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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 (1 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
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WITHDRAWAL SHEET
Ronald Reagan Library
DOCUMENT
NO. AND TYPE
SUBJECT/TITLE
DATE
RESTRICTION
1. memo
Michael J. Horowitz to Stockman and Harper, re Legal Fee Cap
7/22/82
PS
Bill (partial of pages 2,3,5; all of page 6)
cas 12/14/00
COLLECTION:
ROBERTS, JOHN G.: Files
dlb
FILE FOLDER:
Attorneys Fees [1 of 3] OA 127657 10017
3/1/96
RESTRICTION CODES
Presidential Records Act [44 U.S.C. 2204(a)]
Freedom of Information Act 15 U.S.C. 562(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 PRA].
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 8 clearly unwarranted invasion of personal privacy [(B)(6) of
P-6 Release would constitute a clearly unwarrented invasion of personal privacy [(a)(6) of
the FOIA]
the PRAJ.
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
Michael J. Horowitz to Stockman and Harper, re Legal Fee Cap
7/22/82
P5
Bill (partial of pages 2,3,5; all of page 6)
COLLECTION:
ROBERTS, JOHN G.: Files
dlb
FILE FOLDER:
Attorneys Fees [1 of 3] OA 127657
3/1/96
RESTRICTION CODES
Presidential Records Act [44 U.S.C. 2204(a)]
Freedom of Information Act 15 U.S.C. 562(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 PRAI.
F-4 Release would disciose 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 privacy I(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].
THE WHITE HOUSE
WASHINGTON
3/16
DICK
AS WE DISCUSSED, IN
CONNECTION WITH THE A.B.A.
MEETING TOMORROW.
of
Dit
Thanks for your help
EXECUTIVE OFFICE OF THE PRESIDENT
OFFICE OF MANAGEMENT AND BUDGET
WASHINGTON, D.C. 20503
MEMORANDUM
JUL 2 2 1982
TO:
David A. Stockman
Edwin Harper
FROM:
Michael J. Horowitz
My
SUBJECT: Legal Fee Cap Bill
Attached is the speaker letter (Tab A), the bill (Tab B) and
a section-by-section analysis (Tab c) regarding our legal fee
cap initiative. It follows along the lines described in our
FY '83 major themes book (Tab D), and has been sharpened and
supplemented following extensive efforts by an interagency
working group and meetings with business community
representatives and the National Association of Attorneys
General. The bill establishes comprehensive limitations on
awards of attorney's fees against the United States and State
and local governments under various federal fee-shifting
statutes. In its main features, the bill does the
following:
For statutes other than the Equal Access to Justice Act
"the Act", limits the awards of fees to the lower of:
(1) the hourly rates payable to the highest paid government
attorneys, plus benefits and a 50% overhead allowance
(for awards against the federal government the
calculated maximum fee will be $53.16) or
(2) the actual cost of attorney's fees incurred by or on
behalf of the party.
For statutes other than the Act, limits the amount of fees
awarded against the government where a money award is part
of the final judgment, by permitting payment only of that
portion of an otherwise allowable fee which exceeds 25% of
the money judgment.
Requires that a. party must prevail in the lawsuit before
fees may be awarded, and that fees may be awarded only for
work preformed on issues upon which the party prevails and
only if the issues were necessary to the resolution of the
controversy. (Recent D.C. Circuit decisions have
interpreted the Clean Air Act and other environmental
statutes, to allow attorney fee awards to non-prevailing
parties if they "substantially contribute to the goals [the
law in question]".
Provides that awards are to be made to clients and not
attorneys, and requires that the client certify that the fees
are owed to the attorney, were determined on an arms length
basis and will be paid to the extent not covered by the fee
award. (This is a critical provision, designed to assure that
fee awards are for the benefit of clients only, in order to make
them whole after they have obligated themselves to pay for
lawyers to defend themselves against overreaching government
action. It is designed in part to bar fee awards to
entrepreneurial attorneys who now engage in contingency
litigation against the government on ideological, public policy
grounds.)
Disallows fee awards to organizations that employ staff
attorneys, except when an attorney was hired for the express
purpose of handling the specific case.
Bars attorney's fee awards to intervenors in agency proceedings
except where specifically authorized by statute and limits any
such awards to the fee caps established by the bill.
Prevents double dipping by legal services organizations who
receive government funds for providing legal services.
Requires that the fee award bear a reasonable relation to the
result achieved in the controversy.
A draft proposed bill was circulated to all cabinet departments,
VA, EPA, SBA, SEC, OPM, FTC, and GSA. Fourteen agencies provided
comments which were supportive of the bill. SBA stated that it
highly favored curbing unreasonable awards of attorney's fees
against the government, but that the Chief Counsel for Advocacy
objected to certain modifications of the Act. (Some of the
objections were based on the Chief Counsel's misinterpretations of
the bill's provisions)*
The objections have been largely
resolved.
*
Agency comments
Justice
strongly supports
Treasury
strongly supports
Transportation
strongly supports
Interior
strongly supports
Defense
supports
State
concurs
Labor
strongly supports
HHS
supports some sections (misunder-
stood focus of other sections)
HUD
concurs
DOE
technical comments only
USDA
supports and defers to Justice
OPM
strongly supports
VA
supports
SEC
oral technical comments only
SBA
favored policy; Chief Counsel for
Advocacy did not favor certain
aspects of the draft bill
The comments were of significant benefit in clarifying the
bill, and making necessary technical amendments. A working
group of attorneys from Justice, Treasury, Interior, and
Transportation has assisted us in refining further drafts and
resolving all legal and technical issues.
Justice strongly supports the bill, but raised two policy
considerations. First, Justice believes that the fee cap of
$53.16 is too low and may risk "credibility" problems.
Justice suggests that the bill conform to the $75.00 fee cap
contained in the Equal Access to Justice Act. Secondly,
Justice questions the need for the requirement of section
5 (a) (2) of the bill that the party seeking the award certify
that he owes a legitimate fee, which will be paid to the
extent uncompensated by a statutory fee award.
With respect to Justice's first concern, I believe that our
$53.16 fee cap is logical and entirely supportable. Unlike
the arbitrarily selected $75.00 fee cap in the Act, the
$53.16 fee cap is based on the highest salary payable to
government attorneys, plus benefits (pursuant to OMB Circular
A-76), plus a fifty-percent overhead add-on. Since many of
the fee-shifting statutes which will be amended by the bill
are premised on the theory that individuals and public
interest groups who sue the government for public benefit
purposes are acting as so called "private attorneys general",
it is entirely appropriate that attorney's fees awarded to
them be consistent with the salary of the "public attorneys
general" of the Federal, State and local governments.
With respect to the requirement for a real fee relationship
between attorney and client as a predicate for fee awards, I
believe that the provision is absolutely necessary to reduce
subsidies to "public interest" lawyers of the right and left
who advocate their ideologies at public expense, in effect on
a contingency basis. This position is in sync with our
initiative to depoliticize the grant process.
What remains are decisions and actions regarding the
introduction and support of the bill. As these matters go,
prospects are good for a remarkable coalition in active
support. State and local governments have been strained
under the provisions of 42 USC §1988, which award attorney's
fees in broadly defined "civil rights" actions. A bill
addressed specifically to their concerns has been introduced
by Hatch and is going nowhere, largely because the focus of
the bill is on cutting back on "civil rights" activities. In
this regard, the National Association of Attorneys General
recently passed a resolution supporting our initiative "in
principle." The business community is deeply concerned about
such matters as intervenor reimbursement, public financing of
"public interest" litigation, etc. and is committed to active
support of the initiative. The small business community --
which has not as yet cleared on the specifics of our bill --
has been concerned about the use of the Equal Access to
Justice Act as a financing mechanism for the "public
interest" bar; it properly believes the Act may not be
renewed after it sunsets in FY 85 unless it is narrowed to
its "core" purpose of providing attorney's fees to small
businesses that are subjected to overreaching action by
federal agencies. However, we have met with representatives
of the National Federation of Independent Business whose
reactions have been clearly positive. The conservative
community has been deeply concerned about federal financing
of political advocacy; the fee cap initiative deals directly
with its concerns. There has been considerable interest on
the Hill about the proposal, particularly since the recent
D.C. Circuit decisions allowing fee awards to "public
interest" groups in environmental cases even when the
government prevails in litigation. Both the business and
conservative communities are confident of their ability to
line up high-level and broad support and sponsorship, in
Congress and elsewhere.
The magnitude of federal fee awards is difficult to determine
in part because many such awards are paid out of the judgment
fund, a permanent indefinite appropriation, and are not
broken down as between legal fees and money judgments.
Perhaps the best index of the size of the fee award industry
is the federal fee award treatises that are now beginning to
appear -- the big ones have been published within the last
year. In addition, there is a bi-monthly Harcourt Brace
report service, "Federal Attorney Fee Awards Reporter."
(Tab E).
A recent mailing campaign by a local law firm to public
interest firms confirms our view of the scope of the
problem. The mailing (Tab F) touts the firm's expertise in
obtaining high awards of attorney's fees against the govern-
ment, and offers their services either to counsel "public
interest" groups on attorney fee recovery tactics or to
handle the fee award litigations on behalf of the groups.
It is so striking and offensive that I propose to attach it
to the Speaker letter. Also attached is a formal
announcement of the recent opening of a law firm entitled
"Trial Lawyers for Public Justice, P.C.", (Tab G) which noted
that it was
"especially indebted to Joan Claybrook for her help in
raising funds and organizing the firm, and to Ralph
Nader for inspiration and guidance; their involvement
has been vital to the founding of the firm."
The firm expects to stay in business largely through fee
awards.
The bill will of course be opposed, and vigorously, by the
"public interest" crowd which is now highly active in lining
up opposition. An ABA committee has already proposed a
resolution against our initiative and civil rights and public
interest groups are asserting that the initiative will
undercut the purposes for which attorney's fees provisions
were enacted -- assurance of adequate legal representation
for the poor and for public issues which would otherwise not
be litigated.
Our counter to this opposition and the cornerstone of the
coalition that we can put together is that taxpayers should
not be required to subsidize attorneys or ideological
advocacy. A literal industry of public interest law firms
has developed as a result of the legal fee awards with such
groups regarding attorney's fees as a permanent financing
mechanism. The point here is not adequate representation of
the poor; rather it is public oversubsidization of middle
class lawyers.
One index of the bill's prospects is the exceedingly
favorable press thus far received on our initiative. The
attached recent pieces have appeared in the National Journal,
Regulation Magazine (Nino Scalia) and the Times, WS Journal
and Louis Rukeyser's column (see Tab H).
Hatch has indicated that, if pressed, he will hold hearings
on the bill before the end of September. The groups with
whom we have spoken believe that hearings in this session
providing a strong showing of fee award "horror stories" and
active and diverse support for the bill will be an important
first step toward passage in the next Congress.
We need to move quickly. I believe we need to show West Wing
support for the proposal, and need to devise a strategy for
sponsorship, hearings and coordination. (I have discussed
the matter with Bob Thompson and Bob Kabel, who are
interested and who are enthusiastic, and awaiting basic
guidance decisions.)
One of you, or perhaps Ed Meese, can call a brief meeting,
with someone from Ken Duberstein's office present, for the
initiative to be set on course.
cc: Ken Cribb
Bob Kabel
Alan Holmer
A
-
EXECUTIVE OFFICE OF THE PRESIDENT
STATE SEURVE BUDGET UNITED BULL OFFICE R
OFFICE OF MANAGEMENT AND BUDGET
WASHINGTON, D.C. 20503
Honorable Thomas P. O'Neill, Jr.
Speaker of the House of Representatives
Washington, D.C. 20515
Dear Mr. Speaker:
Enclosed for your consideration and appropriate reference is
a legislative proposal, "To provide for the limitation on
legal fees awarded against the United States, State and local
governments." The proposal is one of the initiatives
contained in the Administration's "Major Themes and
Additional Budget Details for Fiscal Year 1983" to reduce
unwarranted subsidies.
Many Federal statutes authorize or require Federal, State and
local governments to pay attorney's fees to prevailing
parties in court or agency proceedings. This reverses the
standard "American rule" under which parties bear their legal
costs, win or lose. Some environmental laws have recently
been determined by the courts to authorize awards of
attorney's fees even to parties who do not prevail in court
proceedings. Most of these fee-shifting statutes provide for
an award of a "reasonable attorney's fee" which are being
granted by the courts based on a "prevailing market rate";
the latter is now largely pegged to private, commercial bar
rates and often substantially exceeds $100 per hour even
where the cost of representation to applicants is far lower
than the fee awards. In many instances, attorney's fees are
awarded to applicants who have no obligation to pay for their
representation.
A literal industry has arisen for attorneys dependent on
Federal, State and local government fee awards. An index of
the size of the fee award industry is the federal fee award
treatises that are now beginning to appear and a bi-monthly
Harcourt Brace publication, "Federal Attorney Fee Awards
Reporter." Of particular note is a recent letter by a local
law firm to public interest groups explaining the firm's
expertise in obtaining high awards of attorney's fees against
the government, and offering their services to counsel public
interest groups on attorney fee litigation practices or to
actually handle the fee award litigation on behalf of the
public interest groups. The letter states that such an
"arrangement offers the possibility of substantial financial
rewards for your organization." (A copy of this letter is
enclosed.)
2
The attorney's fee awards are invariably at multiples of the
cost of the government attorneys involved in the same cases.
Moreover, since awards are based in large part upon the
length of time spent by attorneys on the case, they often
exceed the amount recovered by the client in the case.
Other than for "core" recoveries to individuals and small
business who are subject to the $75 per hour limitation under
the Equal Access to Justice Act, the proposed legislation
will establish a maximum hourly rate for fee awards against
the United States and State and local governments under all
Federal fee-shifting statutes. The fee cap would be set at
the lower of (1) the actual direct cost of attorney's fees
incurred by or on behalf of the party; or (2) a fee
calculated on the basis of the highest hourly rate, plus
benefits, paid to government attorneys plus a constant factor
to pay for overhead costs. As mentioned, "core" recoveries
under the Act would be exempt from the fee cap provision.
The proposed legislation will preclude awards of attorney's
fees against the United States or State or local governments
unless the party seeking the award prevailed on the merits of
the controversy. Parties seeking such awards must file with
the court or agency certain information including a statement
under oath that the attorney's fees and expenses are owed to
the attorney, were determined on an arm's length basis and
will be paid to the extent not covered by the fee award. In
all cases, the fee awarded must bear a reasonable relation to
the result achieved in the proceeding and may not exceed
actual incremental fees and expenses incurred by the party by
reason of his participation in the proceeding in question.
The proposal also:
limits the amount of attorney's fees and costs awarded
against the United States or State or local governments
in cases where a money award is part of the final judgment
or agency order ("Core" recoveries to individuals and small
business under the Equal Access to Justice Act and awards
in cases where government "bad faith" is proven under the
Act will be exempt from this provision);
bars agencies from awarding attorney's fees to intervenors
and participants in agency proceedings except as expressly
authorized by law and limits any such awards to the maximum
rates established by the bill;
3
disallows awards of attorney's fees or other costs against
the United States or State or local governments:
-- to any corporation, association, or organization or
their grantees, or to any party represented by such
an entity, whose primary purpose is to provide legal
services and whose legal services in the controversy
were funded in whole or part by a grant or
appropriation by the United States, State or local
government for the purpose of providing legal
services;
-- where the prevailing party unduly protracted the
final resolution of the controversy;
-- where the United States, State or local government
was not unreasonable in the legal position it took in
court or before the agency in controversies concerning
the payment of attorney's fees;
-- where the party declined an offer of settlement
which was substantially as favorable as the relief
ultimately awarded to him; or
--- where the claims are found to be moot due to a
change in government policy.
We believe that this legislation will eliminate the results
reached in cases such as Copeland V. Marshall, 641 F.2d 880
(D.C. Cir. 1980) (en banc), and Sierra Club V. Gorsuch,
672 F.2d 33 (D.C. Cir. 1982), which placed unreasonable and
excessive litigation expenses on the American taxpayer.
In Copeland, in litigation under Title VII of the Civil
Rights Act the court awarded attorney's fees of $160,000
based on the rate "prevailing in the community for similar
work" and without any real relation either to the value of the
recovery to the client or to the salary of the "public attorney
general." In Sierra Club, the court awarded attorney's fees
even though the plaintiff did not prevail on any issues in the
litigation. The court interpreted the Clean Air Act, which
authorizes attorney's fees where "appropriate," to allow the
award of fees to unsuccessful litigants if they "substantially
contributed to the goals of the Clean Air Act."
The proposal will restrict contingency fee litigation against
Federal, State and local governments, brought by and on behalf
4
of attorneys whose "notational" clients bear no litigation
risks or costs, and who are merely the means by which attor-
neys satisfy nominal standing requirements. Finally, by
restricting attorney's fees the proposal will decrease
Federal, State, and local government outlays and will reduce
their civil case load, while maintaining protections for
individuals and small businesses who have been subjected to
overreaching government actions.
The Administration strongly urges prompt and favorable
consideration of this proposed legislation, enactment of
which would be in accord with the program of the President.
Sincerely,
David A. Stockman
Director
Enclosure
A BILL
To provide for the limitation on legal fees awarded against
the United States, States and local governments.
Be it enacted by the Senate and House of Representatives of
the United States of America in Congress Assembled, That this
Act may be cited as "The Limitation on Legal Fees Awards Act
of 1982.'
Sec. 2. Notwithstanding any other provision of law, no award
of attorney's fees or other expenses may be made against the
United States or any agency or any official of the United
States acting in his or her official capacity, or under
Federal law against any State or local government or agency or
official acting in his or her official capacity thereof, in
any litigation or administrative proceeding unless the party
seeking the award clearly and substantially prevailed on the
merits of the controversy. If a party has clearly and
substantially prevailed on the merits of the controversy, any
such award may be made only for work performed on activities
or issues upon which the party prevails against the United
States, a State or local government or an agency or official
of the United States, State or local government, and only if
such activities and issues were necessary to the disposition
of the controversy.
-2-
Sec. 3. (a) Notwithstanding any other provision of law, no
award of attorney's fees made against the United States or any
agency or any official of the United States acting in his or
her official capacity, or under Federal law against any State
or local government or agency or official acting in his or her
official capacity thereof, in any litigation or administrative
proceeding shall exceed the lower of
(1) an hourly rate which is the sum of (A) the highest
hourly pay rate plus benefits payable to Government
attorneys in the Civil Service (said rate to be annually
determined at the beginning of each Fiscal Year by the
Director of the Office of Personnel Management), or for
awards against State or local governments or agencies or
officials thereof, the highest hourly rate plus benefits
payable to State or local government attorneys of the
State or local government involved in the litigation,
plus (B) reasonable overhead expenses provided that such
expenses do not exceed 50% of the total of the calculated
hourly rate plus benefits calculated under paragraph (A)
above; or
(2) the actual, direct cost of attorney's fees incurred
by or on behalf of the party.
(b) (1) Where awards of attorney's fees are made pursuant to
subsection (a) (1) above, no hourly rates for awards of
fees for paralegals or law clerks shall exceed one-third
of the hourly rate awarded for attorney's fees.
(2) Where awards of attorney's fees are made pursuant to
subsection (a) (2) above, costs for paralegals and law
clerks shall be included in the actual direct costs
incurred by or on behalf of the party.
-3-
(c) This Section shall not apply to fees awarded under
section 504 (a) (1) of Title 5 of the United States Code or
Sections 2412 (d) (1) (A) and (d) (3) of Title 28 of the United
States Code.
Sec. 4. (a) Notwithstanding any other provision of law, in any
litigation or administrative proceeding in which an award of
money is part of the final judgment or final agency order, no
attorney's fees against the United States or an agency or an
official of the United States acting in his or her official
capacity, or under Federal law against any State or local
government or agency or official acting in his or her official
capacity thereof, shall be payable except to the extent that
the attorney's fees (computed in accordance with Section 3 of
this Act) exceed 25% of such money award as part of the
judgment or final agency order. Only the portion of
attorney's fees which exceed 25% of such money award shall be
payable under this section. In no event shall the fee awarded
exceed the fee established pursuant to Section 3 of this Act.
(b) This Section shall not apply to fees awarded under
section 504 (a) (1) of Title 5 of the United States Code,
Sections 2412 (d) (1) (A) and (d) (3) of Title 28 of the United
States Code, or in cases where government "bad faith" is
proven under section 2412(b) of Title 28 of the United States
Code.
Sec. 5. Notwithstanding any other provision of law--
(a) A party who is seeking an award of attorney's fees or
other expenses against the United States or any agency or any
official of the United States acting in his or her official
-4-
capacity, or under Federal law against any State or local
government or agency or official acting in his or her official
capacity thereof, shall, within thirty days of either a
decision on the merits by the court or the entry by an
administrative officer of an agency of a final disposition of
an administrative proceeding, submit to the court or agency an
application for such award. Such application shall include a
statement that sets forth and establishes to the satisfaction
of the Court or the administrative officer the following:
(1) a description of the basis of the award sought indicating
that it is proper under applicable law, and the amount
sought. Where the party and the attorney have entered
into a written fee agreement, the application shall
include a copy of the fee agreement. The application
shall also include (A) an itemized statement under oath
from the attorney representing or appearing in behalf of
the party, setting forth and establishing the actual hours
expended per day by each attorney, and the specific tasks
performed during that time in behalf of the party; and (B)
such information as the court or administrative officer
may require in order to determine the actual, direct cost
of attorney's fees and other expenses incurred by or on
behalf of the party;
-5-
(2) where the attorney's fees or other expenses sought have
not been paid or assumed, a statement under oath by the
party establishing that the attorney's fees or other
expenses sought are owed to the attorney, were determined
on an arm's length basis and will be paid by the party to
the extent not covered by the fee award;
(3) where the attorney's fees or other expenses have been
previously paid or assumed and the party seeks
reimbursement of such attorney's fees or other expenses,
a statement under oath by the party establishing that the
attorney's fees or other expenses would not have been
incurred but for the participation by the party in the
litigation or administrative proceeding for which the
award is sought; and
(4) such other information as may be required by law or the
court or the administrative officer.
(b) A party who seeks an award of attorney's fees or costs
against the United States or any agency or any official of the
United States acting in his or her official capacity, or under
Federal law against any State or local government or agency or
official acting in his or her official capacity thereof,
shall, within one year after the action was initiated and
annually thereafter, provide to the United States, federal,
State, or local government agency or federal, State, or local
government official, and to the court or administrative
officer of an agency, a report which shall include such
information required by subsection (a) of this Section as is
available or assertainable.
-6-
(c) (1) No award of attorney's fees, or other costs, may be
made against the United States or any agency or any official
of the United States acting in his or her official capacity,
or under Federal law against any State or local government or
agency or official acting in his or her official capacity
thereof, unless the party seeking the award has complied with
the provisions of this Section.
(2) This subsection shall not apply to a party who for good
cause determined by the court or administrative officer failed
to file an annual report, or filed an incomplete annual
report, as required by subsection 5(b).
(d) (1) A party who seeks an award of attorney's fees or costs
against the United States or any agency or any official of the
United States acting in his or her official capacity, or under
Federal law against any State or local government or agency or
official acting in his or her official capacity thereof, shall
have the burden of proof with respect to establishing
entitlement and the amount of any award of attorney's fees and
other expenses, and with respect to meeting the other
requirements of this section.
(2) This subsection shall not apply to determinations of
"substantial justification" in applications for fee awards
under section 504 (a) (1) of Title 5 of the United States Code
or Sections 2412 (d) (1) (A) and (d) (3) of Title 28 of the United
States Code.
(e) A Court or administrative officer may in its discretion
hear and determine any right to payment of attorney's fees or
other expenses against the United States or any agency or any
official of the United States acting in his or her official
capacity, or under Federal law against any State or local
government or agency or official acting in his or her official
capacity thereof, following a decision on the merits by the
Court or the entry by the administrative officer of an agency
of a final disposition of an administrative proceeding, or may
delay such hearing and determination until completion of all
appeals and entry of a final judgment. In no event shall a
court or administrative office hear or determine such a right
-7-
prior to entry of a decision on the merits by the court or
entry of a final disposition of an administrative proceeding
by an administrative officer. Payment of attorney's fees or
other expenses awarded against the United States or any agency
or any official of the United States acting in his or her
official capacity, or against any State or local government or
agency or official acting in his or her official capacity
thereof, shall be stayed until completion of all appeals and
entry of a final judgment.
(f) A party that has employed salaried staff attorneys prior
to the onset of the specific case shall not be eligible for
fee awards for the work of such staff attorneys except upon a
showing that the staff attorney had been retained in express
anticipation of the specific case and that staff employee
levels would have been lower but for the anticipated need to
deal with the specific litigation or administrative
proceeding. The provisions of this subsection apply to
prepaid legal services, including dues paying structures which
provide for the use of attorneys in return for dues.
Sec. 6. Notwithstanding any other provision of law, no award
of attorney's fees may be made against the United States or
any agency or any official of the United States acting in his
or her official capacity, or under Federal law against any
State or local government or agency or official acting in his
or her official capacity thereof, unless the fee awarded bears
a reasonable relation to the result achieved in the
proceeding; nor may such an award be made where the Court or
administrative officer of an agency determines that special
circumstances make such an award unjust. In no event shall
the fee awarded exceed the fee established pursuant to Section
3 of this Act.
-8-
Sec. 7. Notwithstanding any other provision of law, no award
of attorney's fees or other expenses against the United States
or any agency or any official of the United States acting in
his or her official capacity, or under Federal law against any
State or local government or agency or official acting in his
or her official capacity thereof, shall be made in any
litigation or administrative proceeding to any corporation,
association or organization or their grantees, or to a party
represented by any such corporation, association or
organization or their grantees, whose primary purpose is to
provide legal services and whose legal services in the
litigation or administrative proceeding were funded in whole
or in part by a grant or appropriation by the United States,
State or local government for the purpose of legal services.
(For the purposes of this section, the term "grantees"
includes recipients of grants, contracts or other agreements,
and the term "grant" includes a grant, contract or other
agreement.)
Sec. 8. In awarding attorney's fees and other expenses under
any provision of law against the United States or any agency
or any official of the United States acting in his or her
official capacity, or under Federal law against any State or
local government or agency or official acting in his or her
official capacity thereof, the court or administrative officer
of an agency shall reduce the amount that otherwise would be
awarded under the provisions of this Act or deny an award, in
whole or in part in the discretion of the court or administrative
-9-
officer, if the prevailing party during the course of the
proceedings engaged in conduct which unduly and unreasonably
protracted the final resolution of the controversy.
Sec. 9. Notwithstanding any other provision of law, no award
of attorney's fees or other expenses in any litigation or
administrative proceeding concerning the payment of attorney's
fees or other expenses shall be made against the United States
or any agency or any official of the United States acting in
his or her official capacity, or under Federal law against any
State or local government or agency or official acting in his
or her official capacity thereof, unless the court or
administrative officer of an agency finds that the United
States, State or local government was unreasonable in the
position it took in court or before the agency concerning such
payment of attorney's fees or other expenses. The party
seeking such attorney's fees or other expenses shall have the
burden of proof with respect to whether such position was
unreasonable.
Sec. 10. Notwithstanding any other provision of law, no award
of attorney's fees or other expenses may be made against the
United States or any agency or any official of the United
States acting in his or her official capacity, or under
Federal law against any State or local government or agency or
official acting in his or her official capacity thereof
(a) as compensation for that part of litigation
or an administrative proceeding subsequent to
a declined offer of settlement when such
offer was as substantially favorable to
-10-
the prevailing party as the relief ultimately awarded
by the Court or administrative officer, unless the
Court, or administrative officer finds that the
prevailing party had substantial justification for
declining the offer and continuing the litigation; or
(b) where a Court or an administrative officer finds the
claims to be moot due to a change in government policy
and that the pendency of the litigation or
administrative proceeding was not a material factor
for such change.
Sec. 11. In any litigation or adjudication against the United
States or any agency or any official of the United States
acting in his or her official capacity, or under Federal law
against any State or local government or agency or official
acting in his or her official capacity thereof, if the Court
or administrative officer of an agency finds that the
plaintiff's claim was frivolous, unreasonable, or groundless,
or that the plaintiff continued to litigate or pursue the
adjudication after it clearly became so, even though there was
no subjective bad faith, attorney's fees and other expenses
should be awarded to the prevailing defendant at the amount
established pursuant to Section 3 of this Act. (For the
purpose of this Section the term "adjudication" means an
adjudication under Section 554 of Title 5 of the United States
Code, and the term "adjudicative officer" means the deciding
official, without regard to whether the offical is designated
as an administrative law judge, a hearing officer or examiner,
or otherwise, who presided at the adjudication.)
- 11 -
Sec. 12. Except as expressly authorized by law, no award of
attorney's fees or other expenses may be made by an agency to
any party who intervenes or participates in an agency
proceeding. Notwithstanding any other provision by law, no
such award of attorney's fees shall exceed the amount
authorized pursuant to Section 3 of this Act.
Sec. 13. Notwithstanding any other provision of law, no award
of attorney's fees or other expenses may be made against the
United States or any agency or any official of the United
States acting in his or her official capacity, or under
Federal law against any State or local government or agency or
official acting in his or her official capacity thereof, to
any intervenor in any litigation, adjudication or licensing
unless the intervenor seeking the award clearly and
substantially prevailed on the merits of the controversy. If
an intervenor has clearly and substantially prevailed on the
merits of the controversy, any such award may be made only
pursuant to the rates established by section 3 of this Act,
and only for work performed on issues which are significantly
new and different from those previously pending in the
litigation, adjudication or licensing, and only if the
invervenor prevails against the United States, a State or
local government or an agency or official of the United
States, State or local government on such significantly new
and different issues, and such activities and issues were
necessary to the disposition of the controversy. Except for
Section 2 of this Act, an intervenor in any litigation,
adjudication or licensing shall be considered a party for the
purposes of this Act.
-12-
Sec. 14. In addition to the other provisions of this Act,
section 722 of the Revised Statutes (42 U.S.C. 1988) is
further amended by adding the following:
"Where a party has prevailed on a pendent claim or
Federal statutory claim not covered under section 722 ( 42
U.S.C. 1988) but which is joined under the Federal Rules of
Civil Procedure to a claim that is under such section, a Court
may only award attorney's fees if it finds that the claim
covered under section 722 of the Revised Statutes (42 U.S.C.
1988) has sufficient merit to have justified a reasonable
person to have brought such claim as a separate suit."
Sec. 15. The Comptroller General of the United States shall
submit annually on April 1 of each year a report to the
President and the Congress on the amount of attorney's fees
and other expenses awarded against the United States, or
agencies and officials of the United States acting in their
official capacities, awarded in litigation and administrative
proceedings during the preceding fiscal year. The reports
shall describe the number, nature, and amount of the awards,
the claims involved in the controversy, and any other relevant
information which may aid the Congress and the President in
evaluating the scope and impact of such awards. Copies of the
reports shall be provided to the Attorney General of the
United States, the Director of the Administrative Office of
the United States Courts, the Chairman of the Administrative
Conference of the United States and the Director of the Office
of Management and Budget. The Courts and each agency shall
provide the Comptroller General with such information as is
necessary for him to comply with the requirements of this
-13-
Section. Each agency shall record every award of attorney's
fees and other expenses made against the agency, an agency
official acting in his or her official capacity, or in the
event of an award against the United States, by the agency on
behalf of which the litigation or administrative proceeding
was brought or defended.
Sec. 16. (a) The provisions of this Act shall apply to any
award of attorney's fees and other expenses made subsequent to
the enactment of this Act including, except as provided in
subsection (b) of this section, actions commenced and fees and
expenses incurred prior to such enactment.
(b) The annual reports required by Section 5(b) of this Act
shall be required only subsequent to enactment of this Act.
Sec. 17. The provisions of this Act establish minimum
criteria and requirements for the award of attorney's fees or
other expenses against the United States or an agency or any
official of the United States acting in his or her official
capacity, or under Federal law against any State or local
government or agency or official acting in his or her official
capacity thereof. The provisions of other statutes which
establish additional criteria or requirements beyond those
established in this Act limiting entitlement to such awards of
attorney's fees or other expenses, or otherwise limiting such
awards, shall apply in addition to the provisions of this Act
to the extent that such additional statutory provisions are
not inconsistent with this Act.
-14-
Sec. 18. Nothing in this Act shall be interpreted to create
any right to an award of attorney's fees or other expenses.
Sec. 19. Definitions - For the purposes of this Act --
(A) "other expenses" includes the reasonable expense of expert
witnesses and the reasonable cost of any study, analysis
engineering report, test, or project which is found by the
agency or court to be necessary for the preparation of the
party's case.
(B) "party" means a party, as defined in section 551(3) of
this title, which is an individual, partnership, corporation,
association, unincorporated business, estate or public or
private organization other than an agency.
(C) "Administrative proceeding" means any agency proceeding,
as defined in subsection 12 of section 551 of Title 5 of the
United States Code, in which a party may under statute or
regulation be awarded attorney's fees or other expenses.
(D) "Administrative officer" means the official or person who
by statute or regulation has the authority to decide the
substantive issues being considered in the administrative
proceeding. Where the official within an agency who pursuant
to statute or regulation has authority to decide matters
pertaining to the award of attorney's fees or other expenses
is not the official or person who by statute or regulation has
the authority to decide the substantive issues being
considered in the administrative proceeding, the head of the
agency shall establish regulations to prescribe the
official [s] or person[s] who shall be designated
"administrative officer [s]" for the purposes of, and
consistent with, each section of this Act which contains such
term.
-15-
(E) "decision on the merits" means a decision by the Court on
all of the substantive issues raised in the litigation.
" '(F) Except as otherwise provided in this section, the
definitions provided in section 551 of Title 5 of the United
States Code apply to this Act.
C
&
Section by Section Analysis
Section 2
Section 2 will preclude awards of attorney's fees against the
United States or State or local government unless the party seeking
the award clearly and substantially prevailed on the merits of the
controversy. Section 2 further provides that awards of attorney's
fees may be made only for work performed on activities or issues
upon which the party prevails and only if the activities and issues
were necessary to the resolution of the controversy. The
provisions of Section 2 requiring that a party clearly and
substantially prevail amend the Clean Air Act and other statutes in
which the award of attorney's fees is not expressly limited to
prevailing parties. Section 2 will disallow awards of attorney's
fees, such as the award in Sierra Club V. Gorsuch, 672 F.2d 33
(D. C. Cir. 1982), to a non-prevailing party. (In Sierra Club, the
court awarded attorney's fees on the basis that the plaintiffs had
"substantially contributed to the goals of the Clean Air Act.")
Section 2 also establishes a uniform standard for determining a
"prevailing party." The words "clearly and substantially" are
meant to limit recovery of attorney's fees to parties who without
question prevail on all significant aspects of the merits of the
controversy. A party who fails to definitively prevail on the
issues would not meet the section's threshold requirement that the
party "clearly" prevail. Although the prevailing party need not
prevail on every issue, he must prevail on the significant issues
of the case and obtain virtually all the relief sought in the
complaint. Attorney's fees may be awarded only after a decision on
the merits by a Court or entry of a final disposition by an agency
in an administrative proceeding; or, at the discretion of the Court
or administrative officer, until completion of all appeals and
entry of a final judgment [See Section 5(e)]. If there is a
decision on the merits, or a final disposition, on less than all
the claims in the lawsuit or administrative proceeding, the court
or administrative officer may, in its discretion, award attorney's
fees and expenses with regard to those claims definitively resolved
prior to reaching the merits of all the claims in the lawsuit or
administrative proceeding. If a party clearly and substantially
prevails on the merits of the controversy, the Court or
administrative officer may award attorney's fees only for work
performed on activities or issues upon which the party prevails
against the United States or State or local government, and only if
the activities and issues were necessary to the resolution of the
controversy.
2
Section 2 does not modify existing case law providing that
settlements may justify the award of attorney's fees. As the court
stressed in Parker V. Mathews, 411 F. Supp. 1059 (D.D.C. 1976), the
facts and circumstances surrounding a particular settlement must be
carefully evaluated:
whether to award attorney's fees where there
has been a settlement of a Title VII lawsuit
must be determined by a close scrutiny of the
totality of the circumstances surrounding the
settlement, focusing particularly on the
necessity for bringing the action and whether
the party is the successful party with
respect to the central issue --
discrimination.
Id., at 1062-64.
The provisions of Section 2 do not preclude discussions between the
parties of attorney's fees, or the waiver thereof, prior to the
decision on the merits by a Court or the final disposition of an
administrative proceeding. Nor does Section 2 prevent the
government from discussing attorney's fees liability together with
liability on the merits as part of a settlement agreement, or from
including provisions for attorney's fees and other expenses in a
settlement agreement.
Section 3
Section 3 establishes a maximum hourly rate for attorney fee
awards against the United States and State and local
governments under certain so called fee shifting statutes
which authorize awards of attorney's fees. Awards will be
limited to the lower of two amounts calculated as follows:
(1) the actual direct cost of attorney's fees incurred by or
on behalf of the party; or (2) an hourly rate which is the
sum of (a) the highest hourly pay rate plus benefits payable
to Federal government attorneys in the Civil Service, or, in
controversies involving State or local governments, to State
or local government attorneys, plus (b) reasonable overhead
expenses. Such overhead expenses, however, shall not exceed
50% of the total of the calculated hourly rate
3
plus benefits.* There shall be no multipliers. Where awards of
attorney's fees are made on an hourly rate basis pursuant to
subsection 3(a)(1), any award of fees for paralegals or law clerks
must not exceed one-third of the hourly rate awarded for attorney's
fees. Where attorney's fees are awarded on an actual cost basis
pursuant to subsection 3 (a) (2), awards to paralegals and law clerks
will be on the basis of their actual direct costs. Awards under 5
U.S.C. 504 (a) (1) and 28 U.S.C. 2412(d) (1) (A) and (d) (3) as
provided by the Equal Access to Justice Act are exempted from this
fee cap.
Section 4
Section 4 provides that in any litigation or administrative
proceeding in which money is part of the final judgment or final
agency order the United States, State or local government will be
required to pay attorney's fees only to the extent that such
attorney's fees (computed in accordance with Section 3) exceed 25%
of the judgment or final agency order. Only the portion of
attorney's fees which exceed 25% of such money award shall be
payable under this section. The principle of this provision is
that a prevailing party should pay his legal expenses from any
monetary award he receives in the litigation or agency proceeding.
Awards under 5 U.S.C. 504(a) (1) and 28 U.S.C. 2412 (d) (1) (A) and
(d) (3) as provided in the Equal Access to Justice Act are exempted
from this provision, as are awards in cases where government "bad
faith" is proven under 28 U.S.C. 2412(b).
* Under the current pay scale for Federal government attorneys in
the Civil Service, the calculated hourly rate plus 50% overhead
under this formula is $53.16. This rate of $53.16 is calculated
as follows:
Facts
Highest annual salary payable to an
attorney in the Senior Executive Service
= $58,500
Benefits to government employees pursuant
to OMB Circular No. A-76, Cost Comparison
Handbook:
Retirement and Disability Benefits
20.4%
Health and life insurance
3.7%
Other benefits
1.9%
Total 26.0%
Number of hours in one work year = 2080
Calculation
$58,500 + [$58,500 (annual salary) X 26% (benefits) = $73,710
per year
$73,710 + [$73,710 X 50% (overhead)]
= $110,565 per year
$110,565/year to 2080 hours/year = $53.16 per hour
4
Section 5
Subsection 5 (a) establishes a jurisdictional requirement that a
party seeking an award of attorney's fees and other expenses must
file an application for such an award within 30 days of the
decision on the merits by a Court or the entry of a final
disposition by an agency in an administrative proceeding. Parties
may not file an application for such award prior to a decision on
the merits or entry of a final disposition or after the 30 day time
limit. This requirement is responsive to the Supreme Court's
recent recommendation that courts adopt procedural rules setting
reasonable time limits for applications for attorney's fees awards.
White V. New Hampshire Department of Employment Security, 50
U.S.L.W. 4255. Subsection 5(b) requires a party who seeks
attorney's fees to file annual reports which must include all of
the information required by subsection 5(a). Such annual reports
shall not be considered "applications" for the purposes of
subsection 5(a), and shall not be construed as a basis to permit
discovery against the government. Rather, the annual reports are
for the purpose of assuring orderly accounting, and recordkeeping
which could be especially useful in multi-year litigation. A party
may resubmit the annual reports as part of his "application" and
need not prepare new documents to indicate the same information
otherwise provided in the previously filed annual reports.
The application required under Subsection 5(a) must establish and
include the following:
The basis on which the award is sought, and the amount sought and
an itemized statement under oath from the attorney or law firm
representing the party setting forth the actual hours expended
per day by each attorney and the specific tasks performed in
behalf of the party. The application must also include a copy of
any written fee agreement. The Court or administrative officer
may require whatever information is necessary for the party to
prove the actual direct cost of attorney's fees incurred by or on
behalf of the party.
A statement under oath by the party that the attorney's fees or
other expenses sought are owed to the attorney, were determined
on an arms length basis, and will be paid by the party to the
extent not covered by the fee award. (This provision assures
that there is a real fee arrangement. The problem here is that
fee awards statutes create contingency fee funds for
entrepreneurial attorneys. The only justification for fee awards
is to compensate clients who had to bear the expense of
litigation. Of course a contingency fee which is owed to the
attorney by the client is an arms length arrangement for the
purposes of this section; it should be understood that any fee
award is subject to the requirements of section 4 of the bill
which, except for certain sections of the Equal Access to Justice
Act, limits fee awards in money judgment cases to the portion of
the fee which exceeds 25% of the judgment.)
Where the attorney's fees or other expenses had been previously
paid or assumed and the party seeks reimbursement the statement
under oath must establish that the fees or other expenses would
The party seeking the award has the burden of proof with respect to
establishing entitlement and the amount of awards of attorney's
fees and other expenses, and with respect to meeting the other
requirements of section 5. However, for applications of awards of
attorney's fees submitted under 5 U.S.C. 504 (a) (1) or 28 U.S.C.
2412(d)(1)(A) or (d) (3), the burden of proof regarding "substantial
justification" rests with the government.
Subsection 5 (e) authorizes courts and administrative officers to
hear and determine awards of attorney's fees or other expenses
following a decision on the merits or final disposition of an
agency administrative proceeding. This provision permits courts
and administrative officers to decide attorney's fees questions
within a reasonable time after a decision on the merits or entry of
a final disposition of an agency administrative proceeding, so that
there could be a simultaneous appeal of the merits and of the fee
award. A quick decision on the fee award would be particularly
appropriate where there was no disagreement over the calculation of
the award or where the determination required complete familiarity
with the record. This provision also avoids having cases go
through the appellate process twice - once on the merits, and
later on the question of attorney's fees. The Supreme Court in
White indicated its dislike of this result, stating that "district
courts generally can avoid piecemeal appeals by promptly hearing
and deciding claims for attorney's fees." Id. at 4258. This
provision further avoids requiring courts of appeal to review the
question of attorney's fees after the facts surrounding the fee
award are relatively stale. On the other hand, subsection 5 (e)
permits courts and administrative officers in their discretion to
defer determination of fee awards in appropriate cases, such as
cases where the determination of attorney's fees would consume a
great deal of time and the case was to be appealed. In no event,
however, may a Court or administrative officer make such
determinations prior to a decision on the merits by the Court or
entry of a final disposition by the administrative officer.
Subsection 5 (e) requires the court or agency to stay the payment of
any fee award until the final decision on appeal.
Subsection 5 (f) specifically precludes awards of attorney's fees
and expenses to a party that has employed salaried staff attorneys
prior to the onset of a specific case except upon a showing that
the staff attorney had been retained in express anticipation of the
specific case and that staff employee levels would have been lower
but for the anticipated need to deal with the specific case. This
provision and subsection 5 (a) (3) are intended to bar subsidization
of the ordinary operating expenses of applicant parties. These
provisions will preclude awards of attorney's fees and expenses
6
where the party cannot show in the specific case that the expenses
were incurred only because of the litigation or administrative
proceeding.
Except for the annual report required under subsection 5(b),
subsection 5(c) disallows the award of attorney's fees and other
expenses against the United States or State or local government if
the party seeking the award has not made the factual showings
required by, and met the procedural requirements of, Section 5.
The provision of subsection 5(c) does not apply to a party who for
good cause determined by the court or administrative officer failed
to file an annual report or filed an incomplete annual report, as
required by subsection 5(b). "Good cause" includes a party who
could not reasonably be expected to be aware of the requirement to
file an annual report.
Section 6
Section 6 requires that any award of attorney's fees or other
expenses against the United States or State or local government
must bear a reasonable relation to the result achieved in the
proceeding. This provision is primarily directed to preventing an
anomalous result such as one where a court could award attorney's
fees of $100,000 for a $30,000 judgment. This provision directs
courts and agencies in considering whether to award the maximum
award authorized under Section 3 of the bill or a lower amount, to
consider the result achieved in the proceeding even though the
attorneys had spent, in good faith, a great number of hours on the
case.
In addition to preventing attorneys from receiving fee awards in
multiples of the monetary relief granted to the client, this
provision also directs courts and agencies to consider lower fee
awards where equity relief granted to the party is nominal or of
very little precedential value. On the other hand, if the monetary
or equitable relief granted to the party is substantial, or if the
result of the case has substantial precedential value, courts and
agencies may award attorneys fees and other expenses at the maximum
amounts authorized under Section 3 of the bill. This provision
does not authorize in any way attorney's fees and other expenses to
be awarded in excess of the amounts authorized in Section 3 of the
bill.
Section 6 also directs a court or administrative officer not to
award attorney's fees or other expenses if the court or
administrative officer determines that special circumstances
make such an award unjust. The provision gives courts and
administrative officers broad discretion to deny awards
where equitable considerations dictate awards should not be
7
made. The concept of "special circumstances" includes both
equitable considerations relating to the factual / context of
the case and equitable considerations relating to the legal
position of the government. Such equitable considerations include
factors which make a plaintiff undeserving of receipt of fees, or
which make requiring the government to pay fees unjust.
Section 7
Section 7 disallows awards of attorney's fees or other expenses
against the United States or State or local government to any
corporation, association, or organization or their grantees, or to
any party represented by such an entity, whose primary purpose is
to provide legal services and whose legal services in the
controversy were funded in whole or part by a grant or
appropriation by the United States, a State or municipality for the
purpose of legal services. This provision prevents having
taxpayers pay twice for the legal services provided by such
entities. It also bars subsidization of operating expenses of such
entities beyond the amounts provided in the grants or
appropriations. Such entities may be awarded attorney's fees and
other expenses against the United States or State or local
government if the entity proves that the funds for the legal
services provided in the controversy came entirely from funds other
than funds from grants or appropriations by the United States, a
State or local government which were provided for the purposes of
legal services.
/ For examples of special circumstances in which courts in civil
rights suits have denied successful plaintiffs attorney fees,
see Chastang V. Flynn & Emrich Co., 541 F.2d 1040 , 1045 (4th
Cir. 1976) (awarding attorney fees against the retirement fund
would penalize innocent participants in the plan) ; Naorstek V.
City of Norwich, 433 F.Supp. 1369, 1370-71 (N.D.N.Y. 1977)
(case brought principally as vehicle to generate fee award);
Skehan V. Board of Trustees, 436 F. Supp. 657, 667 (M.D. PA.
1977) (award considered unjust because plaintiff in violation
of "clean hands" doctrine); Bacica V. Board of Education,
451 F. Supp. 882, 889 (W.D. Pa. 1978) (court critical of
plaintiff's counsel for failing to marshall evidence and make
clear presentation of the facts).
8
Section 8
Section 8 directs a court or administrative officer to reduce
awards of attorney's fees or other expenses against the United
States or State or local government, or to deny such awards in
instances in which the court or administrative officer finds that
the prevailing party unduly protracted the final resolution of the
controversy.
Section 9
Section 9 provides that in any litigation or administrative
proceeding concerning the issue of payment of attorney's fees or
other expenses a court or administrative officer may not award
attorney's fees or other expenses to a prevailing party for
activities associated with the issue of attorney's fees or other
expenses unless the court or administrative officer finds that the
United States, State or local government was unreasonable in the
position it took in court or before the administrative officer
concerning the issue of attorney's fees. This provision concerns
awards of attorney's fees or other expenses for the activities and
time spent by a party's counsel in preparation for, and
presentation of evidence in, hearings and preparation of papers
filed with the court or agency concerning the issue of whether the
party is entitled to an award of attorney's fees or other expenses
and if so the amount of such awards. Such "fees on fees" may not
be awarded by a court or administrative officer unless the party
proves that the legal position taken by the United States, a State
or local government in hearings and in other papers filed
concerning the issue of attorney's fees awards was unreasonable.
"Unreasonable" legal positions are limited to those which are
captious, frivolous, indefensible, filed in bad faith, or filed
where no genuine dispute exists.
Section 10
Subsection 10 (a) would deny attorney's fees or other expenses to a
party that has rejected a settlement offer which was as favorable
to the party as the relief ultimately granted by the court or
administrative officer. This provision would be beneficial to both
parties in litigation or administrative proceedings. The provision
would provide great incentive to the defendant United States, State
or local government to offer reasonable settlements to the
plaintiffs, resulting in a quick and fair resolution of the dispute
9
and a reduction of the backlog of cases in our courts. As
mentioned in the analysis of section 2, the provisions of the bill
are not intended to impede settlement, including settlement
agreements which include provisions for attorney's fees and other
expenses. The United States, States and local governments could
also benefit if they offered a reasonable settlement because they
could protect themselves against large fee awards which could
result from lengthy litigation.
Currently a plaintiff will be held to be a prevailing party and
entitled to recover fees even if the claim has been mooted if the
Court finds that the suit was a "catalyst" for the change of policy
which rendered the claim moot. Subsection 10 (b) would clarify that
the pendency of the litigation had to be a material factor in the
government's decision to change its policy which moots the suit.
This standard is in fact being applied currently by most courts.
See e.g., Morrison V. Ayoob, 627 F.2d 669 (3d Cir. 1980), cert.
denied, 449 U.S. 1102 (1981). Subsection (b) will insure that
courts do not place strong emphasis on chronology - that is, the
fact that the plaintiffs case was pending when the government
changed the policy which mooted the litigation - as establishing
that the suit was a catalyst for the government's action.
Subsection 10 (b) will allow governments to make planned changes and
improvements in policy without fear that they will become liable
for fees in a pending suit. Where suits do act as "catalysts" in
pointing out policies which need to be changed and which the
government does subsequently change as a result of the pendency of
the litigation, awards of attorneys' fees may be made. Subsection
10 (b) is needed to insure that planned improvements are not delayed
in order to prevent an adverse judgment.
Section 11
Section 11 encourages, and will authorize, courts and agencies in
adjudication to award attorney's fees against a plaintiff if the
plaintiff's claim is frivolous, unreasonable, or groundless, or if
the plaintiff continued to litigate or pursue the adjudication
after it clearly became so, even though there was no subjective bad
faith. Section 11 is intended to reduce frivolous lawsuits and
adjudication and reduce court and agency time and money expended on
groundless matters. Section 11 is intended to clarify that the
standard enunciated by the Supreme Court in Christiansburg Garment
Co. V. Equal Employment Opportunity Commission, 434 U.S. 412
(1978), is to apply to prevailing defendants in claims against the
10
United States, States and local governments. The Christiansburg
Garment standard will provide some deterrent to frivolous cases by
forcing the plaintiffs to pay the government's attorney's fees if
the suit was frivolous or groundless. The standard has been
applied in civil rights fee statutes, and has been cited in some
cases under 42 U.S.C. 1988; those who would file frivolous suits at
taxpayers' expense do so at the risk of paying the government's
attorney's fees.
Section 12
Section 12 will apply the maximum hourly rate provisions of section
3 to attorney's fees authorized to be awarded by statute to parties
who intervene or participate in agency proceedings. [The term
"agency proceeding" is defined in 5 U.S.C. 551(12).] Section 12 of
the bill does not create any right to such an award other than as
provided by existing statutes.
Section 12 also precludes awards of attorney's fees or other
expenses to intervenors or participants in agency proceedings
unless such awards are expressly authorized by statute. This
prohibition follows and adopts the Fourth Circuit's ruling in
Pacific Legal Foundation V. Goyan, 664 F.2d 1221 (4th Cir. 1981),
which found that agencies have no implied or general authority to
award attorney's fees in agency proceedings.
Section 13
Section 13 will preclude awards of attorney's fees or other
expenses against the United States or State or local government to
intervenors in litigation, adjudication or licensing unless the
intervenor seeking the award clearly and substantially prevailed on
the merits of the controversy. Furthermore, Section 13 provides
that awards of attorney's fees or other expenses may be made only
for work performed on issues which are significantly new and
different from those previously pending and only if the intervenor
prevails and if the issues were necessary to the resolution of the
controversy. Section 13 requires that awards of attorney's fees to
intervenors be made only pursuant to the rates established by
section 3 of the bill. Except for Section 2 of the bill, an
intervenor in litigation, adjudication or licensing shall be
considered a party for the purposes of the bill.
Section 14
Section 14 contains provisions directed to resolving a problem
States and local governments have experienced under 42 U.S.C. 1988.
Section 14 modifies the awarding of fees where the plaintiff
prevails on a claim not covered under section 1988 but there is a
pendent claim covered under section 1988 which the court does not
decide.
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Currently, when a plaintiff prevails on the basis of a claim which
does not provide for attorney's fees but is joined to a claim which
is covered under section 1988, the plaintiff often will recover
fees for the entire suit despite the fact that the court did not
reach the claim covered by section 1988 and despite the fact that
the claim may have no merit. In these situations, the standard
used to determine whether the section 1988 claim may be joined to a
valid State claim, for example, is that it is not "obviously
frivolous" or "wholly insubstantial". In these situations the
courts, following the sound judicial rule that constitutional
questions should not be decided if the case can be resolved on
other grounds, will decide the case on the valid State claim.
Section 14 is intended to clarify that, despite a footnote in the
House Report to the contrary, the Fees Act does not provide
attorney's fees from the public treasury to creative attorneys in
any suit against State or local governments regardless of whether
it pertains to civil rights or not. One alternative for correcting
this problem is to provide that no fees may be awarded unless the
plaintiff specifically prevails on the claim covered by section
1988. But this approach would hamper judicial economy in
situations in which there was in fact a valid State or Federal
claim not covered under section 1988 and a valid section 1988
claim, because the plaintiff would be likely to bring two separate
actions to insure he recovered fees he was entitled to, or the
court would have to decide a constitutional claim which was not
necessary for it to decide.
The change proposed in section 14 will direct the judge, in these
situations, to make a determination as to whether it would have
been rational to have brought the section 1988 claim as a separate
suit. One court has denied fees in this situation, stating that,
"this court sees no basis for awarding fees when the fee triggering
statúte plays no role but that allowing attorney fees." Tatro V.
State of Texas, 516 F. Supp. 968, 984 (N.D. Tex. 1981). If the
court determined that the claim covered under section 1988 had
sufficient merit to have been reasonably brought as a separate
suit, attorney's fees could be awarded even though the plaintiff
prevailed on a non-1988 claim. The judge would not have to
determine whether the plaintiff prevailed on the section 1988
claim, and the decision would not require extensive analysis in the
vast majority of cases. While this amendment would require an
additional determination by the court, it is more than justified by
the two alternatives -- leaving the situation as it exists now or
not allowing fees unless the court makes a final determination on
the claim covered under section 1988. The latter course would
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probably severely hamper judicial economy, while the former is too
burdensome on State and local governments. This proposal should
not burden the plaintiff since he simply has to determine whether
he is joining the section 1988 claim because it has merit or
because he is trying to use it to collect fees.
Section 15
Section 15 requires the Comptroller General of the United States to
submit an annual report to the President and the Congress on the
amount of fees and other expenses awarded against the United States
in litigation and in administrative proceedings. Copies of these
reports must be provided to the Attorney General of the United
States and the Director of the Administrative Office of the United
States Courts, the Chairman of the Administrative Conference of the
United States and the Director of the Office of Management and
Budget. Agencies will be required to keep records on attorney's
fees awards. The Courts and agencies must provide to the
Comptroller General information for the preparation of his report.
Section 16
Section 16 applies the provisions of the bill to any award of
attorney's fees and other expenses made subsequent to the enactment
of the bill. Except for the requirement for annual reports
required by section 5 (b) of the bill, the provisions of the bill
apply to actions commenced and fees and expenses incurred prior to
enactment. In litigation pending at the time of enactment of the
bill, the annual reports must be filed within one year of such
enactment.
Section 17
Section 17 provides that the criteria for the awards of attorney's
fees and other expenses established by this bill do not supercede
more restrictive criteria contained in other statutes for making
such awards. The provisions of this bill establish minimum
criteria to be applied for determining and awarding attorney's fees
and other expenses in litigation and administrative proceedings
against the United States or State or local government. For
example, 5 U.S.C. 7701(g) (1) provides that attorney's fees
may be awarded if two criteria are met: (1) the party must
have prevailed; and (2) the award of attorney's fee must be
determined to be "warranted in the interest of Justice
"
While the prevailing party criterion in 5 U.S.C. 7701(g) (1)
is controlled by section 2 of the bill, the bill does not
contain a provision modifying or controlling the second
criterion in 5 U.S.C. 7701 (g) (1) concerning "warranted in the
interest of Justice." Under section 17, the second criterion
13
would remain in effect. Thus, awards of attorney's fees under 5
U.S.C. 7701 (g) (1) must be made in compliance with provisions of
this bill and the more restrictive provision "warranted in the
interest of Justice."
Another example is found under the Equal Access to Justice Act.
Under the newly enacted 28 U.S.C. 2412 (d) (1), an otherwise eligible
prevailing party is entitled to attorney fees and expenses from the
United States "unless the Court finds that the position of the
United States was substantially justified or that special
circumstances make an award unjust." 28 U.S.C. 2412 (d) (1) (A).
While section 6 of the bill contains the "special circumstances"
provision, the bill does not contain the "substantially justified"
provision. The "substantially justified" provision under 28 U.S.C.
2412 (a) (1) (A) is one of the additional "criteria or
requirements limiting entitlement to awards of attorney's fees
or other expenses" within the meaning of section 17 of the bill and
as such remains in effect.
Section 18
Section 18 provides that nothing in this bill shall be interpreted
to create any right to an award of attorney's fees or other
expenses. Any right to such awards is created solely by the
provisions of other laws. This bill, however, does apply to, and
modify, all fee shifting statutes, including the Equal Access to
Justice Act, Public Law 96-481, except that (1) the provisions of
section 3 which establishes a fee cap do not apply to awards made
under 5 U.S.C. 504 (a) (1) and 28 U.S.C. 2412 (d) (1) (A) and (d) (3) ;
(2) the provisions of section 4 which establishes a 25% trigger in
monetary awards do not apply to awards made under 5 U.S.C.
504 (a) (1), and 28 U.S.C. 2412 (d) (1) (A) and (d) (3), or in cases
where government "bad faith" is proven under 28 U.S.C. 2412(b) ; and
(3) the government has the burden of proof regarding determinations
of "substantial justification" under 5 U.S.C. 504 (a) (1) and
28 U.S.C. 2412(d) (1) (A) and (d) (3).
Furthermore, it is emphasized that the bill affects only litigation
or administrative proceedings in which the award of attorney's fees
is entered against the United States or State or local government,
as opposed to cases in which an award is authorized to be paid out
of proceeds or damages assessed against the United States. For
example, the bill does not authorize award of fees directly against
the Government in cases under the Federal Tort Claims Act, 28
U.S.C. § 2671-2680, or in cases involving National Service Life
Insurance or United States Government Life Insurance, under 38
U.S.C. § 784. In those cases attorney's fees are paid from the
prevailing party's total award of damages or proceeds and are not a
separate judgment or award entered against the Government.
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Section 19
Section 19 provides for definitions.