EVANS, GOVERNOR OF IDAHO, ET AL. v. JEFF D. ET AL., MINORS, BY AND THROUGH THEIR NEXT FRIEND, JOHNSON, ET AL.
No. 84-1288
Supreme Court of the United States
Argued November 13, 1985—Decided April 21, 1986
475 U.S. 717
James Thomas Jones, Attorney General of Idaho, argued the cause for petitioners. With him on the briefs were John J. McMahon, Chief Deputy Attorney General, and Michael De Angelo and James Wickham, Deputy Attorneys General.
Deputy Solicitor General Wallace argued the cause for the United States as amicus curiae urging reversal. With him on the brief were Acting Solicitor General Fried, Acting Assistant Attorney General Willard, Deputy Solicitor General Geller, Kathryn A. Oberly, John F. Cordes, and Douglas Letter.
William T. Coleman, Jr., argued the cause for respondents. With him on the brief were Aaron S. Bayer, Howard A. Belodoff, and Charles Johnson III.*
*Briefs of amici curiae urging reversal were filed for the State of Alabama et al. by Francis X. Bellotti, Attorney General of Massachusetts,
Briefs of amici curiae urging affirmance were filed for the Committee on Legal Assistance of the Association of the Bar of the City of New York by Allan L. Gropper; and for the NAACP Legal Defense and Educational Fund, Inc., et al. by Julius LeVonne Chambers, Charles Stephen Ralston, Steven L. Winter, E. Richard Larson, Burt Neuborne, James Robertson, Harold R. Tyler, Jr., Norman Redlich, William L. Robinson, Norman J. Chachkin, Kalman Finkel, Helaine M. Barnett, and John E. Kirklin.
JUSTICE STEVENS delivered the opinion of the Court.
The Civil Rights Attorney‘s Fees Awards Act of 1976 (Fees Act) provides that “the court, in its discretion, may allow the prevailing party . . . a reasonable attorney‘s fee” in enumerated civil rights actions. 90 Stat. 2641,
I
The petitioners are the Governor and other public officials of the State of Idaho responsible for the education and treatment of children who suffer from emotional and mental handicaps. Respondents are a class of such children who have been or will be placed in petitioners’ care.1
On August 4, 1980, respondents commenced this action by filing a complaint against petitioners in the United States District Court for the District of Idaho. The factual allegations in the complaint described deficiencies in both the educational programs and the health care services provided respondents. These deficiencies allegedly violated the United States Constitution, the Idaho Constitution, four
On the day the complaint was filed, the District Court entered two orders, one granting the respondents leave to proceed in forma pauperis, and a second appointing Charles Johnson as their next friend for the sole purpose of instituting and prosecuting the action. At that time Johnson was employed by the Idaho Legal Aid Society, Inc., a private, nonprofit corporation that provides free legal services to qualified low-income persons.2 Because the Idaho Legal Aid Society is prohibited from representing clients who are capable of paying their own fees,3 it made no agreement requiring any of the respondents to pay for the costs of litigation or the legal services it provided through Johnson. Moreover, the special character of both the class and its attorney-client relationship with Johnson explains why it did not enter into any agreement covering the various contingencies that might arise during the course of settlement negotiations of a class action of this kind.
Shortly after petitioners filed their answer, and before substantial work had been done on the case, the parties entered into settlement negotiations. They were able to reach agreement concerning that part of the complaint relating to educational services with relative ease and, on October 14, 1981, entered into a stipulation disposing of that part of the case. The stipulation provided that each party would bear its “own attorney‘s fees and costs thus far incurred.” App.
Negotiations concerning the treatment claims broke down, however, and the parties filed cross-motions for summary judgment. Although the District Court dismissed several of respondents’ сlaims, it held that the federal constitutional claims raised genuine issues of fact to be resolved at trial. Thereafter, the parties stipulated to the entry of a class certification order, engaged in discovery, and otherwise prepared to try the case in the spring of 1983.
In March 1983, one week before trial, petitioners presented respondents with a new settlement proposal. As respondents themselves characterize it, the proposal “offered virtually all of the injunctive relief [they] had sought in their complaint.” Brief for Respondents 5. See App. 89. The Court of Appeals agreed with this characterization, and further noted that the proposed relief was “more than the district court in earlier hearings had indicated it was willing to grant.” 743 F. 2d 648, 650 (CA9 1984). As was true of the earlier partial settlement, however, petitioners’ offer included a provision for a waiver by respondents of any claim to fees or costs.4 Originally, this waiver was unacceptable to the Idaho Legal Aid Society, which had instructed Johnson to reject any settlement offer conditioned upon a waiver of fees, but Johnson ultimately determined that his ethical obligation to his clients mandated acceptance of the proposal. The parties conditioned the waiver on approval by the District Court.5
In addition, the entire settlement agreement was conditioned on the District Court‘s approval of the waiver provision under
When respondents appealed from the order denying attorney‘s fees and costs, petitioners filed a motion requesting the District Court to suspend or stay their obligation to comply with the substantive terms of the settlement. Because the District Court regarded the fee waiver as a material term of the complete settlement, it granted the motion.7 The Court of Appeals, however, granted two emergency motions for stays requiring enforcement of the substantive terms of the consent decree pending the appeal. More dramatically, after ordering preliminary relief, it invalidated the fee waiver and left standing the remainder of the settlement; it then instructed the District Court to “make its own determination of the fees that are reasonable” and remanded for that limited purpose. 743 F. 2d, at 652.
In explaining its holding, the Court of Appeals emphasized that
the Fees Act normally requires an award of fees to prevailing plaintiffs in civil rights actions, including those who have prevailed through settlement.9 The court added that “[w]hen attorney‘s fees are negotiated as part of a class action settlement, a conflict frequently exists between the class lawyers’ interest in сompensation and the class members’ interest in relief.” 743 F. 2d, at 651-652. “To avoid this conflict,” the Court of Appeals relied on Circuit precedent which had “disapproved simultaneous negotiation of settlements and attorney‘s fees” absent a showing of “unusual circumstances.” Id., at 652.10 In this case, the Court of Appeals found no such “unusual circumstances” and therefore held that an agreement on fees “should not have been a part of the settlement of the claims of the class.” Ibid. It concluded:
“The historical background of both Rule 23 and section 1988, as well as our experience since their enactment, compel the conclusion that a stipulated waiver of all attorney‘s fees obtained solely as a condition for obtaining relief for the class should not be accepted by the court.” Ibid.
II
The disagreement between the parties and amici as to what exactly is at issue in this case makes it appropriate to put certain aspects of the case to one side in order to state precisely the question that the case does present.
To begin with, the Court of Appeals’ decision rested on an erroneous view of the District Court‘s power to approve settlements in class actions.
might have advised petitioners and respondents that it would not approve thеir proposal unless one or more of its provisions was deleted or modified,
That duty, whether it takes the form of a general prophylactic rule or arises out of the special circumstances of this case, derives ultimately from the Fees Act rather than from the strictures of professional ethics. Although respondents contend that Johnson, as counsel for the class, was faced with an “ethical dilemma” when petitioners offered him relief greater than that which he could reasonably have expected to obtain for his clients at trial (if only he would stipulate to a waiver of the statutory fee award), and although we recognize Johnson‘s conflicting interests between pursuing relief for the class and a fee for the Idaho Legal Aid Society, we do
The defect, if any, in the negotiated fee waiver must be traced not to the rules of ethics but to the Fees Act.15 Fol-
lowing this tack, respondents argue that the statute must be construed to forbid a fee waiver that is the product of “coercion.” They submit that a “coercive waiver” results when the defendant in a civil rights action (1) offers a settlement on the merits of equal or greater value than that which plaintiffs could reasonably expect to achieve at trial but (2) conditions the offer on a waiver of plaintiffs’ statutory eligibility for attorney‘s fees. Such an offer, they claim, exploits the ethical obligation of plaintiffs’ counsel to recommend settlement in order to avoid defendant‘s statutory liability for its opponents’ fees and costs.16
The question this case presents, then, is whether the Fees Act requires a district court to disapprove a stipulation seeking to settle a civil rights class action under Rule 23 when the offered relief equals or exceeds the probable outcome at trial but is expressly conditioned on waiver of statutory eligibility for attorney‘s fees. For reasons set out below, we are not persuaded that Congress has commanded that all such settlements must be rejected by the District Court. Moreover, on the facts of record in this case, we are satisfied that the Dis-
III
The text of the Fees Act provides no support for the proposition that Congress intended to ban all fee waivers offered in connection with substantial relief on the merits.17 On the contrary, the language of the Act, as well as its legislative history, indicates that Congress bestowed on the “prevailing party” (generally plaintiffs18) a statutory eligibility for a discretionary award of attorney‘s fees in specified civil rights actions.19 It did not prevent the party from waiving this eli-
gibility anymore than it legislated against assignment of this right to an attorney, such as effectively occurred here. Instead, Congress enacted the fee-shifting provision as “an integral part of the remedies necessary to obtain” compliance with civil rights laws, S. Rep. No. 94-1011, p. 5 (1976), to further the same general purpose—promotion of respect for civil rights—that led it to provide damages and injunctive relief. The statute and its legislative history nowhere suggest that Congress intended to forbid all waivers of attorney‘s fees—even those insisted upon by a civil rights plaintiff in exchange for some other relief to which he is indisputably not entitled20—anymore than it intended to bar a concession on damages to secure broader injunctive relief. Thus, while it is undoubtedly true that Congress expected fee shifting to attract competent counsel to represent citizens deprived of their civil rights,21 it neither bestowed fee awards upon attor-
In fact, we believe that a general proscription against negotiated waiver of attorney‘s fees in exchange for a settlement on the merits would itself impede vindication of civil rights, at least in some cases, by reducing the attractiveness of settlement. Of particular relevance in this regard is our recent decision in Marek v. Chesny, 473 U. S. 1 (1985). In that case, which admittedly was not a class action and therеfore did not implicate the court‘s approval power under
“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 settlement 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, supra, at 7.
“. . . 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 litigation. In short, settlements rather than litigation will serve the interests of plaintiffs as well as defendants.” 473 U. S., at 10.
To promote both settlement and civil rights, we implicitly acknowledged in Marek v. Chesny the possibility of a tradeoff between merits relief and attorney‘s fees when we upheld the defendant‘s lump-sum offer to settle the entire civil rights action, including any liability for fees and costs.
In approving the package offer in Marek v. Chesny we recognized that a rule prohibiting the comprehensive negotiation of all outstanding issues in a pending case might well preclude the settlement of a substantial number of cases:
“If defendants are not allowed to make lump-sum offers that would, if accepted, represent their total liability, they would understandably be reluctant to make settlement offers. As the Court of Appeals observed, ‘many a defendant would be unwilling 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.” Id., at 6-7.
See White v. New Hampshire Dept. of Employment Security, 455 U. S. 445, 454, n. 15 (1982) (“In considering whether to enter a negotiated settlement, a defendant may have good reason to demand to know his total liability from both damages and fees“).
Most defendants are unlikely to settle unless the cost of the predicted judgment, discounted by its probability, plus the transaction costs of further litigation, are greater than the cost of the settlement package. If fee waivers cannot be negotiated, the settlement package must either contain an attorney‘s fee component of potentially large and typically uncertain magnitude, or else the parties must agree to have the fee fixed by the court. Although either of these alternatives may well be acceptable in many cases, there surely is a significant number in which neither alternative will be as satisfactory as a decision to try the entire case.23
The adverse impact of removing attorney‘s fees and costs from bargaining might be tolerable if the uncertainty introduced into settlement negotiations were small. But it is not. The defendants’ potential liability for fees in this kind of litigation can be as significant as, and sometimes even more significant than, their potential liability on the merits. This proposition is most dramatically illustrated by the fee awards
The unpredictability of attorney‘s fees may be just as important as their magnitude when a defendant is striving to fix its liability. Unlike a determination of costs, which ordinarily involve smaller outlays and are more susceptible of calculation, see Marek v. Chesny, 473 U. S., at 7, “[t]here is no precise rule or formula” for determining attorney‘s fees,
IV
The question remains whether the District Court abused its discretion in this case by approving a settlement which included a complete fee waiver. As noted earlier,
The Court of Appeals, respondents, and various amici supporting their position, however, suggest that the court‘s authority to pass on settlements, typically invoked to ensure fair treatment of class members, must be exercised in accordance with the Fees Act to promote the availability of attorneys in civil rights cases. Specifically, respondents assert that the State of Idaho could not pass a valid statute precluding the payment of attorney‘s fees in settlements of civil rights cases to which the Fees Act applies. See Brief for Respondents 24, n. 22. From this they reason that the Fees Act must equally preclude the adoption of a uniform statewide policy that serves the same end, and accordingly contend that a consistent practice of insisting on a fee waiver as a condition of settlement in civil rights litigation is in conflict with the federal statute authorizing fees for prevailing parties, including those who prevail by way of settlement.31 Remarkably, there seems little disagreement on these points. Petitioners and the amici who support them never suggest that the district court is obligated to place its stamp of approval on every settlement in which the plaintiffs’ attorneys have agreed to a fee waiver. The Solicitor General, for ex-
We find it unnecessary to evaluate this argument, however, because the record in this case does not indicate thаt Idaho has adopted such a statute, policy, or practice. Nor does the record support the narrower proposition that petitioners’ request to waive fees was a vindictive effort to deter attorneys from representing plaintiffs in civil rights suits against Idaho. It is true that a fee waiver was requested and obtained as a part of the early settlement of the education claims, but we do not understand respondents to be challenging that waiver, see Tr. of Oral Arg. 31-32, and they have not offered to prove that petitioners’ tactics in this case merely implemented a routine state policy designed to frustrate the objectives of the Fees Act. Our own examination of the record reveals no such policy.
What the outcome of this settlement illustrates is that the Fees Act has given the victims of civil rights violations a powerful weapon that improves their ability to employ counsel, to obtain access to the courts, and thereafter to vindicate their rights by means of settlement or trial. For aught that appears, it was the “coercive” effect of respondents’ statutory right to seek a fee award that motivated petitioners’ exceptionally generous offer. Whether this weapon might be even more powerful if fee waivers were prohibited in cases like this is another question,34 but it is in any event a question
The judgment of the Court of Appeals is reversed.
It is so ordered.
JUSTICE BRENNAN, with whom JUSTICE MARSHALL and JUSTICE BLACKMUN join, dissenting.
Ultimately, enforcement of the laws is what really counts. It was with this in mind that Congress enacted the Civil Rights Attorney‘s Fees Awards Act of 1976,
I
The Court begins its analysis by emphasizing that neither the language nor the legislative history of the Fees Act supports “the proposition that Congress intended to ban all fee waivers offered in connection with substantial relief on the merits.” Ante, at 730. I agree. There is no evidence that
II
The Court asserts that Congress authorized fee awards “to further the same general purpose—promotion of respect for civil rights—that led it to provide damages and injunctive
Obviously, the Fees Act is intended to “promote respect for civil rights.” Congress would hardly have authorized fee awards in civil rights cases to promote respect for the securities laws. But discourse at such a level of generality is deceptive. The question is how did Congress envision that awarding attorney‘s fees would promote respect for civil rights? Without a clear understanding of the way in which Congress intended for the Fees Act to operate, we cannot even begin responsibly to go about the task of interpreting it. In theory, Congress might have awarded attorney‘s fees as simply an additional form of make-whole relief, the threat of which would “promote respect for civil rights” by deterring potential civil rights violators. If this were the case, the Court‘s equation of attorney‘s fees with damages would not be wholly inaccurate. However, the legislative history of the Fees Act discloses that this is not the case. Rather, Congress provided fee awards to ensure that there would be lawyers available to plaintiffs who could not otherwise afford counsel, so that these plaintiffs cоuld fulfill their role in the federal enforcement scheme as “private attorneys general,” vindicating the public interest.1
“If successful plaintiffs were routinely forced to bear their own attorneys’ fees, few aggrieved parties would be in a position to advance the public interest by invoking the injunctive powers of the federal courts. Congress therefore enacted the provision for counsel fees — not simply to penalize litigants who deliberately advance arguments they know to be untenable but, more broadly, to encourage individuals injured by racial discrimination
to seek judicial relief under Title II.” Ibid. (footnote omitted).
Newman interpreted the fee provision of Title II as intended to bridge the gap between the desire of an individual who has been deprived of a federal right to see that right vindicated and the financial ability of that individual to do so. More importantly, Newman recognized that Congress did not erect this bridge solely, or even primarily, to confer a benefit on such аggrieved individuals. Rather, Congress sought to capitalize on the happy coincidence that encouraging private actions would, in the long run, provide effective public enforcement of Title II. By ensuring that lawyers would be willing to take Title II cases, Congress made the threat of a lawsuit for violating Title II real, thereby deterring potential violators.
After Newman, lower courts—invoking their equitable powers to award attorney‘s fees—adopted a similar rationale to award fees in cases brought under civil rights statutes that did not contain express provisions for attorney‘s fees. See, e. g., Stolberg v. Members of Board of Trustees for State Colleges of Conn., 474 F. 2d 485 (CA2 1973) (
In the wake of Alyeska, Congress acted to correct “anomalous gaps” in the availability of attorney‘s fees to enforce civil rights laws, S. Rep. No. 94-1011, p. 1 (1976) (hereafter S. Rep.).2 See H. R. Rep. No. 94-1558, p. 2 (1976) (hereafter H. R. Rep.); 122 Cong. Rec. 31472 (1976) (remarks of Sen. Kennedy). Testimony at hearings on the proposed legislation disclosed that civil rights plaintiffs, “a vast majority of [whom] cannot afford legal counsel,” H. R. Rep. 1, were suffering “very severe hardships because of the Alyeska decision,” id., at 2. The unavailability of fee shifting made it impossible for legal aid services, “already short of resources,” to bring many lawsuits, and, without much possibility of compensation, private attorneys were refusing to take civil rights cases. id., at 3. See generally Hearings on the Effect of Legal Fees on the Adequacy of Representation before the Subcommittee on Representation of Citizen Interests of the Senate Committee on the Judiciary, 93d Cong., 1st Sess., pts. 1-4 (1973). Congress found that Alyeska had a “devastating” impact on civil rights litigation, and it concluded that the need for corrective legislation was “compelling.” H. R. Rep. 3; see also, 122 Cong. Rec., supra, at 31471 (remarks of Sen. Scott), 31472 (remarks of Sen. Kennedy).
Accepting this Court‘s invitation, see Alyeska, supra, at 269-271, Congress passed the Fees Act in order to re-establish the Newman regime under which attorney‘s fees were awarded as a means of securing enforcement of civil rights laws by ensuring that lawyers would be willing to
“The application of these standards will insure that reasonable fees are awarded to attract competent counsel in cases involving civil and constitutional rights, while avoiding windfalls to attorneys. The effect of [the Fees Act] will be to promote the enforcement of the Federal civil rights acts, as Congress intended, and to achieve uniformity in those statutes and justice for all citizens.” H. R. Rep. 9.
These same themes are prominent in the Senate Report:
“The purpose and effect of [the Fees Act] are simple—it is designed to allow courts to provide the familiar remedy of reasonable counsel fees to prevailing parties in suits to enforce the civil rights acts which Congress has passed since 1866. . . . All of these civil rights laws depend heavily upon private enforcement, and fee awards have proved an essential remedy if private citizens are to have a meaningful opportunity to vindicate the important Congressional policies which these laws contain.” S. Rep. 2.
The Senate Report quotes the same language from Newman as the House Report, explaining that “fees are an integral
The floor debates, which were extensive, also are replete with similar expressions; I set out but a few examples. Senator Tunney, who sponsored the original version of the Fees Act, stated to the Senate:
“The problem of unequal access to the courts in order to vindicate congressional policies and enforce the law is not simply a problem for lawyers and courts. Encouraging adequate representation is essential if the laws of this Nation are to be enforced. Congress passes a great deal of lofty legislation promising equal rights to all.
“Although some of these laws can be enforced by the Justice Department or other Federal agеncies, most of the responsibility for enforcement has to rest upon private citizens, who must go to court to prove a violation of the law. . . . But without the availability of counsel fees, these rights exist only on paper. Private citizens must be given not only the rights to go to court, but also the legal resources. If the citizen does not have the resources, his day in court is denied him; the congressional policy which he seeks to vindicate goes unvindicated; and the entire Nation, not just the individual citizen, suffers.” 122 Cong. Rec. 33313 (1976).
Senator Kennedy, who sponsored the amended version of the Fees Act that was actually passed, made the same point somewhat more succinctly:
“Long experience has demonstrated . . . that Government enforcement alone cannot accomplish [compliance with the civil rights laws]. Private enforcement of these laws by those most directly affected must continue to receive full congressional support. Fee shifting provides a mechanism which can give full effect to our civil rights laws, at no added cost to the Government.” Id., at 31472.
But perhaps it was Representative Anderson, responding to a question from an opponent of the Fees Act, who summed up the reason for the legislation most effectively. He said:
“We are talking here about major civil rights laws. We have an obligation, it seems to me, as the representatives of the people, to make sure that those laws are enforced and we discharge that obligation when we make available a reasonable award of attorneys’ fees at the discretion of the court. Those of us who are interested in making sure that those laws are enforced . . . are simply abetting and aiding that process of law enforcement when we agree to the provisions of this bill.” Id., at 35116.
See also, e. g., id., at 31471 (remarks of Sen. Scott) (“Congress should encourage citizens to go to court in private suits to vindicate its policies and protect their rights“), 35128 (remarks of Rеp. Seiberling).
III
As this review of the legislative history makes clear, then, by awarding attorney‘s fees Congress sought to attract competent counsel to represent victims of civil rights violations.3 Congress’ primary purpose was to enable “private attorneys
I have gone to great lengths to show how the Court mischaracterizes the purpose of the Fees Act because the Court‘s error leads it to ask the wrong question. Having concluded that the Fees Act merely creates another remedy to vindicate the rights of individual plaintiffs, the Court asks whether negotiated waivers of statutory attorney‘s fees are “invariably inconsistent” with the availability of such fees as a remedy for individual plaintiffs. Ante, at 732. Not surprisingly, the Court has little difficulty knocking down this frail straw man.5 But the proper question is whether permitting nego-
A
Permitting plaintiffs to negotiate fee waivers in exchange for relief on the merits actually raises two related but distinct questions. First, is it permissible under the Fees Act to negotiate a settlement of attorney‘s fees simultaneously with the merits? Second, can the “reasonable attorney‘s fee” guaranteed in the Act be waived? As a matter of logic, either of these practices may be permitted without also permitting the other. For instance, one could require bifurcated settlement negotiations of merits and fees but allow plaintiffs to waive their fee claims during that phase of the negotiations. Alternatively, one could permit simultaneous negotiation of fees and merits but prohibit the plaintiff from waiving statutory fees. This latter possibility exists because there is a range of “reasonable attorney‘s fees” consistent with the Fees Act in any given case. Cf. Blum v. Stenson, 465 U. S. 886 (1984); Hensley v. Eckerhart, 461 U. S. 424, 433-437 (1983); H. R. Rep. 8-9; S. Rep. 6; see generally Johnson v. Georgia Highway Express, Inc., 488 F. 2d 714, 716-720 (CA5 1974) (listing relevant factors).6
More importantly, since simultaneous negotiation and waiver may have different effects on the congressional policy of encouraging counsel to accept civil rights cases, each practice must be analyzed independently to determine whether or
B
1
It seems obvious that allowing defendants in civil rights cases to condition settlement of the merits on a waiver of statutory attorney‘s fees will diminish lawyers’ expectations of receiving fees and decrease the willingness of lawyers to accept civil rights cases. Even the Court acknowledges “the possibility that decisions by individual clients to bargain away fee awards may, in the aggregate and in the long run, diminish lawyers’ expectations of statutory fees in civil rights cases.” Ante, at 741-742, n. 34. The Court tells us, however, that “[c]omment on this issue” is “premature at this juncture” because there is not yet supporting “documentation.” Ibid. The Court then goes on anyway to observe that “as a practical matter the likelihood of this circumstance arising is remote.” Ibid.
I must say that I find the Court‘s assertions somewhat difficult to understand. To be sure, the impact of conditional fee waivers on the availability of attorneys will be less severe than was the restriction on fee awards created in Alyeska. However, that experience surely provides an indication of the immediate hardship suffered by civil rights claimants
But it does not require a sociological study to see that permitting fee waivers will make it more difficult for civil rights plaintiffs to obtain legal assistance. It requires only common sense. Assume that a civil rights defendant makes a settlement offer that includes a demand for waiver of statutory attorney‘s fees. The decision whether to accept or reject the
“Defense counsel . . . are in a uniquely favorable position when they condition settlement on the waiver of the statutory fee: They make a demand for a benefit that the plaintiff‘s lawyer cannot resist as a matter of ethics and one in which the plaintiff has no interest and therefore will not resist.” Op. No. 147, reprinted in 113 Daily Washington Reporter, supra n. 8, at 394.
Of course, from the lawyer‘s standpoint, things could scarcely have turned out worse. He or she invested consid
And, of course, once fee waivers are permitted, defendants will seek them as a matter of course, since this is a logical way to minimize liability. Indeed, defense counsel would be remiss not to demand that the plaintiff waive statutory attorney‘s fees. A lawyer who proposes to have his client pay more than is necessary to end litigation has failed to fulfill his fundamental duty zealously to represent the best interests of his client. Because waiver of fees does not affect the plaintiff, a settlement offer is not made less attractive to the plaintiff if it includes a demand that statutory fees be waived. Thus, in the future, we must expect settlement offers routinely to contain demands for waivers of statutory fees.12
The cumulativе effect this practice will have on the civil rights bar is evident. It does not denigrate the high ideals that motivate many civil rights practitioners to recognize that lawyers are in the business of practicing law, and that, like other business people, they are and must be concerned with earning a living.13 The conclusion that permitting fee
Because making it more difficult for civil rights plaintiffs to obtain legal assistance is precisely the opposite of what Congress sought to achieve by enacting the Fees Act, fee waivers should be prohibited. We have on numerous prior occasions held that “a statutory right conferred on a private party, but affecting the public interest, may not be waived or released if such waiver or release contravenes the statutory policy.” Brooklyn Savings Bank v. O‘Neil, 324 U.S. 697, 704 (1945) (holding right to liquidated damages under
This all seems so obvious that it is puzzling that the Court reaches a different result. The Court‘s rationale is that, unless fee waivers are permitted, “parties to a significant number of civil rights cases will refuse to settle . . . .” Ante, at 736. This is a wholly inadequate justification for the Court‘s result.
First, the effect of prohibiting fee waivers on settlement offers is just not an important concern in the context of the
In an attempt to justify its decision to elevate settlement concerns, the Court argues that settlement “provides benefits for civil rights plaintiffs as well as defendants and is consistent with the purposes of the Fees Act” because “[s]ome plaintiffs will receive compensation in settlement where, on trial, they might not have recovered, or would have recovered less than what was offered.” Ante, at 732-733 (quoting Marek v. Chesny, 473 U.S. 1, 10 (1985)); see also ante, at 731 (legislative history does not show that Congress intended to bar “even [waivers] insisted upon by a civil rights plaintiff in exchange for some other relief to which he is indisputably not entitled . . .“) (footnote omitted).
As previously noted, by framing the purpose of the
Moreover, I find particularly unpersuasive the Court‘s apparent belief that Congress enacted the
Second, even assuming that settlement practices are relevant, the Court greatly exaggerates the effect that prohibiting fee waivers will have on defendants’ willingness to make settlement offers. This is largely due to the Court‘s failure to distinguish the fee waiver issue from the issue of simultaneous negotiation of fees and merits claims. Supra, at 754. The Court‘s discussion mixes concerns over a defendant‘s reluctance to settle because total liability remains uncertain with reluctance to settle because the cost of settling is too high. See ante, at 734-737. However, it is a prohibition on simultaneous negotiation, not a prohibition on fee waivers, that makes it difficult for the defendant to ascertain his total liability at the time he agrees to settle the merits. Thus, while prohibiting fee waivers may deter settlement offers simply because requiring the defendant to pay a “reasonable attorney‘s fee” increases the total cost of settlement, this is a separate issue altogether, and the Court‘s numerous arguments about why defendants will not settle unless they can determine their total liability at the time of settlement, ante, at 734, 735, 736, are simply beside the point.17 With respect
The Court asserts, without factual support,18 that requiring defendants to pay statutory fee awards will prevent a “significant number” of settlements. Ante, at 734-735. It is, of course, ironic that the same absence of “documentation” which makes comment on the effects of permitting feе waivers “premature at this juncture,” ante, at 742, n. 34, does not similarly affect the Court‘s willingness to speculate about what to expect if fee waivers are prohibited. Be that as it may, I believe that the Court overstates the extent to which prohibiting fee waivers will deter defendants from making settlement offers. Because the parties can negotiate a fee (or a range of fees) that is not unduly high and condition their settlement on the court‘s approval of this fee, the magnitude
All of which is not to deny that prohibiting fee waivers will deter some settlements; any increase in the costs of settling will have this effect. However, by exaggerating the size and the importance of fee awards, and by ignoring the options available to the parties in settlement negotiations, the Court makes predictions that are inflated. An actual disincentive to settling exists only where three things are true: (1) the defendant feels he is likely to win if he goes to trial, in which case the plaintiff will recover no fees; (2) the plaintiff will agree to relief on the merits that is less costly to the defendant than litigating the case; and (3) adding the cost of a negotiated attorney‘s fee makes it less costly for the defendant to litigate. I believe that this describes a very small class of cases—although, like the Court, I cannot “document” the assertion.
C
I would, on the other hand, permit simultaneous negotiation of fees and merits claims, since this would not contra
IV
Although today‘s decision will undoubtedly impair the effectiveness of the private enforcement scheme Congress established for civil rights legislation, I do not believe that it will bring about the total disappearance of “private attorneys general.” It is to be hoped that Congress will repair this Court‘s mistake. In the meantime, other avenues of relief are available. The Court‘s decision in no way limits the power of state and local bar associations to regulate the ethical conduct of lawyers. Indeed, several Bar Associations have already declared it unethical for defense counsel to seek fee waivers. See Committee on Professional Ethics of the Association of the Bar of the City of New York, Op. No. 82-80 (1985); District of Columbia Legal Ethics Committee, Op. No. 147, supra n. 8, 113 Daily Washington Law Reporter, at 389. Such efforts are to be commended and, it is to be hoped, will be followed by other state and local organizations concerned with respecting the intent of Congress and with protecting civil rights.
During the floor debates over passage of the
Notes
This is not to deny that the threat of liability for attorney‘s fees contributes to compliance with civil rights laws and that this is a desirable effect. See Hensley v. Eckerhart, 461 U. S. 424, 443, n. 2 (1983) (BRENNAN, J., concurring in part and dissenting in part); see also, Cooper v. Singer, 719 F. 2d 1496, 1501 (CA10 1983); Shadis v. Beal, 685 F. 2d 824, 829 (CA3 1982); Oldham v. Ehrlich, 617 F. 2d 163, 168 (CA8 1980); Dennis v. Chang, 611 F. 2d 1302, 1306 (CA9 1980); Calhoun, Attorney-Client Conflicts of Interest and the Concept of Non-Negotiable Fee Awards Under
Alyeska was decided on May 12, 1975. Senator Tunney introduced S. 2278 on July 31, 1975. The bill was signed by the President and became effective on October 19, 1976.
Even the Court acknowledges that “it is undoubtedly true that Congress expected fee shifting to attract competent counsel to represent citizens deprived of their civil rights . . . .” Ante, at 731 (footnote omitted). Ironically, the only authority the Court cites from the legislative history is in support of this statement.
The Court seems to view the options as limited to two: either the Fees Act confers a benefit on attorneys, a conclusion which is contrary to both the language and the legislative history of the Act, ante, at 730-731; or the Fees Act confers a benefit on individual plaintiffs, who may freely exploit the statutory fee award to their own best advantage. It apparently has not occurred to the Court that Congress might have made a remedy available to individual plaintiffs primarily for the benefit of the public. However, Congress often takes advantage of individual incentives to advance public policy, relying upon “private attorneys general” to secure enforcement of public rights without the need to establish an independent enforcement bureaucracy. As long as the interests of individual plaintiffs coincide with those of the public, it does not matter whether Congress intended primarily to benefit the individual or primarily to benefit the public. However, when individual and public interests diverge, as they may in particular situations, we must interpret the legislation so as not to frustrate Congress’ intentions. See Brooklyn Savings Bank v. O‘Neil, 324 U. S. 697, 704 (1945).
The assumption that fee awards are identical to other remedies like damages or injunctive relief makes it easy for the Court to conclude that Congress would not have intended to prohibit fee waivers in exchange for relief on the merits “anymore than it intended to bar a conсession on damages to secure broader injunctive relief.” Ante, at 731.
“In other words, an attorney like myself can be put in the position of either negotiating for his client or negotiating for his attorney‘s fees, and I think that that is pretty much the situation that occurred in this instance.
“I was forced, because of what I perceived to be a result favorable to the plaintiff class, a result that I didn‘t want to see jeopardized by a trial or by any other possible problems that might have occurred. And the result is the best result I could have gotten in this court or any other court and it is really a fair and just result in any instance and what should have occurred years earlier and which in fact should have been the case all along. That result I didn‘t want to see disturbed on the basis that my attorney‘s fees would cause a problem and cause that result to be jeopardized.” App. 90-91.
Thus, even if statutory fees cannot be waived, the parties may still want to agree on a fee (or a range of acceptable fees) that they believe to be within the range of fees authorized by the Act. The parties may then, if they choose to do so, make their settlement on the merits contingent upon the district court‘s approval of their negotiated fee as within the range of “reasonable” fees contemplated by the Fees Act.
“[T]he defendants’ signing of the stipulation was dependent upon the Court‘s approval of the finding that it was appropriate to accept a stipulation where plaintiffs waived attorneys fees. . . . The defendants entered into the stipulation only as a compromise matter with the understanding that they would not pay any attorneys fees, and advised the Court that if there were going to be attorneys fees that they wanted to proceed with trial because they did not think they were required to conform to the stipulation legally. Under those circumstances, it would be entirely inappropriate to leave the stipulation in effect. If you effectively challenge the stipulation, the whole stipulation falls and the matter must be tried by the Court. On the other hand, if you do not successfully challenge the stipulation, then the stipulation and stay is in effect. But until the validity of the stipulation is detеrmined, the Court feels it is entirely unfair to enforce it.” Id., at 115-116. See id., at 112.
It is especially important to keep in mind the fragile nature of the civil rights bar. Even when attorney‘s fees are awarded, they do not approach the large sums which can be earned in ordinary commercial litigation. See Berger, Court Awarded Attorneys’ Fees: What is “Reasonable“?, 126 U. Pa. L. Rev. 281, 310-315 (1977). It is therefore cost inefficient for private practitioners to devote much time to civil rights cases. Consequently, there are very few civil rights practitioners, and most of these devote only a small part of their time to such cases. Kraus, 29 Vill. L. Rev., at 633-634 (citing studies indicating that less than 1% of lawyers engage in public interest practice). Instead, civil rights plaintiffs must depend largely on legal aid organizations for assistance. These organizations, however, are short of resources and also depend heavily on statutory fees. H. R. Rep. 3; Kraus, supra, at 634; see also, Blum v. Stenson, 465 U. S. 886, 894-895 (1984).
The attorney is, in fact, obliged to advise the plaintiff whether to accept or reject the settlement offer based on his independent professional judgment, and the lawyer‘s duty of undivided loyalty requires that he render such advice free from the influence of his or his organization‘s interest in a fee. See, e. g., ABA, Model Code of Professional Responsibility EC 5-1, EC 5-2, DR 5-101(A) (1982); ABA, Model Rules of Professional Conduct 1.7(b), 2.1 (1984). Thus, counsel must advise a client to accept an offer which includes waiver of the plaintiff‘s right to recover attorney‘s fees if, on the whole, the offer is an advantageous one. Seе, e. g., Commission Op. No. 17 (1981), Advisory Opinions of the Grievance Commission of the Board of Overseers of the Bar of Maine 69, 70 (1983); District of Columbia Bar, Legal Ethics Committee, Op. No. 147, reprinted in 113 Daily Washington Law Reporter 389, 394 (1985). As the discussion in text makes clear, the plaintiff makes no sacrifice by waiving statutory attorney‘s fees, and thus a settlement offer is not made less attractive by the inclusion of a demand for a fee waiver.
See also S. Rep. 2; 122 Cong. Rec. 31472 (1976) (remarks of Sen. Kennedy); id., at 31832 (remarks of Sen. Hathaway) (“[R]ight now the vindication of important congressional policies in the vital area of civil rights is made to depend upon the financial resources of those least able to promote them“). Indeed, legal aid organizations receiving funds under the Legal Services Corporation Act,
Nor can attorneys protect themselves by requiring plaintiffs to sign contingency agreements or retainers at the outset of the representation. Amici legal aid societies inform us that they are prohibited by statute, court rule, or Internal Revenue Service regulation from entering into fee
“In any action or proceeding to enforce a provision of sections 1977, 1978, 1979, 1980, and 1981 of the Revised Statutes, title IX of Public Law 92-318, or in any civil action or proceeding, by or on behalf of the United States of America, to enforce, or charging a violation of, a provision of the United States Internal Revenue Code, or title VI of the Civil Rights Act of 1964, the court, in its discretion, may allow the prevailing party, other than the United States, a reasonable attorney‘s fee as part of the costs.” 90 Stat. 2641,
“On the other hand, the Jeff D. approach probably means that a defendant who is willing to grant immediate prospective relief to a plaintiff case, but would rather gamble on the outcome at trial than pay attorneys’ fees and costs up front, will never settle. In short, removing attorneys’ fees as a ‘bargaining chip’ cuts both ways. It prevents defendants, who in Title VII cases are likely to have greater economic power than plaintiffs, from exploiting that power in a particularly objectionable way; but it also deprives plaintiffs of the use of that chip, even when without it settlement may be impossible and the prospect of winning at trial may be very doubtful.” 246 U. S. App. D. C., at 133, 762 F. 2d, at 1112.
Since Congress has not sought to regulate ethical concerns either in the Fees Act or elsewhere, the legality of such arguments is purely a matter of local law. See Nix v. Whiteside, ante, at 176 (BRENNAN, J., concurring in judgment).sion, makes it impossible.” Report of the Third Circuit Task Force: Court Awarded Fees 38 (1985) (footnotes omitted). The Task Force reasoned: “[P]reventing agreement on fees at the time settlement of the merits is discussed . . . makes it difficult for the defendant to ascertain precisely what its liability will be, thereby eliminating the very certainty that makes settlement attractive to the defendant. The net effect . . . may be more trials, thus raising the question whether that cost is justifiable inasmuch as the conflict between settling the merits and discussing fees may be more hypothetical than real.” Ibid. (footnotes omitted).
Respondents implicitly acknowledge a defendant‘s need to fix his total liability when they suggest that the parties to a civil rights action should “exchange information” regarding plaintiff‘s attorney‘s fees. See, e. g., Committee on Professional and Judicial Ethics of the New York City Bar Association, Op. No. 82-80, p. 2 (1985); Grievance Commission of Board of Overseers of the Bar of Maine, Op. No. 17, Advisory Opinions of the Grievance Commission of the Board of Overseers of the Bar 70 (1983). If this exchange is confined to time records and customary billing rates, the information provides an insufficient basis for forecasting the fee award for the reasons stated above. If the “exchange” is more in the nature of an “assurance” that attorney‘s fees will not exceed a specified amount, the rule against waiving fees to obtain a favorable settlement on the merits is to that extent breached. Apparently, some parties have circumvented the rule against simultaneous negotiation in one Circuit by means of tacit agreements of this kind. See El Club Del Barrio, Inc. v. United Community Corps., 735 F. 2d, at 101, n. 3 (defendants’ counsel suggest that the Third Circuit‘s ban on simultaneous negotiations is “‘more honored in the breach‘“); A. Miller, Attorneys’ Fees in Class Actions 222 (1980) (“Hence even if agreements on fees are not included in settlements, the net result might be to increase informal agreements among counsel or to encourage withholding agreements on fees from the judge until after the settlement is approved“); Comment, Settlement Offers Conditioned Upon Waiver of Attorneys’ Fees: Policy, Legal, and Ethical Considerations, 131 U. Pa. L. Rev. 793, 805, n. 90 (1983) (survey of several District Judges serving in the Third Circuit finding exchanges of information being used by plaintiffs’ lawyers to “voluntarily reduce the number of compensable hours claimed as an incentive for defendant to settle“). Finally, if counsel for the plaintiffs are allowed to renege on their informal agreements, the rule against fee waivers will have been vindicated at the expense of future settlements, inasmuch as defendants will be unable to trust assurances made by plaintiffs’ counsel.
The Court is unanimous in concluding that the Fees Act should not be interpreted to prohibit all simultaneous negotiations of a defendant‘s liability on the merits and his liability for his opponent‘s attorney‘s fees. See opinion of BRENNAN, J., dissenting, post, at 762-763, 764-765. We agree that when the parties find such negotiations conducive to settlement, the public interest, as well as that of the parties, is served by simultaneous negotiations. Cf. supra, at 732-734. This reasoning applies not only to individual civil rights actions, but to civil rights class actions as well.
Although the dissent would allow simultaneous negotiations, it would require that “whatever fee the parties agree to” be “found by the court to be a ‘reasonable’ one under the Fees Act.” Post, at 754. See post, at 753, n. 6. The dissent‘s proposal is imaginative, but not very practical. Of the 10,757 “other civil rights” cases filed in federal court last year—most of which were
See Committee on Professional and Judicial Ethics of the New York City Bar Association, Op. No. 80-94, reprinted in 36 Record of N. Y. C. B. A., 507, 510 (1981) (“[T]he long term effect of persistent demands for the waiver of statutory fees is to . . . undermine efforts to make counsel available to those who cannot afford it“). Accord, District of Columbia Bar Legal Ethics Committee, Op. No. 147, reprinted in 113 Daily Wash. L. Rep. 389, 394 (1985). National staff counsel for the American Civil Liberties Union estimates that requests for fee waivers are made in more than half of all civil rights cases litigated. See Winter, Fee Waiver Requests Unethical: Bar Opinion, 68 A. B. A. J. 23 (1982).
In this regard, consider the following comment in the Final Subcommittee Report of the Committee on Attorney‘s Fees of the Judicial Conference of the United States Court of Appeals for the District of Columbia Circuit:
“Against this background, it was agreed that there were certain situations in which the refusal of defense counsel to proceed except on a package basis was improper. For instance, in a Freedom of Information Act case, where a journalist was the plaintiff and either had a reasonably good case, or had won in the district court and the government was considering appeal, it would be improper for government counsel to offer to release the documents, only if plaintiff‘s counsel agreed to waive all attorneys fees. That situation presents a grossly unfair choice to the plaintiff and his/her counsel, and permitting such offers to be made would seriously undermine the purpose of fee shifting provisions. Moreover, it would serve no end other than saving the government money which it would otherwise have to pay, yet any such saving is plainly at odds with the purpose for which the fee shifting statute was enacted.” 13 Bar Rep., at 6.
From the declarations of respondents’ counsel in the lower courts, as well as those of the District Court and the Court of Appeals, all of which are quoted in Part I, supra, we understand the District Court‘s approval of the stipulation settling the health services claims to have rested on the determination that the provision waiving attorney‘s fees and costs was fair to the class—i. e., the fee waiver was exchanged for injunctive relief of equivalent value.
We are cognizant of the possibility that decisions by individual clients to bargain away fеe awards may, in the aggregate and in the long run, diminish lawyers’ expectations of statutory fees in civil rights cases. If this occurred, the pool of lawyers willing to represent plaintiffs in such cases might shrink, constricting the “effective access to the judicial process” for persons with civil rights grievances which the Fees Act was intended to provide. H. R. Rep. No. 94-1558, p. 1 (1976). That the “tyranny of small decisions” may operate in this fashion is not to say that there is any reason or documentation to support such a concern at the present time. Comment on this issue is therefore premature at this juncture. We believe, however, that as a practical matter the likelihood of this circumstance arising is remote. See Moore v. National Assn. of Securities Dealers, Inc., 246 U. S. App. D. C., at 133, n. 1, 762 F. 2d, at 1112, n. 1 (Wald, J., concurring in judgment).
“Each negotiation, like each litigant, is unique; reasonableness can only be determined by looking at the strength of the plaintiff‘s case, the stage at which the settlement is effective, the substantiality of the relief obtained on the merits, and the explanations of the parties as to why they did what they did.” Id., at 134, 762 F. 2d, at 1113 (Wald, J., concurring in judgment).
See also the following comment in the opinion of the Final Subcommittee Report of the Committee on Attorney‘s Fees of the Judicial Conference of the United States Court of Appeals for the District of Columbia Circuit:
“[T]he purpose of such settlement offers is not, in most cases, to create an attorney-client conflict, nor to punish or deter plaintiffs’ attorneys from taking on fee shifting cases. Generally speaking, the reason that defendants make such offers is to limit their total exposure.
“The key in these situations is whether the defendant‘s offer is reasonable in light of all the circumstances, including the chances of success on the merits and the risk of possible exposure in damages and attorneys fees. And in making such determinations, the legitimate interest of the fee shifting provisions must be balanced against the legitimate interest of the defendant, whether a governmental agency or private party, in making an offer which will fix liability with considerable certainty. This balancing approach applies regardless of whether the issue is phrased in terms of the right of the defendant to make a lump sum settlement offer, or the right to refuse to pay fees to the plaintiff‘s attorney while providing some measure of relief to the client. In both situations, the inquiry is the same and can be decided only on a case by case basis, assessing the reasonableness of the defendant‘s conduct.” 13 Bar Report, at 6.
Although the record in this case does not provide us with any information concerning the amount of money that had been expended on costs, it is appropriate to note that costs other than fees may also be a significant item in class-action litigation. For example, in Moore v. National Assn. of Securities Dealers, Inc., supra, at 116-117, 762 F. 2d, at 1095, 1096, and n. 2 (opinion of MacKinnon, J.). The interest in recovering costs already expended by a class representative may justify a refusal to accept a settlement including only prospective relief and, conversely, the interest in avoiding the additional expenditures associated with continuing the litigation may also justify accepting an otherwise doubtful settlement.