Opinion ID: 885550
Heading Depth: 2
Heading Rank: 4

Heading: enhancement of lodestar for undesirability.

Text: ¶ 69 Whether the District Court abused its discretion by not enhancing the lodestar to reflect the undesirability of the case? ¶ 70 In Ihler I, we concluded that the District Court's enhancement of the lodestar by 50 percent based on the contingent nature of a statutory award of fees under § 1988 was prohibited by Dague and remanded the case to the District Court with instructions to delete this increase. Ihler I, 259 Mont. at 246, 855 P.2d at 1013. On remand, the District Court stated: This Court's upward adjustment to the lodestar was based on D'Emanuele v. Montgomery Ward & Co., 904 F.2d 1379 (9th Cir.1990), which held that Justice O'Connor's concurring opinion in Pennsylvania v. Delaware Valley Citizens' Council for Clean Air, 483 U.S. 711 [107 S.Ct. 3078, 97 L.Ed.2d 585] (1987), was the correct approach. Under that approach, enhancement was appropriate where a plaintiff established that without such an enhancement, he would have faced substantial difficulties in finding counsel in the relevant market. 483 U.S. at 733 [107 S.Ct. 3078]. This Court therefore granted an enhancement solely due to [the] reluctance of Montana attorneys to accept civil rights cases without the prospect of an enhanced fee. However, that approach was specifically rejected in Dague. [505 U.S. at 563-64, 112 S.Ct. at 2641-42] 120 L.Ed.2d at 457. ¶ 71 The Patients contend that the District Court erred as a matter of law. The Patients assert that the District Court found that civil rights cases are, as a class, generally undesirable to attorneys in Montana and that Dague does not prohibit an enhancement based on undesirability. The Hospital asserts that this factor was already subsumed within the initial lodestar determination and that the Patients did not meet their burden of establishing that civil rights cases are so undesirable as to require an enhancement. ¶ 72 Although Dague prohibits an enhancement based on contingent risks, Dague does not prohibit all enhancements to a lodestar figure. See Guam Soc'y of Obstetricians & Gynecologists v. Ada (9th Cir.1996), 100 F.3d 691, 697 (affirming an enhancement based on the extreme undesirability of the case, the likelihood that no other local attorney would have accepted the case, and the rare and exceptional nature of the case). However, there is a strong presumption that the lodestar figure represents a reasonable fee. See Dague, 505 U.S. at 562, 112 S.Ct. at 2641 (citation omitted). The applicant has the burden of proving that the requested enhancement is necessary to the determination of a reasonable fee. Dague, 505 U.S. at 562, 112 S.Ct. at 2641 (quoting Blum, 465 U.S. at 898, 104 S.Ct. at 1548). ¶ 73 In Dague, the Supreme Court observed that the risk of loss (and, therefore, the attorney's contingent risk) is the product of two factors: (1) the relative legal and factual merits of the claim, and (2) the difficulty in establishing those merits. Dague, 505 U.S. at 562, 112 S.Ct. at 2641. The Court noted that the difficulty in establishing the merits of a claim is ordinarily reflected in the lodestareither in the higher number of hours expended to overcome the difficulty, or in the higher hourly rate of the attorney skilled and experienced enough to do so. Dague, 505 U.S. at 562, 112 S.Ct. at 2641. The Court observed that the first factor, the relative legal and factual merits of the claim, should play no part in the calculation of an award because accounting for it would provide attorneys with the same incentive to bring relatively meritless claims as relatively meritorious ones. See Dague, 505 U.S. at 563, 112 S.Ct. at 2642. ¶ 74 In holding that a lodestar fee may not be enhanced for contingent risks, the Court explicitly rejected the approach of the concurrence in Pennsylvania v. Delaware Valley Citizens' Council for Clean Air (1987), 483 U.S. 711, 107 S.Ct. 3078, 97 L.Ed.2d 585 (hereinafter Delaware Valley II ), that enhancement may be appropriate if the applicant can establish that without an adjustment for risk the prevailing party would have faced substantial difficulty finding counsel in the local or other relevant market because of the market treatment of similar claims as a class. See Dague, 505 U.S. at 563-64, 112 S.Ct. at 2642. The Court observed that the predominate reason that a contingent-fee claimant has difficulty finding counsel in any legal market where the winner's attorney fees will be paid by the loser is that attorneys view the claimant's case as too risky. See Dague, 505 U.S. at 564, 112 S.Ct. at 2642. ¶ 75 On remand, the District Court noted that its original enhancement had been based solely on reasoning contained in the Delaware Valley II concurrence, which had been expressly rejected by Dague. Accordingly, the Court correctly removed the enhancement from its award on remand. ¶ 76 We cannot conclude that the District Court erred as a matter of law by doing exactly as the law required. Dague explicitly rejected the notion of enhancing an attorney fee award because of the undesirability of a class of claims. Moreover, we note that by holding that the District Court erroneously failed to award reasonable fees at out-of-state rates, this factorthe reluctance of Montana attorneys to represent these types of claimsis now subsumed in the lodestar figure. Consequently, we conclude that the District Court did not abuse its discretion in refusing to enhance the lodestar figure for undesirability.