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This
important case tackles the critical issue of what constitutes a
"prevailing party" under 42 U.S.C. §§ 1983 & 1988 where the parties
resolved their dispute through a private settlement agreement when
the district court retained enforcement jurisdiction. In a decision
that may have far reaching implications for other fee generating
cases, the second circuit court of appeals found that the district
court’s retention of jurisdiction carried sufficient "judicial approval"
of the settlement to award attorney's fees.
The
plaintiffs brought an action pursuant to 42 U.S.C. § 1983 against
defendants mayor social services commissioner of New York City,
New York State commissioners of public assistance and health departments,
asserting that the system for investigating joint applications for
food stamps and public assistance violated the federal Food Stamp
Act. The district court held the city's investigation process did
not violate federal law and the plaintiffs' claim seeking monetary
damages from the state officers in their official capacity was constitutionally
barred. As a result, the plaintiffs and the city officials entered
into a private settlement agreement resolving the remaining six
claims. The United States District Court for the Southern District
of New York denied plaintiffs' motion for attorneys' fees and the
plaintiffs subsequently appealed.
The
plaintiffs' motion for fees was denied on the ground that plaintiffs
were not "prevailing parties" under the standard espoused in the
recently decided Buckhannon v. W. Va. Dep't Health & Human Serv.,
532 U.S. 598 (2001). In Buckhannon, the U.S. Supreme Court redefined
the meaning of "prevailing party" to include the achievement of
some "material alteration of the legal relationship of the parties"
that must be judicially sanctioned. Sufficient judicial imprimatur
includes judgment on the merits and settlement agreements pursuant
to a court ordered consent decree. In the present case, the district
court recognized that the settlement agreement was a material change
in the legal relationship between plaintiffs and the city officials.
But, the court held that its continuing jurisdiction to enforce
the agreement did not constitute a judicial sanctioning of an alternation
of the parties' legal relationship so that the plaintiffs could
be considered "prevailing parties". The circuit court disagreed
and concluded that the district court's retention of jurisdiction
carried sufficient judicial approval of the agreement to support
an award of attorneys' fees. Because the district court retained
jurisdiction under the approved procedures, it gave judicial sanction
to a change in the legal relationship of the parties.
The
court held that the district court's retention of jurisdiction over
the Agreement in this case provides sufficient judicial sanction
to convey "prevailing party status" on the plaintiffs. Because the
district court wrongly concluded that plaintiffs were not prevailing
parties, it did not consider whether the plaintiffs' argument regarding
the amount of their fee demand was compensable. The court remanded
the case to the district court to specifically consider the issue
of plaintiff compensation.
The
case may be accessed through electronic research services (LEXIS
or WESTLAW) or by going to the Second Circuit Court of Appeals website
at www.ca2.uscourts.gov.
(KM)
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