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Friday, November 06, 2009

Fair Play and Rule 83

It is a few months old, but I recently came across the Eleventh Circuit's attorney's fees opinion in Sahyers v. Prugh, Holliday, and Karatinos  and it is troubling-- far more so than the Second Circuit opinion I blogged about earlier.  The plaintiff worked as a paralegal and sued her old firm for violations of the Fair Labor Standards Act, especially not paying required overtime.  She requested tens of thousands of dollars, and the defendants ultimately offered her about $3500, which she accepted.  She then requested attorneys fees, which prevailing parties are entitled to under the statute.

The district court set the amount of fees at zero, concluding that "a reasonable fee is no fee."  The principal reason?  As the Eleventh Circuit put it:

[T]he lawyer for Plaintiff made absolutely no effort -- no phone call; no email; no letter -- to inform them of Plaintiff’s impending claim much less to resolve this dispute before filing suit. Plaintiff’s lawyer slavishly followed his client’s instructions and -- without a word to Defendants in advance -- just sued his fellow lawyers. As the district court saw it, this conscious disregard for lawyer-to-lawyer collegiality and civility caused (among other things) the judiciary to waste significant time and resources on unnecessary litigation and stood in stark contrast to the behavior expected of an officer of the court.  The district court refused to reward -- and thereby to encourage -- uncivil conduct by awarding Plaintiff attorney’s fees or costs. Given the district court’s power of oversight for the bar, we cannot say that this decision was outside of the bounds of the district court’s discretion.

As the opinion goes on to explain, the district court felt that the plaintiff's lawyer was violating a local custom about honor among lawyers that you shouldn't sue another lawyer without warning.  The opinion has already been criticized for giving special rights to defendants who are lawyers over lay defendants (you might have thought the latter, if anybody, were the ones who needed special protection).  Two other things are far more troubling about this.

First, while district courts are generally permitted to regulate practice in accordance with unwritten local customs, that regulation must be consistent with real law, like the statutes passed by Congress.  Here, a statute gives prevailing parties a right to attorney's fees--the decision to award them is not discretionary like the cost-shifting rule we discussed earlier. 

That brings us to the second.  As the Eleventh Circuit concluded, the district court's decision not to award the plaintiff her statutory fees must be justified as a sanction for violation of another rule.  But Rule 83, which is what gives district courts general power to "regulate practice in any manner consistent with federal law," also provides that "[n]o sanction or other disadvantage may be imposed for noncompliance with any requirement not in federal law, federal rules, or the local rules unless the alleged violator has been furnished in the particular case with actual notice of the requirement."  But where is it written, and who told the plaintiff's attorney, that failure to violate one's clients wishes and leak confidential information to the opposing counsel will forfeit one's right to attorney's fees?  It is one thing to say that district courts have the inherent power to discipline the lawyers who practice before them, but the federal rules of civil procedure (and basic notions of fair play!) say that if district courts make up the rules as they go along, they must at least tell the lawyers in advance before punishing them.  [If the plaintiff had "actual notice" of this rule of collegiality, that fact is not mentioned by the court.]  District courts just aren't supposed to sanction parties by taking away their statutory rights because their lawyers violated an unwritten rule that nobody told them about.

The Eleventh Circuit appears to recognize that it is doing something pretty funky, because it ends with the defensive disclaimer:

We strongly caution against inferring too much from our decision today.  These kinds of decisions are fact-intensive. We put aside cases in which lawyers are not parties. We do not say that pre-suit notice is usually required or even often required under the FLSA to receive an award of attorney’s fees or costs. Nor do we now recommend that courts use their inherent powers to deny prevailing parties attorney’s fees or costs. We declare no judicial duty. We create no presumptions.  We conclude only that the district court did not abuse its discretion in declining to award some attorney’s fees and costs based on the facts of this case.

I'm not quite sure how this works.  One can't hold "only" that a district court did not abuse its discretion in declining to follow the law and instead following an unwritten rule it hadn't told the parties about.  The court necessarily holds that it is sometimes okay for district courts to do so, even though Rule 83 says it isn't.  The opinion would only work if declaring something to be factbound and invoking the abuse of discretion standard are enough to transmogrify a decision from right to wrong.  But abuse of discretion doesn't work that way.

Which brings us to more recent developments.  An en banc panel of the Ninth Circuit attempted to clarify and revise the circuit's abuse-of-discretion standard yesterday, holding that so long as district courts 1, correctly recite the law, and 2, apply it in a way that isn't "illogical," "implausible," or without support from possible inferences from the record, they don't abuse their discretion.  I'm not quite sure what this new test is supposed to mean, but I hope the Eleventh Circuit's decision here stands as a caution against awarding talismanic effect to the abuse of discretion standard or to a court's attempt to simply declare that it is merely applying undisputed law to the facts.  Sometimes, entailed in that application are some pretty wacky beliefs about what the law is.

Posted by Will Baude on November 6, 2009 at 08:43 AM | Permalink

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Posted by: bilal | Nov 7, 2009 4:27:01 PM

Point taken re: Farrar. As for the first, I do think there's a differencec between what you say and what the district court seems to have done, but I agree that a finding like that would have been unexceptionable.

Posted by: Will Baude | Nov 7, 2009 2:35:21 PM

I'm not sure we disagree that much, but we probably do disagree about the bottom line.

1. On the remand, I take it that it would be unnecessary if the district court had written: "The plaintiff lawyer did a lot of unnecessary work, and achieved a substandard result. Since the same result could have been achieved with a 5 minute phone call, 0.1 of the attorney's hourly rate is the only 'reasonable' fee." Given the district court's opinion did rely on the waste of "significant time and resources on unnecessary litigation," I think a court of appeals may well say "close enough."

2. Given the Farrar Court affirmed an award of zero fees, I don't think its reasoning can be described as "dicta." There is, of course, a debate about whether Farrar is strictly limited to nominal damages or applies to insignificant victories (e.g. nuisance settlements) in general. But at least an interpretation of Farrar as applying to nuisance settlements is not implausible.

Posted by: TJ | Nov 7, 2009 2:34:31 AM

First, maybe that course would be appropriate. But if a district court's exercise of its discretion was "guided by erroneous legal conclusions" (Koon v. United States) (here, its made-up rule of practice applied in violation of Rule 83), then it has abused its discretion and at most a remand would be appropriate for the district court to consider this kind of argument afresh.

At any rate, Farrar says in dicta that no fee is appropriate in some cases where "nominal" damages are awarded. $3500 is a lot less than the plaintiff was asking for, but it sure ain't nominal-- it's my rent for a couple months.

Posted by: Will Baude | Nov 6, 2009 2:18:42 PM

OK, the court's reasoning seems rather fishy. But why can't the district court's decision be sustained under Farrar v. Hobby, 506 U.S. 103 (1992) ($0 fee is reasonable when given that plaintiff's win is insignificant)?

Posted by: TJ | Nov 6, 2009 2:06:21 PM

The court seems to have been bothered by the fact that it was a weak case, and yet the default rule is to award attorneys fees. Although the case settled, from the description of the facts I'm not sure it would have survived summary judgement.

But the reasoning of the decision is ludicrous, and harmful. It's uncivil to not notify a party that you're filing a complaint? Just because that party is a law firm? Since when? The complaint IS the notice--that's the whole point. (In order to be really civil, wouldn't you have to give prior notice of the prior notice of the notice?) This decision strikes me as lawyer protectionism by judges who are also lawyers, imposing some sort of ad hoc meet-and-confer requirement for defendants who know the secret handshake. "Sure, we know that's how the hoi polloi get treated, but this defendant is a *law firm*--harrumph!" It's hard not to find this outrageous.

Posted by: Bruce Boyden | Nov 6, 2009 1:27:53 PM

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