Richlin v. Chertoff and Fees under EAJA

If Charles Dickens were alive today and desired to update Bleakhouse, he could do no better than to tell the story of this case. Indeed as the lower court, the Court of Appeals for the Federal Circuit, said, "This is the fifth time this case has come before this court," Richlin Sec. Service. v. Chertoff, 472 F3d 1370, 1371 (2006). The specific issue that comes before the US Supreme Court is a highly technical one--whether the lawyer who has prevailed in an action on behalf of his/her client against the United States is entitled to reimbursement for paralegal expenses at the going market rate for paralegals or only at the cost to the attorney for the paralegal services (i.e., since the paralegals worked for the attorney, s/he paid them about $35 an hour; the "market rate" for paralegals, if hired "off the street" was about $95 an hour). We are dealing with approximately 600 hours of paralegal time in this case; thus the total amount at issue is 600 X $60 or about $36,000. Not a huge amount, but I guess the Court wanted to clear up a minor difficulty in interpreting the Equal Access to Justice Act.

I will lay out the issue from the text of the statute below, but I thought it would be especially fun to recount the history of this case, so that you can see the nuts and bolts of how a complex case works, especially when you are suing the government. When I was in private practice I was engaged in such a case, a case which lasted more than 20 years...

The Whole Richlin Case

Richlin is a security service which, under contract with the Immigration and Naturalization Service (currently the Deparment of Homeland Security), provided guard services for detainees at the Los Angeles International Airport. As a result of a mutual mistake, the contracts misclassified Richlin's employees as "Guard I" rather than "Guard II" for wage classification under the Service Contract Act, a mistake which resulted in the underpayment of Richlin's employees. As long ago as Feb. 1995, the Department of Labor determined that Richlin's employees were entitled to back wages from Richlin. So, Richlin filed a claim against the government for over $1.5 million in back wages and other costs. The claim was denied, Richlin appealed, lots of fireworks happened. Then, after a "series of appeals," as the Federal Circuit's decision says, the Board of Contract Appeals (there are tons of these boards in the DC area; we are dealing here with the Board of Contract Appeals for the Department of Transportation) awarded Richlin the full amount of additional wages, payroll taxes, etc. The Court of Appeals for the Federal Circuit affirmed all of this. Phew.

Once all these wages were paid (about 8 years after the 1995 determination by the DOL), Richlin submitted an application for reimbursement of attorney's fees, expenses and costs to the Board pursuant to the Equal Access to Justice Act, a 1988 statute allowing attorney fees in many successful suits against the US government. In his EAJA application, Richlin sought reimbursement for $51,793.75 in attorney's fees for work in the underlying case and $14,225.00 in attorney's fees for preparing the EAJA application. The attorney also asked for reimbursement of paralegal services at the rate billed to Richlin for paralegal time (which averaged about $95 per hour). The amount that Richlin sought for reimbursement for paralegal expenses from the government was $45,141.10 for 523.8 hours of paralegal time for working on the underlying cases and $6,760.00 for 68.2 hours of paralegal work preparing the EAJA application. Whew. When you bill more than $20,000 just to complete an application, you know that you have forms that are way too complex on your hands...I have filled out some of them, and can attest to that.

Moving to the EAJA Angle

As said above, the EAJA allows reimbursement of attorney fees and costs to those who have prevailed in a suit against the government, unless the government's position was "substantially justified." The fact that only the grandchildren of the prevailing lawyer may see the money is not something the statute is concerned about...

The EAJA provides:

"an agency that conducts an adversary adjudication shall award, to a prevailing party ... fees and other expenses incurred by that party in connection with that proceeding, unless the adjudicative officer of the agency finds that the position of the agency was substantially justified or that special circumstances make an award unjust," 5 USC sec. 504(a)(1).

Another section of the statute defines "fees and expenses,"

"fees and other expenses” includes the reasonable expenses of expert witnesses, the reasonable cost of any study, analysis, engineering report, test, or project which is found by the agency to be necessary for the preparation of the party's case, and reasonable attorney or agent fees (The amount of fees awarded under this section shall be based upon prevailing market rates for the kind and quality of the services furnished),..." 5 USC sec. 504(b)(1).

The maximum fee for an attorney is $125 per hour, unless the agency determines that an increase in the cost of living or a special factor, such as the limited availability of qualified attorneys justifies a higher fee. But the statute is silent on how to reimburse paralegals. Though the legislative history to the EAJA statute made one terse reference to paralegals being reimbursed at "cost" (which would imply only what it cost the attorney who paid the paralegal employed by him/her rather than the "market rate" for paralegal services), the statute is silent on the issue.

So, that is the issue before the Court--whether an attorney submitting an EAJA application can be reimbursed for paralegal time at market rate or at the rate that the person normally pays a paralegal in his/her employ. We are not talking about huge amounts of money here, but there is a division in the circuits on the issue--the majority of them, perhaps surprisingly, allowing market-rate reimbursement of paralegals.

It is likely that this case won't get much press outside of a fairly narrow group of professionals. Indeed, it is interesting to study the "briefs and related documents" submitted in this case compared to the Heller case (handgun ban in the District of Columbia) which will be argued on the day before this case. Dozens of amicus briefs have been submitted in the Heller case. In contrast, this case has oly one amicus: filed by the National Association of Legal Assisitants and Paralyzed Veterans of America (what are they doing on the same brief--unless a large number of paralyzed veterans are legal assistants?).

If I were a betting man, I would say the Court would not side with paralegals and attorneys here. Why? Probably because I perceive at least 4 of the Justices as against anything that might help lawyers or their the "little people" in their offices. It is not that this Court loves the government; I think it just detests private enterprising attorneys and their staff a little more...

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