U.S. v. $186,416.00 In U.S. Currency

Citation642 F.3d 753
Decision Date26 April 2011
Docket NumberNo. 07–56549.,07–56549.
PartiesUNITED STATES of America, Plaintiff–Appellee,v.$186,416.00 IN U.S. CURRENCY, Defendant.United Medical Caregivers Clinic, Inc., Claimant–Appellant.
CourtUnited States Courts of Appeals. United States Court of Appeals (9th Circuit)

OPINION TEXT STARTS HERE

Steven R. Welk, U.S. Department of Justice, for the plaintiff-appellee.Paul L. Gabbert, Santa Monica, CA, for the claimant-appellant.Eric Honig, Marina Del Rey, CA, for amicus curiae National Association of Criminal Defense Lawyers.D.C. No. CV–05–06703–SVW–SH, Central District of California, Los Angeles.Before: MICHAEL DALY HAWKINS, MARSHA S. BERZON, and RICHARD R. CLIFTON, Circuit Judges.

ORDER

Claimant United Medical Caregivers Clinic (UMCC) prevailed in a civil forfeiture proceeding initiated by the United States. See United States v. $186,416.00 in U.S. Currency, 590 F.3d 942 (9th Cir.2009). The Civil Asset Forfeiture Reform Act (“CAFRA”) provides that in “any civil proceeding to forfeit property under any provision of Federal law in which the claimant substantially prevails, the United States shall be liable for reasonable attorney fees and other litigation costs reasonably incurred by the claimant.” 28 U.S.C. § 2465(b)(1)(A).

UMCC has moved for an award of attorney fees pursuant to CAFRA and has specifically requested that the fee award be paid directly to its counsel rather than to UMCC itself, as the claimant. The government does not contest UMCC's entitlement to fees as a substantially prevailing party but has objected to the amount sought by the motion and has opposed the request that the fee award be paid directly to UMCC's attorney.

We refer the matter to the Appellate Commissioner to calculate the amount of an appropriate fee award. We instruct the Appellate Commissioner to use the lodestar method, and conclude that the actual fee agreement between UMCC and its attorney may be taken into account but is not by itself determinative in calculating the appropriate amount of the fee award. As for the payee of the fee award, we conclude that attorney fees awarded under CAFRA are payable to the claimant, not to claimant's attorney, so the fee awarded here will be payable to UMCC.

1. The amount of the fee award

CAFRA does not specify precisely how fee awards should be calculated. The statute simply provides that the government is liable for “reasonable attorney fees and other litigation costs reasonably incurred by the claimant.” 28 U.S.C. § 2465(b)(1)(A).

This court has not yet addressed the proper method of determining a fee award under CAFRA. Other courts have used the lodestar method to determine the amount to be awarded under CAFRA. See U.S. v. One Star Class Sloop Sailboat, 546 F.3d 26, 37–8 (1st Cir.2008); U.S. v. $60,201.00 in U.S. Currency, 291 F.Supp.2d 1126, 1129–1130 (C.D.Cal.2003). In this case UMCC proposes that its fees be determined that way, but the government argues that the lodestar approach should not be used and that the fee should primarily be based on the actual agreement between UMCC and its attorney. UMCC has declined to make its fee agreement available, and the government asks that its production be ordered.

The lodestar approach is the method customarily used to determine attorney fees under fee-shifting statutes. See Blanchard v. Bergeron, 489 U.S. 87, 93–94, 109 S.Ct. 939, 103 L.Ed.2d 67 (1989) (the lodestar method determines the statutory fee award under 42 U.S.C. § 1988); Nadarajah v. Holder, 569 F.3d 906, 916 (9th Cir.2009) (EAJA). We see no reason to depart from that approach under CAFRA and conclude that the lodestar method should be used in calculating fees in this case.

That does not mean that the actual fee agreement cannot be relevant to the fee determination. Under § 1988 and EAJA, the actual fee agreement does not act as a cap on the amount of statutory attorney fees awarded. See Blanchard, 489 U.S. at 93–94, 109 S.Ct. 939; Corder v. Gates, 947 F.2d 374, 377–78 (9th Cir.1991); Nadarajah, 569 F.3d. at 916. However, the agreement can be considered when determining a reasonable fee under the lodestar approach. See Blanchard, 489 U.S. at 93, 109 S.Ct. 939; Corder, 947 F.2d at 377–8. We see no reason to depart from this practice in the CAFRA context, either. UMCC is required to disclose its agreement with its attorney.

This matter is referred to the Appellate Commissioner for the purpose of determining the amount of reasonable attorney fees and other litigation costs reasonably incurred by UMCC, consistent with this order. The Appellate Commissioner may issue an order awarding fees and other litigation costs. Any such order is subject to a motion for reconsideration by this panel. See Circuit Rule 39–1.9.

2. The CAFRA fee award should be paid to the claimant

CAFRA does not explicitly identify to whom an award for fees and costs under that statute are to be paid. It simply says that “the United States shall be liable for reasonable attorney fees and other litigation costs reasonably incurred by the claimant.” 28 U.S.C. § 2465(b)(1)(A).

Prior to CAFRA's enactment in 2000, attorney fees could be sought by successful claimants in forfeiture actions under the Equal Access to Justice Act (“EAJA”), 28 U.S.C. § 2412(d). See $60,201.00 U.S. Currency, 291 F.Supp.2d at 1130. EAJA provides that a court “shall award to a prevailing party other than the United States fees and other expenses” in specified circumstances. 28 U.S.C. § 2412(d)(1)(A). The language used in CAFRA and EAJA is somewhat different. EAJA specifically assigns fee awards to “the prevailing party,” but CAFRA does not, stating only that “the United States shall be liable for reasonable attorney fees.” 28 U.S.C. § 2465(b)(1)(A).

UMCC reads this difference to mean that CAFRA fees should go directly to attorneys instead of the prevailing litigant. Following the Supreme Court's recent decision in Astrue v. Ratliff, ––– U.S. ––––, 130 S.Ct. 2521, 177 L.Ed.2d 91 (2010), we conclude otherwise.

Ratliff resolved a longstanding circuit split on the question of whether fee awards under EAJA were payable to the party or the attorney by holding that EAJA awards are to be paid to the prevailing litigant. Id. at 2525–29. In part, the Court based its decision on the specific language in EAJA, noted above, directing payments to the “prevailing party.” [P]revailing party is a ‘term of art’ that refers to the prevailing litigant.” Id. at 2525. CAFRA does not contain similar language directing fees to the prevailing party.

The Court's decision in Ratliff did not stop there, however. It went on to highlight the absence of language in EAJA explicitly directing fees to attorneys. Comparing EAJA with a provision in the Social Security Act making fee awards payable “to such attorney,” see 42 U.S.C. § 406(b)(1)(A), the Court concluded that “given the stark contrast between the SSA's express authorization of direct payments to attorneys” and the absence of such language in EAJA, it would not interpret EAJA to “contain a direct fee requirement absent clear textual evidence supporting such an interpretation.” Ratliff, 130 S.Ct. at 2527–28. As the Court noted, Congress “knows how to make fees awards payable directly to attorneys where it desires to do so.” Id. at 2527.

Ratliff counsels that in the absence of explicit instructions from Congress awarding fees to the attorney, direct payment to the attorney should not be presumed. Id. There is no such explicit instruction in CAFRA.

Direct payment to the attorney is the exception, not the rule. “The Supreme Court has made it clear that, in general, statutes bestow fees on parties, not upon attorneys.” United States ex rel. Virani v. Jerry M. Lewis Truck Parts & Equipment, 89 F.3d 574, 577 (9th Cir.1996). For example, attorney fee awards under 42 U.S.C. § 1988 or under the antitrust laws are payable to parties. See Evans v. Jeff D., 475 U.S. 717, 731–33, 106 S.Ct. 1531, 89 L.Ed.2d 747 (1986); Gilbrook v. City of Westminster, 177 F.3d 839, 875 (9th Cir.1999) (“In the absence of a contractual assignment to counsel, § 1988 requires that attorney fee awards be made directly to the prevailing party); Image Technical Service, Inc. v. Eastman Kodak Co., 136 F.3d 1354, 1357 (9th Cir.1998) (“Any fee award in an antitrust case goes to the successful plaintiff, not to plaintiff's counsel.”). Unless the statute specifies payment to the litigant's attorney, payment to the attorney is not assumed.

UMCC argues that by not including EAJA's language mandating fee awards to the “prevailing party in CAFRA, Congress signaled its intent to reject EAJA's method of awarding attorney fees. Without further evidence, the use of the passive phrase “the United States shall be liable for reasonable attorney fees” in CAFRA, rather than “shall award to a prevailing party in EAJA, cannot be read as a clear expression of congressional intent to create a direct fee award to counsel. If, as UMCC argues, Congress intended to liberalize fee awards in forfeiture cases with CAFRA, it did so by eliminating EAJA's language exempting the government for payment of fees where the “position of the United States was substantially justified,” not by providing for fee awards to be paid directly to attorneys. 28 U.S.C. § 2465(b)(1)(A). Neither legislative history nor “clear textual evidence,” Ratliff, 130 S.Ct. at 2528, supports UMCC's contention that direct fee payment to counsel was one of the reforms envisioned by Congress in CAFRA.1

UMCC attempts to extract a direct fee requirement from two phrases in 28 U.S.C. § 2465(b)(1)(A)—that the government is “ liable for ” attorney fees incurred by the claimant (emphasis added). This effort is not persuasive. The word “liable,” as UMCC agrees, means to be “legally obligated.” See Black's Law Dictionary (9th ed.2009). It does not indicate to whom the liability is owed. UMCC is right that under fee-shifting statutes, fees may be considered to be “incurred” by the client even though...

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