Opinion ID: 3168179
Heading Depth: 3
Heading Rank: 3

Heading: Recovery of Attorney Fees Under the Common

Text: Fund Doctrine Is Preempted by the URA We turn to whether the presence of the URA resolves the inequity. That is, we consider whether class counsel can recover attorney fees under the common fund doctrine in lieu of the URA, which provides class counsel with reasonable attorney fees. We review the determination of reasonable attorney fees for abuse of discretion. See Bywaters, 670 F.3d at 1228; Hall v. Sec’y of Health & Human Servs., 640 F.3d 1351, 1356 (Fed. Cir. 2011). However, errors of law in the award of attorney fees are corrected without deference. See Bywaters, 670 F.3d at 1228–34; Brytus, 203 F.3d at 244. Congress has determined that in certain cases the prevailing parties may recover their attorney fees from the opposing side. See 42 U.S.C. § 4654(c). 18 Statutes 18Section 4654(c) of Title 42 of the United States Code provides in its entirety: The court rendering a judgment for the plaintiff in a proceeding brought under sec- tion 1346(a)(2) or 1491 of Title 28, awarding compensation for the taking of property by a Federal agency, or the Attorney General ef- fecting a settlement of any such proceeding, HAGGART v. UNITED STATES 31 that provide for such fees are termed “fee-shifting” statutes. Unlike the common fund doctrine, fee-shifting statutes require the losing party to bear the burden of the attorney fees. Under a fee-shifting statute, the court calculates awards for attorney fees using the “lodestar method” which is “the product of reasonable hours times a reasonable rate.” City of Burlington v. Dague, 505 U.S. 557, 559–60 (1992) (quoting Pennsylvania v. Del. Valley Citizens’ Council for Clean Air, 478 U.S. 546, 565 (1986)). In common fund cases, district courts have applied the lodestar method to determine the amount of attorney fees. See In re Wash. Pub. Power Supply Sys. Sec. Litig., 19 F.3d 1291, 1299 (9th Cir. 1994). However, unlike statutory fee-shifting cases, in common fund cases, courts have applied a risk multiplier when using the lodestar approach. 19 Id. Alternatively, as in this case, courts may determine the amount of attorney fees to be awarded from shall determine and award or allow to such plaintiff, as a party of such judgment or set- tlement, such sum as will in the opinion of the court or the Attorney General reimburse such plaintiff for his reasonable costs, dis- bursements, and expenses, including reason- able attorney, appraisal, and engineering fees, actually incurred because of such pro- ceeding. 42 U.S.C. § 4654(c). 19 “A ‘multiplier’ is a number, such as 1.5 or 2, by which the base lodestar figure is multiplied to increase (or decrease) the award of attorney[] fees on the basis of factors such as the risk of prevailing on the merits of the case and the length of the proceedings.” See Staton, 327 F.3d at 968. But see Perdue v. Kenny A. ex rel. Winn, 559 U.S. 542, 546 (2010) (asserting that “there is a strong presumption that the lodestar is sufficient”). 32 HAGGART v. UNITED STATES the fund by employing a percentage method. See Blum v. Stenson, 465 U.S. 886, 900 n.16 (1984) (“[U]nder the ‘common fund doctrine,’ . . . a reasonable fee is based on a percentage of the fund bestowed on the class.”); see also Applegate v. United States, 52 Fed. Cl. 751, 760 (2002) (“[C]ourts readily calculate fees [] as a percentage of the fund.”). The URA is a fee-shifting statute and provides for the award of “reasonable” attorney fees in two distinct circumstances. First, attorney fees may be awarded where the Government begins a condemnation proceeding resulting in either a final judgment that the Government may not acquire the property by condemnation or abandonment of the proceeding by the Government. See 42 U.S.C. § 4654(a)(1)–(2); see also Bywaters, 670 F.3d at 1227. Second, attorney fees may also be granted where, as in the case before us, a landowner brings an inverse condemnation action under the Tucker Act or the Little Tucker Act alleging a Government taking under the Fifth Amendment and that action results in an award of compensation for the taking. See id.; 42 U.S.C. § 4654(c). The Government argues that “applying [a common fund] to a judgment specifying a sum certain for every party/client when the attorney will receive a reasonable statutory fee [under the URA] stretches the doctrine beyond all recognition.” Government Br. 32. According to the Government, because “[f]ederal fee-shifting statutes, including the URA, . . . provide for defendants to pay ‘reasonable’ fees[,] [a]n additional fee is by definition unreasonable when a reasonable statutory fee has already been awarded.” Id. at 41. Accordingly, the Government contends “[t]here is no basis in equity for awarding common-fund fees as well as the URA fees.” Id. The Haggarts assert the Supreme Court’s decision in Venegas v. Mitchell is controlling because it “did not preclude recovery of additional attorney[] fees under a HAGGART v. UNITED STATES 33 contingency fee contract.” Haggart Br. 44 (citing 495 U.S. 82, 90 (1990)). According to the Haggarts, “[t]he teaching of Venegas is that fee-shifting statutes do not regulate what clients pay their lawyers, and do not cap or limit the amount of fees that lawyers can collect.” Id. at 45. Thus, the Haggarts contend “the URA does not address or regulate what plaintiffs are to pay [c]lass [c]ounsel, and does not impose any constraint on the [Claims Court’s] inherent equitable authority to award common-fund fees.” Id. at 45–46. The Claims Court defined the common fund to include the principal amount and interest. Haggart IV, 116 Fed. Cl. at 144. However, it rejected the Haggarts’ contention that the statutory attorney fees of $1,920,000, calculated using the lodestar method, must be included as part of the common fund. Id. (“[H]ere the contingent fee percentage should be applied to the principal and interest, not also to the amount of statutory fees.”). The court found “that the common fund consists of $137,961,218.69 ($110,000,000 in principal [plus] $27,961,218.69 in interest).” Id. at 148. As to whether class counsel’s request for thirty percent of the common fund was reasonable, the Claims Court looked to factors it has previously applied in determining the percentage of recovery. Id. at 145. The court ultimately used a scaled methodology and, from the $110 million the Government agreed to pay, “award[ed] class counsel 30% of the first $50 million, 25% of the next $50 million, and 20% of all monies over $100 million.” Id. at 148. Thus, the court awarded class counsel fees totaling $35,092,243.74. Id. Finally, because class counsel retained the agreed statutory fee, the court awarded class members “a dollar-for-dollar credit for the statutory fee paid by the [G]overnment in the amount of $1,920,000, [thus] reducing the amount of the attorney[] fees to paid 34 HAGGART v. UNITED STATES out of the common fund to $33,172,243.74. 20 Id. (footnote omitted). The fact that a common fund has been created is not sufficient to establish a finding that the common fund doctrine must be applied when awarding attorney fees, an assertion implicit in the Haggarts’ argument. See Brytus, 203 F.3d at 243. Rather, recovery under the common fund doctrine derives from the equitable power of courts to create the obligation for attorney fees against benefits received as a result of the advocacy of another. Knight, 982 F.2d at 1580. Thus, recovery requires the existence of an inequitable outcome, which in turn requires redressability. We begin our analysis by noting that, contrary to the Haggarts’ contention and the Claims Court’s determination, Venegas does not govern the case before us. See Haggart IV, 116 Fed. Cl. at 148 n.18 (stating that “to disallow a contingent fee in this case would be contrary to [Venegas]”). In Venegas, the Supreme Court held a statute authorizing payment of reasonable attorney fees to prevailing civil rights plaintiffs does not invalidate contingent fee contracts that would require a prevailing plaintiff to pay his attorney more than the statutory award against the defendant. 495 U.S. at 90 (stating that 42 U.S.C. § 1988 “does not interfere with the enforceability of a contingent-fee contract”). Unlike the common fund doctrine, which is imposed absent the express agreement of class members as a matter of equity, contingent fee awards are a matter of individual contract. Thus, although the Court’s holding in Venegas may be applicable to class members who signed the contingent fee agreement, we see no reason to extend it to the majority This amount represents approximately 24% of the 20 common fund. HAGGART v. UNITED STATES 35 of class members, including the Woodleys, who did not sign the agreement. The URA expressly allows landowners to retain the full compensation of the value of their property by mandating the Government to assume the litigation expenses of counsel in bringing forth the takings claim. See 42 U.S.C. §4654(c); (asserting that plaintiff shall be awarded “such sum as will in the opinion of the court or the Attorney General reimburse such plaintiff for his . . . reasonable attorney . . . fees”); see also URA Legislative History, S.1, Senate Floor Remarks, Congressional Record, Senate, 115 Cong. Rec. 31533 (Oct. 27, 1969), Uniform Relocation Assistance and Land Acquisition Policies Act of 1969 (“Transactions must be carried out in a manner that will assure that the person whose property is taken is no worse off economically than before the property was taken.”). Under the URA, it is the Government, as opposed to class counsel or another member of the plaintiff class, who bears the reasonable cost of the action; thus, the inequity that would otherwise result is expressly addressed by the statute. In the presence of the URA, we find no inequity to redress. The sine qua non of the common fund doctrine is that some inequity must exist. Without inequity, class counsel cannot attempt to augment reasonable attorney fees by substituting the application of the doctrine in place of the URA. Such an action not only undermines the purpose of the URA, see Milwaukee v. Illinois & Michigan, 451 U.S. 304, 314 (1981) (“[W]hen Congress addresses a question previously governed by a decision rested on federal common law[,] the need for such an unusual exercise of lawmaking by federal courts disappears.”), but also unjustly enriches class counsel at the expense of class members, a result diametric to the primary purpose of the common fund doctrine, see Greenough, 105 U.S. at 532; see also Tex. v. Pankey, 441 F.2d 236, 241 (10th Cir. 1971) (asserting that federal common law applies “[u]ntil the field has been made the 36 HAGGART v. UNITED STATES subject of comprehensive legislation or authorized administrative standards”). Our decision finds support in Supreme Court holdings concerning the intersection of law and equity. In Petrella v. Metro-Goldwyn-Mayer, Inc., the Court found that the common law equitable doctrine of laches is inapplicable when Congress has, through statute, filled the void the common law doctrine was intended to address. 21 134 S. Ct. 1962, 1973 (2014) (“Last, but hardly least, laches is a defense developed by courts of equity; its principal application was, and remains, to claims of an equitable cast for which the Legislature has provided no fixed time limitation.” (citation omitted)). According to the Supreme Court, because “[l]aches . . . originally served as a guide when no statute . . . controlled the claim; it can scarcely be described as a rule for intervening a statutory prescription.” Id. at 1975. Similarly, the common fund is an equitable doctrine established for the primary purpose of addressing inequities resulting from the unjust enrichment of class members at the expense of the litigating party. With the enactment of the URA, which provides class counsel with reasonable fees as compensation for their efforts in bringing forth the litigation, Congress has spoken “directly to the question at issue.” Am. Elec. Power Co. v. Connecticut, 131 S. Ct. 2527, 2537 (2011) (internal quotation marks, brackets, and citations omitted); see id. (“Legislative displacement of federal common law does not require the ‘same sort of evidence of a clear and manifest congressional purpose’ demanded for 21 In Petrella, the Supreme Court rejected the application of laches to a statutorily defined limitations period, asserting that it has “never applied laches to bar in their entirety claims for discrete wrongs occurring within a federally prescribed limitations period.” 134 S. Ct. 1962 at 1975. HAGGART v. UNITED STATES 37 preemption of state law.” (bracket and citation omitted)); see also Petrella, 134 S. Ct. at 1977 (holding that applicable statutory language “leaves little place” for equitable principles to the contrary (citation omitted)). Finally, the Haggarts point to the Ninth Circuit’s decision in Staton, which held that statutory fee-shifting and the equitable common fund doctrine operate differently and should be treated separately as support for their contention that the common fund doctrine may be applied in the presence of a fee-shifting statute. See Staton, 327 F.3d at 967. Staton also held that “unless Congress has forbidden the application of the common fund doctrine in cases in which attorneys could potentially recover fees under the type of fee-shifting statute[][,] [] courts retain their equitable power to award common fund attorney[] fees.” Id. at 968 (citing Alyeska Pipeline, 421 U.S. at 257–59). However, the Seventh Circuit in Pierce v. Visteon Corp., limited the common fund doctrine to cases “outside the scope of a fee-shifting statute.” 22 791 F.3d 782, 787 (7th Cir. 2015); see also id. (“But this case was litigated under a fee-shifting statute, and we do not see a good reason why, in the absence of a contract, counsel should be entitled to money from the class on top of or in lieu of payment by the losing litigant.”). 22 In Pierce, terminated employees brought a putative class action suit against their previous employer, alleging that the employer failed to timely deliver notice of employees’ opportunity to continue health insurance at their own expense under the Consolidated Omnibus Budget Reconciliation Act. 791 F.3d at 784. The court affirmed the district court’s award of attorney fees under the Employee Retirement Income Security Act, 29 U.S.C. § 1132, a different fee-shifting statute than the one at issue in this case. See id. 38 HAGGART v. UNITED STATES We agree with the Seventh Circuit. The fact that Congress did not expressly abjure the common fund doctrine in enacting the URA is not dispositive. See Petrella, 134 S. Ct. at 1975 (asserting that equity “can scarcely be described as a rule for interpreting a statutory prescription”). What is more, we agree with the Pierce court’s determination that permitting class counsel to recover in the presence of fee-shifting statutes similar to the URA contravenes the Supreme Court’s decision in Dague. See Pierce, 791 F.3d at 787. In Dague, the Court held that, in calculating a reasonable fee under feeshifting statutes like the URA, district courts should not include a multiplier that effectively compensates class counsel for risk of loss. See 505 U.S. at 562 (“We note at the outset that an enhancement for contingency would likely duplicate in substantial part factors already subsumed in the lodestar.”). However, similar to the contingent fee agreement addressed in Dague, allowing class counsel to recover under a common fund would operate in precisely the same manner because, like a contingent fee agreement, “[a] common-fund award . . . [effectively serves to] build[] in a multiplier in [] cases where counsel prevails.” Pierce, 791 F.3d at 787. We do not foreclose the application of the common fund doctrine in all instances in which a fee-shifting statute is present. Equity may sometimes deem it appropriate to give counsel a piece of either the final judgment or settlement agreement. See id. (positing that it may “sometimes [be] appropriate to give . . . [counsel] a slice of the class’s recovery on top of a fee-shifting award”); see also Brytus, 203 F.3d at 247 (“This is not to say that the common fund doctrine may never be applied in a case for which there is a statutory fee provision . . . .”). At its heart, equity is about fairness. See Petrella, 134 S. Ct. at 1977 (asserting that equity may still intervene to address a party’s conduct in certain circumstances). HAGGART v. UNITED STATES 39 In the present case, the URA provision was expressly enacted with the primary purpose of rendering property owners whole and fee recovery is governed by statute. The URA provides a reasonable fee and thus forecloses application of the common fund doctrine.