Court To Weigh Payment of Legal Fees in Rights Cases

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WASHINGTON--The U.S. Supreme Court last week agreed to decide whether attorneys' fees should be awarded to the plaintiffs in civil rights lawsuits when they win only nominal damages.

The question could be significant for school districts because escalating legal fees are often more of a financial threat than the actual damages that districts might lose in such cases, legal experts said last week.

"The threat of [paying] attorneys' fees is often what schools' litigation strategy is based on," said Gwendolyn H. Gregory, the deputy general counsel of the National School Boards Association.

"Schools will settle cases they wouldn't otherwise settle" because of the prospect of high fees, she said.

The High Court on Feb. 23 agreed to review a dispute over attorneys' fees from a long-running Texas lawsuit involving the closing of a private school by state authorities nearly 20 years ago.

Artesia Hall, a school for troubled teenagers in Liberty County, was closed by state officials in 1973 after the death of a student and amid allegations of child sexual abuse.

After the school's operator, Joseph D. Farrar, was indicted on a murder charge in the student's death, state officials, including then-Lieut. Gov. William Hobby, moved quickly to close the facility. The murder charge against Mr. Farrar was eventually dropped.

Mr. Farrar and his son, Dale, sued several state officials in federal court in 1975, alleging that the officials had violated their civil rights by closing the school without due process of law. The Farrars sought $17 million in damages.

Mr. Farrar died shortly before the case came to trial in 1983, but the suit was pressed by his son and his estate. A jury ruled that Mr. Hobby had violated Mr. Farrar's civil rights, but it refused to award any damages.

$300,000 in Fees, Expenses

The U.S. Court of Appeals for the Fifth Circuit later ruled that Mr. Farrar should receive nominal damages of $1, and it returned the case to the district court, where the judge awarded attorneys' fees and expenses of more than $300,000 to the Farrar estate.

Mr. Hobby appealed that ruling to a separate Fifth Circuit appellate panel, which last year reversed the award. The panel ruled that the Farrars were not "prevailing parties" under the federal Civil Rights Attorney's Fees Awards Act of 1976 because their victory was only "technical" and that the outcome did not change the legal relationship between the parties.

In their petition to the Supreme Court in Farrar v. Hobby (Case No. 91-990), lawyers for the Farrar estate argued that the appellate court misinterpreted several High Court precedents on attorney's fees, including the Court's 1989 ruling in Texas State Teachers Association v. Garland Independent School District. In that case, the Court held that civil rights plaintiffs become the prevailing parties, and thus entitled to attorneys' fees, if they succeed on "any significant issue in litigation which achieve[d] some of the benefit the parties sought in bringing suit."

The Farrars maintained the jury's finding helped clear Mr. Farrar's name and helped prevent future denials of due process by state officials.

Ms. Gregory of the N.S.B.A. said last week that the question of when attorneys' fees can be awarded in civil-rights cases "could probably use a little clarification.''

The case will probably be heard by the High Court in the next term.

Proposition 13 Case

Meanwhile last week, the High Court heard arguments in a case challenging California's property-tax system.

In Nordlinger v. Hahn (No. 90-1912), a Los Angeles homeowner is challenging a key provision of Proposition 13, the state's 1978 voter-initiated property-tax-limitation law.

The law greatly limited the ability of the state and local governments, including school districts, to increase property taxes. Over the years, it has cost schools billions of dollars in increased property-tax revenues they would otherwise have received.

The issue in this case concerns the provision of Proposition 13 that did away with the traditional property-tax-assessment system that was based on current market values. The 1978 law froze assessments for existing homeowners at 1975 assessed values. The law also limited annual property-tax increases for those homeowners to 2 percent, while basing taxes on new homes or property that changes ownership on the acquisition price.

The result is that neighbors who live in nearly identical houses can have sharply different property-tax bills. Stephanie Nordlinger, who is challenging the system, purchased her Los Angeles home in 1988. She pays more than $1,700 in annual property taxes, while her neighbors who have owned similar houses since before Proposition 13 went into effect pay only $350 to $400. This disparity violates the U.S. Constitution's guarantee of equal protection of the laws, Ms. Nordlinger, who is a lawyer, maintains.

While many California interest groups and officeholders have taken sides in the dispute, the state's school districts have decided to stay out.

Because the state has taken action since Proposition 13 to roughly equalize school funding, many school leaders fear the political uncertainty that would ensue if the Supreme Court invalidates a provision of the law. Should that occur, the legislature would have to re-examine the entire property-tax system.

A decision in the case is expected by July.

Other Action

In other action last week, the High Court:

  • Declined to hear an appeal by a Christian school in Virginia that said its rights to free exercise of religion were infringed when two municipalities imposed zoning restrictions on the property.

The U.S. Court of Appeals for the Fourth Circuit held that the owners of the Fairfax Christian School did not prove "that the zoning laws or fire codes burden their exercise of religion.'' The appeal was Christ College Inc. v. Board of Supervisors of Fairfax County (No. 91-965).

  • Let stand a state-court ruling upholding action by Gov. William Donald Schaefer of Maryland that increased the workweek of state employees from 35 1/2 hours to 40 hours without any increase in pay. The case was Maryland Classified Employees Association v. Schaefer (No. 91-650).

Vol. 11, Issue 24, Page 19

Published in Print: March 4, 1992, as Court To Weigh Payment of Legal Fees in Rights Cases
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