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4th Circuit- Project Vote v. Dickerson- Award of Attorneys Fees with Nominal Damages‏

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By Ed Boltz, 7 November, 2011
The Fourth Circuit reversed the denial of attorneys fees by the District Court,  finding that while only nominal actual damages were awarded,  attorneys fees were still allowed.
 
The Court of Appeals held that while Farrar v. Hobby, 506 U.S. 103 (1992) and Mercer v. Duke Univ., 401 F.3d 199 (4th Cir. 2005)  held that when a Plaintiff  "received only nominal damages, 'the only reasonable fee is . . . no fee at all.'” Quotiing Farrar, 506 U.S. at 115.
This, however, is an incomplete analysis, as the Farrar-Mercer test instructs a court to consider:
 
(1) the degree of the plaintiff’s overall success,
(2) the significance of the legal issue on which the plaintiff prevailed, and
(3) the public purpose served by the litigation. Farrar, 506 U.S. at 122 (O’Connor, J., concurring); Mercer
 
While in Farrar and  Mercer the Plaintiffs had sought large monetary awards and only received nominal damages,  in the instant case,  the Plaintiff  had sought injunctive relief and the Defendant  made substantial regulatory changes.
 
The District Court rejected this as a basis for attorney's fees,  relying on the Supreme  Court's rejection in Buckhannon Board & Care Home, Inc. v. West Virginia Dept of Health & Human Services, 532 U.S. 598, 610 (2001), of the "catalyst theory",  i.e. that the lawsuit  was the catalyst for a change in defendant's conduct.  the 4th Circuit distinguished the instant case from Buckhannon  as here the Plaintiffs were actually the prevailing party and because the change actually resulted from the Court approved  "binding judicial undertaking"  between the parties.
 
Further,  the Court of Appeals held that the second Farrar-Mercer factor  did not require that the case be "groundbreaking" or "novel",  instead only of "general legal importance".
 
Why would this be of interest  in bankruptcy and consumer rights matters? Many courts have struggled with the award of attorneys' fees  where there has only  be a "technical" violation of the automatic stay, a prime example being the car  creditor who refuses to deactivate a "kill switch"  during the pendancy of a Chapter 13 bankruptcy,  forcing the Debtor to obtain reactivation codes on a weekly basis.  This leaves  attorneys in a bind between an obligation to mitigate damages and the  need to have damages to get paid for prosecuting bankruptcy protections.
 
Project Vote  stands for the proposition that obtain injunction relief in furtherance of important legal principals  can result in the award of attorneys' fees even with only nominal actual damages.
 
Project Vote v. Dickerson.PDF

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