Civil Procedure Class Notes 11/12/03

 

They didn’t fix the other projector!  Boooo!  Fairman’s not surprised.

 

Fairman’s starting late again.

 

Next Monday, we’ll meet at 10 AM and 11 AM.

 

More on financing litigation!  We talked about contingency fees.  We also talked about hourly fees.  That’s how a lot of corporate work is done.  Some basic work is done by flat fee, like divorce, petty crime, wills, and stuff like that.  Some legal work is done pro bono.  Insurance is also a source of funding.

 

Fee shifting

 

The American Rule says that everyone pays for their own lawyers.  However, we have some elements of fee shifting (like the English Rule) embedding in our fee structure.  The clearest example is in civil rights litigation.  42 U.S.C. § 1988(b) says that the court may allow the prevailing party in a civil rights suit to get the opposing party’s attorney’s fees.  The Supreme Court has interpreted “the prevailing party” to mean “the prevailing plaintiff”.

 

Why would Congress create a statute like this?  Maybe Congress is trying to create incentives.  Congress favors civil rights and favors civil rights litigation as a way to achieve civil rights.  Therefore, they’ll give you extra incentive to bring these kinds of lawsuits.  Congress also wants to “pile on” the defendant.

 

Remember that fees are not the same thing as costs!


Say you have a client who was fired from their job.  They were fired both in breach of an employment contract and in violation of his civil rights.  So you sue under both, and you make sure that you include the civil rights claim so you can get your fees.  The thing is, if you file the civil rights claim in state court, it could get removable to federal court.  If that’s not what you want, you better watch out.  In fact, it’s probably better to file in federal court in the first place.

 

FRCP Rule 54(d) says that generally you’ll get costs other than fees if you win (whether you’re the plaintiff or the defendant).  You would never bother filing a motion for costs because the costs they’ll let you recover are so minimal.

 

Rule 68 and Fee Shifting Statutes

 

FRCP Rule 68 allows defendants to cap their liability for certain costs by making a settlement offer before trial.  Say a defendant makes you an offer of judgment under Rule 68.  If I accept, we’re done.  If I reject it, we’re done.  If, at trial, I get more than the defendant offered to settle for, then that’s fine.  But, on the other hand, if I get less than the defendant offered, I don’t get my costs, and in fact I must pay the defendant his costs.  The idea is that I should have taken the offer when I should have.

 

This rule doesn’t explicitly say “attorney’s fees”.  But what if we put this rule in a civil rights context?  We’ll get back to that.

 

In an ordinary piece of federal litigation, the defendant makes a good faith offer of judgment.  If the plaintiff accepts, that’s the end of the case.  If not, the case goes on to judgment.  There are two possible results: the plaintiff gets more than the offer and recovers costs.  If the plaintiff gets less than the offer, the plaintiff gets their costs up to the point of the offer, but not any of their costs after that offer.  In fact, the plaintiff has to pay the defendant’s costs from that point on.

 

This doesn’t usually have a big impact, but it could if we’re dealing with a fee shifting statute.

 

Say you’re under 42 U.S.C. § 1988(b).  Fees are defined as costs.  Say you reject a Rule 68 offer and then there’s a judgment for the plaintiff.  If the judgment is for more than the initial offer, the plaintiff gets costs including attorney’s fees.  However, if the judgment for the plaintiff is less than the initial offer, the plaintiff gets costs, including fees, up to the time of the offer, but the plaintiff pays the defendant’s costs not including fees for the post offer period.  In that way, the defendant, by making an offer, can avoid paying the plaintiff’s attorney’s fees after the offer.

 

“Courts are hostile to civil rights litigation in general.”

 

Given the structure of litigation, as you get closer and closer to trial, the trial will become a huge part of your attorney’s fees.

 

Evans v. Jeff D.

 

Civil rights plaintiffs are also jeopardized by things like the Jeff D. offer.

 

I get called on!  Johnson, with Legal Aid, sues Idaho on behalf of institutionalized children.  Idaho offers to settle and offers pretty much everything they wanted, except the class has to waive its claims for attorney’s fees.

 

Idaho Legal Aid initially wants him to reject the offer, because they need money to help them to represent other clients.

 

Johnson accepts the offer, but goes to the court to review the class settlement offer.

 

What’s the impact of this?  What are Johnson’s incentives?

 

If this had been a Rule 68 offer, the class still would have received their fees up to the offer.  Rule 68 just blocks the fees earned after the date of the offer.  On the other hand, this offer is intended to avoid trial altogether by making an attractive settlement offer.

 

There’s an ethical dilemma!  Well…or not.  The Supreme Court says that you have to accept the offer, even if you don’t get paid.  Johnson’s ethical duty is to serve his clients.

 

People in civil rights litigation hate this case!  It gives civil rights violators a blueprint for how to avoid attorney’s fees!  What’s the motivation on the part of Idaho to settle this way?

 

Who are the real losers?  Johnson doesn’t lose.  The kids don’t lose.  It’s the future legal aid clients who are hurt!  The state of Idaho can discourage litigation by crippling the group that provides the free legal services!  The Supreme Court says it’s okay!  Hmmmm

 

We’ll have a bit more on this tomorrow.  Then it’s Fuentes!

 

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