City of Burlington v. Dague
505 U.S. 557 (1992)
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Rule of Law:
Federal fee-shifting statutes that authorize courts to award 'reasonable attorney's fees' to a prevailing party do not permit an enhancement of the fee award above the lodestar amount to reflect the fact that the attorneys were retained on a contingent-fee basis.
Facts:
- Ernest Dague, Sr. owned land in Vermont adjacent to a landfill.
- The landfill was owned and operated by the City of Burlington.
- Dague retained attorneys on a contingent-fee basis, meaning they would only be paid if the lawsuit was successful.
- Dague sued the City of Burlington, alleging that its operation of the landfill violated federal environmental laws.
Procedural Posture:
- Ernest Dague sued the City of Burlington in the U.S. District Court for the District of Vermont.
- The District Court found that Burlington had violated the Solid Waste Disposal Act and the Clean Water Act.
- The court determined Dague was a 'substantially prevailing party' and calculated a 'lodestar' attorney's fee of $198,027.50.
- The District Court then applied a 25% 'contingency enhancement,' increasing the award by $49,506.87.
- The City of Burlington, as appellant, appealed the fee award to the U.S. Court of Appeals for the Second Circuit.
- The Court of Appeals affirmed the District Court's judgment, upholding the 25% contingency enhancement.
- The U.S. Supreme Court granted certiorari limited to the question of whether a contingency enhancement was permissible.
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Issue:
Do federal fee-shifting statutes, such as the Solid Waste Disposal Act and the Clean Water Act, permit a court to enhance a 'reasonable attorney's fee' award above the lodestar amount to reflect the risk of nonpayment in a contingent-fee arrangement?
Opinions:
Majority - Justice Scalia
No. Enhancement for contingency is not permitted under the fee-shifting statutes at issue. There is a strong presumption that the 'lodestar' figure—the product of reasonable hours times a reasonable rate—represents the 'reasonable' fee. An enhancement for contingency would impermissibly duplicate factors, such as the difficulty of the case, that are already subsumed in the lodestar calculation through either the number of hours expended or the higher hourly rate of a skilled attorney. Furthermore, enhancing fees based on the risk of losing would create a perverse incentive to bring nonmeritorious claims, as the lowest-merit cases would receive the highest risk multiplier. Finally, allowing contingency enhancements would be inconsistent with the Court's general rejection of the contingent-fee model for statutory fee awards and would undermine the goal of ready administrability by creating complex and litigable satellite litigation over fees.
Dissenting - Justice Blackmun
Yes. A 'reasonable' fee should be a 'fully compensatory fee' calculated based on prevailing market practices, and the market compensates attorneys for taking on the risk of nonpayment in contingent-fee cases. The purpose of fee-shifting statutes is to attract competent counsel to enforce important federal laws, particularly in civil rights and environmental cases. By refusing to compensate for contingency risk, the Court makes these cases less remunerative than private litigation, meaning prudent attorneys will avoid them, thereby undermining the enforcement mechanism Congress intended. The majority's concern about paying for losing cases is misplaced because the fee is awarded to the prevailing party, not the attorney, and the issue is the amount of the reasonable fee, not eligibility for it.
Dissenting - Justice O'Connor
Yes. A 'reasonable' attorney's fee must sometimes incorporate an enhancement for contingency to provide a sufficient incentive to attract competent counsel to take a case in the first place. When faced with a choice, an attorney will always choose a fee-paying client over a contingency client unless the latter can promise an enhancement to offset the risk of nonpayment. However, such an enhancement should be based on the general market treatment of contingent-fee cases as a class, not on the specific riskiness of an individual case. Because the lower courts based the 25% enhancement on case-specific factors, the judgment should be vacated and remanded for a proper market-based assessment.
Analysis:
This case definitively settled a question left open in Pennsylvania v. Delaware Valley II, establishing a bright-line rule against contingency enhancements under federal fee-shifting statutes. By rejecting any enhancement to the lodestar for contingency risk, the Court prioritized a simple, administrable standard for fee awards over an approach that attempts to replicate private market incentives. This holding simplifies fee litigation but, as the dissenters warned, may diminish the financial incentive for private attorneys to represent plaintiffs in high-risk but meritorious public interest cases, potentially impacting the enforcement of civil rights and environmental laws.
