High Court Construes EAJA To Allow Award of Paralegal Expenses as “Fees” at “Prevailing Market Rates.”
Petitioner Richlin prevailed against the Government on a claim before the Department of Transportation’s Board of Contract Appeals, and then filed an application for reimbursement, among other things, of paralegal fees pursuant to the Equal Access to Justice Act (EAJA). Both the Transportation Board and Federal Circuit concluded the term “fees” only embraced recovery of fees of attorneys, experts, and agents at prevailing market rates under EAJA.
The United States Supreme Court, in an unanimous decision (except for some segments not joined in by Justices Scalia and Thomas), reversed and remanded for considering the inclusion of the proper amount of paralegal fees in the fee award to petitioner.
In Richlin Security Serv. Co. v. Chertoff, Secretary of Homeland Security, 553 U.S. __, Case No. 06-1717 (U.S. June 2, 2008), the Supreme Court held that a prevailing party that satisfies EAJA’s other requirements may recover its paralegal fees from the Government at prevailing market rates. (Slip Opn., at pp. 4-18.)
The case makes interesting reading, almost sounding at times like an equal protection analysis. The high court found that paralegals are surely more analogous to attorneys, experts, and agents than to mere studies, analyses, reports, tests, and projects that are labeled expenses compensable at the reasonable rate paid by the attorney with no overhead mark-up. The Court further reasoned that “incurred by that party” language in the EAJA left no doubt that Congress even intended the “reasonable cost” items to be calculated from the litigant’s perspective. The end result is pragmatic, because paralegal use should be encouraged and frequently makes litigation more economically palatable for clients.
CALIFORNIA’S VIEWPOINT—Under many California statutory fee grants, paralegal fees have been found to be a proper component of an attorney’s fees award. See, e.g., Guinn v. Dotson, 23 Cal.App.4th 262, 267-270 (1994) [paralegal fees within the meaning of “attorney’s fees” for Code of Civil Procedure section 411.35(h), the certificate of merit statute]; Sundance v. Municipal Court, 192 Cal.App.3d 268, 274 (1987) [attorney’s fees award for paralegal time appropriate under Code of Civil Procedure section 1021.5, the public right enforcement statute]; accord, Benson v. Kwikset Corp., 152 Cal.App.4th 1254, 1280 (2007) [citing Guinn and Sundance].) Although Guinn is a good case on paralegal compensation, its one questionable aspect is relying on Bussey v. Affleck, 225 Cal.App.3d 1162 (1990), which has been severely criticized and abrogated by the same court initially deciding Bussey. (This will be the subject of a future post.) However, Guinn also noted that paralegal time is compensable under the civil rights attorney’s fees statute, 42 U.S.C. § 1988, and citing Missouri v. Jenkins, 491 U.S. 274, 284-288 (1989) in support—a good analogy and one used by the Richlin Security Court when holding that paralegal time is awardable under the EAJA.
One interesting open issue is whether paralegal time is awardable under Civil Code section 1717. We could find no published case directly on point. However, there is an unpublished Fifth District decision which so holds. (See Gunter v. Perrett, 2002 WL 337526 at *9 (5th Dist. Mar. 4, 2002) [“We are not aware of any published decisions that explicitly hold paralegal fees are encompassed by a contractual fee clause and Civil Code section 1717. We view the objective meaning of ‘attorney’s fees’ as used [in the lease involved in the case] to allow the inclusion of reasonable paralegal fees, which were billed separately and were not part of overhead included in the hourly rate charged by Landlord’s attorneys.”].)
For a nice website collecting both California and national cases on entitlement to compensation for paralegal time, see California Alliance of Paralegal Associations, Recovery of Legal Fees.