In 2001, the U.S. Supreme Court reversed a long-standing rule
that allowed attorneys' fees in civil rights cases where the
lawsuit was a "catalyst" for remedial actions, even if there was no
court order or decision on liability. See Buckhannon Bd. and
Care Home v. West Virginia Dept. of Health and Human
Resources.1
The Court held that a plaintiff had to obtain a "judicially
sanctioned change in the legal relationship of the
parties"2 in order to be considered a prevailing party
and obtain fees. The Buckhannon Court identified two,
non-exclusive examples of situations that would satisfy the new
prevailing party test: judgments on the merits and formal
court-ordered consent decrees. Voluntary changes in conduct by the
defendant and private settlement agreements over which the court
did not retain enforcement authority would not
suffice.3
Most of the circuits interpreted the decision liberally, and
awarded fees in a variety of situations where there was no formal
consent decree, provided that the settlement is endorsed by the
court and is judicially enforceable.4 The First Circuit
initially appeared to apply Buckhannon more literally, and
reversed a fee award in a case presenting unique facts. See
Aronov v. Napolitano.5 In Hutchinson v.
Patrick,6 the First Circuit has aligned itself with
most of the other courts of appeals and made clear that attorney's
fees are available where the district court approves the settlement
and retains jurisdiction to enforce it.
Hutchinson in the district court
The case
The plaintiffs in Hutchinson, represented by counsel
from the Center for Public Representation and WilmerHale LLP,
brought a class action on behalf of more than 9,000 individuals in
Massachusetts with acquired brain injuries who were inappropriately
institutionalized in nursing facilities. The amended complaint
sought to compel the commonwealth to develop rehabilitative
services in integrated community settings for class members, based
upon claims under the Americans with Disabilities Act and the
Medicaid Act.
At the outset, the defendants vigorously contested all aspects of
the case, including venue, class certification, procedural motions
and discovery. After losing all of these issues, the defendants
proposed a settlement process. Following six months of intensive
negotiations, the parties signed a comprehensive settlement
agreement.
The settlement
The agreement requires the defendants to create an entirely new
community service system for persons with brain injuries, including
new integrated services, new rights, new procedural protections,
new quality safeguards, new monitoring programs and new data
collection methods. The agreement also provided that, to become
effective, it had to be approved by the district court after a
fairness hearing pursuant to Fed. R. Civ. Pro. 23(e), and then
would be subject to the court's ongoing enforcement authority. The
court could dismiss the case only when it determines that
the defendants have complied with the agreement.
At the conclusion of the fairness hearing, the court invited the
parties to submit a proposed order approving the agreement. The
plaintiffs wanted the order to explicitly state that the court
retains enforcement jurisdiction. The defendants opposed this
provision and requested, instead, that the order make clear that
the agreement was not a consent decree. In the end, the court
entered an order approving the agreement, "noting that the parties
agree that the agreement does not constitute a consent decree, and
that the court will retain jurisdiction over the case … and that
judgment not enter pending compliance with the terms of the
Comprehensive Settlement Agreement."
The district court's fee decision
The plaintiffs filed a motion for an award of attorney's fees.
They supported their motion with lengthy affidavits from
co-counsel, fee experts, brain injury experts and experienced
private and public interest attorneys in the Boston area, as well
as detailed time records for all counsel. The defendants opposed
the motion, arguing that the plaintiffs were not prevailing parties
under Buckhannon, as applied by the First Circuit in
Aronov, and thus were not entitled to any fees.
In the alternative, the defendants asserted that the plaintiffs
were not entitled to their requested fees, both because the time
they expended was not compensable and because their requested rates
were too high. Other than a two-page published billing survey, the
defendants did not include any evidence in their opposition.
On Feb. 8, 2010, the district court issued its
decision.7 After a careful review of Buckhannon
and Aronov, the lower court concluded that there was
sufficient judicial approval and oversight of the agreement to
satisfy the judicial imprimatur requirement, and, therefore, the
plaintiffs were entitled to fees.
Reading the agreement and its approval order together, the
district court held that: (1) the label of the agreement, and the
fact that it was not a consent decree, was not determinative of
prevailing party status; (2) the approval of the agreement by the
court was the critical factor that altered the legal relationship
between the parties, since without the court's approval, the
agreement would be null and void; (3) the court had carefully
considered the merits of the plaintiffs' claims in determining that
the agreement was fair, adequate, and reasonable at the fairness
hearing; (4) the provisions of the agreement create binding
obligations that can only be modified by the court; (5) the
agreement is fully enforceable by the court, through all available
equitable remedies, including contempt; and (6) the court retains
jurisdiction over the agreement to ensure and determine
compliance.
Finally, the district court determined, in an exercise of its
discretion, that the time expended by the plaintiffs' counsel was
well documented and reasonable in light of the litigation activity,
the negotiation process and the success obtained. It also found
that the hourly rates were more than reasonable, were considerably
lower than the market rates of the plaintiffs' private attorneys,
and were consistent with hourly rates recently awarded to many of
the same counsel and the same firms. The district court awarded the
plaintiffs the full amount of their requested fees and costs.
Hutchinson in the First Circuit
The defendants' appeal
The defendants, relying upon Buckhannon and
Aronov, argued that the plaintiffs were not prevailing
parties and, therefore, not entitled to any fees. They contended
that under Aronov, the only relevant document for
determining prevailing party status was the court's order. They
asserted that, while the order approved the agreement and retained
jurisdiction of the case pending the defendants' compliance with
the terms of the settlement, the order itself "did not require the
defendants to do anything [and] defendants would not violate the
district court's order … even if they violated the terms of the
agreement."8 As such, the defendants maintained that the
order was not the functional equivalent of a consent decree and did
not provide the necessary judicial imprimatur to satisfy either
Aronov or Buckhannon.
The defendants also claimed that the plaintiffs had not yet
prevailed because the case was ongoing and, pursuant to the
explicit terms of the agreement, there were certain contingencies
that could result in the case being reopened and
litigated.9
Finally, the defendants argued that the amount of the district
court fee award was excessive, because the rates were too high and
because it compensated the plaintiffs for unnecessary and
duplicative work.
The plaintiffs' response
The plaintiffs responded that the order must be evaluated in
conjunction with the provisions of the agreement to assess whether
the three Buckhannon criteria identified in
Aronov were satisfied: that the change in the legal
relationship of the parties must be court ordered, that judicial
approval of the relief must reflect an assessment of the merits,
and that there be continuing judicial oversight and enforcement of
the settlement. Because the agreement specifically required court
approval before it became operative, the plaintiffs claimed that
first prong of the test was met. Because the court engaged in a
searching assessment of the merits in order to determine if the
agreement was fair and reasonable, the second prong of the test was
satisfied. And because the court explicitly kept the case open
pending compliance by the defendants with their obligations under
the settlement, the third prong of the prevailing party test was
met.
In addition to a careful analysis of both Buckhannon and
Aronov, the plaintiffs and numerous amici
10 provided the court with a comprehensive analysis of
the decisions of the other circuit courts of appeal regarding the
application of Buckhannon to settlement agreements that
were not entered as formal consent decrees. That review
demonstrated that the district court's fee award would be affirmed
in nine of the 10 circuits that had addressed the issue.
Finally, plaintiffs responded to the defendants' attack on the
amount of the fee award. Pointing to the extensive documentation in
the record supporting the fee award and the dearth of evidence to
the contrary, the plaintiffs asserted that the district court's
award was appropriate, and certainly not a manifest abuse of
discretion.
The First Circuit decision
The First Circuit issued its decision on Feb. 17, 2011,
affirming the district court's decision in all respects. Judge
Selya, writing for the panel, first addressed the prevailing party
issue. Describing the defendants' efforts to get the court to "look
exclusively at the approval order" and ignore the agreement as "too
crabbed a reading of Aronov" and "myopic," the court
reemphasized that "judicial imprimatur can only be determined by
determining the content of the order against the entire context
before the court."11
The court then turned to the three-part test for judicial
imprimatur it had set forth in Aronov. Largely following
the plaintiffs' arguments and the district court's analysis, the
court noted that the agreement specifically required court approval
to become operative, and concluded that "this is a situation in
which the court order triggers the change in the [legal]
relationship between the parties, not one in which the court merely
recognizes what the government has voluntarily agreed to
do."12
Turning to the second prong of the Aronov test - whether
there has been "judicial approval of the relief vis a vis the
merits"13 - the court found that class action approvals
under Rule 23(e) are "strikingly similar to a court's role in
entering a consent decree."14As a result, the district
court's order, entered after a fairness hearing, constituted "a
sufficient appraisal of the merits for purposes of the imprimatur
requirement."15
The appeals court then turned to the third prong of the imprimatur
test - "whether there exists an obligation to comply and the
provision of judicial oversight to enforce the
obligation."16
Noting that the district court order, as well as the agreement,
explicitly provided that the district court retains jurisdiction to
hear and adjudicate noncompliance motions, the appeals court easily
concluded that this final prong of the inquiry was satisfied.
The First Circuit then addressed the defendants' argument that the
fee application was premature because the case was ongoing and no
final judgment had entered. Rather than focusing on the
formalities, such as the entry of a final judgment, the court
instead chose to "focus on function over form."17
Finding that as a result of the entry of the agreement, the
litigation had reached a significant plateau and was no longer
currently being litigated, the court concluded that "the
litigation, as a practical matter, has drawn to a
close."18
The appeals court quickly disposed of the defendants' challenge to
the reasonableness of the award, stating: "In light of the
supporting documentation provided by the plaintiffs and the
Commonwealth's failure to produce or point to contradictory
evidence, we conclude that the district court did not abuse its
discretion in fashioning a fee award premised on the suggested
rates."19
Conclusion
The First Circuit decision in Hutchinson has clarified
the approach to determining prevailing party status in cases
resolved by settlements and has clearly aligned the First Circuit
with the majority of other circuits which authorize fees for
settlements if they are approved by the court after an assessment
of merits and include judicial oversight and enforcement. At least
with respect to class actions, the Rule 23(e) approval following
the fairness hearing should generally suffice to satisfy the court
approval and assessment of the merits prong.
In cases that are not class actions, counsel needs to be sensitive
to this requirement and structure the settlement in a way that
ensures sufficient court review and approval. As Aronov
made clear, the court's approval of a settlement without any
indication that the court undertook an assessment of the merits
will not suffice. Ensuring ongoing court jurisdiction to enforce
the terms of the agreement is also essential. While obtaining fees
for cases that settle will continue to pose challenges for
plaintiffs' counsel, the Hutchinson decision does provide
a path to follow to establish prevailing party status in such
circumstances.
With respect to challenges to the amount of fees,
Hutchinson reemphasized the importance of carefully
documenting both the time reasonably expended and the
reasonableness of the rates requested. And it made clear that
defendants challenging fee awards must marshal evidence, not just
argument, to rebut the plaintiffs' documentation.
1532 U.S. 598 (2001).
2Id. at 605.
3Id. at 604 n.7, 605.
4See, e.g., Roberson v. Guiliani, 346 F.3d 75,
81 (2d Cir. 2003); Carbonell v. Immigation & Naturalization
Service, 429 F.3d 894, 899 (9th Cir. 2005); Truesdell v.
Philadelphia Housing Authority, 290 F.3d 159 (3d Cir.
2002).
5562 F.3d 84, 88 (1st Cir. 2009), cert denied
130 S.Ct. 1137 (2010).
6No. 10-1268, 2011 WL 540538 (1st Cir. Feb. 17,
2011).
7683 F. Supp. 2d 121 (D. Mass. 2010).
8Brief of the Defendants-Appellants at 21.
9Most notably, if the defendants could not obtain
necessary approval from the federal Center for Medicare and
Medicaid Services or funding from the Massachusetts Legislature to
develop the needed community services and supports, the parties
could move to vacate the settlement and proceed to trial.
10Recognizing the importance of the issue to civil
rights enforcement, the firm of Foley Hoag LLP donated its services
to represent a broad array of amici, including national,
regional and local public interest advocacy organizations, in
support of the plaintiffs' entitlement to fees.
11Hutchinson, 2011 WL at *4 (emphasis in
original) (internal quotation marks omitted).
12Id. (internal quotation marks
omitted).
13Id. at *5.
14Id.
15Id.
16Id.
17Id. at *7.
18Id.
19Id. at *12. The rates awarded by the
district court and affirmed by the First Circuit ranged from
$425/hr. for lead counsel from the Center for Public Representation
and the senior partner from WilmerHale to $275 for an attorney at
the center with approximately 10 years of experience.