The "positive Effect" Escape Hatch: the Eleventh Circuit's New View of the Catalyst Theory and the Resulting Difficulty for Plaintiffs to Receive Attorney Fees

• Publication year: 2013

The "Positive Effect" Escape Hatch: The Eleventh Circuit's New View of the Catalyst Theory and the Resulting Difficulty for Plaintiffs to Receive Attorney Fees

Lindsay Schafer

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The "Positive Effect" Escape Hatch: The Eleventh Circuit's New View of the Catalyst Theory and the Resulting Difficulty for Plaintiffs to Receive Attorney Fees

I. INTRODUCTION

Environmental plaintiffs now have fewer opportunities to receive attorney fees in the wake of the United States Court of Appeals for the Eleventh Circuit's decision in Friends of the Everglades v. South Florida Water Management District¹ (Friends of the Everglades II). In this case the court further narrowed what plaintiffs' civil suits must accomplish to have a "positive catalytic effect."² While many circuits, including the Eleventh Circuit, have focused on what it means for a party to be a "prevailing party" under various statutory schemes,³ and thus receive attorney fees, this case marks the first time the Eleventh Circuit has defined what is sufficient to constitute a change for purposes of the positive catalyst theory when reading the Clean Water Act's "whenever . . . appropriate"⁴ language in conjunction with this theory.⁵ In this case the court held that when a plaintiff's lawsuit spurs an agency to

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make new rules that are adverse to the plaintiff's position, the lawsuit will not be considered to have a positive catalytic effect and, thus, attorney fees are not "appropriate."⁶

II. FACTUAL BACKGROUND

In 2002, various environmental groups brought a suit to stop the South Florida Water Management District from pumping polluted canal water into a local lake.⁷ The plaintiffs wanted to force the Water District to obtain a National Pollution Discharge Elimination System (NPDES) permit under the Clean Water Act, which requires all "point sources" to apply for a permit when they "discharge[, or add,] any pollutant" into "navigable waters."⁸ Point source, discharge, pollutant, and navigable waters are all specifically defined under the Clean Water Act, and the controversy centered on whether transferring contaminated water from one navigable water—the canal—to another navigable water—the lake—constituted an "addition of [a] pollutant to navigable waters . . . ."⁹

The district court ruled in favor of the environmental groups, finding that pumping polluted water from one navigable water to another was a "discharge" under the Clean Water Act.¹⁰ Accordingly, the district court issued an injunction to stop the Water District from transferring the polluted water.¹¹ The Water District appealed, but before the case was resolved, the Environmental Protection Agency (EPA) promulgated a new rule that specifically excluded water transfers from the requirement to obtain NPDES permits.¹² Ultimately, the Eleventh Circuit

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gave Chevron¹³ deference to EPA's new rule and reversed the district court's injunction.¹⁴

That reversal influenced the court's decision in Friends of the Everglades II. After the Eleventh Circuit overturned the injunctive relief to the environmental groups, the district court denied the plaintiffs' request for attorney fees, concluding the environmental groups were not a "prevailing party" on appeal.¹⁵ The environmental groups then appealed that subsequent denial of attorney fees.¹⁶ The Eleventh Circuit affirmed, holding that attorney fees were not appropriate because the environmental groups' suit had no positive catalytic effect on the EPA's actions.¹⁷

III. LEGAL BACKGROUND

A. The Catalyst Theory Under the "Prevailing Party" Standard

In 1970, the United States Court of Appeals for the Eighth Circuit was the first to articulate the catalyst theory in Parham v. Southwestern Bell Telephone Co.,¹⁸ although the case did not involve an environmental statute. In that case the plaintiff claimed his employer had violated Title VII of the Civil Rights Act of 1964¹⁹ by engaging in racially

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discriminatory employment practices.²⁰ Before the district court rendered its judgment, the company stopped its discriminatory conduct.²¹ Accordingly, the court of appeals declined to issue an injunction but awarded attorney fees for two reasons.²² First, "[the plaintiff's] lawsuit acted as a catalyst which prompted the [defendant] to take action . . . ."²³ Second, the plaintiff "performed a valuable public service in bringing [his] action."²⁴ Thus, the original catalyst theory applied only to the fee-shifting provision in Title VII and required a plaintiff's suit to cause the defendant to positively and voluntarily alter his or her conduct towards the plaintiff.²⁵

Four years later, in 1974, the United States Court of Appeals for the District of Columbia Circuit extended the catalyst theory to environmental litigation in Wilderness Society v. Morton.²⁶ The plaintiff in Wilderness Society successfully sued to halt construction of the trans-Alaska pipeline.²⁷ As a result of that litigation, Congress amended the Mineral Leasing Act of 1920²⁸ to specifically permit construction of the pipeline.²⁹ While the main issue and holding concerned the private attorney general theory, which is no longer a viable method under which plaintiffs may receive attorney fees, the court of appeals relied on Parham to adopt the catalyst theory.³⁰ Notably, the court took a different viewpoint than the Eighth Circuit regarding what constitutes a positive change.³¹ Whereas the Eighth Circuit defined positive change from the plaintiff's perspective—that the defendant's voluntary actions must align with what the plaintiff originally sought in the lawsuit³² —the District of Columbia Circuit defined positive change from society's viewpoint.³³ The court reasoned that the plaintiff's lawsuit had a positive catalytic effect because it had indirectly caused Congress

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to take action: "[f]orcing [the defendant] to go to Congress to amend the 1920 Act certainly was not a sterile exercise in legal technicalities devoid of public significance."³⁴ Overall, the District of Columbia Circuit's 1974 decision both extended the catalyst theory to environmental lawsuits and expanded the theory's positive-change aspect to include the value to society.³⁵

Shortly after these two circuits adopted this method for awarding attorney fees, the United States Supreme Court indirectly halted the spread of the common law catalyst theory in its Alyeska Pipeline Service Co. v. Wilderness Society³⁶ decision.³⁷ Although the Court did not consider the catalyst theory in that case, Justice White's majority opinion held that only the legislature, not the judiciary, may award attorney fees to prevailing litigants through statutory authorization.³⁸ The Court reasoned that the only exceptions to the American rule—which states that generally each party to a lawsuit pays for its own litigation costs, including attorney fees—had previously been mandated by Congress through legislation.³⁹ Therefore, federal courts "[were] not free to fashion drastic new rules with respect to the allowance of attorneys' fees to the prevailing party in federal litigation . . . depending upon the courts' assessment of the importance of the public policies involved in particular cases."⁴⁰

Congress responded swiftly. In 1976, federal legislators passed the Civil Rights Attorney's Fees Award Act⁴¹ in response to the Supreme Court's Alyeska Pipeline Service Co. decision.⁴² Although the relevant statutory language did not mention the catalyst theory by name,⁴³ this legislation created a broad authorization for attorney fee awards in a variety of civil rights cases.⁴⁴ Importantly, Congress implicitly recognized the catalyst theory by citing Parham with approval in Senate Report No. 94-1011.⁴⁵ The report also mentioned a number of environmental

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statutes with "[s]imilar standards [as the Civil Rights Attorney's Fees Award Act] . . . providing for attorneys' fees," suggesting that Congress also contemplated the catalyst theory for environmental litigation, not solely civil rights litigation.⁴⁶

After such congressional authorization, all the circuit courts of appeal adopted the catalyst theory, albeit in civil rights litigation. For example, the United States Courts of Appeal for the First and Seventh Circuits soon recognized the catalyst theory for awarding attorney fees in civil rights litigation under various sections of Title 42,⁴⁷ consistent with the Civil Rights Attorney's Fees Award Act.⁴⁸ Additionally, the United States Court of Appeals for the Ninth Circuit placed great weight on the Act's legislative history by stating that "the Senate Report directs that [plaintiffs] be awarded fees" when their "lawsuit 'acted as a catalyst which prompted the [defendant] to take action.'"⁴⁹ By the end of 1990, the remaining federal courts of appeal followed suit and joined the First, Seventh, Eighth, Ninth, and District of Columbia Circuits in applying the catalyst theory.⁵⁰

Even the Supreme Court implicitly adopted the catalyst test after Congress passed the Civil Rights Attorney's Fees Awards Act, but not in the context of environmental litigation.⁵¹ In its Hanrahan v. Hampton⁵²

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decision, the Court interpreted the term "prevailing party" in the Act's attorney fee provision for civil rights litigation.⁵³ The Court cited the legislative history of the Act, specifically Senate Report No. 94-1011, implying the catalyst test was an acceptable method of recovering attorney fees.⁵⁴

However, the Supreme Court seemed to indirectly rattle the foundation of the catalyst theory—despite unanimity among the circuit courts, many of which had cited Hanrahan, that attorney fees are available under the catalyst theory—when Justice Thomas wrote the majority opinion in Farrar v. Hobby.⁵⁵ Although the Court did not directly address the catalyst theory or consider "prevailing party" status in the context of environmental litigation in Farrar, the majority held that nominal damages—which "modif[y] the defendant's...