Legal Opinions - U.S. Supreme Court: June 16, 2008

Daily Record, The (Baltimore), Jun 16, 2008

U.S. Supreme Court

Civil Procedure

Recovery of paralegal fees

BOTTOM LINE: A prevailing party that satisfies the Equal Access to Justice Act's requirements may recover its paralegal fees from the Government at prevailing market rates.

CASE: Richlin Security Service Co. v. Chertoff, No. 06-1717 (decided June 2, 2008) (Justices Roberts, Stevens, Kennedy, Souter, Ginsburg, Breyer & ALITO) (Justices Scalia & Thomas, joining in part).

FACTS: After prevailing against the Government on a claim originating in the Department of Transportation's Board of Contract Appeals, petitioner (Richlin) filed an application with the Board for reimbursement of attorney's fees, expenses, and costs, pursuant to the Equal Access to Justice Act (EAJA).

The Board concluded, inter alia, that Richlin was not entitled to recover paralegal fees at the rates at which it was billed by its law firm, holding that the EAJA limited such recovery to the attorney's cost, which was lower than the billed rate.

In affirming, the Federal Circuit concluded that the term "fees," for which the EAJA authorizes recovery at "prevailing market rates," embraces only the fees of attorneys, experts, and agents.

The Supreme Court reversed and remanded.

LAW: The EAJA permits a prevailing party to recover "fees and other expenses incurred by that party in connection with" administrative proceedings, 5 U.S.C. [section]504(a)(1), including "the reasonable expenses of expert witnesses, the reasonable cost of any study, analysis, engineering report, test, or project...and reasonable attorney or agent fees," and bases the amount of such fees on "prevailing market rates," [section]504(b)(1)(A).

Because Richlin "incurred" "fees" for paralegal services in connection with its action before the Board, a straightforward reading of the statute demonstrates that Richlin was entitled to recover fees for the paralegal services it purchased at the market rate for such services.

The Government's contrary reading -- that expenditures for paralegal services are "other expenses" recoverable only at "reasonable cost" -- was unpersuasive. Section 504(b)(1)(A) does not clearly distinguish between the rates at which "fees" and "other expenses" are reimbursed. Even if the statutory text supported the Government's dichotomy, however, it would hardly follow that amounts billed for paralegal services should be classified as "expenses" rather than as "fees." Paralegals are surely more analogous to attorneys, experts, and agents than to studies, analyses, reports, tests, and projects.

Even if the Court agreed that the EAJA limited paralegal fees to "reasonable cost," it would not follow that the cost should be measured from the perspective of the party's attorney rather than the client. By providing that an agency shall award a prevailing party "fees and other expenses...incurred by that party," [section]504(a)(1) leaves no doubt that Congress intended the "reasonable cost" of [section]504(b)(1)(A)'s items to be calculated from the litigant's perspective.

It was unlikely that Congress, without even mentioning paralegals, intended to make an exception of them by calculating their cost from their employer's perspective. It seemed more plausible that Congress intended all "fees and other expenses" to be recoverable at the litigant's "reasonable cost," subject to the proviso that "reasonable cost" would be deemed to be "prevailing market rates" when such rates could be determined.

To the extent that some ambiguity subsists in the statutory text, this Court needed look no further to resolve it than Missouri v. Jenkins, 491 U.S. 274, where the Court addressed a similar question with respect to the Civil Rights Attorney's Fees Awards Act of 1976 - - which provides that a court "may allow the prevailing party...a reasonable attorney's fee as part of the costs," 42 U.S.C. [section]1988 -- finding it "self-evident" that "attorney's fee" embraced the fees of paralegals as well as attorneys, 491 U.S., at 285.

The EAJA, like [section]1988, entitles certain parties to recover "reasonable attorney...fees," [section]504(b)(1)(A), and makes no mention of the paralegals, "secretaries, messengers, librarians, janitors, and others whose labor contributes to the work product for which an attorney bills her client," 491 U.S., at 285. Thus, the EAJA, like [section]1988, must be interpreted as using the term "attorney...fees" to reach fees for paralegal services as well as compensation for the attorney's personal labor, making "self- evident" that Congress intended that term to embrace paralegal fees.

Since [section]504 generally provides for recovery of attorney's fees at "prevailing market rates," it followed that paralegal fees must also be recoverable at those rates. The Government's contention that Jenkins found paralegal fees recoverable as "attorney's fee[s]" because [section]1988 authorized no other recoverable "expenses" found no support in Jenkins itself, which turned not on extratextual policy goals, but on the "self-evident" proposition that "attorney's fee[s]" had historically included paralegal fees.