon a finding that on the basis of the facts available to the agency, its action was not
"clearly without merit." The full Board upheld this decision.
The Appeals Court overturned MSPB's decision, stating that "when dealing with the
'substantially innocent' standard for award of attorney fees, the question of the agency's original
fault need never arise." It held that an examination of whether the agency knew or should have
known that it would not prevail on the merits is irrelevant to the issue of whether the
"substantially innocent" criteria had been met. The Court drew a clear distinction between the
fifth Allen category (which deals with whether the agency knew or should have known that it
would not prevail when it brought the action) which it said requires a "sensitive evaluation of the
agency's original action" and the "substantially innocent" criteria which "refers to the result of
the case in the Board, not to the evidence and information available prior to the hearing." Since
the presiding official in the initial MSPB hearing found no credible evidence that the appellant
had engaged in any misconduct, the "substantially innocent" standard was met and an award of
attorney fees was warranted.
The Court went on to indicate that its ruling did not mean that every prevailing employee will be
entitled to an award of attorney fees, noting that an employee must prevail on substantially all
the charges to be found "substantially innocent." It further noted that the degree of fault on the
employee's part should be taken into account in assessing whether he is "substantially innocent."
(Further discussion in OPM Significant Cases, No. 43, 1/85.)
E. Failure to afford an opportunity period may warrant an award of fees
Grant V. Dept. of Transportation, AT04328410145ADD (1985)
Mr. Grant's removal based on unacceptable performance was reversed by the Board upon a
finding that his agency had failed to afford him a reasonable opportunity to improve as required
by statute and first recognized by MSPB in its Sandland decision. Mr. Grant then petitioned for
attorney fees, arguing that he was "substantially innocent" of the charges and that an award was
warranted in the interest of justice. The presiding official denied his motion, finding that: 1) he
was not substantially innocent since the Board did not reverse the finding. that his performance
on at least one critical element was unacceptable as charged and 2) since the Sandland decision
was issued after the agency effected the action, the agency therefore had no reason to know that it
would not prevail when it took the action.
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The full Board reversed this ruling and granted the motion for an award of attorney fees. It noted
that when considering whether an agency's action was "clearly without merit" (or whether an
employee is "substantially innocent"), the relevant focus is on the result before the Board, not on
the information available to the agency prior to the hearing. Since the agency did not present
credible evidence that it had afforded the appellant an opportunity to improve, the agency's action
was determined to be clearly without merit. The Board went on, however, to find that the both
the statute itself as well as OPM guidance made it clear that agencies must afford employees an
opportunity to improve prior to taking action based on unacceptable performance. Hence the fact
that the Sandland decision was issued after the agency action took place was irrelevant. The
lesson here is that failure to provide a key substantive right provided in the statute (such as a
reasonable opportunity to improve) may result in an award of attorney fees based upon a finding
that the agency action was "clearly without merit."
F. Negligent presentation of an agency's case may lead to an attorney fee award
Trowell V. U.S. Postal Service, 3 MSPB 117 (1980)
In this case, the MSPB presiding official reversed the agency's dismissal of Mr. Trowell, finding
that the agency failed to support the charge with any evidence. In subsequently granting an
award of attorney fees, he specifically noted that the agency's representative's "apparent
unfamiliarity with prosecuting an appeal amounted to negligence. This negligence clearly
existed to such a degree as to unconscionably taint the entire proceeding." Both the agency and
OPM contended in their petition for review before the full Board that the award of attorney fees
cannot be warranted "in the interest of justice" simply because the agency's presentation of its
case before the Board was negligent.
The Board disagreed with this argument, stating that while agencies are not required to be
represented by legal counsel, "the assignment of totally unskilled, inexperienced, and unprepared
agency representatives who are utterly lacking in familiarity with the essentials of presenting
the agency's case before the Board" is not permitted. It noted that "If an agency is not prepared to
take a removal action seriously enough to present its case with at least a minimal degree of
competence, then in the interest of justice to all concerned it should not initiate the action to begin
with." Attorney fees were awarded, based on the reasoning that the fifth Allen category, "where
the agency knew or should have known it would not prevail on the merits when it brought the
proceeding," includes instances where the agency presented its case SO negligently that the action
could not possibly be sustained on the record established before the Board.
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V. DETERMINING WHETHER THE FEES REQUESTED ARE REASONABLE
Introduction - Once it has been determined that the prerequisites of 5 USC 7701(g)(1) as to
"prevailing party" and "interest of justice" have been met, the final significant statutory requirement
is that only "reasonable" attorney fees be awarded. As seen in the cases below, there has been
considerable effort at establishing an analytical framework by which a determination whether the
fees requested are "reasonable" may be made. In actual practice, decisions in this area often turn on
the individual facts in each case. The Board's holding in O'Donnell (discussed earlier at p. 3), the
first significant decision which addressed reasonableness of attorney fees, has been substantially
expanded in the following cases.
A. Factors used in determining reasonableness of fees
Kling V. Dept. of Justice, AT075299048 (1980)
In this case the agency did not contest the amount of the fees which Mr. Kling's attorney claimed,
instead challenging whether the award was in the interest of justice. Nevertheless, after
upholding the initial decision as to the merits of the award, the Board took the time to discuss at
some length the pertinent factors to be considered in determining the amount of a "reasonable"
attorney fee and the analytical framework for considering these factors. The Board indicated that
the two most critical factors are the lawyer's customary billing rate and the number of hours
devoted to the case. Once these two factors have been scrutinized and multiplied to obtain their
product, presiding officials may take into account other factors not adequately reflected in the
time and hourly rate charged. Such factors, the Board suggested, might include the "quality of
professional performance, unusual time restraints, an unusually unpopular cause, and a
contingency factor when the attorney has agreed to be paid only if successful."
The Board emphasized that the presiding official must carefully scrutinize the hours and billing
rates claimed by attorneys seeking fee awards. In particular, the billing rate must be evaluated
according to the individual attorney's professional standing, specialized experience, and status.
Presiding officials must include in their decision information sufficient to substantiate not only
the billing rate and hours charged, but also any adjustment to this amount, even if the agency
fails to contest the amount claimed. The Board concluded that: "The particular facts and
circumstances of the parties and attorneys will necessarily vary from case to case, but the method
of determining a reasonable fee award should not vary. A reasoned analysis with factual support
in the record is always required."
B. Importance of market rate in determining reasonable fees
Mitchell V. Dept. of Health and Human Services, DA07528110152ADD (1984)
The Board in this case focused specifically on the determination of the appropriate billing rate
used in the Kling formula to arrive at a reasonable attorney fee award. Recognizing that the
actual rate which was billed is not necessarily the appropriate rate, it stated that the rate that an
attorney can command in the market is "important substantiating evidence of the prevailing
community rate". However, the Board went on to require: 1) that attorneys who vary their rates
according to the kind of case should state the average rate charged in cases similar to the one for
which an award is being sought, and 2) that fee applications should provide information to show
that the attorney has billed sufficient work to establish that their rate reflects a market value for
his services. If an attorney either does not bill clients or has not billed sufficient work to establish
a market rate, the Board indicated that they could introduce other evidence, such as affidavits of
attorneys with similar experience as to the rate at which they charge clients.
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In addressing the question of whether the same rate should be billed for different types of legal
work, the Board held that while the applicable rate is presumed to be the same for all types of
legal work, such a rate should not be used for work "which is normally done by nonlegal personnel
such as clerical or paralegal workers". Similarly, the time spent in travel is not legal work and
should be compensated at a lower rate. Finally, with regard to recovery of costs (as opposed to
attorney fees) the Board noted that its authority under 5 USC 7701(g)(1) is limited to those
expenses normally included within attorney fees. This is in contrast to fees authorized as a result
of a finding of discrimination (5 USC 7701(g)(2)), where in addition to attorney fees, the costs of
expert witnesses, transcripts, depositions, subpoenas, and duplicating may be recovered.
C. Compensation of union and other salaried attorneys
Powell V. Dept. of the Treasury, DC075299039 (1981)
The issue in this case was how to arrive at a reasonable billing rate when legal services are
provided by a union attorney who is compensated on the basis of an established salary. In this
case, the appellant was represented by union counsel who sought to have the attorney fee award
based on prevailing rates in the community, rather than on his actual salary. OPM intervened in
this case to argue that a fee award to a salaried union attorney must be limited to the actual cost
to the union of providing the legal services. The problem in this area is that disciplinary rules
covering attorneys prohibit their splitting their fees with non-attorneys. If a salaried union
attorney was reimbursed at a rate exceeding their salary and the excess reimbursement was
turned over to the union, a violation of such rules would occur.
The Board agreed with OPM and held that the reasonable attorney fee recoverable by a salaried
union attorney may consist of no more than the actual cost to the union of providing legal services
to the appellant. This actual cost may include, in addition to the attorney's hourly salary, an
allowance of 100% of the salaried attorney's compensation for overhead. However, if the fee is to
be retained by the attorney, rather than turned over to the union (as when a union hires outside
counsel), then the establishment of a reasonable fee may be set based on the prevailing rate in the
community.
D. Degree to which "costs" may be included in a fee award
Bennett V. Dept. of Navy, 699 F.2d 1140 (1983)
The question of the degree to which "costs", as opposed to attorney fees,may be covered in an
attorney fee award was addressed by the Court in this case. The Court ruled that since 5 USC
7701(g)(1) only authorizes the MSPB to award attorney fees, "costs" may not be covered. The
problem, of course, is distinguishing between fees and costs. The Court agreed with the Board's
definition in O'Donnell that fee awards may include "reimbursement for the attorney's out-of-
pocket disbursements for incidental and necessary expenses incurred in furnishing effective and
competent representation." The Court indicated that certain "costs" were clearly not covered,
including witness fees and expenses, fees for stenographic transcripts, compensation of expert
witnesses, and investigation expenses. Properly included in an award are an attorney's travel
expenses, postage, and long distance telephone costs. The Court stated that such charges are
"directly related to the services performed by the attorney, are not charges that are normally
subsumed within the hourly rate figure, and yet may fairly be described as part of the fee for
services rendered."
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ALPHABETICAL INDEX TO ATTORNEY FEE CASES
CASE
PAGE
Alfaro V. Dept. of Transportation
NY075281F0428ADD2d (1985)
4
Allen V. U.S. Postal Service
AT075299011 (1980)
7
Army and IBEW
14 FLRA 90 (1984)
2
Bennett V. Dept. of Navy
699 F.2d 1140 (1983)
12
Carpenter V. Bureau of Alcohol, Tobacco,
and Firearms
5 MSPB 432 (1981)
6
Grant V. Dept. of Transportation
AT04328410145ADD (1985)
9
Hodnick V. FMCS
SF531D09004 (1981)
5
Keely V. MSPB
760 F.2d 246 (1985)
8
Kling V. Dept. of Justice
AT075299048 (1980)
11
Lamorge V. Dept. of Agriculture
BN075209027 (1981)
4
Langenbach V. U.S. Postal Service
NY07528090142ADD (1982)
4
Lizut V. Dept. of the Army
PH07528110266ADD (1985)
1
McBride V. Dept. of Agriculture
SF043209006 (1980)
3
Mitchell V. Dept. of Health and
Human Services
DA07528110152ADD (1984)
11
Moir V. Dept. of the Treasury
754 F.2d 341 (1985)
1
O'Donnell V. Dept. of the Interior
NY075299058 (1980)
3
Powell V. Dept. of the Treasury
DC075299039 (1981)
12
Sterner V. Dept. of the Army
711 F.2d 1563 (1983)
5
Thomson V. MSPB
772 F.2d 879 (1985)
8
Trowell V. U.S. Postal Service
3 MSPB 117 (1980)
10
Yorkshire V. MSPB
746 F.2d 1454 (1984)
9
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