When Does a Party Prevail?: A Proposed "Third-Circuit-Plus" Test for Judicial Imprimatur

I. INTRODUCTION Congress has encouraged individual plaintiffs to bring civil rights lawsuits by providing that their attorney's fees will be paid for if a judge deems them to be the "prevailing party."1 Congress utilizes these fee-shifting statutes to further important public policies by allowing private citizens to bring suits to protect their civil rights.2 However, when parties resolve their suits via private settlement, the question of whether a party has "prevailed" is not always easily answered. Federal courts of appeals have split three ways on the questions of whether a party to a private settlement may be considered a prevailing party, and if so, what degree of judicial involvement is required for such a determination. This circuit split results in varying availability of attorney's fees to civil rights plaintiffs throughout the country. This disagreement among circuits thus undermines Congress's public policy of encouraging "private attorneys general" that underlies the fee-shifting statutory regimes.3 This split of authority stems from the Supreme Court's lack of guidance in its most recent attorney's fees case, Euckhannon Board and Care Home, Inc. v. West Virginia Department of Health and Humtin Resources.4 There the Court eliminated the "catalyst theory"-a widely used test5 for determining prevailing party status-by adhering to a strict interpretation of the "plain language"6 of the fee-shifting statutes. The Court reasoned that the catalyst theory permitted fee awards in the absence of any court-ordered or judicially sanctioned change in the parties' legal relationship.7 To illustrate, the Court explained that both a judgment on the merits and a consent decree involved the necessary judicial approval and oversight to provide prevailing party status.8 However, it failed to adequately delineate the parameters of prevailing party status in the private settlement context. This failure has led to a divergence of views as to how much judicial imprimatur in the resolution of a lawsuit is required before a party can be said to have "prevailed."9 This question gains importance in light of the various ways in which a suit may end. The level of judicial imprimatur in the resolution of a suit varies according to the manner in which a suit concludes. If a case actually culminates in a trial verdict, the prevailing party is readily ascertainable because the judgment on the merits bears full judicial sanction. However, not all cases are tried to conclusion, as parties often negotiate a settlement prior to litigation in order to save costs.10 Parties wishing to resolve a dispute prior to litigation may enter their private agreement as an official judgment of the court, known as a consent decree.11 This action bears the highest level of judicial involvement short of proceeding to trial. Alternatively, parties may enter a purely private settlement12 and petition the judge to enter a stipulated dismissal order.13 Such an action generally bears the least judicial imprimatur. Parties may also opt for a resolution somewhere between private settlements and consent decrees on the spectrum of judicial involvement.14 The three-way split among the circuits revolves around whether a party to a private settlement that falls short of a consent decree can ever be termed a prevailing party. Contrary to the majority of circuits interpreting the issue, the Ninth Circuit has ruled that a party with nothing more than a private settlement may be awarded fees as a prevailing party.15 At the other end of the spectrum, the Eighth Circuit has ruled that nothing short of a consent decree or a judgment on the merits may serve as the basis for prevailing party status.16 Finding a middle ground, and representative of the majority of circuits to have considered the issue, the Third Circuit ruled that a party with a settlement agreement may be a prevailing party if the settlement bears sufficient judicial imprimatur.17 This Comment argues that of the various approaches taken by the circuits, the Third Circuit's comes closest to satisfying the Supreme Court's concerns regarding judicial approval and oversight. …