Blum v. Stenson
465 U.S. 886 (1984)
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Rule of Law:
Reasonable attorney's fees under 42 U.S.C. § 1988 are to be calculated based on prevailing market rates for both private and non-profit counsel, and an upward adjustment to this fee is permissible only in rare cases of exceptional success supported by specific evidence proving the adjustment is necessary for fair compensation.
Facts:
- Under New York law, individuals who were eligible for Supplemental Security Income (SSI) were automatically eligible for Medicaid benefits.
- New York had a practice of automatically terminating Medicaid benefits for any individual who subsequently became ineligible for SSI.
- These individuals were not provided with a separate determination of their continued eligibility for Medicaid, nor were they given timely notice or an opportunity for a hearing before their Medicaid benefits were terminated.
- Susan Stenson represented a statewide class of individuals who were subject to this automatic termination policy.
- Stenson and the class were represented by attorneys from the Legal Aid Society of New York, a private, non-profit law office.
Procedural Posture:
- Susan Stenson, representing a class, filed a civil rights suit against New York Commissioner of Social Services Barbara Blum in the U.S. District Court for the Southern District of New York.
- The District Court granted summary judgment in favor of Stenson's class, ordering injunctive and declaratory relief.
- The U.S. Court of Appeals for the Second Circuit affirmed the District Court's judgment on the merits.
- Stenson's counsel then filed a motion in the District Court for attorney's fees under 42 U.S.C. § 1988, requesting a fee based on market rates plus a 50% upward adjustment.
- The District Court awarded the requested fees, including the 50% upward adjustment, for a total of $118,968.
- Blum, the petitioner, appealed the fee award to the U.S. Court of Appeals for the Second Circuit, which affirmed the District Court's award.
- The U.S. Supreme Court granted certiorari to review the methodology for calculating the fee award.
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Issue:
Does a court abuse its discretion under 42 U.S.C. § 1988 by awarding a 50% upward adjustment to a presumptively reasonable attorney's fee based on conclusory factors such as complexity, novelty of the issues, and quality of representation, without specific evidence that these factors were not already reflected in the initial fee calculation?
Opinions:
Majority - Justice Powell
Yes. A court abuses its discretion by awarding an upward adjustment to a presumptively reasonable fee without a showing by the applicant, supported by specific evidence, that such an adjustment is necessary to provide fair and reasonable compensation. First, the Court held that attorney's fees under § 1988 for non-profit legal services organizations should be calculated using prevailing market rates, not a cost-based method. The legislative history of the statute clearly indicates that Congress intended fees to be governed by the same standards as other complex federal litigation, which used market rates, and made no distinction between private and non-profit counsel. Second, the Court reasoned that the product of reasonable hours multiplied by a reasonable hourly rate, known as the 'lodestar', is presumed to be the 'reasonable fee' authorized by the statute. While an upward adjustment may be justified in 'some cases of exceptional success,' the burden is on the fee applicant to prove its necessity. In this case, the reasons cited by the District Court for the 50% bonus—novelty and complexity of issues, quality of representation, benefit to the class, and riskiness—were improper. Novelty and complexity are already reflected in the number of hours billed, and the quality of representation is generally reflected in the hourly rate. An upward adjustment for these factors constitutes impermissible double counting unless specific evidence shows the lodestar fee is unreasonably low. As the respondent provided no evidence to justify the enhancement, the base fee of $79,312 was fully compensatory, and the upward adjustment was an abuse of discretion.
Concurring - Justice Brennan
Justice Brennan concurred, agreeing with the Court's reasoning and judgment. He wrote separately to reaffirm his view that the risk of not prevailing in a case is a proper basis for a district court to award an upward adjustment to an otherwise compensatory fee, although it was not justified on the record in this particular case. He argued that the legislative history of § 1988, which cited cases like Johnson v. Georgia Highway Express, Inc., explicitly listed the contingent nature of a fee as a relevant factor. Allowing for such an adjustment aligns with the market-based approach, as private attorneys charge higher rates when compensation is contingent on success. This ensures that fees under § 1988 remain adequate to attract competent counsel to represent clients in civil rights cases.
Analysis:
Blum v. Stenson firmly established the 'lodestar' method (reasonable hours times a reasonable market rate) as the cornerstone for calculating attorney's fees under § 1988, applying it equally to both private and non-profit law offices. This decision standardized fee calculations and prevented a lower, cost-based standard for legal aid organizations, thereby encouraging them to litigate civil rights cases. Most significantly, the ruling substantially raised the bar for obtaining upward adjustments or 'bonuses.' By placing a heavy evidentiary burden on the fee applicant to prove 'exceptional success' not already captured by the lodestar, the Court curtailed the discretionary power of lower courts to award enhancements, making them a rare exception rather than a common practice.
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