Perdue v. Kenny A.
559 U. S. ____ (2010) (2010)
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Rule of Law:
Under federal fee-shifting statutes, an attorney's fee award calculated by the lodestar method (reasonable hours multiplied by a reasonable hourly rate) is strongly presumed to be sufficient and may only be enhanced based on superior performance and results in rare and exceptional circumstances.
Facts:
- Children in the Georgia foster-care system, represented by their next friends, brought a class action lawsuit against the Governor of Georgia and other state officials.
- The lawsuit alleged that systemic deficiencies in the foster-care system in two counties near Atlanta violated the children's federal and state constitutional and statutory rights.
- The class action was filed on behalf of approximately 3,000 children in foster care.
- The parties engaged in mediation, which resulted in a comprehensive consent decree that resolved all substantive issues of the case.
- The consent decree left open only the issue of the amount of 'reasonable attorney's fee' the plaintiffs' counsel were entitled to recover under 42 U.S.C. § 1988.
Procedural Posture:
- Respondents (children in foster care) filed a class action lawsuit against Petitioners (Georgia state officials) in the U.S. District Court for the Northern District of Georgia.
- Following mediation and a consent decree, Respondents' counsel submitted a fee request for over $14 million, which included a lodestar calculation and a 100% enhancement.
- The District Court calculated a lodestar of approximately $6 million and awarded a 75% enhancement, resulting in a total fee award of approximately $10.5 million.
- Petitioners appealed the fee award to the U.S. Court of Appeals for the Eleventh Circuit.
- A three-judge panel of the Eleventh Circuit affirmed the District Court's award.
- The Eleventh Circuit denied a petition for rehearing en banc.
- The U.S. Supreme Court granted certiorari to review the issue of the fee enhancement.
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Issue:
Under federal fee-shifting statutes, may a court enhance an attorney's fee award above the presumptively reasonable lodestar amount based on superior performance and results?
Opinions:
Majority - Justice Alito
Yes, an attorney's fee award may be enhanced above the lodestar amount, but only in rare and exceptional circumstances where the lodestar is not adequate to attract competent counsel. There is a strong presumption that the lodestar figure is reasonable and already accounts for most relevant factors. An enhancement cannot be based on factors already subsumed in the lodestar, such as the novelty of the case, the complexity of the issues, or the quality of the attorney's performance, as these are typically reflected in the hours billed and the hourly rate. Enhancements require specific evidence and objective calculation, and may be appropriate only in a few circumstances, such as when the lodestar method fails to capture an attorney's true market value, or for extraordinary outlays of expenses or exceptional, unanticipated delays in payment. The District Court's 75% enhancement in this case was essentially arbitrary and lacked the specific, reviewable justification required.
Concurring - Justice Kennedy
Yes. While rejecting an absolute bar on enhancements is proper, it must be understood that the 'rare' and 'exceptional' circumstances required for such an award are presented only in the rarest of situations. This strict standard is necessary to maintain the integrity and objectivity of the fee-awarding process.
Concurring - Justice Thomas
Yes. The Court correctly holds that a lodestar fee may be enhanced for attorney performance in rare and exceptional circumstances, consistent with precedent. However, the Court's strict limitations on such enhancements preserve prior cases and continue a judicial trend against them. The lodestar calculation will, in virtually every case, already incorporate all indicators of attorney performance relevant to a fee award, making enhancements almost always unnecessary.
Concurring-in-part-and-dissenting-in-part - Justice Breyer
Yes, a fee enhancement based on superior performance and results is permitted in extraordinary circumstances, and I agree with the Court on this central holding. However, I dissent from the Court's decision to review the specific application of this rule to the facts of this case, a fact-intensive inquiry best left to the district court. The District Court judge, who witnessed the entire litigation, did not abuse his discretion in determining this was an exceptional case involving a broken foster-care system, difficult litigation, and extraordinary results that justified an enhancement. The appellate court's judgment affirming the District Court should have been upheld.
Analysis:
This decision significantly tightens the standards for awarding attorney's fee enhancements under federal fee-shifting statutes, reinforcing the strong presumption that the lodestar amount is sufficient. By requiring specific, objective evidence for any enhancement and disallowing factors like 'quality of performance' that are already subsumed in the lodestar, the Court makes such enhancements exceedingly difficult to obtain. This ruling increases predictability for defendants, particularly government entities paying fees from public funds, but may reduce the financial incentive for attorneys to take on exceptionally complex or high-risk civil rights litigation where the potential for a large, successful outcome might otherwise have been a motivating factor.
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