Greenberg Traurig Alert
"Catalyst Theory" is not a Valid Basis for Awarding
in Federal Employment Discrimination/Civil Rights Cases
John Scalia, Esq., Greenberg
Traurig, Tysons Corner Office
View or download the PDF version of this Alert
The U.S. Supreme Court, on May 29, 2001, held that plaintiffs whose civil
rights lawsuits have brought about a desired change in the defendant’s conduct,
but have not resulted in a final judgment or court-ordered consent decree,
do not have a valid statutory basis for receiving an award of attorneys’
fees. The Court’s decision in Buckhannon Board & Care Home, Inc. et al.
v. West Virginia Department of Health and Human Resources, et al., No.
99-1484, ___ U.S. ___ (2001), resolved a conflict among the federal circuit
courts, rejecting the "catalyst theory" that had been adopted by nine of
In Buckhannon, an assisted living facility in West Virginia, Bukhannon
Board and Care Home, failed an inspection by the West Virginia fire marshal’s
office because some of its residents were incapable of "self-preservation"
as defined by state law. After receiving orders to close its operations,
the Buckhannon facility brought suit in federal District Court against the
State, seeking declaratory and injunctive relief that the "self-preservation"
requirement violated the Fair Housing Amendments Act of 1988 (FHAA) and
the Americans with Disabilities Act of 1990 (ADA). While the case was pending
in District Court, the West Virginia Legislature enacted several bills eliminating
the self-preservation provision contained in the state law. As a result,
the District Court granted the State’s motion to dismiss the case as moot.
The Buckhannon facility then asked the District Court for attorneys’ fees
as the "prevailing party" under the fee-shifting provisions contained in
the FHAA and ADA. The facility based its entitlement on the "catalyst theory,"
which holds that a plaintiff is a "prevailing party" if it achieves the
desired result because the lawsuit brought about a voluntary change in the
defendant’s conduct. The District Court denied the facility’s request for
attorneys’ fees, following Fourth Circuit precedent refusing to recognize
the catalyst theory. The Fourth Circuit affirmed the District Court’s decision,
and the Supreme Court granted the facility’s petition for certiorari.
The Supreme Court affirmed the Fourth Circuit’s decision, holding that
the catalyst theory is not a permissible basis for the award of attorneys’
fees under the FHAA and ADA. The Court held that "[I]n the United States,
parties are ordinarily required to bear their own attorneys’ fees – the
prevailing party is not entitled to collect from the loser." Under this
"American Rule," courts follow a general practice of not awarding attorneys’
fees to a prevailing party absent explicit statutory authority. In noting
that Congress has employed the phrase "prevailing party" as a legal term-of-art
in numerous statutes authorizing awards of attorneys’ fees, the Court held
that its prior cases defined a "prevailing party" as one who has been awarded
some relief by a court. The Court pointed out that both judgments
on the merits and court-ordered consent decrees create a material alteration
of the parties’ legal relationship, thus permitting an award of attorneys’
fees; the catalyst theory, however, allows an award of attorneys’ fees where
there is no judicially sanctioned change in the parties’ legal relationship.
The Court concluded that a defendant’s voluntary change in conduct,
although perhaps accomplishing what the plaintiff sought to achieve by filing
the lawsuit, lacks the necessary judicial imprimatur on the change.
The Buckhannon decision is significant because it has broad application
to civil rights and employment discrimination litigation, and because it
clarifies a long-standing ambiguity in that area of the law. While the Court’s
opinion only specifically addresses the fee-shifting provisions contained
in the FHAA and ADA, the same analysis applies to numerous other federal
anti-discrimination statutes – including Title VII of the Civil Rights Act
of 1964, the Fair Labor Standards Act, the Age Discrimination in Employment
Act and the Family and Medical Leave Act. It is now clear that in all federal
employment discrimination litigation involving these statutes – regardless
of the circuit in which the case may be brought – a plaintiff may not recover
"prevailing party" attorneys’ fees in the absence of a judgment on the merits
or a court-ordered consent decree.
The Buckhannon decision provides much-needed and long-overdue predictability
for employers faced with federal discrimination claims. In those nine circuits
that previously applied the catalyst theory, the Buckhannon decision
now allows a defendant-employer considerably more flexibility and security
in deciding whether to voluntarily change its conduct in accordance
with a result sought by a plaintiff in a pending federal discrimination
lawsuit. This issue frequently arises in the context of a plaintiff-employee
alleging in a lawsuit that the defendant-employer’s employment policy or
practice constituted unlawful discrimination under, for example, Title VII.
Not infrequently, an employer faced with such a lawsuit might, notwithstanding
its good faith belief in the legitimate, non-discriminatory nature of its
policy, decide for business reasons that it makes sense to voluntarily change
the challenged policy in the manner advocated by the plaintiff-employee.
Before the Court’s Buckhannon decision, such an employer might reasonably
decide against making that change simply because to do so would expose the
company to a catalyst theory attorneys’ fee claim. And, to the extent the
employer were to decide to proceed with the voluntary change, it would face
a Hobson’s choice: Implement the change unilaterally, and risk the plaintiff
seeking catalyst theory attorneys’ fees; or, implement the change as part
of a negotiated settlement with the plaintiff, and risk the plaintiff exacting
some monetary payment in return for waiving the catalyst theory attorneys’
fees claim. The Buckhannon decision brings an end to such untenable
decisions, and has the positive effect of encouraging employers to voluntarily
implement beneficial changes to their policies and practices without fear
of having that decision turned against them in the form of an attorneys’
fees award under the now dead "catalyst theory."
© 2001 Greenberg Traurig
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feel free to contact one of our attorneys.
This GT ALERT is issued for general purposes only and is not intended
to be construed or used as legal advice. Greenberg Traurig attorneys provide
practical, result-oriented strategies and solutions tailored to meet our
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