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Webster J. Arceneaux III is a self-described small-town lawyer whose 16-lawyer firm won’t collect about $200,000 because the U.S. Supreme Court has repudiated the so-called catalyst theory for obtaining attorneys’ fee awards. The high court, in a 5-4 ruling on May 29, held that a “prevailing party” eligible for attorneys’ fee awards — the term used in most federal fee-shifting statutes — does not mean a litigant whose suit achieved its aim by inducing a voluntary change in the defendant’s conduct. The majority, led by Chief Justice William H. Rehnquist, said that there must be some relief awarded by a court, either by a judgment on the merits or a court-ordered consent decree. Buckhannon Board & Care Home v. W.Va. Department of Health & Human Resources, No. 99-1848. The ruling will have a “profound adverse effect on the economics of public interest litigation,” says veteran environmental litigator John Eccheverria of Georgetown University School of Law. “It will increase the risk that thousands of hours of legal time invested in a case will never be reimbursed even if the litigation in fact is successful and accomplished its objective,” he says. And it’s not just the ACLU, Public Citizen Litigation Group and other longtime civil rights and environmental organizations that will feel the impact, say Eccheverria and others. Arceneaux and those like him will feel it most keenly — the very kind of lawyers that Congress sought to entice into handling complex civil rights and environmental litigation by enacting fee-shifting provisions in more than 150 federal laws. Even as Arceneaux, who argued and lost Buckhannon, was informing his clients that no payment was expected on the $200,000 bill because he knew they were unable to pay, plaintiffs’ lawyers and defense counsel were weighing possible litigation scenarios in Buckhannon‘s wake. Plaintiffs’ attorneys say that the ruling gives defendants an incentive to drive litigation along, requiring plaintiffs’ counsel to expend significant resources and then, at the 11th hour when plaintiffs appear likely to prevail, unilaterally change their policies to moot the litigation and avoid a fee award. Defense counsel predict that plaintiffs’ attorneys will make damages claims even where they might initially have sought only injunctive or other equitable relief in order to avoid a mooted case. Environmental litigators will continue to pursue awards based on the catalyst theory under fee provisions in 17 statutes that don’t use the “prevailing party” standard but allow awards if “appropriate.” That tactic is likely to produce more litigation. Congress will be asked to overturn Buckhannon by amending fee-shifting statutes expressly to permit the catalyst theory. Arceneaux of Lewis, Glasser, Casey & Rollins in Charleston, W.Va., is a skilled litigator, one of five in his commercial law firm. The boarding home association is a longtime client of his firm’s health care practice. He took on its suit against West Virginia, litigation brought under the Americans With Disabilities Act and the Fair Housing Amendments Act, over a state rule that could have forced many assisted-living residences to close. “This was supposed to be an hourly fee case,” Arceneaux says. “But the fire safety issues were just so complicated that we had to go out and hire experts. We spent $25,000 to $30,000 just in expert expenses.” It quickly became apparent, he says, that the clients could not bear the expense. “So then you do an analysis on the merits,” he says. “We always expected to prevail on merits, and we never expected the state to capitulate. They said they would never settle this case.” But six weeks after the state said it would never settle, the Legislature repealed the rule that was the target of the litigation. Arceneaux’s case was dismissed as moot. He then began his unsuccessful battle against the refusal by the 4th U.S. Circuit Court of Appeals to recognize the catalyst theory as a basis for fee awards. The catalyst theory has been recognized by federal courts for at least 30 years. Until the May 29 Supreme Court decision, among the nine federal circuits to have considered the question, the 4th Circuit stood alone in its rejection of the theory. WIDE IMPACT There are a lot of J. Arceneauxs out there, says Brian Wolfman of Public Citizen Litigation Group, more than there are lawyers at civil rights organizations, “which is the whole point of the fee-shifting statutes.” Attorneys’ fee awards are “very useful” to Public Citizen, primarily because starting salaries for its attorneys are lower than those for government attorneys, says Wolfman. But attorneys’ fees are “a sliver of what supports us,” he says. For Public Citizen, the impact of Buckhannon depends on the conduct of the federal government — the principal defendant in the group’s suits under the Freedom of Information Act and other statutes. “To take advantage of Buckhannon, defendants have to do something,” he says. “They’re the ones who moot the litigation. The government may find it unsavory, and they just might not center a portion of their litigation strategy around the fee component of the case. It will have some effect, but it’s hard to say what.” It’s much easier to say Buckhannon will have a significant effect in general, he says. “This is a significant loss, and I don’t think there’s any way around it. It can’t plausibly be argued this ruling won’t apply to fee-shifting statutes other than those involved in Buckhannon. There are 150 other federal fee-shifting statutes in which this is the rule.” Attorneys’ fees are a significant source of income supporting the litigation program at the American Civil Liberties Union, says Steven Shapiro, its national legal director. The ACLU has a number of large fee claims pending that are based on the catalyst theory, he says. One of its regional offices has a $1.2 million claim against the state of Maryland that will likely be lost because of Buckhannon. “In the short term, this case will have an immediate impact,” says Shapiro. “In the long term, the decision will produce one of two results: more litigation on collateral issues involving attorney fees and a decrease in the amount of litigation we are able to undertake.” The decision also will make it more important when considering settlements, to try to structure settlements in a way that will continue to fulfill the purposes of the attorneys’ fees act, he says, “to enable us to bring these kinds of cases.” The ruling, he says, is a “blow to national civil rights organizations, but we have other sources of income. But for other people out there, this is perhaps an even more serious blow. Whether it has a devastating impact depends on the extent to which defendants alter their conduct.” But defendants folding at the 11th hour to avoid attorneys’ fee awards is “an unrealistic, conjured-up vision that hasn’t played out in reality,” says Charles A. Newman of St. Louis’ Bryan Cave, who represented the Alliance of Automobile Manufacturers as an amicus in the Buckhannon case. “Why would any defendant expend resources in money, time and effort to defend a case vigorously and then cave on the eve of trial just to avoid attorney fees?” he asks. Maryland Solicitor General Andrew Baida agrees, calling manipulation by the private or government defendant “highly unlikely.” And, he adds, from his own experience before and after the 4th Circuit eliminated the catalyst rule, the high court’s decision will have no meaningful impact on the volume of litigation. Newman says that he has no doubt “that the ingenuity of the plaintiffs’ bar will be substantial, and they’ll endeavor to find ways to avoid cases from becoming moot.” One way, he agrees, will be for plaintiffs to include damages claims. Arceneaux affirms that, saying, “What [the Court] doesn’t appreciate is how a litigator thinks. You’ve got to get where you’ve got to go. Now I’m going to have to look at these claims and see what kind of individual claims I can find so that if defendants do what I want, the case doesn’t moot out.” On the environmental side of the equation, public interest litigators are hopeful that they can continue to use the catalyst theory under fee-shifting provisions in all federal environmental laws but three: the Clean Water Act, the Comprehensive Environmental Response, Compensation and Liability Act, and the Resource Conservation and Recovery Act (RCRA). “There is a lot of litigation under RCRA, so that is a blow,” says Jim Hecker, environmental enforcement director at Trial Lawyers for Public Justice. “My interpretation is that under statutes that do not use ‘prevailing’ party language and use the ‘appropriate’ standard, plaintiffs can still get fees for winning even in the absence of a formal judgment.” But Hecker predicts there will be litigation over his interpretation. And the ruling does affect awards under the Equal Access to Justice Act — a source of attorneys’ fees for environmental and other public interest litigators, notes Bill Curtis, vice president of programs at the EarthJustice Legal Defense Fund. “If you bring an ordinary Administrative Procedure Act case where you’re claiming the defendant acted arbitrarily and capriciously, the only mechanism that permits a fee award is the Equal Access to Justice Act,” he explains. “We do a fair amount of that.” As with Public Citizen, the variable as to how Buckhannon will play out for EarthJustice is the government’s conduct, says Curtis. In the end, the ACLU’s Shapiro and others say, Congress should intervene and overrule Buckhannon — the second civil rights ruling in two months to overturn a long-settled interpretation of congressional intent. But civil rights litigator Gerald Birnberg of Houston’s Williams, Birnberg & Andersen is not optimistic. “Any efforts to reverse the Supreme Court’s trend risk producing the opposite result,” he says. “There is a relatively small cadre of principled and dedicated folks who will continue to do the best they can, but significant, long-term relief is not on the visible horizon.”

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