Opinion ID: 28979
Heading Depth: 2
Heading Rank: 4

Heading: Art. 595(A), Louisiana Code of Civil Procedure

Text: In its entirety, art. 595(A) reads: 28 The court may allow the representative parties their reasonable expenses of litigation, including attorney's fees, when as a result of the class action a fund is made available, or a recovery or compromise is had which is beneficial, to the class. 25 29 Literally, this article is expressed (1) permissively, using may rather than shall; and (2) conditionally, authorizing the court to allow the representative parties to recover litigation expenses (which expressly include attorney's fees) only if the class litigation is the producing cause of either (a) a common fund that is available to the class or (b) some other type of recovery or compromise that is beneficial to the class. We first note that, on its face, this code article does not condition the court's authority to grant fees on the class's being successful to the point of judgment; rather, art. 595(A) requires only the availability of either a common fund or some other result that is beneficial to the class: The fund or the other recovery can eventuate either from a judgment or from some non-judicial disposition, such as settlement, compromise, alternative dispute resolution, or the like. 30 We next note that the plain wording of art. 595(A) does not literally limit the permissible sources available for attorney's fees. Facially, the code article does not restrict the source of such court-allowed fees to the fund or other recovery for the benefit of the class; the article requires only that such benefit result from the class litigation. Neither does the article either expressly authorize or expressly prohibit the court's tagging the defendant with such fees. The Official Revision Comments to art. 595(A) 26 can be read as the Legislature's elimination of any question of source by stating its intention that attorney's fees allowed to the class representatives under authority of art. 595(A) are to be paid out of the fund or benefits made available by the class representatives' litigation efforts. In Louisiana's code-drafting scheme, however, such comments are not the law, but rather are instructive or clarifying. Like legislative history, they are most compelling when the code article itself is ambiguous — and we are not prepared to say that art. 595(A) is ambiguous. 27 Instead, we assume arguendo that art. 595(A) does not authorize the court to assess attorney's fees to the class action defendant; rather, that only the common fund or the other benefits made available to the class by the class representatives' litigation are eligible sources of such fees. 31 Under that assumption, art. 595(A) remains a fee-shifting statute, but the shifting is not between the class and the defendant. Instead, the shifting is between the class representatives and the rank and file members of the class. Furthermore, such shifting is not restricted to common fund cases (which this case is not): The court can allow fees to the class representatives either from a fund made available or from a recovery or compromise ... which is beneficial to the class. Thus, in a non-fund case like this one, each class member's damage recovery could be reduced by the court and shifted to the class representatives, even if art. 595(A) were construed narrowly to prohibit the court from assessing attorney's fees to the losing tortfeasor. 32 In every Louisiana class action, then, the class representatives could receive attorney's fees from either (1) the defendant directly, pursuant to a separate attorney's fee statute, or (2) the non-representative members of the class indirectly, as a result of art. 595(A)'s fee shifting and attribution. In either case, calculation of the anticipated recovery of the class representatives — the only one that matters for purposes of § 1332 — must include those potential attorney's fees in addition to damages, just as Abbott commands. We know from Zahn v. International Paper Co., 28 that in class actions, we separately test the amount in controversy of each class member, whether class representative or rank and file. We also know from Zahn that we are not to aggregate the potential recovery of class members. 29 In addition, § 1367 instructs that the jurisdictional amount is satisfied when the potential recovery (including attorney's fees when appropriate) of only one plaintiff exceeds § 1332's threshold. And Abbott confirms that when the federal court has jurisdiction over at least one member of the class by virtue of (1) diversity of citizenship and (2) a sufficient jurisdictional amount, that court has supplemental jurisdiction over all diverse class members, including those whose claims fall short of § 1332's amount-in-controversy threshold. 30 33
34 The class representatives would make much of the fact that art. 595(A)'s authorization for the court to allow them attorney's fees is couched in permissive terms, employing may rather than shall. Such reliance is misplaced. The only other federal court of appeals to have addressed this issue directly is the Ninth Circuit which, in Galt G/S v. JSS Scandinavia, 31 squarely held that where an underlying statute authorizes an award of attorney's fees, either with mandatory or discretionary language, such fees may be included in the amount in controversy. 32 Notably, the state statute at issue in Galt did in fact provide for the discretionary award of attorney's fees, so the quoted language clearly is not dictum. As one leading treatise notes: 35 There is authority for the proposition that when the applicable substantive law makes the award of an attorney's fee discretionary, a claim that this discretion should be exercised in favor of the plaintiff makes the requested fee part of the statutorily required amount in controversy. 33 36 Here, the class representatives' petition includes the prayer for their costs for the prosecution of this class action, and art. 595(A) defines expenses of litigation to include attorney's fees. Therefore, even though the general rule is that interest and court costs are not includable in calculating the amount in controversy, 34 attorney's fees are includable when the state statute allowing cost shifting expressly defines the allowable expenses of litigation to include attorney's fees, 35 especially when the plaintiffs expressly pray for recovery of costs. In the instant case, art. 595(A) expressly authorizes the court to allow attorney's fees to the class representatives as a defined element of the expenses of litigation; and although that alone is sufficient in light of LCCP art. 862's authorization of judgments that exceed prayers or demands, it is further confirmed by the class representatives' prayer for recovery of costs. Furthermore, on this point we are bound by Abbott, which relied on art. 595(A) to include § 52:137's attorney's fees in the calculation of the class representative's amount in controversy. Declining to create a circuit split with the Ninth Circuit, we hold that when there is state statutory authority for the court to award attorney's fees to class representatives, either with mandatory or discretionary language, such fees may be included in the amount in controversy. 36 37
38 The propriety of this holding is underscored by a functional analysis of art. 595(A) in the context of Louisiana's statutory class action scheme. Such a contextual reading of art. 595(A) reveals that it is Louisiana's default provision for attorney's fees in class actions. Remembering that (1) as a general rule, Louisiana does not authorize the court to award attorney's fees in tort suits, and (2) art. 595(A) stands as a statutory exception to that general rule for purposes of class actions, the function and necessity of using may rather than shall becomes self-evident. Art. 595(A) completes the attorney's fees picture for Louisiana class actions by covering the otherwise-unaddressed situation in which (1) there is no separate statutory provision for attorney's fees, and (2) such fees could not be assessed against a defendant cast in judgment were the action based on an individual delictual claim rather than a class claim. The way that art. 595(A) harmonizes Louisiana's attorney's fees rules in the context of class actions is by empowering, without mandating, the court to allow attorney's fees to class representatives from funds or other sources of recovery made available to the class — whether by judgment, settlement, or otherwise — so long as such favorable result is the product of the class litigation. 39 Quite simply, when there is a separate statute (such as § 51:137 in Abbott ) that mandates assessment of attorney's fees in favor of the class and against the defendant, there is no need for the court to invoke art. 595(A)'s default authorization to shift a portion of the class members' recovery for the benefit of those class representatives who have contracted with the attorneys and could be out of pocket for various costs and expenses. But when, as here (and in myriad other Louisiana tort class actions) attorney's fees are not recoverable under some separate statute, art. 595(A) clutches in to supply the default rule, authorizing the court to allow attorney's fees and other costs to the class representatives out of the sums recoverable by the entire class in recompense for damages — specifically, the funds made available by judgment, compromise, or any other source, as long as it results from the class litigation and is for the benefit of all class members — whether in a common fund or in separate, individual recoveries. Of course, this is only meet and right when the recovery from which attorney's fees are allowed flows from the class action litigation. 40 It is this default function of art. 595(A) — complementing as it does, those situations, such as in Abbott, in which separate statutes mandate attorney's fees — that explains why the redactors of Louisiana's Civil Procedure code consciously employed the permissive may rather than the mandatory shall. Were it otherwise, the class representatives would be, or at least could be, the unintended beneficiaries of double dipping: In an Abbott -like situation, receiving fees first from the defendant and then from their fellow class members as a result of a mandatory (shall) taxing of their respective shares of either a common fund or separate awards of damages, would constitute a windfall to the class representatives rather than a making them whole, as clearly intended. The use of may avoids the potential of such a windfall to the class representatives, imparting discretion to the court either to (1) refrain from shifting a portion of the class members' recoveries from the rank and file to the class representatives when a separate statute imposes attorney's fees on the defendant, over and above damages; or (2) shift a portion from the shares of the non-representative class members by awarding therefrom attorney's fees and other costs to the class representatives when no other source is available. 37