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7th Cir. Holds Pl’s Recovery of Less Than Pre-Trial Settlement Offers Does Not Justify Denying Atty Fees

The U.S. Court of Appeals for the Seventh Circuit recently held that a trial court abused its discretion in denying attorney’s fees to a prevailing plaintiff despite the plaintiff’s failure to recover an award which exceeded the pre-trial settlement offers.

A copy of the opinion in Capps v. Drake is available at:  Link to Opinion.

The plaintiff filed suit against multiple law enforcement officers pursuant to 42 U.S.C. § 1983 asserting a number of claims for unlawful search and use of excessive force. At various points during litigation, the parties engaged in settlement discussions with the plaintiff demanding $3.5 million and rejecting an ultimate offer of $200,000 by the defendants.

At the trial, the jury found in favor of the plaintiff on the majority of his claims and awarded the plaintiff $22,000 in compensatory damages and $10,092 in punitive damages.  Following the trial, the plaintiff moved for an award of attorney’s fees per 42 U.S.C. § 1988(b), but the trial court denied that petition.

The plaintiff appealed the trial court’s denial of attorney’s fees.

The Seventh Circuit begins its analysis with a brief overview of the fee shifting provision of section 1988(b), which provides that “the court, in its discretion, may allow the prevailing party, other than the United States, a reasonable attorney’s fee.”  As noted in the opinion, the Supreme Court of the United States has clarified that even a plaintiff who receives only a nominal award may be considered a prevailing party but that it is reasonable for a court to refuse to award fees if the damages awarded are merely technical or de minimis.  See Farrar v. Hobby, 506 U.S. 103 (1992).

The Seventh Circuit further explained that a denial of fees may also be appropriate where the plaintiff in a matter was “aiming high and fell short, and in the process inflicted heavy costs on his opponent and wasted the time of the court.”  But, the Court noted, this does not apply to cases where the claim is small and tried accordingly.

In rejecting the trial court’s determination that the plaintiff in this matter “aimed high and fell short,” the Seventh Circuit first noted that it “doubt[s] an award including punitive damages can be considered technical or de minimis.”  The Court further explained that the trial record reflected that damages sought by the plaintiff was not his primary focus and instead he was more interested in an adjudication of his claims and the acceptance of responsibility by the defendants.  The Court commented that section 1988 was enacted for precisely this type of situation where the primary goal is the vindication of rights.

Importantly, the Seventh Circuit noted that the defendants never made a proper pre-trial offer of judgment under Federal Rule of Civil Procedure 68.

The Court also criticized the trial court judge for appearing to punish the plaintiff for purported inappropriate conduct by his attorney in the litigation.  Further, the Seventh Circuit determined that a potentially unenforceable fee arrangement between the plaintiff and his counsel was not a basis to deny the fee petition, but that even if it is unenforceable, this alone would “not justify denying outright the petition for fees.”

In sum, the Seventh Circuit reiterated that the plaintiff had a right to reject the settlement offers by defendants — which were not made as proper Rule 68 offers of judgment — and proceed to trial. The case was remanded to the trial court for additional hearing on the proper fee amount to be awarded.

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Cole Braun is based in Maurice Wutscher's Chicago office, where he practices in the firm's Commercial Litigation, Consumer Litigation, and Insurance Recovery and Advisory groups. He has significant litigation experience in a number of state and federal jurisdictions in a variety of different types of litigation. Cole graduated magna cum laude from Florida State University College of Law, and earned the distinction to be elected to the Order of the Coif. He was awarded his Bachelor of the Arts degree from the University of Tennessee.

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