Opinion ID: 3014026
Heading Depth: 1
Heading Rank: 2

Heading: interest on its bonds. Vose ultimately

Text: succeeded and saved the trust fund a We exercise de novo review of “the significant amount of money. Trustees, standards and procedures applied by the 105 U.S. at 529. Vose then petitioned for District Court in determining attorneys’ “an allowance out of the fund for his fees, as it is purely a legal question.” expenses and services” because he had Planned Parenthood v. Att’y Gen. of N.J., borne “the whole burden of this litigation” 297 F.3d 253, 265 (3d Cir. 2002). for more than a decade and had “advanced However, we review the District Court’s most of the expenses which were findings of fact for clear error. Id. In this necessary for the purpose of rendering [the case, there are no disputed issues of fact. litigation] effective and successful.” Id. The District Court recognized that Rand The courts below had approved the bulk of had conferred a “definite benefit upon the Vose’s requests, including the fees for his corporation.” App. at 6. We agree. That, solicitor and counsel, costs of court, and however, is not the issue before us. copying. Critically, they also approved an award for “personal services” and “private Rand argues that the District Court expenses.” Id. at 537. erred as a matter of law in holding that attorney’s fees may not be awarded to an The Supreme Court approved of attorney who represented himself in a compensating Vose for his attorney’s fees shareholder derivative suit even where the and court fees as a matter of “equity and suit has benefitted the corporation. The justice.” Id. at 536-37. Because Vose had Supreme Court has issued two opinions “worked for [other bondholders] as well as that guide our decision on this appeal: for himself,” the Court found that it would Trustees of the Internal Improvement Fund have been “unjust” to give other of Fla. v. Greenough, 105 U.S. 527 (1882), bondholders an “unfair advantage” by not and Kay v. Ehrler, 499 U.S. 432 (1991). requiring them to contribute to “the expenses which [Vose had] fairly A. Trustees of the Internal incurred” in the course of litigation that Improvement Fund of Fla. v. had benefitted all bondholders. Id. at 532. Greenough The Supreme Court thus established the “common fund” doctrine as a federal In Trustees, Francis Vose, a common law doctrine that prevents the unjust enrichment of non-litigant beneficiaries at the litigant’s expense. Accordingly, it affirmed the award for of his efforts. 5 reimbursement for attorney’s fees and In short, Trustees emphasizes that a costs to Vose, the litigant whose actions person who draws a salary or other resulted in the creation of the common compensation from a trust or settlement fund for the benefit of himself and others. fund should not have a personal stake in the fund and instead should objectively Critically for our purposes, the seek to maximize the settlement fund to Supreme Court denied Vose’s petition for the benefit of the corporation or group. “personal services” and “private expenses” The Court’s refusal to award Vose a fee because such an award would have been for “personal services” illustrates its without precedent in law or equity. Id. at unwillingness to set up financial incentives 536-38. The Court found pivotal that for objectors to pursue potentially Vose “was a creditor, suing on behalf of unnecessary litigation to obtain a salary (or himself and other creditors, for his and fees for “personal services”) that might their own benefit and advantage.” Id. at conflict with the best interest of the 537. In denying Vose’s request for corporation or other shareholders. The payment of “personal services” and Court thus denied Vose’s request for fees “priva te expenses,” the Court for “personal services” because such distinguished the character of a trustee, compensation might reward and encourage who could properly receive a salary from potentially useless litigation by others the trust, from that of an interested seeking lucrative “salaries.” objector such as Vose, who could not reap a salary: As with Vose, Rand is not a trustee of corporation nor is it his job description Where an allowance is made to objectively and selflessly protect it. to trustees for their personal Rand is a doubly interested party: he has services, it is made with a a shareholder’s interest in the corporation view to secure greater as well as an attorney’s interest in activity and diligence in the obtaining attorney’s fees. Because the performance of the trust, conflict of interest as a lawyer and an and to induce persons of objector-shareholder might lead him to reliable character and take actions contrary to the best interest of business capacity to accept the corporation, he is not entitled to a the office of trustee. These “salary” of attorney’s fees under Trustees. considerations have no As the District Court properly noted, application to the case of a awarding Rand attorney’s fees potentially creditor seeking his rights in could “tempt” other lawyer-shareholders to a judicial proceeding. “advance garden variety objections because of the prospect of an award of Trustees, 105 U.S. at 537-38. attorney fees for their personal service.” App. at 10; see also Trustees, 105 U.S. at 6 537-38 (observing that an award for acknowledged that the traditional personal services may be “too great a American rule ordinarily prevents a temptation to parties to intermeddle” in prevailing litigant from recovering affairs in which they had “only the interest attorney’s fees from the loser but urged the of creditors, and that perhaps only to a court to consider whether their fee request small amount”). We note that Rand did fell within any of the equitable exceptions not incur any financial liabilities for his to the American rule. Id. at 245. After work on this case. Failure to award Rand determining that neither the bad faith nor fees should not discourage other the common fund doctrines applied, the shareholders from raising meritorious Court of Appeals for the District of objections in the future; it will only ensure Columbia Circuit held that the plaintiffs that they pursue objections with the were entitled to one-half of their fee assistance of third-party counsel. request for acting to “vindicate important statutory rights” for all citizens under the We also find instructive the “private attorney general” doctrine. Id. at Supreme Court’s decision in Alyeska 245-46 (internal quotation marks and Pipeline Service Co. v. Wilderness citations omitted). The Supreme Court Society, 421 U.S. 240 (1975). Although reversed that decision, holding that Alyeska did not address whether pro se Congress may authorize new exceptions to attorneys may recover fees under the the American rule, but the courts are not common fund doctrine, it underscored the empowered to do so without statutory limitations on the judiciary’s power to authorization. Id. at 262 (“[I]t is apparent award attorne y’s fees w ithout that the circumstances under which congressional authorization. In Alyeska, attorneys’ fees are to be awarded and the an environmental group requested an range of discretion of the courts in making award of attorney’s fees for their third- those awards are matters for Congress to party attorneys. 4 The plaintiffs determine.”). Absent a congressional directive that pro se attorneys should be able to recover attorneys’ fees in derivative 4 actions, we find no basis to create a new Plaintiffs had sought to enjoin the equitable exception for attorneys who Secretary of the Interior from issuing represent themselves in shareholder permits for the construction of the trans- derivative actions. Alaska oil pipeline. The district court initially granted a preliminary injunction against the issuance of permits, but dissolved it following the Secretary of the Interior’s announcement granting the subsequently amended the Mineral permits. Although pipeline construction Leasing Act “to allow the granting of the was later enjoined as a result of the permits sought” by the defendant. Mineral Leasing Act, Congress Alyeska, 421 U.S. at 242-44. 7 B. Kay v. Ehrler would deprive the litigation of the detached, reasoned judgment associated The distinction that the Supreme with third-party counsel. See id. at 437-38 Court drew in Trustees – between the (pro se attorneys deprived of independent compensable work of an objective, judgment in “framing the theory of the disinterested party and the non- case, evaluating alternative methods of compensable work of an interested litigant presenting the evidence, cross-examining – was further developed in its opinion in hostile witnesses, formulating legal Kay v. Ehrler, 499 U.S. 432 (1991). Kay arguments, and in making sure that reason, had brought a civil rights action rather than emotion, dictates the proper challenging a Kentucky statute that ta c t ic a l r e s p o n s e t o u n f o r e se e n precluded including his name on the developments in the courtroom”). The primary ballot. Id. at 433-34. After he Court explained that unlike pro se prevailed he sought attorney’s fees under representation, traditional third-party 42 U.S.C. § 1988, which provides for an compensable representation is objective, award of attorney’s fees to successful civil unclouded by the emotional hindrances rights plaintiffs. Id. at 434. The Court of borne of first-hand involvement in a case. Appeals read the statute as assuming “the Id. Moreover, the Court emphasized that existence of ‘a paying relationship the word “attorney” generally connotes between an attorney and a client.’” Id. at some form of an agency relationship, id. at 435 (quoting Kay v. Ehrler, 900 F.2d 967, 436 n.6; thus, Congress likely had 971 (6th Cir. 1990)). The Supreme Court c o n t e m p l a te d “ a n a tt o r n e y- c l ie n t affirmed. It noted that the circuits are in relationship as the predicate for an award agreement that a pro se litigant who is not under § 1988.” Id. at 436.5 a lawyer is not entitled to attorney’s fees but were in conflict as to “whether a lawyer who represents himself should be 5 In Duncan v. Poythress, 777 F.2d treated like . . . a client who has had the 1508 (11th Cir. 1985) (en banc), a case benefit of the advice and advocacy of an implicitly overruled by the Supreme independent attorney.” Id. at 435. The Court in Kay, the court addressed a Court considered whether such an award similar question to the one at bar. The would run contrary to the statute’s purpose Honorable Paul H. Roney, in dissent, of creating incentives for plaintiffs to focused upon the agency relationship, obtain independent counsel who would writing: successfully prosecute meritorious claims. Id. at 436-37. This case turns on the meaning of the word The Court noted that an attorney “attorney.” Although the who represents himself would be hindered majority believes the “plain by his inability to testify in the case and language” of section 1988 8 does not preclude an attorney in litigation award of fees to a there must be two lawyer representing people. Plaintiff herself,” we have here appeared pro simply been unable se. The term “pro to find any se” is defined as an definition which individual acting “in permits a decision his own behalf, in that a pro se lawyer person.” By has an attorney. Set definition, the forth in an person appearing “in