Nilsen v. York County

District Court, D. Maine
400 F. Supp. 2d 266 (2005)

ELI5:

Rule of Law:

In a class action resulting in a common fund, the preferred method for determining a reasonable attorney's fee is a market-mimicking analysis that seeks to award counsel the market price for legal services, rather than a subjective multi-factor test.

Facts:

York County Jail maintained a policy of strip-searching arrestees upon their admission.
These strip searches were conducted as a blanket policy, without individualized suspicion that a particular arrestee was concealing weapons or contraband.
Numerous individuals processed at the jail were subjected to these strip searches.
The arrestees alleged that this policy violated their Fourth Amendment right to be free from unreasonable searches.

Procedural Posture:

Individuals sued York County in the U.S. District Court for the District of Maine, alleging unconstitutional strip searches.
The district court granted the plaintiffs' motion for class certification under Federal Rule of Civil Procedure 23(b)(3).
York County (defendant-appellant) appealed the class certification order to the U.S. Court of Appeals for the First Circuit.
The First Circuit affirmed the district court's class certification.
Following mediation, the parties reached a settlement agreement creating a $3.3 million common fund.
Plaintiffs' counsel filed a motion for attorney's fees, requesting 30% of the settlement fund.
After a final fairness hearing, the district court approved the settlement but reserved its ruling on the motion for attorney's fees.

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Issue:

Should a court determine a reasonable attorney's fee from a class action common fund by applying a multi-factor test or by using a market-mimicking analysis to approximate the fee that would have been negotiated at the outset of the litigation?

Opinions:

Majority - Hornby, District Judge

A court should use a market-mimicking analysis. This method is preferred over the multi-factor approach because it provides a more objective, predictable, and externally constrained standard for determining reasonable attorney's fees. The court rejected the multi-factor test, used by a majority of circuits, as offering little predictability and allowing for 'uncabined discretion' by the awarding judge. Instead, it adopted the Seventh Circuit's market-mimicking approach, which aims to determine 'what the lawyer would receive if he were selling his services in the market rather than being paid by court order.' To apply this analysis, the court examined available market data, including standard contingency fees, statutory fee caps in other areas of law like medical malpractice, and awards in similar strip-search class actions. Based on this data, the court concluded a 25% fee was reasonable, reducing the attorneys' 30% request but acknowledging their exemplary performance.

Analysis:

This decision establishes a significant precedent within the District of Maine by formally adopting the minority Seventh Circuit 'market-mimicking' approach for calculating attorney's fees in common fund cases. It explicitly critiques and rejects the more widely used multi-factor tests as being too subjective and arbitrary. This ruling shifts the paradigm for future class action fee petitions in the district, signaling that counsel must provide concrete, market-based evidence to support their fee requests, rather than relying on qualitative arguments about the case's complexity or their performance.

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