Courts Move Reduction or Rejection of Attorney Fees | KingSpry

Courts Move Toward Reduction Or Rejection In Attorney Fee Cases

Photo of attorney Brian J. Taylor

Posted on October 18th, 2018
by Brian J. Taylor

In yet another move toward greater and more stringent scrutiny, the Third Circuit recently held in a series of cases that an attorney fee request by a prevailing party can be so out of proportion to the claims pursued to merit a reduction or in some instances, so outrageous that a reviewing court is entitled to reject the entire request and award nothing at all.

Many civil rights laws and other federal statutes that apply directly to school districts such as the Individuals with Disabilities Education Act and The Rehabilitation Act of 1973 colloquially known as “Section 504” contain provisions that award reasonable attorneys’ fees to the prevailing party.

Originally thought of as a way to address constitutional violations and claims that might not otherwise be pursued, in practice these provisions have often had the effect of deterring school districts from defending legitimate legal positions because of the fear of liability from an outrageous fee request.  Such fee-shifting runs counter to the typical American Rule where each party bears the cost of their own attorney fees regardless of the outcome of the case, unless there is a statute or agreement between the parties to do otherwise.

Attorneys’ fees are calculated under what is known as the lodestar method, which multiplies the actual number of hours spent in pursuing the claim by a reasonable rate.

Under this lodestar method, the party seeking attorneys’ fees has the burden to prove its request is reasonable. A reviewing court will look at a number of factors including the reasonable fee rate of similarly experienced attorneys in the area and complexity of the litigation as well as an examination for items that appear excessive, vague, redundant or otherwise unnecessary.

Key to the determination in education cases is the measurement of success at trial and the concept of proportionality.  Plaintiffs often file complaints alleging various claims or violations by  the school district or intermediate unit in providing a Free and Appropriate Education (FAPE) as mandated by Congress. It is a standard statement of the law regarding fee request that where a party does not succeed on all of their claims, the court has the discretion to reduce the fee accordingly. To be considered a prevailing party, the Plaintiff must succeed on some significant issues that materially changes the relationship between the district and the student.

M.D. v. Shamokin Area School District is one such case where the court underscored the impact of proportionality on attorney fee determinations. In M.D., Plaintiffs filed a nine-count complaint alleging failure to provide FAPE. After two days of testimony, the hearing officer condensed the detailed complaint to five issues and determined that the Plaintiffs had only prevailed with respect to one violation or 20% of their claims. Using this reasoning, the court reduced the attorneys’ hours expended and the fee award by 80%.

The greater scrutiny accorded these requests has also led to a formalizing of the rule followed in other circuits of allowing an outright rejection where the attorney fee request is outrageous in proportion to the success achieved.

In a recently decided case, the Third Circuit of Appeals examined one of the most blatant attempts to improperly fee shift. Young v. Smith was a case brought in 2007 against a school district and a teacher by a group of students regarding the improper and inappropriate conduct of the teacher. The first trial resulted in a favorable verdict for the Plaintiff that was vacated as a result of egregious misconduct by their attorney that had prejudicially influenced the jury during the trial. The second trial ended with a complete defense verdict for the school district. The third trial including the remaining defendant, the teacher, ended in a settlement for $25,000.

Plaintiff’s counsel subsequently submitted a fee petition requesting $733,002.23. At the fee petition hearing, Plaintiff’s counsel argued that she was free to submit whatever amount she wanted and it was up to the Court and Defendants to parse through the bills. The request also contained hundreds of inappropriate, unethical and likely illegal entries billed to the client. Moreover, Plaintiff’s counsel attempted to recover for activities related to the vacated first trial, the second trial in which she lost as well as fees relating to the school district in the third trial in which it was not involved. Plaintiff’s counsel also declined an invitation from the Court to submit an amended fee petition with the District Court noting, “I was transported to a universe devoid of legal principles and fundamental notions of relevance”.

After initially attempting to line item review the bill itself, the District Court eventually abandoned the review of the numerous and lengthy inappropriate entries, concluding that many of the requests were outright fraudulent. The District Court’s opinion, which was 136 pages long, outlined Plaintiff’s counsel’s misconduct and previous warnings given to her regarding prior requests and practice in other cases.

In denying the fee petition, the Young court cited the Federal Rules of Civil Procedure which mandates that attorneys be scrupulously honest in their representations to the court.  The Court even noted that they have discretion to outright deny the petition where the request is “so excessive that it shocks the conscience of the Court.”

The court then decided that the instant case involved conduct that was so egregious and blatant that it would join in with several other sister District Courts of Appeals which have held that a court may exercise its discretion and deny a request for attorney’s fees in toto where the request was so outrageously excessive that it shocks the conscience of the court. The Third Circuit determined that the conduct of Plaintiff’s counsel in Young was such as example and that it warranted a rejection of the total fee request and moreover justified the imposition of  sanctions in the aggregate amount of $25,000  upon the attorney.

In Clemens v. New York Central Mutual Insurance, the Third Circuit again rejected the total fee request where the prevailing counsel relied on time records that were reconstructed after the fact, contained tasks that were purely “clerical in nature” and incredibly vague. The trial court had been particularly disturbed that trial counsel had been unprepared during trial and even failed to submit routine affidavits in support of their own requests identifying their rates or describing their experience level. The Clemens’ court originally reduced the fees to only 13% of the $950,000 request before exercising its discretion to award no fee at all.

Bottom Line for Schools

The bottom line is that these cases signal a new diligence and a higher level of scrutiny given to claims for prevailing fees. The take-away for educational institutions from these cases is that: 1) a careful determination of the ultimate relief granted should be reviewed 2) school districts and their trial counsel should not just accept a fee demand without a detailed itemization and 2) districts should have their attorneys obtain a review of the fee request by someone knowledgeable with rates that are considered acceptable and reasonable.

If your school has a question, please contact your legal counsel or one of the attorneys at KingSpry.

 

This School Law Bullet is a publication of the KingSpry Education Law Practice Group. John E. Freund is our editor. It is meant to be informational and does not constitute legal advice.