Court Opinion

ID: 9634591
Source: CourtListenerOpinion
Date Created: 2023-08-22 13:17:39.758541+00
Date Added: 2024-06-11T18:09:06.295914
License: Public Domain

CAROL DALBY, Special Justice, concurring. I agree with the majority that the chancery court erred in failing to hold a compliance trial and in failing to award attorneys’ fees. I concur because I believe additional clarification on the issue of attorneys’ fees needs to be addressed. Under the American Rule (which Arkansas follows) a litigating party, whether successful or not, must pay its own attorney’s fee, unless a statute, contract, or judicial exceptions provide otherwise. Arkansas has recognized exceptions to this rule as noted in the majority opinion. Two of those exceptions under which an award of attorneys’ fees in this case could be granted are the common-fond and the common-benefit exceptions. For the reasons set forth below, I believe the common-benefit exception should be applied to award attorneys’ fees calculated by the lodestar method. The common-fund exception permits the granting of attorneys’ fees and other costs of litigation when a plaintiff is successful in creating, increasing, or preserving a fund which benefits an ascertainable class. The court, in exercising its equity jurisdiction may grant fees and costs by directing payment from the fund. Newberg on Class Action, Sec. 13.52 (3rd ed. 1992). In the case now before us, the evidence (despite the assertions of counsel in argument before the chancery court) is clear that the existing fund for school funding was increased, but no new fund was created nor preserved. It follows that any award of attorney’s fees based on the common-fund exception should be based on the increase in that fund and should be taxed against those specific districts that received an increase in state funding. This, of course, would tax those who could least afford it (i.e. ‘the poorer school districts’), which makes its application contrary to the purpose of the fee-shifting exception. If, however, the chancery court does determine that an award of fees is warranted under the common-fund exception, I urge it to calculate the amount of fees based on the agreement made by the attorneys when they agreed to take the case. It appears that plaintiffs’ attorneys were at one point satisfied to be paid a contingent of any settlement or judgment that Lake View received as per the employment contract entered into by the parties on September 3, 1998, some six years after the initial filing of this lawsuit. There certainly was nothing in the record to indicate a fee agreement prior to that time. Now, they are urging upon this Court, as they did in the chancery court, that they are entitled to a contingent fee from all monies now available to all school districts because of the legislative acts and Amendment 74. Their position is contrary to their own agreement. If they are to receive attorneys’ fees at all under the common-fund exception, then they should be limited to that amount the Lake View School District recovered as per the fee agreement filed in the trial record at page 1239. Alternatively, I would urge the chancery court to apply the lodestar method to calculate attorneys’ fees. This method would be particularly appropriate in this case since the first contingency-fee agreement was not entered into until September 3, 1998. How did plaintiffs’ counsel expect to be paid during the first six years of litigation? It could not have been on a contingent basis since there was no writing stating such. See Model Rules of Professional Conduct, Rule 1.5. The common-benefit exception is often used interchangeably with the common-fund exception, but there are subtle differences and it is those differences that determine who becomes responsible for payment of attorneys’ fees. Under this exception the court is permitted to award attorney’s fees from a defendant if the plaintiff’s action results is a substantial benefit to the class but does not create a monetary fund from which fees might be awarded. Newberg on Class Actions, Sec. 13.52 (3rd ed. 1992). There is no doubt that the State of Arkansas has benefited and will continue to benefit by providing equality in education for all of its citizens and not just for those who reap the benefits of education by virtue of where they reside. The majority eludes to a “substantial economic benefit” accruing to the State as a whole. As noble as this statement is and in reality how true it may be, the record is devoid of any evidence as to the “substantial economic benefit” the State has received and no evidence has been offered upon which a percentage fee could be calculated. The only type of measurable economic benefit has inured to the poorer school districts, the effect of which is discussed above. I believe that the State has and will benefit as a result of plaintiffs’ efforts by having better-educated citizens. It is under this exception I would grant attorneys’ fees against the State. For the reasons set forth below, I am convinced that the proper calculation of attorneys’ fees under this exception and under the unique facts of this case should be by the lodestar method. The lodestar method of fee calculation relies on the time and services that an attorney spends on a lawsuit, rather than the granting of a fee based on a percentage of the recovery. Lindy Brothers Builders v. American Radiator & Standard Sanitary Corp., 487 F.2d 161 (3rd Cir. 1973), aff’d in part and vacated, 540 F.2d 102 (3rd Cir. 1976). In Lindy, the court stated the purpose of a fee award in common-fund cases is “to compensate the attorney for the reasonable value of services benefiting the underrepresented claimant.” 487 F.2nd at 167. The court must look to the hours reasonably expended multiplied by a reasonable hourly rate. Id. This Court recognizes that time spent on a case is “an important element to be considered in determining the reasonable value of an attorney’s services.” Powell v. Henry, 267 Ark. 484, 487, 592 S.W.2d 107 (1980); Millsap v. Lane, 288 Ark. 439, 443, 706 S.W.2d 378 (1986). This application is particularly appealing here since the attorneys cannot be paid a percentage of the true benefit to the citizens of this State — better education. I am hard pressed to find any basis upon which the plaintiffs’ attorneys should be compensated in the millions of dollars for their efforts. Plaintiffs’ attorneys should be required to account to the chancery court and the citizens and taxpayers of this State (the class) as to what they expended in time and services in this lawsuit before the chancery court can determine a reasonable fee, as required by the Model Rules of Professional Conduct.