475 U.S. 717 (1986)
On August 4, 1980, respondents, a class of children suffering from emotional and mental handicaps, filed suit in the United States District Court for the District of Idaho against petitioners, the Governor and other officials of the State of Idaho responsible for their education and treatment.1
The complaint alleged deficiencies in both educational programs and health care services that violated the Education of the Handicapped Act, the Rehabilitation Act of 1973, 42 U.S.C. § 1983, and provisions of the Idaho Constitution and statutes.2 It sought injunctive relief along with costs and attorney’s fees.3 Charles Johnson of the Idaho Legal Aid Society served as next friend for the class.4 The organization made no fee agreements with class members because it was prohibited from representing clients able to pay.5
Shortly after petitioners filed their answer, the parties reached a partial settlement on the educational services claims in October 1981 under which each side would bear its own attorney’s fees and costs.6 Negotiations on the treatment claims broke down.7 This led to cross-motions for summary judgment, class certification, discovery, and preparation for a spring 1983 trial.8
In March 1983, one week before trial, petitioners presented respondents with a new settlement proposal.9 As respondents themselves characterize it, the proposal offered virtually all of the injunctive relief they had sought in their complaint.10 Petitioners' offer included a provision for a waiver by respondents of any claim to fees or costs.11 Respondents’ counsel had been instructed by the Idaho Legal Aid Society to reject any settlement offer conditioned upon a waiver of fees.12 Johnson ultimately determined that his ethical obligation to his clients mandated acceptance of the proposal.13 The parties conditioned the waiver on approval by the District Court.14
Johnson then filed a written motion requesting the District Court to approve the settlement except for the provision on costs and attorney's fees.15 He also asked to allow respondents to present a bill of costs and fees for consideration by the court.16 The District Court evaluated the waiver in the context of the entire settlement and rejected the ethical underpinnings of Johnson's argument.17 Accordingly, the District Court approved the settlement and denied the motion to submit a costs bill.18
When respondents appealed from the order denying attorney's fees and costs, petitioners filed a motion requesting the District Court to suspend or stay their obligation to comply with the substantive terms of the settlement.19 The Court of Appeals granted two emergency motions for stays requiring enforcement of the substantive terms of the consent decree pending the appeal.20 After ordering preliminary relief, it invalidated the fee waiver and left standing the remainder of the settlement.21 It then instructed the District Court to make its own determination of the fees that are reasonable and remanded for that limited purpose.22 The Supreme Court granted certiorari to resolve a conflict among the circuits.23
Whether a federal court may approve a class action settlement that contains a waiver of the plaintiffs’ statutory right to seek attorney’s fees under 42 U.S.C. § 1988?24
The Civil Rights Attorney’s Fees Awards Act of 1976 provides that in federal civil rights actions the court in its discretion may allow the prevailing party a reasonable attorney’s fee as part of the costs.25 The statute does not prohibit the simultaneous negotiation of relief and attorney’s fees.26 It does not bar waivers of fees in settlements that provide substantial relief on the merits.27
Yes. The District Court possessed authority under Federal Rule of Civil Procedure 23(e) to approve the settlement agreement that included the fee waiver.28 The agreement granted the class virtually all of the injunctive relief sought in the complaint in exchange for the waiver.29 The court determined that this exchange constituted an adequate quid pro quo after evaluating the proposal in the context of the entire settlement.30
The established facts show that the March 1983 proposal offered virtually all of the injunctive relief the class had sought.31 Johnson concluded his ethical obligation to the class required acceptance because the result was the best obtainable.32 The District Court approved the entire settlement including the waiver after finding it fair to the class.33
A federal court may approve a class action settlement containing a waiver of statutory attorney’s fees under 42 U.S.C. § 1988 when the waiver is exchanged for substantial relief on the merits. The court must find the overall settlement fair and reasonable.34
Related opinions on this issue
Joined by Justices Marshall And Blackmun
Justice Brennan dissented on the ground that permitting defendants to condition settlement on fee waivers undermines the central purpose of the Fees Act to ensure that victims of civil rights violations can obtain competent legal representation.35 He argued that the majority’s decision allows defendants to eliminate the very incentive Congress created for private enforcement of civil rights laws.36 The District Court in this case correctly recognized that the fee waiver was invalid.37
The court found that the waiver was the product of coercion.38 The defendants had made it clear that they would not settle the case unless the plaintiffs agreed to waive their claim for attorney’s fees.39 Given the defendants’ superior bargaining power, the plaintiffs had no real choice but to agree.40
Justice Brennan concluded that the fee waiver provision should not have been approved.41
Whether the District Court had the power, in its discretion, to approve the settlement agreement including the fee waiver provision?42
Rule 23(e) of the Federal Rules of Civil Procedure requires court approval of class action settlements.43 It authorizes the district court to determine whether a proposed settlement is fair, reasonable, and adequate.44 The rule does not empower the court to modify a proposed consent decree and order its acceptance over a party’s objection.45
Yes. The District Court exercised its discretion under Rule 23(e) to approve the settlement agreement including the fee waiver.46 The court evaluated the waiver in the context of the extensive structural relief obtained for the class.47 It concluded that the waiver was fair to the class as an adequate quid pro quo.48
The established facts establish that the District Court approved the entire settlement after determining that the defendants were willing to make the required changes in their practices provided they did not face additional costs.49 The court rejected the argument that the waiver violated ethical considerations because an attorney may give up fees to obtain a better bargain for clients.50
The District Court had the power in its discretion to approve the settlement agreement that included the fee waiver provision.51
Whether a federal court is required to inquire into the reasonableness of a fee waiver when it approves a class-action settlement?52
A federal court is not required to inquire into the reasonableness of a fee waiver when it approves a class-action settlement.53 The Fees Act does not mandate such an inquiry.54 The court’s role under Rule 23(e) is limited to determining whether the overall settlement is fair, reasonable, and adequate.55
No. The District Court was not required to conduct a separate inquiry into the reasonableness of the fee waiver beyond its evaluation of the overall settlement.56 The Fees Act confers eligibility for fees on the prevailing party without preventing waiver of that eligibility.57 The court properly focused on whether the settlement as a whole provided adequate relief to the class.58
The established facts demonstrate that the District Court evaluated the waiver in the context of the entire settlement and found it fair without undertaking an independent reasonableness analysis of the fee amount that would have been awarded absent the waiver.59
A federal court is not required to inquire into the reasonableness of a fee waiver when it approves a class-action settlement.
Whether Section 1988 prohibits the simultaneous negotiation of relief and attorney’s fees in a class action?60
Section 1988 does not prohibit the simultaneous negotiation of relief and attorney’s fees in a class action.61 Nothing in the language or legislative history of the statute bars such negotiation.62 Simultaneous negotiation is the norm in civil rights litigation as it promotes settlement without undermining the statutory purpose.63
No. Section 1988 does not prohibit simultaneous negotiation of relief and attorney’s fees.64 The statute merely confers eligibility for a discretionary fee award on the prevailing party.65 It does not render that eligibility nonwaivable or nonnegotiable.66
The established facts show that the parties negotiated the fee waiver as part of the March 1983 settlement proposal that provided virtually all of the injunctive relief sought. The facts further establish that the partial settlement on educational claims in October 1981 also included a provision that each party would bear its own fees.67 This confirms that simultaneous negotiation occurred without violating the statute.68
Section 1988 does not prohibit the simultaneous negotiation of relief and attorney’s fees in a class action.
Whether the fee waiver was the product of coercion that rendered it invalid under Section 1988?69
A fee waiver is not invalid under Section 1988 merely because it results from the defendant’s superior bargaining power.70 The statute does not define coercion to include the ordinary dynamics of settlement negotiations in which a defendant conditions relief on the merits upon a waiver of fees.71 The plaintiffs’ counsel made a voluntary tactical decision to accept the settlement.72
No. The fee waiver was not the product of coercion that rendered it invalid under Section 1988.7374 The defendants’ request for the waiver was not a vindictive effort to deter civil rights litigation.75 The record contains no evidence of a statewide policy or practice of routinely demanding fee waivers.76 Johnson made a tactical decision that his ethical obligation to the class required acceptance of the proposal.77
The established facts show that the Idaho Legal Aid Society had instructed Johnson to reject any offer conditioned on a fee waiver.78 Yet Johnson ultimately determined that acceptance was required because the proposal delivered the best result obtainable for the class.79 The District Court found the decision voluntary and reasonable.80
The fee waiver was not the product of coercion that rendered it invalid under Section 1988.