Opinion ID: 2510533
Heading Depth: 1
Heading Rank: 7

Heading: Substantial benefit doctrine

Text: Nevada follows the American rule that attorney fees may not be awarded absent a statute, rule, or contract authorizing such award. [10] A judicially created exception to the American rule is the substantial benefit doctrine. [11] This doctrine allows recovery of attorney fees when a successful party confers `a substantial benefit on the members of an ascertainable class, and where the court's jurisdiction over the subject matter of the suit makes possible an award that will operate to spread the costs proportionately among them.' [12] Typically, the substantial benefit exception is applied in cases involving shareholders or unions. [13] In those actions, the successful plaintiff confers a benefit on all shareholders or union members, and thus, attorney fees assessed against the corporation or union are easily and equitably spread among the shareholders or members who are the beneficiaries of the litigation. [14] What is important in those instances is that `the class of beneficiaries is before the court in fact or in some representative form.' [15] To recover fees under the substantial benefit doctrine, a successful party must demonstrate that: (1) the class of beneficiaries [is] `small in number and easily identifiable'; (2) `the benefit [can] be traced with some accuracy'; and (3) `the costs [can] ... be shifted with some exactitude to those benefiting.' [16] Regarding the first factor, we conclude that the class of beneficiaries, the City of North Las Vegas taxpayers, is sufficiently small in number and easily identifiable for purposes of the substantial benefit exception. [17] As to the second factor, the substantial benefit of Thomas and Armstrong's litigation is that their case brought about changes in how the City and the NLVPOA authorize grievances to be arbitrated. [18] The NLVPOA position statement, issued after Thomas and Armstrong won their suit to compel arbitration, stated that the NLVPOA's position prior to their suit was erroneous. And, because of Thomas's and Armstrong's lawsuits, the NLVPOA changed the way that it authorizes grievances to be arbitrated. However, although Thomas and Armstrong have met the first two factors, they have not met the third factor required for relief because they have not demonstrated that the costs will be shifted to those benefiting. This is determinative, and we therefore conclude that the substantial benefit exception is inapplicable. Thomas and Armstrong seek attorney fees from the City and not from the NLVPOA. They argue that because all NLVPOA members are City employees, all City employees governed by a collective bargaining agreement benefited, including police officers, corrections personnel, and firefighters. The City argues that because City of North Las Vegas citizens did not benefit from the order compelling arbitration, the municipality as a whole cannot be forced to bear the cost of litigation. We agree with the City. [19] Whether the substantial benefit exception applies to a municipality is an issue of first impression for this court. Generally, in actions against municipalities, states, and the United States, courts conclude that all citizen taxpayers of the municipality, state, or United States usually cannot share the benefit conferred, and therefore, the costs cannot be shifted with some exactitude to those benefiting. Thus, the substantial benefit doctrine does not apply. [20] However, there have been instances where courts have held that the substantial benefit exception applies to a municipality, and Thomas and Armstrong rely on this line of authority. In Ex parte Horn, [21] the plaintiffs successfully prevented the operation of a garbage transfer station in their neighborhood. As a result of the large public interest caused by the plaintiffs' efforts, the City of Birmingham passed a new ordinance regulating and licensing all solid waste facilities in Birmingham. Therefore, the plaintiffs' efforts resulted in a benefit to all residents of the City of Birmingham, and the costs of litigation could be spread accordingly. [22] Here, distinguishable from Ex parte Horn, City of North Las Vegas citizen taxpayers are not before the court in a representative form and will receive no benefit from this litigation. The benefit conferred by this litigation, the change in NLVPOA grievance and arbitration procedures, was conferred on NLVPOA members and NLVPD officers governed by the CBA. Thus, shifting attorney fees to City of North Las Vegas citizen taxpayers would not shift the costs to those benefiting. We therefore conclude that the substantial benefit exception cannot be extended to the municipality under these circumstances and Thomas and Armstrong are not entitled to attorney fees under this exception. [23] Accordingly, the district court properly denied Armstrong's and Thomas's motions for attorney fees.