Does the catalyst theory for recovery of attorneys’ fees apply to settlement agreements? (Does it apply, at all?)

First, “What is this so-called ‘catalyst theory’ I've never heard of?"

We’re talking about money (of course).  And in this case, the entitlement to attorneys’ fees for a prevailing party.[1]  The catalyst theory defines[ed] a prevailing party as one who achieves the desired result because the lawsuit brought about a voluntary change in the defendant’s conduct.[2]

Once upon a time, all it took for the happy plaintiff’s attorney to get paid was to sue somebody under a statute that provides prevailing party attorneys’ fees, and if that suit resolved early (by settlement or otherwise), and generated a “voluntary change in the defendant’s conduct,” the plaintiff – even without a favorable judicial order or consent decree – was determined to be the prevailing party and could seek its attorneys’ fees.[3]

It seems to have worked well for a while (I wasn’t around for most of it).  There were somewhat constrictive tests to make sure the suit wasn’t frivolous and really was the “catalyst” for the defendant’s behavioral modification, and nearly every Federal Circuit had approved usage of the catalyst theory.  But then in Buckhannon,[4] SCOTUS had to step in and stop the catalyst gravy train, perhaps in an effort to stop all this litigiousness-ness.[5]  Bottom line: for all intents and purposes, the catalyst theory is dead. (or, is it?)

“So why are we even talking about this?”

Well since Buckhannon, courts have been dealing with two major issues: (1) does the Court’s decision apply to all prevailing party attorneys’ fees statutes, or just those at issue in that case; and (2) what does it mean to be a prevailing party anyway?[1]  I’m not going to tackle either of those because this is a blog post and not a legal note or case book, and the author of the article cited in FN.6 does a fine job ferreting out those.  But what I am going to say is this –

In the only two post-Buckhannon Florida cases that even mention the term “catalyst theory,”[2] each court found an entitlement to attorneys’ fees in favor of plaintiffs that had settled via offers of judgment (i.e., not by favorable judicial order on the merits or by consent decree), despite the defendant’s staunch reliance on Buckhannon to the contrary.  The Florida courts distinguished their results from those in Buckhannon by finding that a “monetary settlement pursuant to an offer of judgment statute applicable to the proceeding bears the imprimatur of a court.”  That’s fancy speak for a court was involved.

In a round-about way, the Florida courts use a catalyst theory type of analysis to find an entitlement to attorneys’ fees in cases where the courts were somehow involved, by incorporating the terms of the settlements into the final orders of dismissal and by explicitly retaining jurisdiction to enforce the terms of the settlements.

“That sounds an awful lot like every single settlement and dismissal I do!”

I know.  That’s why, the point of this post and the (long-winded) question you should be asking is: When I enter into a settlement agreement to resolve a lawsuit, and the court retains jurisdiction to enforce the terms of that agreement, does such contain a sufficient “judicial imprimatur” to classify the plaintiff as a prevailing party for purposes of an attorney fee assessment?   If it does, the plaintiff (who has just settled the case) might also be entitled to its attorneys’ fees.  This is of particular import in the construction space, where fee entitlements sometimes need to be analyzed from, potentially, a dozen sides (or more).

 Just one more reason why it is imperative to ensure your settlement agreements and concomitant orders of dismissal are carefully and well prepared by experienced litigation counsel.

[1] As we all know, “prevailing party” is a legal term of art that simply means “one who has been awarded some relief by a court” (yes, it’s that simple), according to Buckhannon Bd. and Care Home, Inc. v. West Virginia Dept. of Health and Human Resources, 532 U.S. 598, 603 (2001).

[2] Id. at 601.

[3] See Attorneys’ Fees, CPD FL-CLE 11-1 (2005).

[4] 532 U.S. 598.

[5] But see Ginsburg scathing dissent, Id. at 622-44; and “litigiousness-ness” is not a real word.

[6] Does Buckhannon Apply? An Analysis of Judicial Application and Extension of the Supreme Court Decision Eighteen Months After and Beyond, 13 Duke Envtl. L. & Pol’y F. 99 (Fall 2002).

[7] Mady v. DaimlerChrysler Corp., 59 So.3d 1129 (Fla. 2011) and San Martin v. DaimlerChrysler Corp., 983 So.2d 620 (Fla. 3d DCA 2008) (I guess Chrysler had it coming?).

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