Basic Principles

• Jurisdiction: Maryland

I. BASIC PRINCIPLES

Our legal system generally follows the "American Rule," which requires each party to bear his or her own litigation expenses, including attorneys' fees, regardless of the result.² However, Congress has authorized courts to deviate from this rule in certain types of cases by awarding a sum for attorneys' fees as compensation from the losing party to the party who has prevailed,³ and Maryland's legislature has done the same. This statutory fee shifting is the principle subject of this chapter, although Maryland's approach to non-statutory fee shifting—also an important subject—is also addressed briefly below. This chapter will address practices in the federal courts, with particular focus on the U.S. District Court for the District of Maryland; the administrative courts, such as the Equal Employment Opportunity administrative judges governing federal agencies; and finally Maryland state courts practices.

A. 'Favored Suitor' Fee-Shifting Public Policy

1. Public policy grants prevailing plaintiffs fees to encourage enforcement of remedial statutes

An extensive jurisprudence has developed for adjudicating post-judgment claims by prevailing plaintiffs for attorneys' fees, under those statutes which are undergirded by express public policy encouraging initiation of litigation to accomplish a statute's remedial purposes. As the Maryland Court of Appeals has held, "the predominant purpose of [statutory fee shifting] is to permit the favored suitor to obtain counsel that, because of legal or practical fee limitations, might otherwise be unavailable."⁴

The key federal statutes in question here are 42 U.S.C. § 2000e-5k and 42 U.S.C. § 1988,⁵ which both state that: "the court, in its discretion, may allow the prevailing party, other than the United States, a reasonable attorney's fee as part of the costs." While the statutes are clear that either the plaintiff or the defendant as the "prevailing party" may be awarded attorneys' fees, in practice, for reasons that will described in some detail below, the awarding of attorneys' fees to plaintiffs as the prevailing party occurs far more frequently than the award of attorneys' fees to defendants.

A party "prevails" by succeed[ing] on any significant issue in litigation which achieves some of the benefit the party sought in bringing suit."⁶ The courts have also articulated the notion of "prevailing," in the context of the plaintiff's success, as obtaining actual relief on the merits of the claim, thereby materially altering the legal relationship between the parties "by modifying the defendant's behavior in a way that directly benefits the plaintiff."⁷ The Supreme Court, in Buckhannon Board and Care Home v. West Virginia Department of Health and Human Services,⁸ made clear that a party may "prevail" through "a settlement agreement enforced by a consent decree[,]" rather than solely through a judgment on the merits of the claim. However, the Court has also made clear that a private settlement without the court's "imprimatur" is insufficient as a basis for a judicial award of attorneys' fees.⁹

In CRST Van Expedited v. EEOC,¹⁰ the high court recently addressed the circumstances in which attorneys' fees may be awarded to the defendant. The court noted that an award of attorneys' fees requires that the moving party also be the "prevailing party," however, that term has starkly different meanings dependent on whether the party is the plaintiff or the defendant. The plaintiff seeks to alter the legal relationship between the parties, while the defendant seeks the status quo.¹¹ Rejecting the conclusion of the Sixth Circuit, which found that that a defendant may be entitled to attorneys' fees only when there has been a determination on the merits of the claim, the Court found that this conclusion was in conflict with its prior decision in EEOC v. Christianburg Garment Co., that the purpose of the fee-shifting provisions with defendants was to deter "frivolous, unreasonable, or groundless litigation."¹² The Court left for another day the exact parameters of a defendant becoming a "prevailing party."

A plaintiff who prevails in remedying a civil rights violation has served as a "private attorney general," vindicating a policy that Congress considered of the highest priority.¹³ Such plaintiff therefore "should ordinarily recover an attorney's fee" from the defendant—the party whose misconduct created the need for legal action.¹⁴ As the U.S. Supreme Court stated in Fox v. Vice, fee-shifting in such a situation both reimburses a plaintiff for "what it cos[t] [the plaintiff] to vindicate [civil] rights," and holds to account "a violator of federal laws."¹⁵ "[A] prevailing plaintiff 'should ordinarily recover an attorney's fee unless special circumstances would render such an award unjust[.]'"¹⁶

As a corollary to the notion that plaintiffs' attorneys work as private attorneys general, courts have often construed the fee-shifting provisions as providing an incentive to attorneys to identify and bring into the legal system claims of employment discrimination or retaliation. The U.S. Court of Appeals for the D.C. Circuit, in a decision exemplifying this justification for fee shifting, has said:

Title VII of the Civil Rights Act of 1964 authorize[s] district courts to award a reasonable attorneys fee to prevailing civil rights litigants. The purpose of such provisions is to encourage private litigants to act as "private attorneys general" on behalf of enforcement of the civil rights laws. Congress clearly hoped to provide an adequate economic incentive for private attorneys to take employment discrimination cases, and thereby to ensure that plaintiffs would be able to obtain competent legal representation for the prosecution of legitimate claims.¹⁷

This logic has been extended beyond Title VII to other federal rights and employment laws, including the Americans with Disabilities Act, the Age Discrimination in Employment Act, the Genetic Information Nondiscrimination Act, the Fair Labor Standards Act, the Family and Medical Leave Act,¹⁸ the False Claims Act (including its anti-retaliation provisions),¹⁹ and numerous other statutes.

Maryland law has not diverged. In addition to the antidiscrimination and wage payment laws, many other Maryland statutes create favored-suitor type fee shifting. These include:

• Md. Code Ann., Com. Law III § 13-408(b) (Consumer Protection Act);

• Com. Law III § 14-1502 (Automotive Warranty Enforcement Act);

• Com. law III 14 § 2007 (unfair and deceptive trade practices);

• Com. Law III § 19-303 (violations by suppliers);

• CTS. & Jud. Proc. § 10-410 (suit for oral, wire, or electronic communication is intercepted, disclosed, or used);

• Crim. Law I § 3-903(Surveillance and other Crimes against Privacy);

• CRiM. Law II § 8-301 (identity fraud);

• FiN. Inst. § 5-302 (banking institutions must provide savings account holders with certain information regarding accounts);

• Fin. Inst. § 12-930 (Maryland Debt Management Services Act);

• Health-Gen. § 17-2A-10 (forensic laboratory employment discrimination and retaliation)

• Health occ. § 1-505 (Health Care Worker Whistleblower Protection Act);

• Ins. I § 4-403 (improper disclosure of insured's medical claims or records);

• Lab. & Empl. § 3-1103 (liens for unpaid wages);

• Real Prop. § 8-203 (failure to return residential tenant security deposit);

• Real Prop. § 8-208 (landlord seeks to enforce illegal terms to lease);

• Real Prop. § 8-208.1 (landlord engages in retaliatory action);

• State Fin. & Proc. § 11-305 (State Contractor Employee's Whistleblower Protection);

• State Pers. & Pens. § 5-310 (Maryland Whistleblower Law).

Under the Maryland Wage Payment and Collection Law,²⁰ as well as the Maryland Wage and Hour Law,²¹ the principle is the same: the goal of fee-shifting statutes is to ensure that individuals, when injured by violations of certain laws, have access to legal counsel by a "statutory assurance that [their counsel] will be paid a 'reasonable fee[.]'"²² Maryland courts view violations of its anti-discrimination laws similarly. Fees are accordingly available for civil litigation under Article 49B, § 20-1202, which authorizes the fee-shifting (and other) provisions of the Howard, Montgomery, and Prince George's County Codes' anti-discrimination ordinances.²³ The statewide private right of action for employment discrimination contains nearly identical language to that of 42 U.S.C. § 1988 and 42 U.S.C. § 2000e-5k,²⁴ stating that either a court or administrative agency "may allow" "reasonable attorney's fees" to the "prevailing party." Considering that the Court of Appeals has repeatedly referred to the federal case law, it has long been entirely reasonable to expect a close relationship between developing case law in Maryland's state and federal courts. And indeed, these principles were enshrined in Maryland state court jurisprudence by rule. Md. Rule 2-703, titled "Attorneys' Fees Allowed By Law[,]" requires adherence to the § 1988 factors for determining the appropriate attorneys' fee.

B. Reasonable Fees and Calculating the Lodestar

The statutes call for the award of a "reasonable" fee.²⁵ The starting point for determining such fee in a given case is the calculation of the "lodestar." A lodestar analysis begins by determining the number of hours reasonably expended on the litigation multiplied by a reasonable hourly rate.²⁶ Such a figure can be a "reasonable" fee, "wholly consistent with the rationale behind the usual fee-shifting statute [.]"²⁷ Under Hensley v. Eckerhart,²⁸ courts are to consider various factors in calculating the reasonable fee upon application of the lodestar method. The 12 factors listed in that opinion are:

(1) the time and labor required; (2) the novelty and difficulty of the questions; (3) the skill requisite to perform the legal service properly; (4) the preclusion of employment by the attorney due to acceptance of the case; (5) the customary fee; (6) whether

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