Pennsylvania v. Delaware Valley Citizens Council For Clean Air

• Decision Date: 03 March 1986
• Docket Number: No. 85-5,85-5
• Parties: PENNSYLVANIA, et al., Petitioners v. DELAWARE VALLEY CITIZENS' COUNCIL FOR CLEAN AIR, et al
• Court: U.S. Supreme Court

483 U.S. 711

107 S.Ct. 3078

97 L.Ed.2d 585

PENNSYLVANIA, et al., Petitioners

v DELAWARE VALLEY CITIZENS' COUNCIL FOR CLEAN AIR, et al.

No. 85-5.

Argued March 3, 1986.

Reargued Oct. 15, 1986.

Decided June 26, 1987.

Syllabus

In 1977, the Delaware Valley Citizens' Council for Clean Air (hereafter respondent) and the United States each filed suit to compel Pennsylvania to comply with certain provisions of the Clean Air Act (Act). (See 478 U.S. 546, 106 S.Ct. 3088, 92 L.Ed.2d 439, an earlier decision in this case setting forth a detailed statement of the facts.) A consent decree, approved by the Federal District Court in 1978, obligated Pennsylvania to establish a program for the inspection and maintenance of vehicle emissions systems in certain counties by August 1980. The State failed to do so, and protracted litigation ensued. In 1983, the parties agreed to set June 1, 1984, as the date the State would commence the program. Shortly after such agreement, respondent petitioned the District Court for attorney's fees and costs, pursuant to § 304(d) of the Act, for the work performed after the issuance of the consent decree. The court divided the work into phases and determined the lodestar amount for attorney's fees (the product of reasonable hours times a reasonable rate) for each phase. For certain phases, the court adjusted the figure upward by doubling the lodestar to reflect the risk presumably faced by respondent that it would not prevail on such phases of the litigation. The Court of Appeals affirmed the District Court's enhancement of the fee award. The issue presented here is whether, under § 304(d), when a plaintiff prevails, its attorney, under a contingent fee arrangement, should or may be awarded separate compensation for the risk of losing and not being paid.

Held: The judgment is reversed.

762 F.2d 272, (CA3 1985), reversed.

Justice WHITE, joined by THE CHIEF JUSTICE, Justice POWELL, and Justice SCALIA, concluded that § 304(d) should be construed as not permitting enhancement of a reasonable lodestar fee to compensate for an attorney's assuming the risk of loss and of nonpayment, and that even if § 304(d) is construed to permit such enhancement in appropriate cases, it was error to do so in this case. Pp. 723-731.

Justice O'CONNOR concluded that Congress did not intend to foreclose consideration of contingency in setting a reasonable fee under fee-shifting provisions such as § 304(d), but that the District Court erred in employing a risk multiplier in the circumstances of this case. Pp. 735-755.

Justice BLACKMUN, joined by Justice BRENNAN, Justice MARSHALL, and Justice STEVENS, concluded that Congress intended § 304(d) to allow an upward adjustment, in appropriate circumstances, for a case taken on a contingent basis, and that the award in this case should be vacated and the case should be remanded to the District Court for further findings. Pp. 735-755.

WHITE, J., announced the judgment of the Court and delivered the opinion of the Court with respect to Parts I, II, and III-A, in which REHNQUIST, C.J., and POWELL, O'CONNOR, and SCALIA, JJ., joined, and an opinion with respect to Parts III-B, IV, and V, in which REHNQUIST, C.J., and POWELL and SCALIA, JJ., joined. O'CONNOR, J., filed an opinion concurring in part and concurring in the judgment, post, p. ----. BLACKMUN, J., filed a dissenting opinion, in which BRENNAN, MARSHALL, and STEVENS, JJ., joined, post, p. ----.

Jay C. Waldman, Harrisburg, Pa., for petitioners.

Donald B. Ayer, Sacramento, Cal., for United States, as amicus curiae, in support of the petitioners, by special leave of Court.

James D. Crawford, Philadelphia, Pa., for respondents.

Justice WHITE announced the judgment of the Court and delivered an opinion, Parts I, II, and III-A of which represent the views of the Court, and Parts III-B, IV, and V of which are joined by THE CHIEF JUSTICE, Justice POWELL, and Justice SCALIA.

This case involves the award of an attorney's fee to the prevailing party pursuant to § 304(d) of the Clean Air Act, 42 U.S.C. § 7604(d).¹

I

We set forth a detailed statement of the facts underlying this litigation in Pennsylvania v. Delaware Valley Citizens' Council for Clean Air, 478 U.S. 546, 106 S.Ct. 3088, 92 L.Ed.2d 439 (1986), and recite only an abbreviated version of those facts here. In 1977, the Delaware Valley Citizens' Council for Clean Air (hereafter respondent) and the United States each filed suit to compel the Commonwealth of Pennsylvania to comply with certain provisions of the Clean Air Act. The parties entered into a consent decree, approved by the District Court in 1978,² which obligated the Commonwealth to establish a program for the inspection and maintenance of vehicle emissions systems in 10 counties in the Philadelphia and Pittsburgh areas by August 1, 1980. The Commonwealth failed to implement the program by this date, and protracted litigation ensued. Ultimately, in May 1983, the parties agreed to set June 1, 1984, as the date on which the Commonwealth would commence the inspection and maintenance program. Shortly after this agreement, respondent petitioned the District Court for attorney's fees and costs for the work performed after the issuance of the consent decree. In determining the amount of fees to be awarded, the District Court divided the work performed by respondent's counsel into nine phases. See 478 U.S., at 549-553, 106 S.Ct., at 3090-3092. After computing the lodestar for each phase, the District Court adjusted this figure upward in phases four, five, and seven by doubling the lodestar to reflect the risk presumably faced by respondent that it would not prevail on these phases of the litigation. The District Court observed:

"The contingent nature of plaintiff's success has been apparent throughout this litigation. Plaintiffs entered the litigation against the U.S. Government and the Commonwealth of Pennsylvania. The case involved new and novel issues, the resolution of which had little or no precedent. . . . [P]laintiffs have had to defend their rights under the consent decree due to numerous attempts by defendants and others to overturn or circumvent this court's Orders." 581 F.Supp. 1412, 1431 (1984).

The Court of Appeals for the Third Circuit affirmed the District Court's enhancement of the fee award for contingency of success, 762 F.2d 272, 282 (1985), a judgment that we now reverse.³

II

We first focus on the nature of the issue before us. Under the typical fee-shifting statute, attorney's fees are awarded to a prevailing party and only to the extent that party prevails. See, e.g., Maher v. Gagne, 448 U.S. 122, 129-130, 100 S.Ct. 2570, 2574-75, 65 L.Ed.2d 653 (1980); Hensley v. Eckerhart, 461 U.S. 424, 435, 103 S.Ct. 1933, 1940, 76 L.Ed.2d 40 (1983). Hence, if the case is lost, the loser is awarded no fee; and unless its attorney has an agreement with the client that the attorney will be paid, win or lose, the attorney will not be paid at all. In such cases, the attorney assumes a risk of nonpayment when he takes the case. The issue before us is whether, when a plaintiff prevails, its attorney should or may be awarded separate compensation for assuming the risk of not being paid. That risk is measured by the risk of losing rather than winning and depends on how unsettled the applicable law is with respect to the issues posed by the case and by how likely it is that the facts could be decided against the complainant. Looked at in this way, there are various factors that have little or no bearing on the question before us.

First is the matter of delay. When plaintiffs' entitlement to attorney's fees depends on success, their lawyers are not paid until a favorable decision finally eventuates, which may be years later, as in this case. Meanwhile, their expenses of doing business continue and must be met. In setting fees for prevailing counsel, the courts have regularly recognized the delay factor, either by basing the award on current rates or by adjusting the fee based on historical rates to reflect its present value. See, e.g., Sierra Club v. EPA, 248 U.S.App.D.C. 107, 120-121, 769 F.2d 796, 809-810 (1985); Louisville Black Police Officers Organization, Inc. v. Louisville, 700 F.2d 268, 276, 281 (CA6 1983). Although delay and the risk of nonpayment are often mentioned in the same breath, adjusting for the former is a distinct issue that is not involved in this case. We do not suggest, however, that adjustments for delay are inconsistent with the typical fee-shifting statute.

Second, that a case involves an issue of public importance, that the plaintiff's position is unpopular in the community, or that defendant is difficult or obstreperous does not enter into assessing the risk of loss or determining whether that risk should be compensated. Neither does the chance that the court will find unnecessary and not compensate some of the time and effort spent on prosecuting the case.

Third, when the plaintiff has agreed to pay its attorney, win or lose, the attorney has not assumed the risk of nonpayment and there is no occasion to adjust the lodestar fee because the case was a risky one. See, e.g., Jones v. Central Soya Co., 748 F.2d 586, 593 (CA11 1984), where the court said that "[a] lawyer may not preserve a right of recourse against his client for fees and still expect to be compensated as if he had sacrificed completely his right to payment in the event of an unsuccessful outcome."

III

A.

Although the issue of compensating for assuming the risk of nonpayment was left open in Blum v. Stenson, 465 U.S. 886, 104 S.Ct. 1541, 79 L.Ed.2d 891 (1984), Justice BRENNAN wrote that "the risk of not prevailing, and therefore the risk of not recovering any attorney's fees is a proper basis on which a district court may award an upward adjustment to an otherwise compensatory fee." Id., at 902, 104 S.Ct. at 1550 (concurring). Most Courts of Appeals are of a similar view and have allowed upward adjustment of fee...