Supreme Court Ruling Limits Cost Shifting Attorneys' Fees for Plaintiffs

Article excerpt

In the Supreme Court decision, Chief Justice Rehnquist wrote, "A defendant's voluntary change in conduct, although perhaps accomplishing what the plaintiff sought to achieve by the lawsuit, lacks the necessary judicial imprimatur on the change." Someone who does not win in court does not prevail, according to the opinion.

Last week, the United States Supreme Court dealt a setback to litigants who have counted on being reimbursed by the other side for their legal fees if their lawsuits, brought under federal law, accomplished their goals.

By a 5-to-4 vote, the court ruled that the fee-shifting provisions of these laws do not apply in the absence of an actual courtroom victory or court-approved settlement agreement. Litigation that only serves as a "catalyst" for a policy change, without producing a legal ruling, does not qualify for reimbursement of fees, the majority said in an opinion by Chief Justice William H. Rehnquist. Some 100 federal laws, including most civil rights and environmental statutes, allow judges to award lawyers' fees to plaintiffs who are the prevailing parties. The theory behind this departure from the traditional rule under which each side pays its own costs is that the plaintiffs are serving a role in the legal system that extends beyond their own interests, acting as "private attorneys general" to vindicate federally guaranteed rights.

For cities and towns, the ruling represents a victory. The catalyst theory relied upon by petitioners in this case and plaintiffs in countless other cases has the potential to be the basis for extortive strike suits that are designed principally to obtain attorney's fees in instances in which municipalities might otherwise have changed their laws without regard to the existence or non-existence of litigation on the issue in question.

Moreover, the catalyst theory is unworkable and potentially greatly disruptive to the operation of local governments. For example, how does a plaintiff prove that his or her lawsuit was the "catalyst" for a change in the law? Will affidavits or statements to the press from a few legislators suffice? Must plaintiffs counsel take the deposition of every member of the city council or state legislature in order to prove that his lawsuit was the "catalyst" for or "cause" of a change in the law?

The ruling came in a case from West Virginia, which had a law requiring that assisted-living or other residential facilities accept only those residents who were capable of "self-preservation," with enough mobility to escape in case of fire. Threatened with dosing by a fire marshal because some residents did not meet the requirement, a group of homes sued the state for violating the Americans with Disabilities Act and a federal fair housing law. More than a year after the plaintiffs filed their suit, the West Virginia State Legislature repealed the self-preservation regulations. West Virginia moved to dismiss the suit as moot; the district court granted the motion.

The plaintiffs then moved to recover their attorney's fees. Plaintiffs claimed that they were entitled to fees because their lawsuit had been the "catalyst" for the repeal of the state's self preservation regulations. …