Attorney’s fees and nominal damages

We previously wrote here about your ability to make the other side in a lawsuit pay your attorney’s fees, including lawsuits involving federal civil rights. Today we write about such when a plaintiff only recovers what is called “nominal damages.”

The term “nominal damages” refers to a situation where a jury finds that a plaintiff’s rights have been violated but that the plaintiff suffered no compensable damages. In that case, the jury may award nominal damages, usually in the amount of $1.00.

Yet, the lawyer representing the plaintiff will have expended a significant amount of time and money in taking the lawsuit through a trial.

If the federal civil rights statute allows the plaintiff to also recover attorney’s fees (and most do), what is the proper amount to be rewarded?

In Farrar v. Hobby , 506 U.S. 103 (1992), the United States Supreme Court held that “[a] plaintiff who wins nominal damages is a prevailing party under § 1988.” (Section 1988 refers to a federal statute that permits an award of attorney’s fees to a winning party in certain civil rights cases.)

The Court explained that a plaintiff “prevails” when actual relief on the merits of his claim materially alters the legal relationship between the parties by modifying the defendant’s behavior in a way that directly benefits the plaintiff.

The Supreme Court further explained that to qualify as a prevailing party, a civil rights plaintiff must obtain at least some relief on the merits of his claim.

“The plaintiff must obtain an enforceable judgment against the defendant from whom fees are sought or comparable relief through a consent decree or settlement.”

“Whatever relief the plaintiff secures must directly benefit him at the time of the judgment or settlement.”

Short answer: yes.

The Farrar court explained: “A judgment for damages in any amount, whether compensatory or nominal, modifies the defendant’s behavior for the plaintiff’s benefit by forcing the defendant to pay an amount of money he otherwise would not pay.”

Short answer: no.

The Supreme Court held that “although the ‘technical’ nature of a nominal damages award or any other judgment does not affect the prevailing party inquiry, it does bear on the propriety of fees awarded under § 1988.”

In other words, “once civil rights litigation materially alters the legal relationship between the parties, the degree of the plaintiff’s overall success goes to the reasonableness of a fee award.”

As Justice O’Connor stated in her concurring opinion, “if ever there was a plaintiff who deserved no attorney’s fees at all, that plaintiff is Joseph Farrar. He filed a lawsuit demanding 17 million dollars from six defendants. After 10 years of litigation and two trips to the Court of Appeals, he got one dollar from one defendant. As the Court holds today, that is simply not the type of victory that merits an award of attorney’s fees.”

As the Fifth Circuit has recently stated, the answer is “yes”.

On August 5, 2020, the United States Court of Appeals for the Fifth Circuit issued its opinion in Arce v. Louisiana State.

In Arce , a jury determined that Arce’s rights under the Americans with Disabilities Act had been violated. But, the jury awarded him nominal damages of $1.00 each against two of the defendants.

The district court initially denied an award of fees based upon the rationale of Farrar.

But, on appeal, the Fifth Circuit reminded the district court that “ Farrar  does not mandate the denial of fees in every case where the plaintiff seeks monetary relief and recovers only nominal damages. The Supreme Court instead explained that, in such cases, ‘the only reasonable fee is  usually  no fee at all.’ ”  Shelton v. Louisiana State , 919 F.3d 325, 329 (5th Cir. 2019).

As the Fifth Circuit also stated in its 2019 opinion, “even nominal damages can support an award of attorneys’ fees” if the litigation “achieved a compensable goal.”

For example, the Fifth Circuit affirmed an award of attorneys’ fees in a case even though the plaintiffs “achieved no specific injunctive or monetary relief” because the litigation resulted in a significant legal victory invalidating racial preferences in public higher education admissions in Texas, a benefit that inures to all future applicants.”

So, the Fifth Circuit remanded the case to the district court to consider that question.

After remand, the district court awarded Arce attorney’s fees of $38,800. Arce’s estate appealed because this was only about 10% of the fees requested.

This time the Fifth Circuit affirmed, holding that the district court’s award was “generous”.

First, a plaintiff in a civil rights case who only recovers nominal damages is nevertheless a “prevailing party” under Section 1988.

Second, when the primary relief sought by the plaintiff is money, an award of only nominal damages is more likely to result in the plaintiff receiving little, or no, attorney’s fees.

Third, when the primary relief sought (and obtained) by the plaintiff is non-monetary (such as injunctive relief or a declaratory judgment), the more likely it is that plaintiff will be view as obtaining a “compensable goal.” In that case, an award of fees is much more likely.

Panter Law Firm, PLLC, 7736 Old Canton Road, Suite B, Madison, MS 39110

601-607-3156

www.craigpanterlaw.com

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