Supreme Court Oks Fee Enhancement, But Questions Remain

Last week the U.S. Supreme Court in Perdue v Kenny A. (U.S. Sup Ct, Apr. 21, 2010, No. 08-970) 2010 US Lexis 3481 ruled that attorney fees awarded under federal fee-shifting statutes may exceed the “lodestar” amount, i.e., the number of hours worked multiplied by the prevailing hourly rates. But such enhancements are only permissible under rare circumstances, which include superior performance by the attorneys. This is clearly an important ruling, but there are a couple of aspects to the case that haven’t received much notice, yet.

In Perdue, a 5-4 decision, the majority held that a $4.5 million fee enhancement for attorneys who brought and won a class action challenging Georgia’s foster care system was permissible, but reversed and remanded because enhancements need to be properly justified, which the majority found that the district court failed to do. The dissenting justices would have approved the enhancement without second-guessing the district court.

As part of the basis for the enhancement, the district court relied on its finding that respondents’ attorneys had exhibited “a higher degree of skill, commitment, dedication, and professionalism . . . than the Court has seen displayed by the attorneys in any other case during its 27 years on the bench.”  The majority rejected the methodology of relying on a comparison of the performance of counsel in this case with the performance of counsel in unnamed prior cases. That begs the question: How can a court judge the quality of attorney performance without comparing it to other attorneys’ performances?

Also interesting is that the Court recognized the effect on one side of long-term litigious conduct by the opposing side that prolongs the case. The Court held that an enhancement may be appropriate if the attorney’s performance includes “an extraordinary outlay of expenses and the litigation is exceptionally protracted.” Does this mean that the effect of delaying litigation alone is compensable?

The Supreme Court has acknowledged its approval of enhancements, but left some aspects unclear. What do you think about this decision and its effects?

For more on fee-shifting statutes, see the new edition of  California Attorney Fee Awards, chapter 3.

© The Regents of the University of California, 2010. Unauthorized use and/or duplication of this material without express and written permission from this blog’s author and/or owner is strictly prohibited.

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