Supreme Court endorses lodestar enhancement in extraordinary circumstances; may affect whistleblowers' attorney fees under False Claims Act

by Ben Vernia | April 21st, 2010

In Perdue v. Kenny J., the Supreme Court on April 21 held that in performing lodestar calculations under the Civil Rights Act, judges may enhance the lodestar rate to account for superior performance. In cases under statutes which call for shifting attorney’s fees costs, a “lodestar” calculation takes the amount of hours expended on a matter multiplied by the prevailing hourly rate in the community. In the case before it, children in Georgia’s foster-care system used the state under the Civil Rights Act, and reached a comprehensive settlement through mediation. The children then filed a fee request, which the district court first reduced for vagueness in some entries, but then enhanced by 75% in recognition of the extraordinary result obtained by the plaintiffs and their professionalism in handling the matter. A divided 11th Circuit affirmed.

The Supreme Court rejected Georgia’s argument that lodestar rates cannot be enhanced for any reason, and enumerated three situations in which enhancement might be appropriate: first, where the lodestar method does not adequate measure the attorney’s true market value; second, where the attorney’s performance “includes an extraordinary outlay of expenses and the litigation is exceptionally protracted”; and third, where there is exceptional delay in the payment of fees. The Court nevertheless remanded the case to the District Court, because the 75% enhancement was not adequately justified.

The case has clear implications for calculations of attorney’s fees under the False Claims Act. 31 USC 3730(d) provides that whistleblowers are to receive, in addition to a share in the recovery, “an amount for reasonable expenses which the court finds to have been necessarily incurred, plus reasonable attorneys’ fees and costs.” This is similar to the fees-shifting provision in the Civil Rights Act which the Court addressed, and the Court itself invited comparison to other federal statutes (presumably including the False Claims Act). See slip op. at 5 n. 3.

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