Evans v. Jeff D.

475 U.S. 717 (1986)

What's Going On?

Defendant seeks review of a decision holding that a settlement agreement containing a waiver of statutorily authorized attorney's fees was invalid.

Who's Who?

Plaintiffs     :

Jeff D., et al – class of emotionally and mentally handicapped children [who have been or will be placed in Defendant's care].

Defendants :

Evans[, et al] – Governor [and other public officials of the State of Idaho, responsible for the education and treatment of emotionally and mentally handicapped children.]

Facts:

Plaintiffs, emotionally and mentally handicapped children, brought a class action suit against Defendants, public officials of the State of Idaho, seeking an injunction in order to improve the treatment of institutionalized members of the plaintiff class. Plaintiff's attorney, Johnson, was employed by a legal aid society and had no agreement regarding legal fees in connection with his representation of Plaintiffs. One week prior to the trial, Defendants proposed a settlement to Plaintiffs offering almost all of the desired injunctive relief, but including a provision requiring waiver by Plaintiffs of all claims to fees or costs provided for by federal statute. Compelled by his ethical obligations, attorney Johnson waived the fees and accepted the settlement offer against the instruction of the legal aid society. The district court approved the settlement. The appellate court invalidated the fee waiver on appeal. Defendants appeal.

Issue:

Does a federal court have a duty to reject a proposed settlement agreement because it includes a waiver of statutorily authorized attorney's fees?

Decision:

No. FRCP 23(e) requires the court to approve the settlement terms of a class action, but Rule 23(e) does not implicitly authorize the court to require the parties to accept a settlement to which they have not agreed. Attorney Johnson argues that the settlement presented him with an ethical dilemma in which he was forced to waive his fees; however, rather than being faced with an ethical dilemma, Johnson was faced with the ethical duty to serve his clients loyally and competently. In light of the probable outcome of the trial, the duty required Johnson to settle the merits. Therefore there was no ethical breach in this case. The propriety of a negotiated fee waiver should be assessed in reference to the Fees Act, not the rules of ethics. The language of the Fees Act, however, grants the prevailing party a waivable statutory eligibility for a discretionary award of attorney's fees in specified civil rights actions. In fact, a general proscription against negotiated waiver for attorney's fees, in exchange for settlement on the merits, would serve as an impediment to the vindication of civil rights by reducing the attractiveness of the settlement. Due to the absence of a legislative command that fees be paid whenever a case is settled, the courts shall rely primarily on the discretion of the district courts to appraise the reasonableness of particular class action settlements on a case-by-case basis, in the light of all relevant circumstances. In this case, the waiver does not appear to be part of a vindictive effort to discourage Johnson from bringing such cases in the future; nor did the waiver result from a realization by Defendants that they lacked any realistic defense on the merits. In fact, the fee waiver secured greater relief for Plaintiffs than they could reasonably have expected to achieve at trial. The district court did not abuse its discretion in upholding the fee waiver.

Basic Rule:

A federal court does not have a duty to reject a proposed settlement because it includes a waiver of statutorily authorized attorney's fees

Terms:

Fees Act :

(The Civil Rights Attorney's Fees Awards Act of 1976, 42 U.S.C. § 1988.) Federal statute providing that "the court, in its discretion, may allow the prevailing party . . . a reasonable attorney's fee" in certain civil rights actions.

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