Attorney's Fees: The Growing Number of Awards to Public Interest Plaintiffs

The past few years, and the last year in particular, have seen dramatic shifts in one of the most hotly contested, and crucially important, areas of public interest law: the award of attorneys' fees to public interest litigants. This process of development has had to overcome two major barriers, the traditional "American rule" under which winning parties normally do not receive counsel fees,¹ and the federal statutory prohibition against awards of counsel fees against the government. In one case, environmentalists opposing federally approved highway construction received not only counsel fees but also reimbursement for expert witnesses; in another, Indians were compensated for suing the government to vindicate tribal rights. The cost of suing for amental patient's release has been assessed against a state government; the Clean Air Act's provision allowing recovery of attorney's fees in district court cases has been construed to permit similar recovery in cases which must by statute be brought in the Court of Appeals; and a federal district court in Texas has approved a grant of counsel fees to environmentalists although they lost on the merits.

The basic statutory prohibition against grants of attorneys' fees is contained in 28 U.S.C. § 2412, which authorizes a judgment for costs, "not including the fees and expenses of attorneys," in suits against a government official acting in his official capacity. Congress has, however, carved out several specific exceptions. The Civil Rights Act of 1964 included a provision authorizing awards of counsel fees to the "prevailing party" in actions brought under the statute. The Clean Air Act Amendments of 1970 permits a grant of fees to "any party."

While Congress has enacted these few specific exemptions from the general statutory prohibition, the courts have been moving rapidly to broaden the "American rule."

The law has long recognized three major exceptions to the rule against awards of counsel fees. Fees will be awarded to a party if the other party has engaged in "obdurate behavior:" harassment, delay, or other tactics indicating bad faith. In such cases, the award of counsel fees represents a form of punitive damages. This exception is unlikely to be applicable to many environmental suits.

In addition, courts will award counsel fees where a plaintiff's action has opened up a "common fund" to a large class of claimants. In a 1939 case,² the Supreme Court ruled that the power to award counsel fees is part of the inherent equity powers of the court. There, counsel fees were assessed against the entire sum made available to all claimants, so that in effect each claimant paid a pro rata share of the cost of the litigation. To do otherwise would be to enrich unjustly those claimants who did not take the initiative in bringing the action and to penalize persons willing to take their case to court. In Mills v. Electric Auto-Lite Co.,³ a 1970 case, the Supreme Court approved a grant of attorneys' fees to shareholder plaintiffs who sued to set aside a corporate merger accomplished by a misleading proxy statement in violation of § 14(a) of the Securities Exchange Act of 1934. The court reasoned that the enforcement of the statute's prohibition against misleading proxy statements rendered a service both to the corporation and its shareholders, so that it was appropriate for all beneficiaries, not merely the named plaintiffs,to share in the cost of suit. In 1973, the Supreme Court in Hall v. Cole⁴ carried the common fund rationale into the somewhat metaphysical area of the First Amendment right to free speech. In that case a member of the Seafarers' Union had been expelled for introducing at a membership meeting a set of resolutions charging undemocratic actions on the part of union officers. Suing for reinstatement, under the Labor Management Reporting and Disclosure Act, the unionist charged that his expulsion violated his rights to free speech. His claims were upheld in federal district court, which further granted him counsel fees against the union. The Supreme Court found the case to be controlled by Mills. The successful unionist, the court ruled, had dispelled the chill cast upon the rights of all other members of the union by the union's policy of stifling dissent.

The third exception to the general rule is the situation in which the plaintiff is acting as a "private attorney general" to enforce an important congressional policy. The leading case in this area is Newman v. Piggie Park Enterprises, Inc.,⁵ a 1968 Supreme Court decision upholding a grant of counsel fees under Title II of the Civil Rights Act of 1964. The court there observed that: When a plaintiff [4 ELR 10022] brings an action under that title, he cannot recover damages. If he obtains an injunction he does so not for himself alone, but also as a "private attorney general," vindicating a policy that Congress considered of the highest priority. If successful plaintiffs were routinely forced to bear their own attorney's fees, few aggrieved parties would be in a position to advance the public interest by involving the injunctive power of the federal courts. It follows that one who succeeds in obtaining an injunction under that title should ordinarily recover his attorney's fees unless certain circumstances render such an award unjust.

In 1971 the Fifth Circuit extended this rationale to grant attorneys' fees to blacks suing against discrimination in sales of land, although there was no specific provision, as in Piggie Park, for such awards.⁶

In 1972, a federal district court in California awarded not only counsel fees, but also reimbursement for expert witnesses, in La Raza Unida v. Volpe,⁷ in which plaintiffs challenged construction of a highway as in violation of the Department of Transportation Act of 1966. The court there examined in detail the existing cases awarding attorneys' fees in public interest cases. Although the statute did not specifically authorize a grant of counsel fees, the court fashioned a three-fold test to justify an award: first, that a strong congressional policy was effectuated by the statute; second, that a benefit was conferred on a large number of people; and third, that the suit in question could only have been brought by private parties. Although 28 U.S.C. § 2412 barred recovery against the federal defendants, no such bar to recovery from the defendant state highway commission was present.

In the same year, plaintiffs in Wyatt v. Stickney,⁸ a suit challenging the constitutionality of Alabama's facilities for the care of the mentally ill, were awarded counsel fees, despite the absence of a specific authorizing statute. The case, in which the Center for Law and Social Policy played the leading role, represents a major milestone in establishing the constitutional rights of the mentally ill.

In 1973, the First Circuit Court of Appeals in NRDC v. EPA⁹ construed the Clean Air Act's authorization of counsel fees in suits brought in district court under § 304 to apply also to $307 suits, which must be initiated in the Court of Appeals. The court was clearly unwilling to allow a drafter's omission to frustrate the congressional purpose of fostering citizen's suits. Also in 1973, a grant of attorneys' fees in excess of §48,000 was made to Sierra Club attorneys who successfully opposed a Clean Air Act implementation plan for the District of Columbia.¹⁰ (It was this suit which resulted in the Supreme Court's 4-4 affirmation of the "non-degradation" ruling of the D.C. Circuit Court of Appeals.)¹¹ The significance of the sum involved is that it represents an award commensurate with the type of fees which attorneys could obtain in normal commercial practice, in contrast to the minimal fees frequently awarded in public interest cases. In Pyramid Lake Paiute Tribe of Indians v. Morton,¹² Judge Gesell of the federal district court in Washington, D.C., approved a grant of attorneys' fees to Indians suing to prevent dissipation of tribal assets and to protect the environment. The court reasoned first that both these purposes were avowed public policy of the United States. It noted further that federal law allows the U.S. Attorney to act as representative for the Indian tribes in advancing their legal claims. Since in this case the Indians were bringing suit against the U.S. Government, it followed that they should be allowed to retain private counsel and secure reimbursement from the government for that expense.

Perhaps the furthest extension of the liberal trend in awarding attorneys' fees occurred in 1973 in Sierra Club v. Lynn.¹³ There, fees were awarded to plaintiffs who had lost the case on the merits. The court reasoned that the plaintiffs, by bringing suit, had caused the defendants to incorporate into their plans for a housing project environmentally protective features that would not otherwise have been included. With those provisions, the project was held to have satisfied the requirements of NEPA. Since the plaintiffs had succeeded in principle, the court was not to be dissuaded from awarding counsel fees by the fact that "technically" they had lost the case.

The courts' increased friendliness towards grants of attorneys' fees in public interest litigation reflects what environmental lawyers have known for sometime: that public interest law cannot be forever dependent on charity. In the last two or three years, as the economic downtrun has meant that foundations have less money to allocate, environmental organizations have begun to feel the pinch. In addition, those organizations willing to provide seed money for fledgling environmental law groups may justly feel that alternative sources of funding should be developed. It would be unrealistic, however, to imagine that in a time of economic difficulty, and with the "Earth Day" spirit flagging under fers of an "energy crisis," the general public can be expected to take up all the slack. Rather, it is through grants of attorneys' fees in environmental litigation that the movement has the greatest opportunity of becoming self-sufficient and self-perpetuating. Nor should this be taken as a grim last resort for environmentalists. The positive aspects of this situation should be emphasized: rather than have the costs of public interest litigation be borne by private individuals interested in environmental protection, the costs can increasingly be assumed either by the parties which cause or threaten the environmental damage, or by the public at large which benefits from the environmentalists' work.

1. By contrast, English courts routinely award counsel fees to the winning litigant. The pros and cons of the two systems have been debated for many years and continue to be a subject of dispute. Proponents of the American system point out that in the United States, plaintiffs have easy access to the law courts, and the contingent fee system allows even an impoverished plaintiff to obtain legal representation of the highest caliber. On the other hand, in the American system a defendant can be drained financially fighting a baseless lawsuit.While the American rule many be beneficial to plaintiffs generally, it often works a hardship on public interest plaintiffs seeking injunctive relief rather than money damages, as there is no damage award from which to reimburse attorneys.

2. Sprague v. Ticonic National Bank, 307 U.S. 161 (1939).

3. 396 U.S. 375 (1970).

4. 3 ELR 20552 (U.S. 1973).

5. 390 U.S. 400 (1968).

6. Lee v. Southern Homes Site Corp., 444 F.2d 143 (5th Cir. 1971).

7. 2 ELR 20691 (N.D. Cal. 1972).

8. 344 F. Supp. 373 (M.D. Ala. 1972).

9. 3 ELR 20803 (1st Cir. 1973).

10. Sierra Club v. Ruckelshaus, __ F. Supp. __ (D.D.C.Oct. 31, 1973).

11. Fri v. Sierra Club, 3 ELR 20684 (U.S. 1973).

12. 3 ELR 20730 (D.D.C. 1973).

13. 3 ELR 20664 (W.D. Tex. 1973).