I complained back when the Supreme Court’s Perdue v. Kenny A. opinion first came out more than a year ago, knocking down attorney’s fees awarded to a set of extraordinary children’s rights lawyers:
It’s no stretch to say those lawyers single-handedly reformed the foster care system in metropolitan Atlanta.
And they did that by spending their own money and putting in their own time, with no guarantee they would recoup any of their out-of-pocket costs, much less get paid a fee for their services. Had they been paid by the hour as they went along, their services would have been worth more than $7 million.
But they weren’t paid by the hour to pursue the case. They were paid nothing at all; instead, they paid money — $1.65 million — for the privilege of cleaning up abuse and neglect in the foster care system.
As Blawgletter explains, there’s a big difference between getting paid to defend a case and paying to pursue one. The former is safe and simple and can be done in perpetuity. The latter is risky and complicated and can only be done for as long as funds are available.
Class actions are, by their nature, extraordinary, more expensive and riskier than even ordinary contingent fee representation. The District Court that oversaw the Perdue litigation recognized that and awarded the plaintiffs’ attorneys their costs, their $7 million or so in hourly fees, and then gave them an “enhancement” of $4.5 million.
The Supreme Court — the Justices of which have a combined experience in contingent fee litigation of exactly 0.0 hours — reversed, holding the plaintiffs’ lawyers, who fought for years without being paid a dime and indeed paying out their own money to fund the case, were entitled only to a fee “that roughly approximates the fee that the prevailing attorney would have received if he or she had been representing a paying client who was billed by the hour in a comparable case.”
It was a phony and vindictive legal fiction designed to dissuade plaintiffs’ lawyers from taking these cases, part of a long campaign against class actions in general that culminated in the Wal-Mart v. Dukes opinion.
Last week, the opinion came back around again to bite a group of employment discrimination lawyers who had been litigating a Title VII class action since 1997. Via the Workplace Class Action Blog comes McClain, et al. v. Lufkin Industries, Inc., No. 10-40036 (5th Cir. Aug. 8, 2011). As they describe:
Plaintiffs had filed a class action in the U.S. District Court for the Eastern District of Texas under Title VII alleging that defendant engaged in unlawful employment practices, including disparate treatment and disparate impact. Id. at *2. The district court certified a class. Id. at *3. After realizing that defendant was not going to settle the case and that they did not have the resources to prosecute an employment class action through trial, plaintiffs’ counsel sought the assistance of another law firm. Id. However, plaintiffs’ counsel was not able to find another law firm in Texas that was willing or able to commit the time and resources necessary to assist in the prosecution of the class action, so plaintiffs’ counsel was forced to turn to an Oakland, California firm with a nationwide reputation as a plaintiffs’ employment discrimination class action firm. Id. at *3-5.
The opinion (here’s the copy at the Workplace Class Action Blog) includes at footnote 4 some remarkable comments about how risky and unprofitable it is to take on these types of cases:
J. Derek Braziel, an experienced Texas litigator in labor and
employment law, explained: “I do not work on employment discrimination class action cases for largely financial reasons, even though I am competent and have the resources to do so. . . . Employment discrimination class actions usually take much longer to litigate than the average employment discrimination or wage and hour case. Defendant companies often use their substantial financial advantage to outstaff and outwork plaintiffs with limited personal resources. …
Steven B. Thorpe, an experienced litigator in Dallas, declared: “My practice focuses in large part on employment civil rights cases in which I represent plaintiffs. . . . [T]he greatest portion of my practice prior to approximately 1985 was in the representation of plaintiffs in class action discrimination suits. At that time I and the firm with which I was associated largely abandoned that area of practice because we found it to be financially infeasible. At this time and for more than a decade I have done no class action employment litigation.
All of that hesitation despite the extraordinary facts that the plaintiff’s lawyer, Timothy Garrigan, had discovered and proven in front of the court during class certification:
During the class certification hearing, one allegation was that African American employees were disproportionately sent to Lufkin’s foundry to work under horrible conditions. The company officials were testifying that the conditions there weren’t so bad. Judge [Howell] Cobb immediately recessed the class certification hearing and ordered everyone to take a tour of the foundry when no one was expecting us to be there.
It was actually the first time I’d been there. The descriptions I’d heard of the place were like something out of Charles Dickens or the Dark Ages, and they turned out to be accurate. It was hot, dark, dirty, ankle deep in dust, with flames leaping out of the darkness just a few feet away from you. It was everything the plaintiffs had been describing. I do think that was a significant point in the case. It confirmed what many of the plaintiffs had been saying and contradicted much of what the company had been saying.
Literally unable to find anyone in Texas willing to take the case, Garrigan reached out across the nation and found Goldstein, Demchak, Baller, Borgen & Dardarian in California, which has long fought these sorts of battles. As Garrigan described back in 2008, while the case was still going on: Continue Reading Perdue v. Kenny A. Keeps On Punishing Class Action Lawyers