Circuit Consensus In Determining Attorney's Fees Under FRE 408

In determining attorney fees award for the plaintiffs (victim's children) in their civil rights action for the use of deadly force resulting in the death of their mother after a car-chase, the district court may consider under FRE 408 evidence of settlement negotiations to the extent it was relevant to the fee applicant having achieved "a level of success that makes the hours reasonably expended a satisfactory basis for making a fee award,” in A.D. v. California Highway Patrol, _ F.3d _ (9th Cir. April 3, 2013) (Nos. 09–16460, 09–17635)

Is evidence of settlement negotiations under FRE 408 barred in attempting to determine reasonable attorney fees? The words of the rule render inadmissible evidence of "conduct or a statement made during compromise negotiations" or "furnishing, promising, or offering — or accepting, promising to accept, or offering to accept" a settlement when used "either to prove or disprove the validity or amount of a disputed claim or to impeach by a prior inconsistent statement or a contradiction." FRE 408. Is the level of attorney fees to be awarded a prevailing party covered by this FRE 408 limitation, so that settlement evidence would not be admissible to the extent it could show the reasonable amount of the fee? The Ninth Circuit recently considered this question and firmly noted that its prior circuit law had changed. While noting that the circuit had earlier prevented the use of settlement negotiations under FRE 408, case law in the circuit had evolved so that now it followed the majority rule of allowing use of settlement negotiation evidence for the purposes of determining the reasonable level of attorney fees to be awarded a prevailing party.

In the case, the children of victim Eklund, who had been shot and killed by pursuing defendant police officers, sought to establish that their Fourteenth Amendment Due Process rights had been violated in an action brought under 42 U.S.C. § 1983. After winning a jury award, plaintiff's counsel sought attorney fees from the defendants. The trial court awarded over a half-million dollars in fees and costs. The trial court determined this amount by presuming a "lodestar" amount was the reasonable fee. Among the factors used to assess how reasonable the fee award was made "'primarily by reference to the level of success achieved by the plaintiff.' In evaluating the Plaintiffs' level of success, district courts should consider two questions: 'First, did the plaintiff fail to prevail on claims that were unrelated to the claims on which he succeeded? Second, did the plaintiff achieve a level of success that makes the hours reasonably expended a satisfactory basis for making a fee award?'” A.D. v. California Highway Patrol, __ F.3d at __ (citing McCown v. City of Fontana, 565 F.3d 1097, 1101-03 (9th Cir. 2009) (quoting Hensley v. Eckerhart, 461 U.S. 424, 436 (1983)).

The defendant in the case argued that in achieving a recovery the plaintiffs "achieved a low level of success by going to trial," which the plaintiff sought to show with evidence of the amounts that had been "discussed in pre-trial settlement negotiations. The trial court refused to admit this evidence, correctly applying the 'then-existing Ninth Circuit precedent interpreting' FRE 408 at the time." Since that time, however, the circuit's standard for admission of settlement negotiations evidence under FRE 408 had changed. Under that evidence rule as currently understood:

Federal Rule of Evidence 408 does not bar district courts in the Ninth Circuit from considering amounts discussed in settlement negotiations as evidence of the extent of the plaintiff's success. Thus, the district court's conclusion that it could not consider those amounts, though appropriate at the time, has now changed. We must then reverse the fee award and remand for a determination of a reasonable fee in light of In re Kekauoha–Alisa[, 674 F.3d 1083, 1093–94 (9th Cir. 2012)] and Ingram [v. Oroudjian, 647 F.3d 925, 927 (9th Cir. 2011)].
A.D. v. California Highway Patrol, __ F.3d at __.

The Ninth Circuit's reaffirmation of carefully reading the FRE 408 limitation and to construe the reasonableness of attorney fees as not relevant to "prove or disprove the validity or amount of a disputed claim or to impeach by a prior inconsistent statement or a contradiction," firmly aligns with other circuits:

  • Third Circuit: Lohman v. Duryea Borough, 574 F.3d 163 (3d Cir. 2009)
  • Fourth Circuit: Sheppard v. Riverview Nursing Center, Inc., 88 F.3d 1332 (4th Cir. 1996)
  • Seventh Circuit: Moriarty v. Svec, 233 F.3d 955 (7th Cir. 2000)
  • Eighth Circuit: Parke v. First Reliance Standard Life Ins. Co., 368 F.3d 999 (8th Cir. 2004)

The decision in A.D. v. California Highway Patrol does not change Ninth Circuit law, but only confirms an earlier change to the majority approach. See In re Kekauoha–Alisa, 674 F.3d 1083, 1093–94 (9th Cir. 2012)] and Ingram v. Oroudjian, 647 F.3d 925, 927 (9th Cir. 2011).

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