Burlington v Dague Sr Brief for Respondents

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Brief Collection, LDF Court Filings. Burlington v Dague Sr Brief for Respondents, 1992. eaac1e19-b79a-ee11-be36-6045bdeb8873. LDF Archives, Thurgood Marshall Institute. https://ldfrecollection.org/archives/archives-search/archives-item/e5badf9d-0ede-42fa-8863-40d25451955f/burlington-v-dague-sr-brief-for-respondents. Accessed October 11, 2025.

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No. 91-810

In The

Supreme Court of the United States
October Term, 1991

----------_— *---------------

CITY OF BURLINGTON,

vs.
Petitioner,

ERNEST DAGUE, SR., ERNEST DAGUE, JR.,
BETTY DAGUE, AND ROSE A. BESSETTE,

Respondents.

On Writ Of Certiorari To The United States Court
Of Appeals For The Second Circuit

— ---------------------— ♦ ----------------------------------------

BRIEF FOR RESPONDENTS

G uy T. Saperstein
M ari M ayeda
Barry G oldstein
Saperstein, M ayeda,
Larkin & G oldstein
1300 Clay Street
11th Floor
Oakland, CA 94612
(510) 763-9800
Co-Counsel for

Respondents

W illiam W. P earson*
M olloy, Jones & D onahue, P.C.
33 North Stone Avenue
Suite 2100
Tucson, Arizona 85701
(602) 620-5520
Counsel for Respondents

*Counsel of Record

COCKLE LAW BRIEF PRINTING CO., (800) 225-6964
OR CALL COLLECT (402) 342-2831

STATEMENT OF THE C A S E ............................................... 1

Summary Of The Litigation On The M erits................. 1

A ttorneys’ Fee Award............................................ 2

SUMMARY OF A R G U M E N T ............................................... 5

ARGUM ENT................................................................................. 6

I. A REASO NA BLE FEE FOR A CASE PR O S
ECUTED ON A CONTINGENT FEE BASIS MAY
INCLUDE AN ADJUSTMENT FOR THE CON
TINGENT RISK OF L O SS........................................... 6

A. This Court Consistently Has Accepted Legal
M arketplace Principles In Determining What
Are Reasonable Fees Under Fee-Shifting Stat
utes ............................................................................... 6

B. Justice O ’C onnor’s Analysis of the Contingent
Adjustment in Delaware Valley II Is Consistent
With This Court’s Adherence To M arket Prin
ciples .......................................................................... 12

II. LEGISLATION PROVIDING FOR THE AWARD
OF REASONABLE ATTORNEY’S FEES TO A
PREVAILING PARTY INCORPORATES LEGAL
MARKETPLACE FACTORS........................................ 13

A. The Language of the Statutes Demonstrate
That Congress Did Not Intend to Depart From
Its Historic Reliance on the M arket Model . . 13

B. The Legislative History Adopts Marketplace Stan
dards For Calculating a “Reasonable Fee” ........... 21

TABLE OF CONTENTS
Page

C. Recognition of the Risk Premium Is Consistent
With The Design, Object and Policy of the
S ta tu tes ........................................................................ 26

D, Risk Adjustments Do Not Compensate Non-
Prevailing Parties..................................................... 30

III. THE TEST SET FORTH BY JUSTICE O ’CONNOR
IN DELAWARE VALLEY II IS CONSISTENT WITH
M ARKET PR IN C IPLES AND HAS PROVEN
W ORKABLE.................................. 34

A. N early A ll C ourts Have A pplied Justice
O ’C onnor’s Concurrence C orrec tly ................... 34

B. As With Other Economic Markets, the Legal
M arketplace Normally Provides a Risk Pre
mium For Cases Taken on a Contingency-Fee
B a s is ............................................................................. 39

1. Contingency Fee Cases Norm ally Com
mand Higher Fees than Fees for Work on
Noncontingency M a tte rs ................................ 39

2. Contingency Enhancements in the Legal
M arketplace Find W ell-Established Paral
lels in M odem Economic Theory Regard
ing How Markets O p e ra te ............................ 40

3. C ourt-A w arded C ontingency E nhance
ments are Nothing More Than the M ini
mum Risk Premium Required by the Legal
M arketplace to Attract Counsel to Fee-
Shifting C ases ................................................... 41

C. The City and Amici Seek a Radical Departure
from Basic M arketplace P rin c ip le s ................... 43

TABLE OF CONTENTS - Continued
Page

Ill

TABLE OF CONTENTS - Continued
Page

D, The Objections Made by The City and Amici
Regarding the Need for and Operation of the
Contingency Risk Factor Are Addressed by
Justice O ’C onnor’s Two-Prong T e s t ............ .. 44

E. D eterm ination o f the A ppropriate M arket-
Based Contingency Adjustment is a Judicial,
Not Legislative, T a s k ............................................. 48

IV. THE DISTRICT COURT PROPERLY EXERCISED
ITS D ISC RETIO N W HEN IT AWARDED AN
E N H A N C E M E N T OF TH E LO D ESTA R FEE
BASED UPON CONTINGENT RISK ........................ 49

CO N CLU SIO N ..................... 50

C ases

A ngoff v. Goldfine, 270 F.2d 185 (1st Cir. 1959)............. 16

Blanchard v. Bergeron, 489 U.S. 87 (1 9 8 9 )...............passim

Blank v. Talley Indus., Inc., 390 F.Supp. 1 (S.D N Y
1975).............................................................................................. 15

Blum v. Stenson, 465 U.S. 886 (1984).......................... passim

Blum v. Witco Chem. Corp., 829 F.2d 367 (3d Cir.
1987) (Blum I ) ........... ...............................................................35

Blum v. Witco Chem. Corp., 888 F.2d 975 (3d Cir.
1989) (Blum II) . . .. .............................................. 35

Bradley v. United States, 410 U.S. 605 (1 9 7 3 )................. 16

Cherner v. Transitron Electronic Corp., 221 F.Supp.
55 (D.M ass. 1963) m odified on other grounds,
Green v. Transitron Electronic Corp., 326 F.2d 492
(1st Cir. 1 9 6 4 ) .......................................................................... 15

Christiansburg Garment Co. v. EEOC, 434 U.S. 412
(1 9 7 8 )............... .............................................. .............. .. 32, 47

City o f Detroit v. Grinnell Corp., 495 F.2d 448 (2nd
Cir. 1 9 7 4 ) ................................................................................... 15

City o f Riverside v. Rivera, A l l U.S. 561 (1986)...............8

Colson v. Hilton Hotels Corp., 59 F.R.D. 324 (N D
HI. 1 9 7 3 ).................................... 15

Conklin v. Lovely, 834 F.2d 543 (6th Cir. 1987)............... 36

Crawford Fitting Co. v. J.T. Gibbons, 482 U.S. 437
(1987 )...................................... ............................... 5, 14, 19, 20

TABLE OF AUTH ORITIES
Page

Curry v. Contract Fabricators Profit Sharing Plan,
744 F.Supp. 1061 (M.D. Ala. 1988), a ff’d, 891 F.2d
842 (11th Cir. 1990)................................................................ 38

Davis v. County o f Los Angeles, 8 Empl. Prac. Dec.
(CCH) f 9444 (C.D. Cal. June 5, 1974)................. 24, 25

D ’Emanuele v. M ontgomery Ward & Co., 904 F.2d
1379 (9th Cir. 1990)................................................................ 37

Department o f Labor v. Triplett, 494 U.S. 715 (1990)
......................... .. .......................... ......................................5, 11, 47

Duke v. Uniroyal, Inc., 743 F.Supp. 1218 (E.D.N.C.
1990), a ff’d in part and rev’d in part on other
grounds, 928 F.2d 1413 (4th Cir. 1 9 9 1 ) ............................ 35

Evans v. J e ff D., 475 U.S. 717 (1986).................................. 28

F.C.C. v. American Broadcasting Co., Inc., 347 U.S.
284 (1954)................................................................................... 17

Fadhl v. City o f San Francisco, 859 F.2d 649 (9th Cir.
1988) ........................................................................................... 37

Franchise Tax Bd. v. United States Postal Service,
467 U.S. 512 (1984)................................................................ 30

Hasbrouck v. Texaco, Inc., 879 F.2d 632 (9th Cir.
1989) ........................................................................................... 37

Hendrickson v. Branstad, 934 F.2d 158 (8th Cir. 1991) . . . . 37

Hensley v. Eckerhart, 461 U.S. 424 (1 9 8 3 ) ................. passim

Hidle v. Geneva County Bd. o f Educ., 681 F.Supp. 752
(M.D. Ala. 1988).............................................................. 39, 46

In re Coordinated Pretrial Proceedings, Etc., 410
F.Supp. 680 (D. Minn. 1 9 7 5 ) . . . ......................................... 15

C ases - C ontinued

Page

In re Detroit I n f l Bridge Co., I l l F.2d 235 (6th Cir.
1940).............................................................................................. 16

In re Gypsum Cases, 386 F.Supp. 959 (N.D. Cal.
1974), a ff’d, 565 F.2d 1123 (9th Cir. 1977) . . . . . . . . . 15

In re Osofsky, 50 F.2d 925 (1 9 3 1 ) ........................................... 16

In re Wicat Securities Litigation, 671 F.Supp. 726 (D.
Utah 1987)............................................................. 39

Independent Fed’ n o f Flight Attendants v. Zipes, 491
U.S. 754 (1989)..................................................... 33

Islamic Center o f M ississippi, Inc. v. Starkville, 876
F.2d 465 (5th Cir. 1 9 8 9 ).......................................................... 36

Johnson v. Georgia Highway Express, Inc., 488 F.2d
714 (5th Cir. 1974)..................................................... 7, 23, 24

Jones v. Diamond, 636 F.2d 1364, 1382 (5th Cir.),
cert, dism issed , 453 U.S. 950 (1981)............................... 23

King v. Bd. o f Regents, 748 F.Supp, 686 (E.D. Wis.
1990)............................................................. 36

King v. Palmer, 950 F.2d 771 (D.C. Cir. 1991)......... 34, 35

Lapina v. Williams, 232 U.S. 78 (1 9 1 4 ) ..............................20

Leigh v. Engle, 714 F.Supp. 1465 (N.D. 111. 1989)........... 37

Lindy Bros. Builders, Inc. v. American Radiator &
Standard Sanitary Corp., 487 F.2d 161 (3d Cir.
1973)..................................................................................... 15, 23

Lindy Bros. Builders, Inc. v. American Radiator &
Standard Sanitary Corp., 540 F.2d 102 (3d Cir.
1976).............................................................................................. 39

C ases — C ontinued

Page

M cKenzie v. Kennickell, 875 F.2d 330 (D.C. Cir.
1989).............................................................................................. 35

M cKittrick v. Gardner, 378 F.2d 872 (4th Cir. 1967) . . . . 16

McNary v. Haitian Refugee Center, Inc., I l l S.Ct.
888 (1991)................................................................................... 16

M arks v. United States, 161 U.S. 297 (1896)............ 14

M artin v. Univ. o f South Alabama, 911 F.2d 604 (11th
Cir. 1 9 9 0 ) ................................................................................... 38

M issouri v. Jenkins, 491 U.S. 274 (1 9 8 9 ) ...5 , 8, 9, 10, 30

M orris v. American N at’l Can Corp., 952 F.2d 200
(8th Cir. 1 991 ).................................................................. 37, 46

Newman v. Piggie Park Enterprises, Inc., 390 U.S.
400 (1968)................................................................................... 31

Norman v. Housing Auth., 836 F.2d 1292 (11th Cir.
1988).............................................................................................. 38

Pennsylvania v. Delaware Valley Citizen’s Counsel fo r
Clean Air, 478 U.S. 556 (1986).....................................passim

Pennsylvania v. Delaware Valley C itizen’s Counsel fo r
Clean Air, 483 U.S. 711 (1987).................................... passim

Perlman v. Feldmann, 160 F.Supp. 310 (D. Conn.
1958)............................................................. 16

Pilot Life Ins. Co. v. Dedeaux, 481 U.S. 41 (1987)......... 26

Ramos v. Lamm. 713 F.2d 546 (10th Cir. 1983)................ 9

Skelton v. General M otors Corp., 860 F.2d 250 (7th
Cir. 1988), cert, denied, 493 U.S. 810 (1989)............... 36

Smith v. Freeman, 921 F.2d 1120 (10th Cir. 1990)........... 37

Vl l

C ases — C ontinued

Page

V l l l

Soto v. Adams Elevator Equip. Co., 941 F.2d 543 (7th
Cir. 1 9 9 1 ) ..................................................................................... 36

Spell v. M cDaniel, 824 F.2d 1380 (4th Cir. 1 9 8 7 ).......... 35

Stainback v. Mo Hock Ke Lok Po, 336 U.S. 368
( 1 9 4 9 ) . . . ................................................................................ 16

Standard Oil Co. v. United States, 221 U.S. 1 (1911) . . . . 16

Stanford Daily v. Zurcher, 64 F.R.D. 680 (N.D. Cal.
1974), a ff’d, 550 F.2d 464 (9th Cir. 1977), rev’d,
436 U.S. 547 (1 9 7 8 ) . . ........................... 23, 24, 25, 28, 45

C ases — C ontinued

Page

Steinberg v. Hardy, 93 F.Supp. 873 (D. Conn. 1950) . . . . 15

Student Pub. Interest Research Group v. AT&T Bell
Laboratories, 842 F.2d 1436 (3d Cir. 1988)................... 35

Swann v. Charlotte-M ecklenburg Bd. o f Educ., 66
F.R.D. 483 (W.D.N.C. 1975)........................................ 24, 25

Texas State Teachers A ss’ n. v. Garland Indep. School
Dist., 489 U.S. 782 (1 9 8 9 )................................................... 31

United States v. Great N. R. R. Co., 287 U.S. 144
(1932 )........................................................................................... 20

United States v. M onia, 317 U.S. 424 (1 9 4 3 ) ................... 16

United States v. Wilson, 60 U.S.L.W. 4244 (1992)........... 17

Vargas v. Calabrese, 750 F.Supp. 677 (D.N.J. 1990) . . . . 35

Venegas v. M itchell, 495 U.S. 82 (1990)...............10, 11, 33

Walters v. National Assn, o f Radiation Survivors, 473
U.S. 305 (1985 )......................................................... 18, 28, 47

West Virginia Univ. Hosp. v. Casey, 111 S.Ct. 1138
(1 9 9 1 )............................................................ 14, 17, 19, 20, 32

W olf v. Planned Property M anagement, 735 F.Supp.
882 (N.D. III. 1 9 9 0 )................................................................ 37

W ulfv. City o f Wichita, 883 F.2d 842 (10th Cir. 1989) . . . . 38

Statutes

American-M exican Chamizal Convention Act o f 1964,
22 U.S.C. §277(1-21. ........................................................ 19

Antitrust Civil Process Act Amendments o f 1976, 15
U.S.C. § 1 5 g (l)(A )-(B )..............................................................18

Black Lung Benefit Act, 30 U.S.C. §§901 et s e q . . . . 11, 47

Civil Rights Act o f 1 9 9 1 ............................................................. 20

Civil Rights A ttorneys’ Fees Awards Act, 42 U.S.C.
§1988 ....................... -14

Clayton Act o f 1914, 15 U.S.C. §15..................... ................ 15

Clean Air Act o f 1970, 42 U.S.C. §§7401 et seq ..............28

Comprehensive Environmental Response, Compensation and
Liability Act (CERCLA),

42 U.S.C. §§9601 et seq ...........................................................19

42 U.S.C. §9659(f) ................................................. 19

Equal Access to Justice Act, 28 U.S.C.
§2414(d)(1 )(A )............................................................... 18

Federal Tort Claims Act, 28 U.S.C. §2678.......................... 18

Federal Water Pollution Control Act (Clean Water Act),

33 U.S.C. §§1251....................... passim

33 U.S.C. §1362(5 ).................................................................. 30

33 U.S.C. §136 5 (d ) ..................................................... 2, 13, 28

C ases - C ontinued
Page

The Effect o f Legal Fees on the Adequacy o f Repre
sentation: Hearings Before the Subcomm. On Rep.
O f Citizen Interests o f the Senate Judiciary Com
mittee, 93d Cong., 1st Sess. (1 9 7 3 ) .................................. 71

R. Evans & R. W einstein, Ranking Occupations as
Risky Income Prospects, 35 Indus. & Lab, Rel. Rev.
252 (1982)................................................................................. , 41

House Committee on Interstate and Foreign Com
merce, 94th Cong., 2d Sess.................................................. 23

H.R. 5757, 98th Cong., 2d Sess. (1 9 8 4 )...... .......................20

H.R. 3181, 99th Cong., 1st Sess. (1985).............................. 23

H.R. Rep. No. 1558, 94th Cong., 2d Sess. (1 9 7 6 )........... 21

Joint Conference Report for Individuals with D isabil
ities in Education Act, reprinted in, 1986 U.S. Code
Conf. & Ad. N e w s .................................................................. 26

A. G. King, Occupational Choice, Risk Aversion, and
Wealth, 27 Indus. & Lab. Rel. Rev. 586 (1 9 7 2 )........... 41

The Legal Fee Equity Act [S.2802]: Hearing Before
the Subcomm. on the Constitution o f the Senate
Judiciary Committee, 98th Cong., 2d Sess., 38-41
(1984 ).................................................................... . . . 2 0

Legal Fees Equity Act [S.1580]: Hearing Before the
Subcomm. on the Constitution o f the Senate Judici
ary Committee, 99th Cong., 1st Sess. 47-51 (1985) 20, 29

Legislative History o f the Toxic Substances Control
Act, 255-56 (Comm. Print 1976)....................................... 23

F.B. M acKinnon, Contingent Fees For Legal Ser
vices: A Report o f the American Bar Foundation,
26 (1964)................... 16

xii

M iscellaneous — C ontinued

Page

H. Newberg, Attorney Fee Awards, 142 (1986)................. 45

R. Posner, Economic Analysis o f Law, 534 (3d ed.
1986) 54 Geo. Wash. L. Rev. (1986)....................... 39, 41

R. Posner, Law and the Theory o f Finance: Some
Intersections, 54 Geo. Wash. L. Rev. 159 (1986)......... 41

S. Rep. No. 414, 92d Cong., 2d Sess. (1972) reprinted
in 1972 U.S. Code Cong. & Ad. News 3668................. 28

S. Rep. No. 1011, 94th Cong., 2d Sess. 6 (1 9 7 6 ) ............. 22

S. 585, 97th Cong., 2d Sess. §722(A)(e) (1982).................. 19

S. 1580, 99th Cong., 1st Sess. (1 9 8 5 )................................. 20

S. 2802, 98th Cong., 2d Sess. (1984)................................... 20

W. Sharpe, Capital Asset Prices With and Without
Negative Holdings, 46 Journal of Finance 489
(1 9 9 1 )....................................................... ................................... 40

Adam Smith, The Nature and Causes o f the Wealth o f
Nations, 106 (Modern Library ed. 1937).......................... 40

2A Sutherland Statutory Construction, §45.12, §51.02
(5th ed. 1992).................................................................... 14, 17

137 Cong. Rec. S. 15338-39 (daily ed. Oct. 29, 1991) . . . . 20

X l l l

M iscellaneo us - C ontinued
Page

STATEM ENT OF TH E CASE

It is undisputed in the record in this case that the market
for legal services ordinarily compensates attorneys for the
risk taken in contingent cases. This Court m ust decide
whether, regardless of the operation of this market for legal
services, the district court lacked authority to consider market
treatm ent of risk in setting a reasonable attorney’s fee.

Sum m ary O f The Litigation On The M erits

Seven years ago, in April 1985, Respondents (“Dagues”)
hired their attorneys to represent them in a lawsuit concerning
hazardous wastes dumped into Petitioner’s (“City”) municipal
landfill (“Landfill”). Jt. App. I at 24. The Dagues’ attorneys
took this case on a contingency fee basis. They assumed the
risk of receiving no attorneys’ fees at all unless the Dagues
prevailed in their lawsuit. Jt. App. at 24 and App. I at 132.

The Dagues own homes next to the Landfill. App. I at 89.
Beginning in 1950, thousands of gallons of hazardous waste
were dumped in the Landfill. App. I at 94-95. By 1985,
methane gas in explosive concentrations was crossing the
Landfill boundary onto the D agues’ property. App. I at 99,
102.

On the opposite side of the Landfill from the Dagues’
property is a wetland called the Intervale. App. I at 89-90. As
a result of tests conducted in 1980, the City learned that
Landfill leachate contam inated with hazardous and toxic
chemicals was being discharged into the Intervale directly
below the Landfill. App. I at 92, 98.

On October 9, 1985, the Dagues filed suit to compel the
City to comply with the Clean Water Act, 33 U.S.C. §§1251 et
seq. (“CWA”), the Resource Conservation and Recovery Act,
42 U.S.C. §§6901 et seq. (“RCRA”), and state environmental
laws. App. II at 244-69. After a vigorously contested and
highly technical trial (App. I at 65-67, 77-81, 133), on Octo
ber 16, 1989, the district court found that the City had
violated the CWA and RCRA (App. I at 87-88), and ordered

the City to close its Landfill and pay the costs of litigation,
including reasonable attorney and expert fees under 42 U.S.C.
§6972(e) and 33 U.S.C. § 1365(d). App. I at 88-89. The
Second Circuit affirmed the district court “in all respects.”
App. I at 37.

A tto rneys’ Fee A w ard

In support of their Application for Award of Fees and
Costs (Jt. App. I at 5-218), the Dagues filed a memorandum
(Jt. App. I at 7-17), two affidavits by trial counsel (Jt. App. I
at 17-32), a detailed bill itemizing work, hours, services and
rates and expert fees and costs (Jt. App. I at 32-210), and
three affidavits by experienced attorneys fam iliar with the
legal marketplace. Jt. App. I at 211-218.

Attorneys William Pearson and Richard Bland provided
the vast m ajority o f legal services. Pearson’s hourly rates
ranged from $85.00 per hour to $125.00 per hour and B land’s
ranged from $45.00 per hour to $80.00 per hour. The overall
composite hourly rate charged in the Dagues’ first fee petition
was $64.35 per hour.

The affidavits o f experienced counsel established that:
(1) the hourly rates the D agues’ attorneys charged were the
prevailing rates for hourly work in the Burlington m ar
ketplace (Jt. App. I at 212, 215, 217); (2) when contingency
fee arrangements are made in the Burlington marketplace, a
percentage of fee recovery is fixed at a level which would be
larger than for work done on an hourly basis to reflect the risk
of no recovery (Jt. App. I at 212, 215); (3) lawyers in the
Burlington marketplace who take contingency work expect to
receive a m ultiple of their usual hourly rate if they prevail (Jt.
App. I at 217-18); and (4) without this expectation of an
enhancement, there is no incentive to take this work (Id.).

The City opposed the D agues’ fee application claiming
they did not substantially prevail. Jt. App. I at 219-29,
236-81. However, the City neither challenged the reasonable
ness of the hourly rates (Pet. Brief 6), nor did it counter any

of the D agues’ evidence regarding the operation of the mar
ketplace for legal services. After a hearing, the district court
aw arded the D agues a fu ll a tto rn e y s ’ fee lodesta r of
$198,027.50, plus expenses of $10,929.66, together with a
25% attorneys’ fee enhancement. App. I at 130-34. The Court
justified the enhancement on the basis o f its findings that
“p lain tiff’s attorneys would not have been compensated at all
unless plaintiffs prevailed” (App. I at 132), that “the risk of
not prevailing was substantial under the facts here,” and that
“absent an opportunity for enhancement, plaintiff would have
faced substantial difficulty in obtaining counsel of reasonable
skill and competence in this complicated field of law.” App. I
at 132-33.

The Dagues requested a separate delay enhancement
given the long history of the case without any fee payment.
App. I at 13. The district court refused, deciding that the 25%
enhancem ent was adequate in order to compensate for delay
in payment as well as risk. App. I at 133. Therefore, the
district court awarded a lodestar that was based only on
historic rates without a separate adjustment for the delay in
payment.

In affirming the lower court “in all respects,” the Second
Circuit expressly rejected the C ity’s claim that the Dagues
had not substantially prevailed “because, in large part, it was
the pressure generated by the plain tiffs’ efforts that caused
the city to actually close the landfill [and ojnly by bringing
this suit against the city were the plaintiffs finally able to get
from the city action as opposed to mere promises.” App. I at
30-31.

The Second Circuit also affirmed the lower court’s lode
star award and the 25% risk enhancement. App. I at 35-37. In
particular, the Court affirmed the finding that “without the
possibility of fee enhancement . . . competent counsel might
refuse to represent clients thereby denying them effective

access to the court.” App. I at 37 .1 On June 26, 1991, the City
filed a Petition for Rehearing and Suggestion for Rehearing
en banc, which was denied on August 20, 1991. App. I at
145-46.

The City filed its Petition for a Writ of Certiorari on
November 18, 1991. On January 27, 1992, this Court granted
the Petition on the single question of whether courts have
authority to consider the risk o f nonpayment o f any fees in a
contingent case when determining a reasonable attorney's fee
under the fee shifting provisions in the CWA and RCRA.

The D agues’ attorneys have provided legal services for
seven years in a difficult case in a complicated field of law,
carried the risk of not receiving any payment for their ser
vices, achieved a substantial result for their clients, charged
an overall composite rate of $67.58 for their services, and

1 On June 25, 1991, following their success in the Second Circuit,
the Dagues filed a Supplemental Application for Award of Fees and Costs
in the District Court, and an Initial Application For Award of Fees and
Costs Incurred on Appeal in the Second Circuit. The District Court
Supplemental Application requested a $24,113.00 lodestar, a 25% fee
enhancement and $2,707.61 in expenses. Jt. App. II at 311-55. The
Second Circuit Application requested a $53,315.00 lodestar, a 25%
enhancement and $2,240.00 in expenses. Jt. App. II at 356-417. Both
applications were in substantially the same format as the original district
court application, including affidavits from experienced attorneys in the
legal marketplace. The City did not file any opposing memoranda or
affidavits to either of the supplemental applications.

On October 11, 1991, the district court issued an Order granting
supplemental attorneys’ fees in the amount of $24,113.00, and expenses
of $2,707.61, together with a 25% enhancement of the attorneys’ fees.
App. II at 137-38.

On October 25, 1991, the Second Circuit issued an Order granting
the Dagues supplemental attorneys’ fees in the amount of $24,113.00, and
expenses of $2,707.61 but denied a 25% “risk enhancement” on the
ground that the “risk” involved in defending an appeal is not significant.
App. I at 38-39.

have not, as of yet, received any payment for their time or even
reimbursement for their advancement of expert fees and costs.

SUMMARY OF ARGUMENT

In determining what are reasonable attorneys’ fees under
prevailing party statutes, this Court consistently has relied on the
principles and practices of the legal marketplace. Hensley v.
Eckerhart, 461 U.S. 414 (1983); Blum v. Stenson, 465 U.S. 886
(1984); Missouri v. Jenkins, 491 U.S. 274 (1989). This Court has
repeatedly emphasized the congressional purpose behind fee-shift
ing statutes as providing incentives for competent private attorneys
to enforce civil rights, environmental, and antitrust statutes. Id. In
Pennsylvania v. Delaware Valley Citizen’s Council for Clean Air,
483 U.S. 711 (1987) (Delaware Valley II), a majority of the Court
held that legal marketplace conditions may require enhancement of
the lodestar fee to account for the risk of loss in order to attract
competent counsel to prosecute such cases. In Department of
Labor v. Triplett, 494 U.S. 715 (1990), this Court recognized that
an adjustment of an attorney’s fee for the contingent risk of loss
was permitted as part of a “reasonable attorney’s fee.” See Section
I, infra.

The phrase “reasonable attorney’s fee” meant to Congress
what it meant in the antitrust and securities statutes that had been
earlier enacted by Congress: that the risks of contingent representa
tion may require additional compensation. If Congress intended to
limit the courts’ consideration of marketplace factors, it would
have done so because “[i]t is . . . clear that when Congress meant
to set a limit on fees, it knew how to do so.” Crawford Fitting Co.
v. J.T. Gibbons, 482 U.S. 437, 442 (1987). Congress made such a
limitation in the Individuals with Disabilities in Education Act, 20
U.S.C. § 1415(e)(4)(C) where “no bonus or multiplier may be used
in calculating fees awarded under this subsection.” Moreover, the
limitation on marketplace factors sought by the City and amici was
presented to Congress as proposed bills and amendments which
were rejected. And, even if reference to legislative history is made,
it demonstrates that it was Congress’ intent, object and design to
adopt marketplace standards for calculating fee awards. In relying
on the phrase “prevailing party” to limit the use of marketplace

factors in fees calculation, amici confuse the statutes’ entitlement
standard with their fee calculation standard. That the phrase “pre
vailing party” speaks to a party’s entitlement to fees has been
repeatedly recognized in this Court’s fees jurisprudence. See Sec
tion II, infra.

Nine circuits have accepted Justice O’Connor’s two-prong
market test and applied it correctly. Nearly all have done so
without difficulty, often on uncontradicted records. An upward
adjustment for risk is not automatic under the test; numerous courts
have found no need for risk enhancement or that the evidence
submitted did not support enhancement. Justice O’Connor’s class-
based assessment of risk has proven workable.

The City and amici do not dispute the marketplace basis
of this Court’s prior attorney’s fees decisions, but simply
reject the m arket’s treatm ent of risk. Their selective rejection
of market principles defies the legal marketplace, the statu
tory language, and well-established principles of market eco
nomics. The City and am ici’s proposed per se rule prohibiting
any risk enhancement has no legal or economic basis. See
Section III, infra.

Because the district court, on an undisputed record, cor
rectly held that an enhancement was available to compensate
for contingent risk, this Court should affirm the district
court’s award. See Section IV, infra.

ARGUM ENT

A REASONABLE FEE FOR A CASE PROSECUTED ON
A C O N T IN G E N T F E E BA SIS MAY IN C L U D E AN
A D JU ST M E N T FO R T H E C O N T IN G E N T R ISK OF
LOSS

A. This C ou rt C onsistently Has Accepted Legal M ar
ketp lace P rincip les In D eterm ining W hat Are R eason
able Fees U nder Fee-Shifting S tatu tes

This Court has consistently relied on legal marketplace
principles and practices in determining what are reasonable

attorney’s fees under fee-shifting statutes. In fact, in its fees
jurisprudence, the Supreme Court has only relied on the
m arketplace to effectuate congressional intent and determine
a “reasonable” fee.

In Hensley v. Eckerhart, the first case in which this Court
provided guidelines for calculating a reasonable attorney’s fee
pursuant to a m ajor fee-shifting statute, this Court adopted the
tw elve factors set forth in Johnson v. Georgia Highway
Express, Inc., 488 F.2d 714 (5th Cir. 1974) as the foundation
for calculating a reasonable fee. Hensley v. Eckerhart, 461
U.S. 414, 429-30 n.3 (1983). These twelve factors derive
directly from the American Bar Association Code of Profes
sional Responsibility, originally promulgated in 1908 and
operative today, as the factors used in the legal marketplace to
calculate reasonable attorney’s fees. See, e.g., E. Cavanagh,
Attorneys’ Fees in Antitrust Litigation: Making the System
Fairer, 57 Fordham L. Rev. 51, 79 and n.199 (1988).

Moreover, Hensley applied the ABA factors with an eye
to their use in the private marketplace:

Counsel for the prevailing party should make a
good-faith effort to exclude from a fee request
hours that are excessive, redundant, or otherwise
unnecessary, just as a lawyer in private practice
ethically is obligated to exclude such hours from his
fee submission.

Id. at 434. The Court then held that district courts must
consider the reasonable num ber of hours, the reasonable
hourly rate, and “ also may consider other factors identified in
Johnson, . . . ” and noted that the inquiry does not end with
the lodestar:

There remain other considerations that may lead the
district court to adjust the fee upward or downward,
includ ing the im portan t factor of the “ results
obtained.”

Id. at n.9.
This Court again relied on the private market in Blum v.

Stenson, 465 U.S. 886 (1984), which presented the question

of what is a reasonable hourly rate for attorney services under
42 U.S.C. §1988. Petitioner in Blum sought to have hourly
rates set on a “cost-plus” basis. Id. at 892 n.6. The Solicitor
General urged the Court to adopt a cost-related standard for
non-profit legal services organizations. Id. at 892. A unani
mous Court rejected these arguments and held that “ [t]he
statute and legislative history establish that ‘reasonable fees’
under §1988 are to be calculated according to the prevailing
market rates in the relevant community. . . . ” Id. at 894-95.
These “prevailing market rates” are the rates that are “in line
with those prevailing in the community for similar services by
lawyers of reasonably comparable skill, experience, and repu
tation.”2 Id. at 895 n . l l .

In City o f Riverside v. Rivera, A l l U.S. 561 (1986), the
Court rejected a proposed rule that a reasonable fee be pro
portional to the money damages recovered and affirmed an
award for all hours reasonably expended at prevailing market
rates. Although the dissent considered the award excessive, it
recognized that market principles apply to the award of statu
tory fees:

The analysis of whether the extraordinary number
of hours put in by respondents’ attorneys in this
case was “reasonable” must be made in light of both
the traditional billing practices in the profession,
and the fundamental principle that the award of a
“ reasonable” attorney’s fee under §1988 means a
fee that would have been deemed reasonable if
billed to affluent plaintiffs by their own attorneys.

Id. at 591 (Rehnquist, J., dissenting).

The Court again adhered to legal marketplace principles
in M issouri v. Jenkins, 491 U.S. 274 (1989). The issues there
were whether: (1) an attorney’s fee can be enhanced to

2 The Blum decision also reaffirmed the Hensley holding that the
lodestar fee could be enhanced, but reversed the enhancement awarded by
the district court for lack of supporting evidence. Id. at 901-02.

account for delay in receipt of payment, (2) the work of
paralegals and law clerks is a compensable part of a reason
able attorney’s fee, and, (3) if so, is compensation to be at
prevailing market rates. In answering all these questions, the
Court held that §1988 requires that market practices be fo l
lowed:

The statute specifies a “reasonable” fee for the
attorney’s work product. In determining how other
elements of the attorney’s fee are to be calculated,
we have consistently looked at the marketplace as
one guide to what is “reasonable.”

Id. at 285-86.

On the issue of enhancement for delay, the majority
stated, “ [o]ur cases have repeatedly stressed that attorney’s
fees awarded under this statute are to be based on market
rates for the services rendered” and held that compensation
received years after the rendering of services is treated differ
ently than compensation paid contemporaneously. Id. at 283.

On the paralegal/law clerk compensation issues, the
Court held that paralegal and law clerk time is to be included
in reasonable attorney’s fees calculations and that market
practices are to be followed in determining their amount:

If an attorney’s fee awarded under §1988 is to yield
the same level of compensation that would be avail
able from the market, the “ increasingly widespread
custom of separately billing for the services of
paralegals and law students who serve as clerks”
Ramos v. Lamm, 713 F.2d 546, 558 (10th Cir. 1983),
m ust be taken into account. . . . Thus, if the prevail
ing practice in a given community were to bill
paralegal time separately at m arket rates, fees
awarded the attorney at market rates for attorney
time would not be fully compensatory if the court
refused to compensate hours billed by paralegals or
did so only at “cost.”

Id. at 286-87.

The Court held that §1988 only requires that market practices
be followed, not that paralegals always be compensated sep
arately at hourly rates:

Nothing in §1988 requires that the work of parale
gals invariably be billed separately. If it is the
practice in the relevant market not to do so, or to
bill the work of paralegals only at cost, that is all
that §1988 requires.

Id. at 288. The Court rejected Petitioner’s claim that this
would lead to a “windfall” for attorneys, or to separate billing
for secretarial services and office supplies:

The answer to this question is, of course, that attor
neys seeking fees under §1988 would have no basis
fo r requesting separa te com pensation o f such
expenses unless this were the prevailing practice in
the local community. The safeguard against the
billing at a profit o f secretarial services and paper
clips is the discipline o f the market.

Id. at 287, n.9 (emphasis added).3

3 This Court also has accepted and endorsed legal marketplace
practices in Blanchard v. Bergeron, 489 U.S. 87 (1989), and Venegas v.
Mitchell, 495 U.S. 82 (1990). Both cases concern the relationship of
percentage-based contingent fee agreements and §1988. Although neither
case holds that the contingent fee percentage determines the reasonable
statutory fee, both hold that the statute was designed to incorporate and
enhance the incentives for attorneys to prosecute civil rights cases, not
limit or restrict market practices and incentives. In Blanchard, Justice
White, writing for the majority, recognized that the purpose of §1988’s
fee provisions is “to encourage meritorious civil rights claims because of
the benefits of such litigation for the named plaintiff and for society at
large” and that using percentage-based fee agreements as a cap on fees
“would create an artificial disincentive for an attorney who enters into a
contingent fee agreement. . . . ” 489 U.S. at 95-96. In Venegas, Justice
White, writing for a unanimous Court, made clear that a fee award under
§1988 (which had included a 2.0 upward adjustment) did not limit the

(Continued on following page)

In fact, in Department o f Labor v. Triplett, 494 U.S. 715
(1990), the Court expressly recognized that the availability of
counsel will relate directly to the level of compensation, and
that in certain markets, additional compensation - or a risk
premium - will and should be reflected in that level of
compensation. In Triplett, Petitioner challenged the Depart
ment of L abor’s rule under the Black Lung Benefits Act
prohibiting attorneys from recovering payments from their
clients, claiming that it would lim it the availability of attor
neys w illing to take contingent cases. However, under the
statute, successful litigants were entitled to an award of “rea
sonable attorney’s fees,” and the Departm ent’s own regulation
perm itted enhancement to “permit consideration of the attor
ney’s risk of going unpaid.” 494 U.S. at 726. Justice Scalia, in
reasoning that was adopted by all nine Justices, held that the
additional compensation for assuming the risk of nonpayment
was consistent with market practices and the statutory provi
sion of a “reasonable attorney’s fee” :

the existence in this country of a thriving contin
gent-fee practice demonstrates that this risk can be
compensated for - so it comes down once again to
the level of compensation.

Id.
The Court has therefore consistently adopted marketplace

principles in its fees jurisprudence. It has accepted that the
congressional purpose behind fee-shifting statutes is to pro
vide incentives for com petent attorneys to enforce our
nation’s civil rights and environmental statutes, has embraced
the principles and practices of the relevant legal marketplace,

(Continued from previous page)
enforceability of a market-based contingent fee, despite the fact that the
fee agreement resulted in a fee more than ten times respondent’s normal
hourly rate. Again, the Court made clear: the statutory fee provision was
not intended to limit market incentives for competent counsel to prosecute
civil rights actions. Venegas, 495 U.S. at 86-88.

and has accepted contingency risk as part of that market and a
perm issible component of a “reasonable attorney’s fee.”

B. Justice O ’C onnor’s Analysis of the Contingent
Adjustment in Delaware Valley II Is Consistent With
This Court’s Adherence To Market Principles

Following this long line of Supreme Court decisions
adopting the market place analysis as the basis for determin
ing a “reasonable attorney’s fee,” Justice O ’Connor in D ela
ware Valley II ruled that an award of fees to a prevailing
plaintiff may properly include an adjustment to compensate
for the risk of loss if the relevant market reflects such an
adjustment as to the class of litigation. 483 U.S. at 731-33. To
avoid arbitrary and conflicting application of the contingency
adjustment, Justice O ’Connor stated that contingency cases
must be treated as a class, fee applicants bear the burden of
proving the degree to which the relevant market compensates
for risk, and enhancements should not be granted on the basis
of the particular risks of the case.

Justice W hite’s plurality decision focuses on a different
question. Rather than questioning whether a contingency
adjustment may be part o f a reasonable fee as determined by
the market, the plurality asks whether the attorney may be
awarded “separate com pensation,” 483 U.S. at 715, and
whether Congress intended the risk of loss to be a basis for
“ increasing an otherwise reasonable fee.” Id. at 723. The
plurality opinion examines the difficulties in assessing a risk
adjustment on a case-by-case basis and does not address
whether the market can compensate for the risk of loss that is
inherent in a class of litigation. The plurality, and indeed, all
nine justices reject an individualized post hoc determination
of the risks. 483 U.S. at 726-27, 731, 745.

The Dagues do not seek to overturn that judgment.
Instead, they embrace Justice O ’Connor’s market-based anal
ysis. By awarding a contingency enhancement based on the
market treatm ent of a class of litigation, and awarding risk

adjustment only insofar as “necessary to bring the fee within
the range that would attract competent counsel,” (Id. at 733),
Justice O ’C onnor’s formulation avoids completely the diffi
cult practical problems identified in Justice W hite’s plurality
opinion and the possibility o f the award of a “windfall” fee.
See Section III.D, infra.

II.
LEGISLATION PROVIDING FOR THE AWARD OF
REASONABLE ATTORNEY’S FEES TO A PREVAILING
PARTY INCORPORATES LEGAL MARKETPLACE
FACTORS

A. The Language of the Statutes Demonstrate That Con
gress Did Not Intend to Depart from Its Historic
Reliance on the Market Model

When Congress enacted the environmental statutes at
issue here, the phrase “reasonable attorney’s fees” for a pre
vailing party had a well-established legislative and judicial
meaning, which incorporated marketplace factors such as
contingent risk. Under the rules of statutory construction,
those phrases m ust be interpreted as they were in the securi
ties and antitrust statutes previously enacted by Congress: to
perm it a contingent risk adjustment in the appropriate case.
Moreover, Congress has put the lim itation sought by the City
and amici in other statutes, but not in the statutes presented
here. Had Congress intended to prohibit the courts from
considering m arketplace factors, it would have done so, as it
has done in numerous other statutes.

Like many statutes enacted before them, the environmen
tal statutes at issue herein provide for a “reasonable attorney’s
fee” to the prevailing party. See 33 U.S.C. § 1365(d); 42
U.S.C. §6972(e). The City and amici postulate that Congress
abandoned its oft-placed reliance on the legal marketplace as
a means of defining the amount of a “reasonable” fee to a
prevailing party. To the contrary, the established canons
o f s ta tu to ry c o n s tru c tio n d em o n s tra te th a t C ongress

incorporated m arketplace factors, such as adjustments for
contingent risk, when it adopted the phrase “ reasonable attor
ney’s fee” for the prevailing party.

“ [T]he purpose of a statute includes not only what it sets
out to change, but what it resolves to leave alone.” West
Virginia Univ. Hosp. v. Casey, 111 S. Ct. 1138, 1147 (1991).
And, where a statute “contains a phrase that is unambiguous -
that has a clearly accepted meaning in both legislative and
judicial practice” the duty of the Court is to enforce the
statute according to its terms. Id.

The phrase “reasonable attorney’s fee” for the prevailing party
had a “clearly accepted meaning” at the time it was incorporated
into the statutes at issue here - a meaning that unquestionably
included marketplace factors and anticipated adjustments for con
tingent risk in the appropriate case. “Reasonable attorney’s fee” for
the prevailing party plainly meant to Congress what it had plainly
meant in the marketplace: that the risks of contingent representa
tion may require special compensation.

It is a fundamental rule of statutory construction that
words or phrases in a provision that were used in other
statutes pertaining to the same subject matter will be con
strued in the same sense. M arks v. United States, 161 U.S.
297, 302-03 (1896); 2A Sutherland Statutory Construction,
§51.02 (5th ed. 1992). The phrase “reasonable attorney’s fee”
for a prevailing party occurs in a number of antitrust and
securities statutes that were enacted prior to the environmen
tal statutes at issue here.4 This Court and Congress have
stated that these various fee-shifting statutes are to be inter
preted “in pari m ateria."5

4 The Clean Water Act was enacted in 1972, and Congress passed
the Resource Conservation and Recovery Act in 1976. The Civil Rights
Attorneys’ Fees Awards Act, 42 U.S.C. §1988, which also provides for
“reasonable attorney’s fees,” was also enacted in 1976.

5 See, e.g., Pennsylvania v. Delaware Valley Citizen’s Council for
Clean Air, 478 U.S. 556, 559 (1986) (Delaware Valley /); Crawford
Fitting Co. v. J.T. Gibbons, Inc., 482 U.S. 437, 445 (1987).

One o f the earliest prevailing party statutes to use the
phrase “reasonable attorney’s fee” was the Clayton Act of
1914, 15 U.S.C. §15, That phrase also is in the Securities Act
of 1933, 15 U.S.C. §77k(e), and the Securities Exchange Act
of 1934, 15 U.S.C. §78i(e), r(a), and u(h)(7)(A). By the mid
1970s, when §1988 and the environm ental statutes were
enacted, the phrase “reasonable attorney’s fee” repeatedly had
been interpreted to include marketplace factors, such as the
contingent nature of the case.6

6 See, e.g., Cherner v. Transitron Electronic Corp., 221 ESupp. 55,
61 (D.Mass. 1963), modified on other grounds, Green v. Transitron
Electronic Corp., 326 F.2d 492, 496-97 (1st Cir. 1964) (antitrust; contin
gency enhancement awarded because “[n]o one expects a lawyer whose
compensation is contingent upon his success to charge, when successful,
as little as he would charge a client who in advance had agreed to pay for
his services, regardless of success.”); Steinberg v. Hardy, 93 F.Supp. 873
(D.Conn. 1950) (securities; contingency enhancement awarded, noting
that “actions, even when well-founded, will seldom be brought unless
counsel can be found” on a contingent basis and that “obviously a retainer
on a contingent basis is distinctly less attractive” than a guaranteed hourly
rate); City of Detroit v. Grinnell Corp., 495 F.2d 448, 471 (2nd Cir. 1974)
(antitrust; risk enhancement available because “despite the most vigorous
and competent of efforts, success [in litigation] is never guaranteed”);
Lindy Bros. Builders, Inc. v. American Radiator & Standard Corp., 487
F.2d 161, 168 (3rd Cir. 1973) (antitrust; lodestar may be increased to
reflect contingent nature of case); Blank v. Talley Indus., Inc., 390 F.Supp.
1, 5 (S.D.N.Y. 1975) (antitrust; $1.4 million fee based in part on contin
gent risk); In re Coordinated Pretrial Proceedings, Etc., 410 F.Supp. 680,
91 (D. Minn. 1975) (antitrust; enhancements awarded to “take into
consideration the contingent nature of this litigation”); In re Gypsum
Cases, 386 F.Supp. 959, 67 (N.D. Cal. 1974), ajf’d, 565 F.2d 1123 (9th
Cir. 1977) (antitrust; enhancements awarded for contingent risk); Colson
v. Hilton Hotels Corp., 59 F.R.D. 324, 326 (N.D. 111. 1973) (antitrust;
court gave “great weight” to fact that contingent case “ought to yield a
greater degree of compensation upon successful prosecution of the

(Continued on following page)

Legislative language is interpreted with the presumption
that Congress had knowledge of the basic rules of statutory
construction. M cNary v. Haitian Refugee Center, Inc., I l l
S.Ct. 888, 898 (1991); Stainback v. Mo Hock Ke Lok Po, 336
U.S. 368, 377-79 (1949). And legal terms in a statute, such as
“reasonable attorney’s fee” for a prevailing party, are pre
sumed to have been used in their legal sense. Standard Oil
Co. v. United States, 221 U.S. 1 (1911); Bradley v. United
States, 410 U.S. 605, 609 (1973).

Here, Congress was enacting the fee provisions against a
legislative common law of remarkable consistency and conti
nuity in which “reasonable attorney’s fee” for a prevailing
party incorporated the marketplace model and, in appropriate
cases, the contingent risk enhancement. Since legislative lan
guage is interpreted with the assumption that the legislature
was aware of existing statutes and judicial decisions, United

(Continued from previous page)
action”); McKittrick v. Gardner, 378 F.2d 872, 875 (4th Cir. 1967) (social
securities disability benefits; “the contingency of compensation is highly
relevant in the appraisal” of reasonable attorney’s fees within the 25%
statutory maximum); Angoff v. Goldfine, 270 F.2d 185, 189 (1st Cir.
1959) (securities; remanding fee award and directing lower court to
consider contingent risk); Perlman v, Feldmann, 160 F.Supp. 310
(D.Conn. 1958) (securities; giving “great weight” to contingent nature of
case); In re Detroit Int’l Bridge Co., I l l F.2d 235, 37 (6th Cir. 1940)
(bankruptcy reorganization under securities laws which considers
“whether the fee is absolute or contingent”). See also, In re Osofsky, 50
F.2d 925, 27 (1931) (bankruptcy action; contingency enhancement
awarded because “however much ingenuity and time attorneys may
expend, they may not be able to get anything for the estate by their
efforts.”); F.B. MacKinnon, Contingent Fees For Legal Services: A
Report of the American Bar Foundation 26 (1964) (“As we have seen in
civil suits for damages under antitrust legislation the claimant is awarded
reasonable attorney’s fees if the suit is successful . . . The contingent
factors, among others, is recognized by the courts in making the award.”).

States v. M onia, 317 U.S. 424, 427-30 (1943); F.C.C. v.
American Broadcasting Co., Inc., 347 U.S. 284, 297 (1954),
Congress’ use of the phrase “reasonable attorney’s fee” for a
prevailing party must be interpreted to include the availability
of a contingent risk enhancement.

If Congress meant to abandon its historic understanding
of the phrase “reasonable attorney’s fee” for a prevailing
party, it would have used different words when it legislated
the statutes at issue here. As noted by Justice Thomas in
United States v. Wilson, 60 U.S.L.W. 4244 (1992), it is a
“ fam iliar maxim that, when Congress alters the words of a
statute, it m ust intend to change the statu te’s meaning” (cit.
omitted). By parity of reasoning, when Congress does not
alter statutory language, its intent is to retain the fam iliar and
accepted meaning. See West Virginia Univ. Hosp. v. Casey,
111 S.Ct. 1138, 1147 (1991); 2A Sutherland Statutory Con
struction, §45.12 (5th ed. 1992). Here, Congress did not alter
the words o f the fee provision because it did not intend to
change the well established meaning of “reasonable attorney’s
fee.”

Thus, in West Virginia University Hosp. v. Casey, this
Court examined congressional changes to the phrase “reason
able attorney’s fee” for a prevailing party in a variety of
statutes. A comparison of the statutes was proper because
statutes are construed “to contain that permissible meaning
which fits most logically and comfortably into the body of
both previously and subsequently enacted law.” I l l S.Ct. at
1148. Because a number of statutes contained an express
grant to a prevailing party of reasonable attorney’s fees plus
expert witness fees, the Court held that the statutory usage
indicated that expert fees were an item “in addition to attor
ney’s fees.” Id. at 1142 (emphasis in original). The Court
reasoned that Congress would not have engaged in “an inex
plicable exercise in redundancy” by changing the language in
some statutes. Id. at 1143.

The same comparison of congressional changes to the
phrase “reasonable attorney’s fee” for a prevailing party dem
onstrates that it is proper for courts to consider the mar
ketplace factor of contingent risk, unless otherwise directed
by Congress, When Congress enacted the Individuals with
D isabilities in Education Act (“IDEA”) in 1986, it speci
fically prohibited all bonuses or multipliers. In order to alter
the usual meaning of the phrase “ reasonable attorneys’ fee”
for a prevailing party, Congress specifically stated that “ [n]o
bonus or m ultiplier may be used in calculating the fees
awarded under this subsection.” 20 U.S.C. §1415(e)(4)(C).
Similarly, when Congress passed the Antitrust Civil Process
Act Amendments of 1976, the legislators focused consider
able attention on the availability of contingent recoveries for
private attorneys. As a consequence, both the House and
Senate ultim ately agreed explicitly to prohibit private attor
neys from collecting contingency fees unless the award is
determined by a court. 15 U.S.C. §15g(l)(A )-(B).

Thus, had Congress intended to limit the courts’ discre
tion when they calculate a prevailing party’s reasonable attor
ney’s fee, it would have imposed express lim itations, as it has
done in numerous other statutes.7

7 Slightly more than one-fifth of the fee provisions in the United
States Code regulate or limit the prevailing party’s attorney’s fee in
certain types of cases. See generally 1 M. Derfner and A. Wolf, Court
Awarded Attorney Fees, §504 (1991); Walters v. National Ass’n of
Radiation Survivors, 473 U.S. 305 (1985) (upholding 38 U.S.C. §3404(c),
which limits to $10 the fee that may be paid an attorney or agent who
represents a veteran); 28 U.S.C. §2412(d)(l)(A) (fee awards under the
Equal Access to Justice Act “shall be based upon prevailing market
rates . . . except that. . . attorney fees shall not be awarded in excess of
$75 per hour . . . ); 42 U.S.C. §300aa-15(b) (fee awards under the
National Vaccine Injury Compensation Act of 1986 limited to $30,000);
28 U.S.C. §2678 (fees under Federal Tort Claims Act limited to 20% of
administrative settlement; 25% of judgment or settlement); 42 U.S.C.

(Continued on following page)

In contrast to the lim itations in myriad fees provisions in
the United States Code, Congress included no such wording
in the environm ental and civil rights statutes. In the same year
that Congress enacted the IDEA, 1986, Congress amended the
Superfund law (CERCLA), 42 U.S.C. §§9601 et seq. to add a
c itizens’ suit provision, which provided for “reasonable attor
ney ’s fees,” 42 U.S.C. §9659(f), yet did not include the
restrictive language found in the IDEA. The “reasonable
attorney’s fees” provision in CERCLA is identical to that
found in the CWA and RCRA. As Chief Justice Rehnquist
aptly observed in Crawford Fitting Co., 482 U.S. at 442, “ [i]t
is . . . clear that when Congress meant to set a lim it on fees, it
knew how to do so.” The City seeks to have this Court
disregard Congress’ selective use of lim iting language in
other fees statutes. That result is impermissible, because such
an interpretation would render Congress’ words “an inexpli
cable exercise in redundancy.” West Virginia Univ. Hosp., I l l
S.Ct. at 1143.

Congress not only knows how to lim it fee enhancements,
but it has also rejected proposed legislation that attempted to
do so. In 1982, Senator Hatch unsuccessfully proposed an
amendment to §1988 which would have prohibited “awards
based on contingency factors or m ultipliers.” S. 585, 97th
Cong. 2d Sess. §722A(e) (1982). See Attorney’s Fees Awards:
Hearings on S. 585 Before the Subcomm. on the Constitution
o f the Senate Comm, on the Judiciary, 97th Cong., 2d Sess. 13
(1982). In addition, four bills were introduced which would
have capped attorney hourly rates levied against government
defendants at $75, and eliminated multipliers and bonuses
under all federal prevailing party fee provisions. None of

(Continued from previous page)
406(b)(1) (fees under Social Security Act limited to 25% of award); 22
U.S.C. §277d-21 (fees under American-Mexican Chamizal Convention
Act of 1964 limited to 10%); 48 U.S.C. §1424c(f) (fees for claims
regarding land under Organic Act of Guam limited to 5%); 50 U.S.C.
App. §1985 (fees under Japanese-American Evacuation Claims Act of
1948 limited to 10%).

these bills passed.8 See S. 2802, 98th Cong., 2d Sess. (1984);
H.R. 5757, 98th Cong. 2d Sess. (1984); S. 1580, 99th Cong.
1st Sess. (1985); and H.R. 3181, 99th Cong. 1st Sess. (1985).
As recently as last year, an amendment was proposed as part
of the Civil Rights Act of 1991, which would have limited a
prevailing party’s attorney’s fees to 20% of the total award.
137 Cong. Rec. S. 15338-39 (daily ed. Oct. 29, 1991).

The rejection of an amendment indicates that the legisla
ture does not intend the law to include the provision embod
ied in the rejected amendment. Lapina v. Williams, 232 U.S.
78 (1914); United States v. Great N. R.R. Co., 287 U.S. 144,
155 (1932). Thus, the numerous failed attempts to lim it the
availability o f enhancements in the environmental and civil
rights area demonstrate that a contingent risk enhancement
may be available in appropriate cases.9

8 In advocating on behalf of the failed bills, the Department of
Justice raised many of the same arguments it raises here. See The Legal
Fee Equity Act [S.2802]: Hearing Before the Subcomm. on the Constitu
tion of the Senate Judiciary Committee, 98th Cong., 2d. Sess., 38-41
(1984) (comments and materials submitted by Deputy Attorney General
Carol Dinkins that a prohibition against multipliers is required because
multipliers subsidize losing cases, create needless litigation, and are
difficult for the courts to administer); Legal Fees Equity Act [S.1580]:
Hearing Before the Subcomm. on the Constitution of the Senate Judiciary
Committee, 99th Cong. 1st Sess. 47-51 (1985) (comments and materials
submitted by Deputy Attorney General Lowell Jensen making same
arguments).

9 This is, moreover, consistent with Crawford Fitting Co., 482 U.S.
437 and West Virginia Univ. Hosp., I l l S.Ct. 1138, where the Court was
examining the civil rights and antitrust fees provisions as well as a
separate specific statute that governed the topic of expert fees, 28 U.S.C.
§1821. The Court described 28 U.S.C. §1821 as a statute which “compre
hensively regulated” the kinds of expenses “that a federal court may tax
as costs against the losing party.” Crawford Fitting, 482 U.S. at 440.
Applying the well-settled rule that a specific statute will control over a

(Continued on following page)

Under standard rules of statutory construction, the lan
guage o f the statutes cannot be interpreted to embody any
lim it on use o f the m arketplace factor of contingent risk in an
appropriate case. Congress has imposed the lim itation sought
by the City and amici, but not in the statutes at issue here.
The City cannot now impute such lim itation in the absence of
clear congressional intent.

B. The Legislative History Adopts Marketplace Stan
dards For Calculating a “Reasonable Fee”

The legislative history readily demonstrates that Con
gress adopted marketplace standards for determining a rea
sonable fee. In enacting §1988, Congress cautioned that
“ [ujnless the judicial remedy is full and complete, it will
remain a meaningless right.” H.R. Rep. No. 1558, 94th Cong.,
2d Sess. 1 (1976) (“H.R. Rep.”). In light of this goal, Con
gress gave ample instruction to the courts on how to calculate
a “reasonable attorney’s fee,” repeatedly pointing to a market
consideration of the contingent nature of a case.

First, “Congress directed that attorney’s fees be calcu
lated according to standards currently in use under other fee-
shifting statutes.” Blum v. Stenson, 465 U.S. at 893. As the
Court noted, Blanchard v. Bergeron, 489 U.S. at 95, Congress
“clearly” instructed the courts to treat fee calculations in the
same m anner as other complex federal litigation fee petitions:

It is intended that the amount of fees awarded under
[§1988] be governed by the same standards which
prevail in other types of equally complex Federal
litigation, such as antitrust cases.

(Continued from previous page)
general one, the Court held that the provisions of 28 U.S.C. §1821 limited
expert fees to $30 per day unless the statutory language indicated
otherwise. Here, there is no specific statute such as 28 U.S.C. §1821 and,
more importantly, attempts to pass such a specific statute limiting fees
have been expressly rejected by the Congress.

S. Rep. No. 1011, 94th Cong., 2d Sess. 6 (1976) (“S. Rep.”).
See also H.R. Rep. at 8-9 (referring to antitrust cases and
noting that “civil rights plaintiffs should not be singled out
for different and less favorable treatm ent.”).

In fact, Congress made repeated reference to the back
drop of established judicial standards that incorporated mar
ket concepts, and it directed courts to follow those standards.
Thus, Congress “intend[ed] that, at a minimum, existing jud i
cial standards . . . should guide the courts.” H.R. Rep. at 8.
Describing the “ reasonable attorney’s fees” provision as a
“key feature,” Congress commented that “ [bjecause other
statutes follow this approach, the courts are fam iliar with
these terms and in fact have reviewed, examined, and inter
preted them at some length.” H.R. Rep. at 6.

As noted above, for years prior to the passage of the
CWA and RCRA, courts had routinely awarded fee enhance
ments where appropriate under sim ilar fee-shifting statutes to
account for contingent risk in various types of complex litiga
tion. See cases cited in IIA, supra. Thus, the “existing judicial
standards” which Congress intended to govern determinations
of a reasonable attorney’s fee, and which the courts had
already “reviewed, examined and interpreted at some length,”
included adjustments for the risk premium.

Congress then instructed the courts that “ [i]n computing
the fee, counsel for prevailing parties should be paid, as is
traditional with attorneys compensated by a fee-paying client,
‘for all time reasonably expended on a m atter.’ ” S. Rep. at 6
[citations omitted]. It was, and is, traditional for attorneys to
receive a higher rate of compensation from contingent fee
paying clients. As amici admit, “ [fjree legal services confer a
substantial benefit on a client. In exchange for that benefit, it
is reasonable for the attorney to charge a fee to the client, if
the case is won, that is greater than the fee [an hourly fee

paying] client would be charged for the time expended.” Brief
of D istrict o f Columbia at 11 [emphasis added].10

Similarly, it is “traditional” for the risk premium for
contingent cases to be calculated separately, rather than to be
subsumed in the lodestar. See, e.g., Declaration of Chester
Kamin at \1 \ Declaration of Chesterfield Smith at f 10; Decla
ration o f Steven M ayer at f 8; Declaration of Robert Weinberg
at f3 . See M aterials lodged by Respondents.

Finally, Congress cited several cases as guideposts for
courts to use in determining a reasonable fee. Both the House
and Senate reports cite Johnson v. Georgia Highway Express,
Inc., 488 F.2d 714 (5th Cir. 1974), which grafted the long
stan d in g leg a l m arke t fac to rs “ c o n sis ten t w ith those
recommended by the American Bar A ssociation’s Code of

10 Courts also have recognized the legal market truism that, in
contrast to cases taken with the expectation of a guaranteed hourly fee,
contingent cases can, in some cases, compel a risk premium. See Lindy
Bros. Builders, Inc. v. American Radiator & Standard Sanitary Corp., 487
F.2d 161, 168 (3d Cir. 1973) (no one expects a lawyer who works on a
contingent fee to charge as little as he would charge an hourly fee client);
see also Jones v. Diamond, 636 F.2d 1364, 1382 (5th Cir.) (en banc), cert,
dismissed, 453 U.S. 950 (1981) (“Lawyers who are to be compensated
only in the event of victory expect and are entitled to be paid more when
successful than those who are assured of compensation regardless of
result”); Stanford Daily v. Zurcher, 64 F.R.D. 680, 685 (N.D. Cal. 1974),
aff’d, 550 F.2d 464 (9th Cir. 1977), rev'd, 436 U.S. 547 (1978) (“the
American Bar Association [has determined] that attorneys deserve higher
compensation for contingent than for fixed fee work”).

Congress expressly approved the Lindy case when it enacted the fee-
shifting provisions of the Toxic Substances Control Act, (“TSCA”) 15
U.S.C. §§2618(d), 2619(c)(2), and 2620(b)(4)(C). Like the statutes at
issue here, all three of TSCA’s provisions allow a court to award
“reasonable fees for attorneys.” The legislative history cites Lindy as
illustrative of the fact that the amount of a fee award “can be adjusted for
factors including, inter alia, the contingent nature of the success.” See
House Committee On Interstate and Foreign Commerce, 94th Cong., 2d
Sess., Legislative History of the Toxic Substances Control Act 255-56
(Comm. Print 1976).

Professional Responsibility” onto the process of setting a
reasonable fee under Title V II’s fee-shifting provision. Id. at
719. See S. Rep. at 6; H.R. Rep. at 8. These twelve ABA
factors include consideration o f “whether the fee is fixed or
contingent.” 11 As recognized by Justice W hite, “ [i]n many
past cases considering the award o f attorney’s fees under
§1988, we have turned our attention to [Johnson],” and the
Johnson contingency fee factor is “a factor” which “may aid
in determining reasonableness.” Blanchard, 489 U.S. at 93.
See, supra, at note 3.

In addition to adopting Johnson, Congress pointed to
three cases where the fee standards were “correctly applied.”
Blanchard, 489 U.S. 87, (examining cases cited in legislative
history to determine Congressional intent). S. Rep. at 6.
These three cases are Stanford Daily, 64 F.R.D. 680; Swann v.
C h a r lo tte -M e c k le n b u rg Bd. o f E d u c ., 66 F .R .D . 483
(W.D.N.C. 1975); and Davis v. County o f Los Angeles, 8
Empl. Prac. Dec. \ 9444 (C.D. Cal. 1974).

11 The City and amici concede that this factor is applicable to a fee
calculation, but attempt to limit its import by saying that the factor only
focuses on the existence of any contract for fees between the attorney and
client. This distinction is without significance. A court must look at
whether or not the attorney accepted the case on a contingent basis,
because “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.” Delaware
Valley II, 483 U.S. at 716.

Similarly, the plurality in Delaware Valley II recognizes that the
factor “suggests that the nature of the fee contract between the client and
his attorney should be taken into account when determining a reasonable
fee,” 483 U.S. at 723, but fails to conclude that a higher fee award might
be warranted when the nature of the fee contract involves the risk of no
recovery. There can be no question that, when Canon 13 of the ABA
Canons of Professional Ethics was promulgated in 1908 and amended in
1933, it provided that risk of loss may be a factor in determining the
reasonable fee: “A contract for a contingent fee, where sanctioned by law,
should be reasonable under all the circumstances of the case, including
the risk and uncertainty of the compensation,. . . . ”

In approving these cases, Congress embraced a definition
of reasonable attorney’s fee” that permits upward adjust
ments for factors such as contingent risk. In Stanford Daily,
the court first found 750 hours expended by plaintiffs reason
able and compensable. 64 F.R.D. at 683. Next, the court
allowed m arket-based “fixed-fee” hourly rates averaging $50
per hour, which defendants conceded were reasonable. Id. at
684-85. Finally, the court examined the fact that counsel
prosecuted the case on a contingent basis, and adjusted the
lodestar upward by approximately 27% to provide “full and
fair com pensation” :

Federal court decisions generally reason that the
amount o f any award o f attorneys’ fees should
reflect any contingencies which stood between the
attorneys and their deserved fee [citations omitted].
These decisions parallel the American Bar Associa
tio n ’s determ ination that attorneys deserve higher
com pensation for contingent than for fixed-fee
work . . .

Federal courts’ failure to make contingency
calculations in determining fees awards, in contrast,
would discourage many attorneys from accepting
pro bono publico cases by presenting them with the
financially unacceptable “risk of wasting hours of
work, overhead and expenses”. . . .

64 F.R.D. at 685 (citation omitted).

Similarly, in Swann, 64 F.R.D. at 484-86, the court held
that a “ [pjertinent factorf] in fixing fees” includes whether
the fee is “fixed or contingent.” Finally, the Davis court
acknowledged there may sometimes be a need for upward
adjustment of the lodestar, 8 Empl. Prac. Dec. H 9444 at 5048,
and recognized that the district court’s “first hand observa
tions” are important in determining a reasonable fee. Id. at
5049 (citation omitted).

None of the cases Congress highlighted supports the kind
of m arketplace intervention the City and amici advance. None

of the cases suggests that an upward adjustment of the lode
star for factors such as contingent risk is prohibited. The
legislative history is devoid of such market restraints. In fact,
as this Court has noted, “P etitioner’s argument that the use of
market rates violates congressional intent . . . is flatly contra
dicted by the legislative history of §1988.” Blum, 465 U.S. at
894.

To the contrary, Congress explicitly has recognized that
reasonable attorney’s fee awards under §1988 may include
upward enhancements. As noted previously, the fee-shifting
provision of the IDEA expressly prohibits the use of a “bonus
or m ultiplier” in calculating “ reasonable attorney’s fees.” 20
U.S.C. § 1415(e)(4)(B) & (C). In the Joint Conference Report,
reprinted in 1986 U.S. Code Cong. & Ad. News 1807, 1808,
the House and Senate Conferees noted that by prohibiting
upward enhancements in the IDEA, Congress did “not intend
in any way to diminish the applicability of interpretation by
the U.S. Supreme Court regarding bonuses and multipliers to
other statutes such as 42 U.S.C. §1988.”

C. Recognition of the Risk Premium Is Consistent With
The Design, Object and Policy of the Statutes

In determining the meaning of a statute, the Courts look
not only to the particular statutory language, but to the design
of the statute as a whole and to its object and policy. Pilot
Life Ins. Co. v. Dedeaux, 481 U.S. 41 (1987). As stated above,
Congress’ design in enacting these statutes was to follow the
market model, and Congress’ object and policy was to pro
vide citizens with meaningful access to the courts to vindicate
their rights. Failure to recognize and account for contingent
risk in determining “reasonable attorneys’ fees” would there
fore contravene Congress’ express design, object and policy.

Congress made findings that a fee structure regulated by
marketplace factors was necessary to accomplish its purposes
in the civil rights and environmental statutes. As the court

recognized in Delaware Valley I, “ ‘[t]he effective enforce
ment of Federal civil rights statutes depends largely on the
efforts of private citizens,’ and unless reasonable attorney’s
fees could be awarded for bringing these actions, Congress
found that many legitim ate claims would not be redressed.”
478 U.S. at 560, citing H.R. Rep. at l . 12 “The purpose of
§1988 is to ensure effective access to the judicial process.”
H en sley , 461 U .S . at 429. T hese fac tu a l f in d in g s 13

12 The legislative history of §1988 echoes these objectives again
and again: See S. Rep at 6 (“[§1988] provides the fee awards which are
necessary if citizens are to be able to effectively secure compliance with
these existing [civil rights] statutes); S. Rep. at 2 (“civil rights laws
depend heavily upon private enforcement, and fee awards have proved an
essential remedy if private citizens are to have a meaningful opportunity
to vindicate the important Congressional policies which these laws con
tain”); S. Rep. at 5 (“[i]n several hearing held over a period of years, the
Committee has found that fee awards are essential if the Federal statutes
to which [§1988] applies are to be fully enforced”); and S. Rep. at 6 (“[i]f
our civil rights laws are not to become mere hollow pronouncements
which the average citizen cannot enforce, we must maintain the tradi
tionally effective remedy of fee shifting in these cases.”)

The legislative history also repeats the concern that poor people in
particular have meaningful access to the courts to assert their rights: See,
e.g., S. Rep. at 2 (“[i]n many cases arising under our civil rights laws, the
citizen who must sue to enforce the law has little or no money with which
to hire a lawyer”); H.R. Rep. at 1 (“[b]ecause a vast majority of the
victims of civil rights violations cannot afford legal counsel, they are
unable to present their cases to the courts”); H.R. Rep. at 3 (“private
lawyers were refusing to take certain types of civil rights cases because
the civil rights bar, already short of resources, could not afford to do
so.”).

13 Congress made these findings based on many days of extensive
testimony. See The Effect of Legal Fees on the Adequacy of Representa
tion: Hearings Before the Subcomm. on Rep. of Citizen Interests of the
Senate Judiciary Committee, 93d Cong., 1st Sess. (1973) and Awarding of
Attorneys’ Fees: Hearings Before the Subcomm. on Courts, Civ. Liberties,
and the Admin, o f Justice of the House Judiciary Committee, 94th Cong.,
1st Sess. (1975).

made by Congress are entitled to “a great deal o f deference.”
Walters v. National A ss’n o f Radiation Survivors, 473 U.S. at
330 n.12 (1985).

The Delaware Valley II plurality postulated that “ [i]t may
be that w ithout the promise o f risk enhancement some lawyers
will decline to take cases; but we doubt that the bar in general
will so often be unable to respond. . . . ” 483 U.S. at 727.
However, Congress found otherwise and, in any event, has
relied upon the application of the market in order to assure
that the bar does respond. See Sections IIA and B, supra. In
particular, Congress wanted to assure that the bar responded
to victims o f violations of environmental and civil rights
statutes because, unlike personal injury cases, these litigants
“seek[j to vindicate important civil and constitutional rights
that cannot be valued solely in monetary term s.” Blanchard,
489 U.S. at 96.

Similarly, Congress enacted the CWA’s fee-shifting pro
vision, 33 U.S.C. § 1365(d), because “it is important to pro
vide that citizens can seek [court enforcem ent],” and noted
that “in bringing legitim ate actions under this section citizens
would be performing a public service and in such instances,
the courts should award costs of litigation to such party.” S.
Rep. No. 414, 92d Cong., 2d Sess. (1972), reprinted in 1972
U.S. Code Cong. & Ad. News 3668 at 3746-47.14

Congress has “ instructed the courts to use the broadest
and most effective remedies available to adhere to [these]
goals,” S. Rep. at 3, and “the fee-shifting provision [is] ‘an
integral part of the remedies necessary to obtain’ compliance
with our statutory policies.” Evans v. Jeff. D., 475 U.S. 717,
731 (1986). In Stanford Daily, 64 F.R.D. 680, the court noted
that accounting for contingent risk in setting a reasonable fee

14 Congress enacted the fee-shifting provision of RCRA “[drawing]
on the similar provisions of the Clean Air Act of 1970 and the [Clean
Water Act].” Delaware Valley I also noted “the purposes behind both
§304(d) [of the Clean Air Act] and §1988 are nearly identical.” 478 U.S.
at 559.

serves C ongress’ purpose of providing meaningful and effec
tive access to the courts:

[Contingent adjustments] help[] attract counsel to
the enforcement of important constitutional princi
ples and significant congressional policies which
m ight otherwise go unrepresented. . . . From the
pub lic’s standpoint, the contingent fee helps equal
ize the access of rich, middle-class, and poor indi
viduals to the courts by making attorney decisions
concerning representation turn on an action’s merits
rather than on the size of a c lien t’s income.

64 F.R.D. at 685.

A “reasonable attorney’s fee” must account for contin
gent risk if Congress’ object of providing meaningful and
effective access is to be met. As one commentator stated, “the
experience o f the marketplace indicates that lawyers generally
will not provide legal representation on a contingent basis
unless they receive a premium for taking that risk.” S. Berger,
Court Awarded A ttorneys’ Fees: What Is "Reasonable”?, 126
U.Pa.L.Rev. 281, 324-25 (1977). See also Legal Fees Equity
Act [S.1580]: Hearings Before the Subcomm. on the Constitu
tion o f the Senate Judiciary Committee, 99th Cong., 1st Sess.
289 (1985), Testimony of Philip Sunderland (“without mar
ket-rate compensation and without the possibility of having
contingent representation, it is not only economically infeas
ible [to take on cases], . . . it is economic suicide”).

In sum, interpreting the statutory language to allow for
contingent adjustments is “ reasonable, consistent, and faithful
to [the sta tu te’s] apparent purpose.” Blanchard, 489 U.S. at
100 (Scalia, J., concurring). Failure to adhere to market

principles in determining a reasonable fee will result in a
failure to follow Congress’ design, object and policy.15

D. Risk Adjustments Do Not Compensate Non-Prevailing
Parties

The Solicitor General contends that including a contin
gency adjustment in a “reasonable” fee is contrary to the
statute, because an adjustment would compensate non-pre
vailing parties. The Solicitor General has provided no legisla
tive history in support of this interpretation and, as discussed
supra in Section II, Congress enacted the CWA and RCRA
prevailing party fee provisions in view of many other prevail
ing party fee statutes, pursuant to which contingency adjust
ments had long been made.

In relying on the phrase “prevailing party” to lim it the
calculation of fees, amici confuse two separate inquires. The
prevailing party inquiry defines the types of parties entitled to

15 The Solicitor General argues that because the fee-shifting statute
constitutes a limited waiver of sovereign immunity, the statute must be
construed narrowly. Solicitor General’s Brief at 26, n. 24. This issue was
raised in the City’s Petition for Certiorari, and was not accepted. More
over, as this Court has held, “[t]he question is what Congress intended -
not whether it manifested the clear affirmative intent . . . to waive the
sovereign’s immunity.” Missouri v. Jenkins, 491 U.S. 274, 282 (1989);
Franchise Tax Board v. United States Postal Service, 467 U.S. 512, 521
(1984) (“waiver of sovereign immunity is accomplished not by a ‘ritualis
tic formula;’ ” and “can only be ascertained by reference to underlying
congressional policy.”). Congress explicitly included government defen
dants in the CWA and RCRA. See 33 U.S.C. §1362(5); 42 U.S.C.
§6903(15). Similarly, Congress intended §1988 to apply equally to gov
ernment and nongovernment defendants: “With respect to the awarding of
fees to prevailing defendants, it should further be noted that governmental
officials are frequently the defendants in cases brought under statutes
covered by [§1988].” H.R. Rep. at 7. See also S. Rep. at 5. Indeed,
Congress has rejected bills which would have limited governmental
exposure in fee-shifting statutes in the manner the Solicitor General
suggests. See pp. 19-20, supra.

a fee award, while the reasonable fee inquiry defines the
proper calculation of the fee award.

This Court defined the term “prevailing party” in Texas
State Teachers’ Assn. v. Garland Indep. School Dist., 489
U.S. 782 (1989). Writing for a unanimous Court, Justice
O ’Connor defined “prevailing party” as an entitlement, rather
than a fee calculation term:

Where . . . a change [in the legal relationship of the
parties] has occurred, the degree o f the p lain tiff’s
overall success goes to the reasonableness of the
award under Hensley, not to the availability of a fee
award vel non.

Id. at 793. The distinction between the entitlement and calcu
lation standards was also noted by the Court in Hensley, 461
U.S. 424.

[The prevailing party standard] is a generous for
m ulation that brings the plaintiff only across the
statutory threshold. It remains for the district court
to determine what fee is ‘reasonable’.

461 U.S. at 433 .16

W here Congress has lim ited the calculation o f the
amount o f fees, it has left the prevailing party standard intact.
For example, although the IDEA prohibits risk enhancements,
fees are aw arded “ to the p a re n ts or g uard ian o f a

16 The legislative history confirms that the phrase “prevailing party”
speaks to entitlement to, and not calculation of, a “reasonable attorney’s
fee.” Both the House and Senate Reports cite Newman v. Piggie Park
Enterprises, Inc., 390 U.S. 400, 402 (1968) for the proposition that “a
prevailing plaintiff ‘should ordinarily recover an attorney’s fee unless
special circumstances would render such an award unjust.’ ” H.R. Rep. at
6; S. Rep. at 5. In fact, the House Report contains a separate section
entitled “Prevailing Party,” which discusses at length the issue of whether
and when a successful litigant is a prevailing party under the statute. The
House Report contains a wholly separate section entitled “Reasonable
Fees.” H.R. Rep. at 8-9.

child or youth with a disability who is the prevailing party.”
20 U.S.C. 1415(e)(4)(B). If, as the amici argue, the phrase
“prevailing party” prohibits risk adjustments, then Congress’
lim iting language is rendered an “inexplicable exercise in
redundancy.” West Virginia Univ. Hosp., I l l S.Ct. at 1143. As
discussed supra at pp. 18-19, Congress used the lim iting
language of the IDEA and other “prevailing party” statutes
when it intended to alter the usual meaning of the fee provi
sion .17

Even more simply, only prevailing parties receive pay
ment. The Dagues are prevailing parties. In fact, there is
nothing in the record to suggest that the Dagues, or any of
their attorneys, have ever lost a case under a federal fee-
shifting statute or that they ever w ill.18 W hat Respondents
and their attorneys seek in this case is market-based compen
sation for the risk they took in prosecuting this case on a
contingent-fee basis, not the risk undertaken in some other
case. The legal m arketplace compensates for this risk regard
less of whether an attorney has ever previously litigated a
case on a contingent-fee basis or will ever in the future, or
whether the attorney has won ten contingent-fee cases in a
row or lost ten in a row. Under Justice O ’Connor’s test, the
risk premium is analyzed on a relevant market basis and
applies only if necessary to attract competent counsel to such
cases, not to pay any non-prevailing party.

17 Amici argue that the term “prevailing party” operates as a limita
tion on reasonable fees. To the contrary, this Court has held that Con
gress’ choice of that phrase was intended to broaden, not limit, the
availability of fees so that both plaintiffs and defendants could be entitled
to fees. Christiansburg Garment Co. v. EEOC, 434 U.S. 412, 415-16
(1978). See also H.R. Rep. at 6 (under the term “prevailing party,” “either
a prevailing plaintiff or prevailing defendant is eligible to receive an
award of fees. Congress has not always been that generous.”)

18 If Messrs. Pearson and Bland had ever lost a case brought
pursuant to a federal fee-shifting statute, the “parties” in that case would
have received nothing from the fee award in this case.

M oreover, in a private contingent fee situation, an attor
ney cannot charge one client for the work performed in
another case for another c lien t.19 If the acceptance of a
contingency enhancem ent in private litigation was for the
purpose o f paying for other failed litigation efforts, contin
gency fee arrangements would be unethical, if not illegal.
Nevertheless, contingency fee arrangements have long been
accepted as legal and ethical, see ABA Model Code if Profes
sional Responsibility, EC 2-20 and DR 2-106(b)(8); ABA
M odel Rules of Professional Conduct 1.5(c) (1983), and
indeed have been approved by this Court in Venegas v. Mit-
chall, 495 U.S. 82 (1990), and Blanchard v. Bergeron, 489
U.S. 87 (1989). Thus, m odem jurisprudence recognizes that
the contingency enhancement compensates for the risk of loss
in that case, not actual or potential loss in other cases.20

Lastly, although the Solicitor General today argues that a
risk adjustment is inconsistent with the “prevailing party”
language o f the statute, that has not always been the inter
pretation of the United States. In Blum v. Stenson, the Solici
tor General, in contending that a public interest attorney was
not entitled to a risk adjustment to the lodestar fee, made the
following concession:

Ordinarily, when a lawyer engaged in private prac
tice agrees to represent a client on such terms he
may have to forego fee-generating employment.

19 An attorney is prohibited from receiving a fee from someone
other than the client, unless the client has knowledge and consent of the
arrangement. See ABA Model Code of Professional Responsibility DR
5-107(A); Model Rules of Professional Conduct, Rule 1.8(f) (1983).

20 Amicus District of Columbia cites Independent Fed’ n of Flight
Attendants v. Zipes, 491 U.S. 754 (1989), for the proposition that fees
cannot be assessed against intervenors, and seeks to extend Zipes to mean
that contingency adjustments assess fees against parties not determined to
be non-prevailing. The Zipes decision cannot be tortured in this fashion.
In Zipes, the intervenors were not determined to be wrongdoers and
plaintiffs did not prevail against them. Here, fees have been assessed only
against the non-prevailing party in favor of the prevailing party.

Some adjustment in the hourly rate o f compensation
to reflect the greater risk o f nonpayment as com
pared to the private attorney’s normal practice may
be reasonable in such cases.15

15The normal hourly rates charged by counsel engaged in
private practice reflect the fact that the client is expected to
pay the fee regardless of the outcome of the case. If recovery
of fees depends on the client’s success, it may be necessary to
allow a slightly higher hourly rate to induce lawyers engaged
in private practice to undertake cases covered by Section
1988.

Solicitor G eneral’s Brief at 21, Blum v. Stenson, 465 U.S. 8S6
(1984) (No. 81-1374) (emphases added). This interpretation
of a comparable prevailing party statute is simply incom pat
ible with the Solicitor G eneral’s current interpretation that a
“prevailing party” statute may never permit an adjustment of
the lodestar hourly rate to reflect the risk of loss.

I II .

TH E TEST SET FO RTH BY JU ST IC E O ’CONNOR IN
D ELAW ARE V ALLEY I I IS CO N SISTEN T W ITH M AR
K ET PR IN C IPL E S AND HAS PROVEN W ORKABLE

A. N early AH C ourts H ave A pplied Justice O ’C o n n o r’s
C oncurrence C orrec tly

The Solicitor General correctly notes that nine circuits
have followed and applied the market-based test set forth in
Justice O ’C onnor’s Delaware Valley II concurring opinion.21
Solicitor G eneral’s Brief at 11-12, n. 11. Nearly all courts
have not only applied Justice O ’C onnor’s concurrence, but
also applied it correctly. M ost courts following Delaware 21

21 The non-conforming circuits are the Second Circuit, in this case,
and the District of Columbia Circuit in King v. Palmer, 950 F.2d 771
(D.C. Cir. 1991).

Valley II have relied on testimony of attorneys practicing in
the relevant legal market to establish, or dispute, the dearth of
counsel and m arket treatment of risk. In most cases, this
testim ony was uncontradicted, fact-finding was simple and
straight-forward, and an adjustment was made. In other cases,
evidence supporting a risk enhancement was found to be
insufficient to meet the Delaware Valley II test, or was suffi
ciently impeached so that no adjustment was awarded. Only
one circuit has found the fact-finding required by Delaware
Valley II to be too difficult to adhere to; yet previous panels in
that Circuit correctly applied Delaware Valley II. Compare
King v. Palmer, 950 F.2d 771 (D.C. Cir. 1991) with McKenzie
v. Kennickell, 875 F.2d 330 (D.C. Cir. 1989).

The Third Circuit follows Justice O ’Connor’s test, and
recognizes that contingency is to be treated on a class basis.
That circuit also rejected the notion that econometric studies
to quantify the market are required, although it has noted that
conclusory affidavits, without sufficient factual foundation,
are not sufficient. Blum v. Witco Chem. Corp., 888 F.2d 975,
983 n.2 (3d Cir. 1989) (“Blum II”). See also Vargas v. Cal
abrese, 750 F. Supp, 677 (D.N.J. 1990).22

The Fourth Circuit also follows Justice O ’Connor’s test
in resolving requests for contingency adjustments. Spell v.
M cDaniel, 824 F.2d 1380, 1403-05 (4th Cir. 1987). Enhance
ments have not necessarily been awarded in all cases. Rather,
where defendants demonstrate that there is an ample supply of
attorneys willing to prosecute contingent cases without an
upward adjustm ent, contingency enhancements have been
denied. See Duke v. Uniroyal, Inc., 743 F. Supp. 1218,

22 Thus, Blum II clarified earlier Third Circuit decisions. See Blum
v. Witco Chem. Corp., 829 F.2d 367, 380 (3d Cir. 1987) (Blum I)
(requesting “expert testimony from someone familiar with the economics
of the legal profession.”) and Student Public Interest Research Group v.
AT&T Bell Laboratories, 842 F.2d 1436, 1452 (3d Cir. 1988).

1226 (E.D.N.C. 1990), a ff’d in part and rev’d in part on other
grounds, 928 F.2d 1413 (4th Cir. 1991).

Before the Fifth C ircuit will approve a contingency
enhancement, there must be evidence in the record and speci
fic findings by the trial court justifying the conclusion that
contingency cases are compensated more highly in the private
market than other cases and that enhancements are necessary
to induce competent counsel to take such cases. Leroy v. City
o f Houston, 831 F.2d 576 (5th Cir. 1987), cert, denied, 486
U.S. 1008 (1988). In reversing and rem anding a d istrict
court’s denial of a contingency premium for failure to make
proper findings, the Fifth Circuit stated:

Justice O ’C onnor’s instructions in Delaware Valley
II are explicit: the district court m ust consider
whether a contingency enhancement would have
been necessary to induce competent counsel to
accept such cases at the time the case was under
taken and whether contingency cases as a class were
treated differently from noncontingency cases.

Islamic Center o f M ississippi Inc. v. Starkville, 876 F.2d 465,
472 (5th Cir. 1989).

Similarly, the Sixth Circuit, applying Justice O ’C onnor’s
test, rem anded a district court’s award of a contingency
enhancement because the court did not make specific findings
of fact as to the amount and necessity of a risk adjustment.
Conklin v. Lovely, 834 F.2d 543, 553-54 (6th Cir. 1987).

„ The Seventh Circuit has clearly adopted Justice O ’Con
n o r’s test for awarding contingent risk enhancements in cases
where the evidence shows that, without the enhancement,
plaintiffs would have faced substantial difficulties in finding
counsel in the local or other relevant market and that the
relevant m arket com pensates for contingent risk. King v.
Board o f Regents, 748 F. Supp. 686, 692-93 (E.D. Wis.
1990).23 On the o ther hand, the d istrict courts have not

23 See also, Skelton v. General Motors Corp., 860 F.2d 250, 254 n. 3
(7th Cir. 1988), cert, denied, 493 U.S. 810 (1989); Soto v. Adams Elevator
Equip. Co., 941 F.2d 543, 553 (7th Cir. 1991).

awarded contingency adjustments where the evidence was
insufficient to satisfy the Delaware Valley II test. Wolf v.
Planned Property M anagement, 735 F. Supp. 882, 887 (N.D.
111. 1990); Leigh v. Engle, 714 F. Supp. 1465, 1475-76 (N.D.
111. 1989).

The Eighth Circuit recently found that a plaintiff met the
Delaware Valley II test based on “undisputed evidence” that
very few attorneys were available to prosecute employment
discrim ination and civil rights cases in the St. Louis M etro
politan area and that a contingency enhancement was neces
sary to attract counsel to such cases. M orris v. American N at’l
Can Corp., 952 F.2d 200, 205-07 (8th Cir. 1991). However, in
cases w here the reco rd fa iled to e s ta b lish tha t the
unavailability of a risk enhancem ent would have caused
plain tiff substantial difficulty in locating competent counsel,
the Eighth Circuit has denied a contingency enhancement.
Hendrickson v. Branstad, 934 F.2d 158, 163 (8th Cir. 1991).

The Ninth Circuit has applied the Delaware Valley II test
correctly in a variety o f cases. In Fadhl v. City o f San
Francisco, 859 F.2d 649 (9th Cir. 1988), the Ninth Circuit
affirmed a contingency enhancement based on uncontradicted
testimony that the legal marketplace, defined as Title VII
cases in the San Francisco Bay Area, required an enhance
ment for attorneys to accept such cases on a contingent fee
basis. Id. at 650-51. Likewise, in Hasbrouck v. Texaco, Inc.,
879 F.2d 632 (9th Cir. 1989), an antitrust case, the Ninth
Circuit affirmed a contingency enhancement under the Dela
ware Valley II test, based on uncontradicted testimony from
antitrust counsel. Id. at 637. See also D’Emanuele v. M ont
gomery Ward & Co., 904 F.2d 1379 (9th Cir. 1990).

The Tenth Circuit, in Smith v. Freeman, 921 F.2d 1120,
1123 (10th Cir. 1990) refused to establish a per se rule
requiring an enhancement in contingent cases. The Tenth
Circuit has further directed its district courts to make specific
findings of fact, pursuant to Delaware Valley II requirements,

before they conclude that a class o f contingency cases
requires upward adjustment of the lodestar. W ulf v. City o f
Wichita, 883 F.2d 842, 876 (10th Cir. 1989).

The Eleventh Circuit also holds that the propriety of
contingency enhancements is governed by Justice O ’C onnor’s
test and has affirmed enhancements where the evidence dem
onstrates their necessity. Curry v. Contract Fabricators Profit
Sharing Plan, 744 F.Supp. 1061, 1073 (M.D. Ala. 1988),
a ff’d, 891 F.2d 842, 850 (11th Cir. 1990); M artin v. Univ. o f
South Alabama, 911 F.2d 604 , 611 (11th Cir. 1990). In Nor
man v. Housing Auth., 836 F.2d 1292 (11th Cir. 1988), the
Eleventh Circuit upheld the denial of contingency risk enhan
cement, finding that “the record is absolutely devoid of any
evidence that would suggest that enhancement over the rates
requested is necessary to attract competent counsel into the
field .” Id., at 1302, 1306.

Thus, almost without exception, the circuits have under
stood and followed the market test set forth by Justice O ’Con
nor in Delaware Valley II, have required specific evidence to
meet the test, and have demonstrated no more difficulty
discerning the m arket treatm ent of contingency than the
courts have in determining m arket-based hourly rates for
attorneys o f comparable skill and experience or determining
how the relevant market compensates paralegals and law
clerks.24 Claims by the City and amici that Justice O ’Con
n o r’s concurrence has proven to be “unworkable” stand w ith
ou t'em pirical support.

24 Congress, of course, invested the federal courts with far more
complicated evaluations of market conditions in antitrust and securities
cases. E. Cavanagh, Attorney’s Fees in Antitrust Litigation: Making the
System Fairer, 57 Fordham L. Rev. 51, 70-71 (1988). No one is suggest
ing that evaluating market treatment of rates, paralegals, and contingent
risk presents even a shadow of the complexity of such cases.

B. As With Other Economic Markets, the Legal Mar
ketplace Normally Provides a Risk Premium For
Cases Taken on a Contingency-Fee Basis

1. C ontingency Fee Cases N orm ally Command
Higher Fees than Fees for Work on Noncon
tingency Matters

It is not surprising that most courts have determined that
the legal m arketplace compensates contingency-fee cases dif
ferently than hourly rate representation. In calculating the
initial lodestar, most courts employ an hourly rate that is
comparable to what is reasonably charged by attorneys with
sim ilar skills and experience for noncontingent matters. See,
e.g., Lindy Bros. Builders, Inc. v. Am. Radiator, Etc., 540 F.2d
102, 117 (3d Cir. 1976); Hidle v. Geneva County Bd. o f Educ.,
681 F.Supp. 752, 755 (M.D. Ala. 1988); In re Wicat Securities
Litigation, 671 F.Supp. 726, 732-34 (D. Utah 1987). That rate
alone may not adequately com pensate the attorney who
accepts a case on the condition that he or she receive no
payment for a losing effort.

A contingent fee must be higher than a fee for the
same legal services paid as they are performed. The
contingent fee compensates the lawyer not only for
the legal services he renders but for the loan of
those services. The interest rate on such a loan is
high because the risk of default (the loss of the
case, which cancels the debt of the client to the
lawyer) is so much higher than that of conventional
loans. . . .

R. Posner, Economic Analysis o f Law 534 (3d ed. 1986). It is
this distinction between contingency rates and non-contin
gency rates that may, where the market so demands, provide a
basis for an “upward adjustment” of, or a “risk premium”
over, the lodestar calculation. See also Affidavit of Richard
Posner (“ [a]n award limited to normal time charges [in an
antitrust case] would, in my judgment, typically undercom
pensate the lawyers for the Class”) at 00244; Affidavit of

Frank Easterbrook and Robert Sherwin (under the “market
value approach to the calculation of fees” in civil rights cases,
the value of the attorneys services may depend “on how the
client promises to compensate the law yer”) at D-4.25

2. Contingency Enhancements in the Legal Mar
ketplace Find Well-Established Parallels in Mod
ern Economic Theory Regarding How Markets
Operate

The “contingency adjustment” at issue before the Court
is simply a specific example o f a core economic principle
called “risk prem ium .” The concept of a risk premium to
provide incentives to invest in more risky enterprises has
existed since Adam Smith wrote The Wealth o f Nations,26 and
continues to provide vitality to well-accepted principles in
m odem economic theory.27

25 These affidavits are in the materials Respondents lodged with the
Court.

26 In 1776, Smith discussed the relationship between the risk in
succeeding in any particular profession and the market wages paid to that
profession. Indeed, in discussing the risks inherent in the legal profession,
Smith suggested that a 20-to-l enhancement over wages paid to more
secure enterprises would be appropriate.

How extravagant soever the fees of counselors at law may
.. sometimes appear, their real retribution is never equal to

this. . . . The lottery of the law, therefore, is very far from
being a perfectly fair lottery; and that, as well as many other
liberal and honourable professions, are, in point of pecuniary
gain, evidently under-recompenced.

Adam Smith, The Nature and Causes of the Wealth of Nations 106
(Modem Library ed. 1937).

27 The concept of the risk premium in accepted modem economic
theory is most recently embodied in the works of economist William
Sharpe, who won the 1990 Nobel Prize for his work on the “Capital Asset
Pricing Model.” See W. Sharpe, “Capital Asset Prices With and Without
Negative Holdings” 46 Journal of Finance 489 (1991).

4 1

Today’s economic literature exploring various aspects of
labor and investment m arkets28 regularly refer to and accept
the well-established concept of the risk premium. The market
will frequently reflect a higher rate of return for an uncertain
enterprise or investm ent over a safe one.

3. Court-Awarded Contingency Enhancements are
Nothing More Than the Minimum Risk Premium
Required by the Legal Marketplace to Attract
Counsel to Fee-Shifting Cases

Enhancem ents o f fee awards by district courts under the
typical fee-shifting statute simply reflect that, in some mar
kets, a premium over normal noncontingent hourly rates may
be required to attract competent counsel. Rather than being a
“windfall for attorneys” above and beyond what is already a
“ reasonable attorney’s fee,” the contingency enhancement is a
potential risk premium which the market may determine to be
part of the reasonable fee. An award that fails to include a
risk premium for a contingent case is not a reasonable fee, if
the m arket compensates for this risk.

Amici contend that a contingency enhancement is not
necessary because: (1) attorneys may bargain for a percentage
of p lain tiffs’ damage recovery; (2) representation may be

28 See, e.g., R. Evans & R. Weinstein, Ranking Occupations as
Risky Income Prospects, 35 Indus. & Lab. Rel. Rev. 252 (1982); A.G.
King, Occupational Choice, Risk Aversion, and Wealth, 27 Indus. & Lab.
Rel. Rev. 586 (1972); R. Posner, Economic Analysis of Law, at 405-410.
See also R. Posner, Law and the Theory of Finance: Some Intersections
54 Geo. Wash. L. Rev. 159, 161 n.5 (1986) (“The higher expected return
for riskier investments is a central empirical finding in the finance
literature”) (citations omitted). One would never expect the market to
reflect the value of a Federal Treasury Bill to be the same for volatile
common stocks. If the expected returns were the same, no investor would
purchase the stocks with their concomitant risk of loss. Thus, the risk
premium is the price that the market uses to call forth an adequate supply
of investors to undertake riskier investments.

secured through voluntary or pro bono efforts; or (3) liability
is sometimes a sure thing. The last argument is simply a claim
that, in certain classes of cases, there is no risk in assuming a
contingent case. If this is so, the plaintiff will be unable to
prove that the market in that type o f litigation commands a
premium for the contingent case, and no premium will be
awarded.

Contentions (1) and (2), however, simply reject the m ar
ket-based approach to determining a reasonable attorneys’
fee. The use o f percentage recovery or pro bono efforts to
provide representation to plaintiffs in certain types o f litiga
tion, as well as compelling counsel to represent unpopular
clients, are alternatives to the fee-shifting statutes, alterna
tives of which Congress was clearly aware when it passed the
fee-shifting provisions. See note 13 supra. In no way does the
availability o f some lim ited representation through other
means diminish the fact that, in many legal marketplaces, a
risk enhancer is necessary to attract competent counsel.29

29 The Solicitor General also contends that a sufficient number of
unemployed or underemployed attorneys are available to prosecute fed
eral fee-shifting cases, and that no risk enhancement is therefore neces
sary. There is no evidence in the legislative history that Congress
intended that important federal policies be enforced primarily by unem
ployed or underemployed attorneys. Effective enforcement requires pro
viding plaintiffs with lawyers comparable in quality to those representing
defendants. Moreover, justifying a “public interest discount” on the
ground that some attorneys may have charitable intentions “invokes the
interests of the disadvantaged to justify a policy contrary to their inter
ests.” S. Berger, 126 U. Pa. L. Rev. at 312.

The “public interest discount” suffers from yet another faulty
premise. Statutory fee provisions are not enacted for the
benefit of lawyers; rather, they are enacted for the benefit of
the class of persons protected by the statutes. Reducing the
fees awarded on the ground that lawyers should be inspired
by their sense of civic responsibility reduces the economic

(Continued on following page)

C. The City and Amici Seek a Radical Departure from
Basic Marketplace Principles

The City and amici do not dispute the marketplace basis
o f this C ourt’s prior fees decisions. In fact, they acknowledge
it. See Wash. Legal Found.’s Brief at 8-9: “All nine justices
[in Delaware Valley II] appear to [agree] that any contingency
enhancem ent should focus primarily on market-wide condi
tions. . . . ” M oreover, the City and amici do not dispute the
applicability o f legal marketplace practices with regard to
reasonable hourly rates, reasonable number of hours, and
compensation for paralegals. Despite these admissions, they
turn their backs on market practices regarding contingent risk.
This selective acceptance of market treatment of reasonable
ness is contradicted by this Court’s fees jurisprudence, the
text o f fee-shifting statutes, and legislative history regarding
reasonable fees. See, Sections I, II.A and II.B, supra.

The City, with no supporting evidence, ignores market
practices regarding contingent risk and baldly asserts that the
reasonable hourly rate used in the lodestar calculation “neces
sarily reflects contingency considerations.” Pet. Brief at 18.
Nowhere does the City explain how a market hourly rate
includes a contingency adjustment. See p. 23, supra.

The difference between an hourly rate and contingent fee
engagem ent can be illustrated as follows. In one case, an
attorney is hired at his or her normal hourly rate. The client
agrees to pay hourly fees and all costs, including litigation
expenses as billed on a monthly basis, win, lose or draw. The
attorney receives payment on a monthly basis for 3,000 hours
of time over a seven year period; the client also pays $80,000
in costs and expert fees.

(Continued from previous page)
attractiveness of such cases, thereby restricting the supply of
legal resources made available. . . .

Id. at 312-315 (emphasis added).

In another case, an attorney receives no payment for
seven years, during which time 3,000 hours and $80,000 in
costs and expert fees are expended. The attorney has a right to
be paid only if he or she prevails in the case. A losing case
will cost the attorney the value of the time and expenses,
because the client is incapable of paying costs. The case is
successful; the client prevails. The client, however, does not
meekly pay the attorney’s bill after seven years of work.
Instead, the client disputes nearly all parts of the attorney’s
fee and cost bill, and the attorney is forced to file a motion
with the court, and defend an appeal, in order to be paid for
the work and the underlying costs. The attorney earns no
interest on the $80,000 advanced for costs.

The same fee would not be reasonable in both cases, nor
would the legal marketplace treat these two types of represen
tation the same. The City and amici would, however, treat
them the same and would prohibit the courts from considering
any evidence from the legal market. They fail to explain,
however, why evidence of relevant market practices should be
ignored or why market practices properly can be relied on to
calculate a “reasonable” lodestar fee, but not a contingency
adjustment.

D. The Objections Made by The City and Amici Regard
ing the Need for and Operation of the Contingency
Risk Factor Are Addressed by Justice O’Connor’s
Two-Prong Test

Many of the City and am ici’s objections to Justice
O ’C o n n o r’s tes t have been addressed . The rem ainder,
addressed here, misunderstand her test, exaggerate the con
cerns or are otherwise without merit.

First, the Solicitor General contends that the class-based
m arket test fails to identify the “relevant m arket.” This
alleged “difficulty,” however, is no different than the inquiry
undertaken in connection with lodestar hourly rates, which
requires courts to determine the market rate for the particular

type of case and geographic area. That relevant market anal
ysis is properly left open for district courts. See H. Newberg,
Attorney Fee Awards §4.14, at 142 (1986) (“Blum deliberately
adopted a flexible, undefined relevant community standard
that leaves room for courts to adopt different geographical
and litigation specialty approaches that best suit the particular
circumstances involved”). See also Section III.E infra.

The Solicitor General next argues that Justice O ’Con
n o r’s test is “unworkable” because (1) there is no incentive to
control the size of the fee, and (2) if enhancements are
“routinely” awarded, attorneys would decline to accept cases
on a guaranteed, hourly rate basis. Again, Justice O ’Connor’s
test addresses these concerns. If the attorney declined repre
sentation on a guaranteed, hourly rate basis, that attorney
would not satisfy the test and obtain an enhancement.30 If the
attorney billed more than a reasonable number of hours, this
would be reduced as part of the lodestar calculation. Like
wise, whether any particular hourly rate is discounted for
“billing judgm ent” or poor results is again a market-based
lodestar determ ination.31

30 The American Bar Association’s Standing Committee on Ethics
and Professional Responsibility considers an attorney’s failure to offer a
client an hourly rate contract before accepting a case on a contingent-fee
basis to be a violation of professional ethics. ABA Standing Committee
on Ethics and Professional Responsibility Informal Opinion, 86-1521
“Offering Alternatives to Contingent Fees” (1986).

31 The notion that the contingent fee attorney has an incentive to
unnecessarily increase hours defies common sense. The risk of receiving
no compensation is enough incentive to expend only those hours reason
ably necessary to win the case. See Stanford Daily v. Zurcher, 64 F.R.D.
680, 683 (N.D. Cal. 1974) (“plaintiffs’ attorneys, who had no assurance
that attorneys’ fees would eventually be granted, had incentive to mini
mize rather than maximize the amount of time spent on the case”).
Moreover, an increased expenditure of time will not decrease the risk
inherent in a class of litigation. By analogy, if an investor is offered an
investment stock that has a 50% chance of an attractive return and a 50%

(Continued on following page)

The Solicitor General also argues that Justice O ’C onnor’s
test requires a “particularized” factual inquiry into the indi
vidual p la in tiff’s “ actual difficulties” in retaining counsel
rather than the general shortage of attorneys for types of
cases. In the next breath, he acknowledges that the O ’Connor
concurrence expressly prohibits the particularized assessment
o f risk. In fact, the courts correctly have focused on the
general dearth of counsel for certain types of cases, not the
difficulty any particular plaintiff had in finding counsel. See,
e.g., M orris v. Am erican Can Corp., 952 F.2d 200, 205
(1991); Spell v. M cDaniel, 824 F.2d at 1405; Hidle v. Geneva
County Bd. o f Educ., 681 F.Supp. 752, 751-58 (M.D. Ala.
1988). M oreover, all nine justices in Delaware Valley II
rejected a particularized inquiry. See pp. 12-13, above.

The Solicitor General then claims that Justice O ’Con
n o r’s test is “unworkable” because it relies on “self-serving”
affidavits. Affidavits in support of - or in opposition to -
contingency adjustments are no more “self-serving” than affi
davits regarding reasonable hourly rates, the reasonable
number o f hours, the quality of legal representation, or the
“exceptional success” of the results achieved. If any particu
lar testimony is biased, or without proper foundation, defen
dants can point that out and/or submit counter-evidence. The
trial courts can be relied upon to separate the real from the
imagined. Indeed, as this Court has stated, the district courts

(Continued from previous page)
chance of total loss, he or she may be willing to purchase 50 or 100
shares, but will hardly be willing to risk all of his or her assets in that
same stock. And, regardless of the size of the investment, the 50-50 risk
always remains the same. Thus, while the attorney who is paid for all
hours worked, win or lose, may have an incentive to increase the hours
billed, an attorney paid on a contingent basis (and who will have to run
the gauntlet of a federal court fee application) will have every incentive to
moderate the time/cost investment, due to the uncertainty of payment.

have “superior understanding” of such factual m atters.32
Hensley, 461 U.S. at 437.

The W ashington Legal Foundation claims that Justice
O ’C onnor’s test would defeat the “rare and exceptional cir
cum stances” rule. No Supreme Court case, including Dela
ware Valley II, has applied the “rare and exceptional” test to
con tingency ad justm ents. Were contingency adjustm ents
available only in “rare and exceptional” cases, it would be
contrary to legal m arketplace treatment of risk, and would
require a particularized, post-hoc analysis to determine if the
risk undertaken in that case greatly exceeded normal risk
levels.

This amicus argues that accounting for contingent risk
will result in “nonm eritorious civil rights and environmental
law com plaints.” Wash. Legal Found.’s Brief at 18. Congress
responded to this concern by providing fees for prevailing
defendants where the case was “frivolous, unreasonable, or
without foundation,” Christiansburg Garment Co. v. EEOC,
434 U.S. 412, 421 (1978), not by lim iting the calculation of
an otherwise reasonable fee as it has done in numerous other
statutes. See Section II.A.

The amicus further contends that if contingency can be
reflected in a fee, “ [tjhere is no lim iting principle” on contin
gency adjustments. That obviously has not happened under
Delaware Valley II. See Section III.A. Moreover, it could not

32 The level of proof of unavailability of counsel required in
Department of Labor v. Triplett, 494 U.S. 715 (1990), is not applicable
here. In Triplett, the anecdotal evidence submitted sought to attack the
constitutionality of the implementation of the Black Lung Benefit Act, 30
U.S.C. §§901 et. seq. This Court noted “the heavy presumption of
constitutionality” and held, as it had in Walters v. National Assn, of
Radiation Survivors, 473 U.S. 305 (1985), that anyone challenging the
law on constitutional grounds had to make “an extraordinarily strong
showing . . . to warrant a holding that the fee limitation denies claimants
due process of law.” Triplett, 494 U.S. at 722.

happen. The lim iting principle” o f the O ’Connor concur
rence is the class-based assessment o f risk and the directive
that any contingency enhancem ent be no “more than neces
sary to bring the fee within the range that would attract
competent counsel.” Delaware Valley II, at 733.

E. Determination of the Appropriate Market-Based Con
tingency Adjustment is a Judicial, Not Legislative,
Task

The Solicitor General and the D istrict o f Columbia sug
gest that Congress should sit as a legislative price control
board that directs the appropriate payment for legal services
on a nationwide basis. Solicitor G eneral’s Brief at 25-26;
D istrict o f Colum bia’s Brief at 24-26. These amici assert that
Congress is better able to direct a fair payment for legal work
involving compensation for risk than the courts are able to
evaluate how the free market compensates such work, despite
this Court s emphasis that the district court has “superior
understanding” o f such factual matters. Hensley, 461 U S at
437.

The short answer is that when Congress decides to inter
vene with the market and set the level of attorney compensa
tion, it says so in the statute. See supra at pp. 17-19.
However, where Congress does not impose such restrictions,
it relies upon the courts to evaluate the operation of the legal
marketplace. The market for legal services is not monolithic:
it is not a uniform, national market that applies in the same
m anner to all the various types of cases brought pursuant to
statutes that contain fees provisions. Nor is the free market
static. D istrict courts are well suited to making specific fact
finding decisions about the operation of the legal market at
specific locations and at particular times with respect to a
certain type of case, just as courts are relied upon to make
other complex decisions regarding the market. See note 24,
supra.

The courts make these kinds of findings regarding hourly
rates and other matters related to the determination of the
lodestar. The City and amici do not, and cannot, contest this.

There is no basis for concluding that courts are able to
determine some aspects of the market, but not the market for
risk compensation.

IV.

TH E D IST R IC T COURT PRO PERLY EX ERCISED ITS
D ISC R E T IO N W H EN IT AWARDED AN EN H A N CE
M EN T O F TH E LODESTAR FEE BASED UPON CON
TIN G EN T RISK

The district court properly held that a “reasonable attor
ney ’s fee” under the applicable federal fee-shifting statutes
may include an enhancement of the lodestar fee to compen
sate for contingent risk. App. I at 130-33. Based on the
evidence submitted, the district court found that the Dagues
were entitled to a 25% contingent risk enhancement. App. I at
133. The Second Circuit agreed with the district court’s deter
m ination that contingent risk may be taken into account in
calculating a reasonable attorney’s fee. App. I at 35-37. It
concluded that the district court’s award of a 25% enhance
ment was supported by its findings and affirmed it. App. I at
34-37. Because it was within the authority of the lower court
to adjust the lodestar fee to compensate for contingent risk,
the district court’s ruling should be affirmed.

The City criticizes the adequacy of the affidavits the
Dagues submitted to support their enhancement request. How
ever, the City did not raise the sufficiency of the evidence
supporting the fee enhancement in its appeal to the Second
C ircuit nor in its petition for certiorari. Moreover, this
Court’s grant of certiorari does not encompass this inquiry.
The C ourt’s order granting certiorari is limited to the issue of
whether a court may, in determining a reasonable attorney’s
fee under the environmental statutes, enhance the lodestar fee
to account for contingent risk.33

33 The City urges this Court to remand the fee award to the district
court not only to vacate the risk enhancement but also to reduce the

(Continued on following page)

Even if the issue were properly before this Court, this
Court need not, and indeed should not, address it. Instead, the
case should be remanded to the district court for reconsidera
tion of the risk enhancem ent calculation, consistent with
Justice O ’C onnor’s test. As discussed in Section III.E, supra,
the district court is keenly fam iliar with the facts relevant to
the inquiry. It is in the best position to evaluate the unique
evidence of the local Burlington legal m arket’s treatm ent of
contingent risk and the availability o f counsel to take complex
cases such as this one.

CONCLUSION

Respondents request that this Court affirm the fee enhan
cement for contingent risk awarded by the district court.
Guy T. Sapertein
M ari M ayeda
Barry Goldstein
Jocelyn D. Larkin
Donna Ryu
Jeremy Friedman
L inda M. Dardarian
Saperstein, M ayeda,

L arkin & Goldstein
1300 Clay Street,

11th Floor
Oakland, CA 94612
(510) 763-9800

W illiam W. P earson*
M olloy, Jones & Donahue, P.C.
33 North Stone Avenue,

Suite 2100
Tucson, Arizona 85701
(602) 620-5520

*Counsel o f Record fo r
Respondents

(Continued from previous page)
lodestar figure. Pet. Brief at 24-26. The City argues that the results
obtained in the litigation were limited and do not justify the lodestar
amount, citing Hensley, 461 U.S. at 429. The district court rejected this
same argument below, as did the Second Circuit. As stated above,
certiorari was granted only on the issue of the availability of contingent
risk enhancements. Accordingly, the issue of the propriety of the lodestar
figure under Hensley is not before this Court.

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Burlington v Dague Sr Brief for Respondents

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