Opinion analysis: Richlin Security v. Chertoff
on Jun 5, 2008 at 2:05 pm
On June 2, 2008, the Court reversed. In an opinion by Justice Alito that was joined in full by six other justices and in part by Justices Scalia and Thomas, the Court held that when the requirements of the Equal Access to Justice Act are otherwise met, a prevailing party can recover paralegal fees from the federal government at prevailing market rates.
After oral argument, it seemed quite likely that Richlin would prevail, so that todayâ€™s decision was not much of a surprise. The only real element of surprise was how uniformly Justice Alitoâ€™s opinion rejects virtually all of the arguments advanced by the government to support its contention that paralegal fees should instead be reimbursed at cost. The opinion regards the plain language of the statute as decisive, explaining that â€œ[i]n this case, Richlin â€˜incurredâ€™ â€˜feesâ€™ for paralegal services in connection with its contract action before the Board. Since Â§504(b)(1)(A) awards fees at â€˜prevailing market rates,â€™ a straightforward reading of the statute leads to the conclusion that Richlin was entitled to recover fees for the paralegal services it purchased at the market rate for such services.â€ The Court dismisses the governmentâ€™s argument that Congress intended paralegal fees to be â€œother expensesâ€ reimbursable at â€œreasonable costâ€ as a â€œfractured interpretation of the statute,â€ explaining that it found no reason to believe that Congress intended â€œexpensesâ€ to be reimbursed differently from fees and, in any event, â€œit would hardly follow that amounts billed for paralegal services should be classified as â€˜expensesâ€™ rather than as â€˜fees.â€™â€ Moreover, the Court continued, even if paralegal fees were to be reimbursed at cost, â€œreasonable costâ€ would still generally be â€œdeemed to be â€˜prevailing market ratesâ€™ when such rates could be determined.â€ Finally, the Court emphasized that the reasoning of its 1989 decision in Missouri v. Jenkins, in which it held that prevailing litigants under Section 1983 could recover paralegal fees at market rates, applied fully to EAJA cases as well.
Justice Alitoâ€™s opinion concludes by addressing, and ultimately deeming unpersuasive, legislative history and policy arguments advanced by the government. (Court watchers will not be shocked to learn that Justice Scalia declined to join the legislative history portion of the opinion, while Justice Thomas declined to join both the Missouri v. Jenkins discussion and the entirety of Part III.) The government had seized on a snippet in a Senate Report indicating that â€œ[e]xamples of the type of expenses that should ordinarily be compensable [under EAJA] include paralegal time (billed at cost).â€ The Court dismissed the snippet, however, as a â€œstray remarkâ€ rendered even less significant by the fact that, â€œas we observed earlier, the word â€˜costâ€™ could just as easily (and more sensibly) refer to the clientâ€™s cost rather than the attorneyâ€™s cost.â€ And the Court rejected the governmentâ€™s argument (on which the Federal Circuit relied below as well) that allowing paralegal fees to be reimbursed at market rates would create a â€œperverse incentiveâ€ for firms to â€œshift an inefficient amount of attorney work to paralegals, since paralegal fees could be recovered at a greater percentage of their full market value.â€ Instead, the Court agreed with Richlin that the argument â€œproves too muchâ€ and could apply just as easily to fees that are undeniably covered under EAJA, such as â€œagentsâ€ and junior attorneys. Finally, although the Court likely would have reached the same result based solely on the text of the statute and Missouri v. Jenkins, Richlinâ€™s cause was certainly helped by the fact that, from a policy perspective, the Court regarded the market-rate system as a far more straightforward one (and, moreover, one which has worked well for some time, both in the Section 1983 context and in circuits employing the same rule for EAJA cases): â€œMarket practice provides by far the more transparent basis for calculating a prevailing partyâ€™s recovery under EAJA. It strains credulity that Congress would have abandoned this predictable, working framework for the uncertain and complex accounting requirements that a cost-based rule would inflict on litigants, their attorneys, administrative agencies, and the courts.â€