PARALEGAL

A person, working under the supervision of a lawyer, qualified through education, training, or work experience to perform substantive legal work that requires knowledge of legal concepts and is customarily, but not exclusively, performed by a lawyer

Richlin Security Service Co. v. Chertoff

The U.S. SUPREME COURT in June 2008 resolved a question of whether paralegal fees incurred during an administrative dispute could be recovered under a federal statute that requires an agency to pay attorney's fees to a party that disputed a claim with the agency formerly known as Immigration and Naturalization Service (INS). According to the Court, the paralegal fees should have been included among other attorney's fees. The Court's opinion reversed a ruling from the U.S. Court of Appeals for the Federal Circuit, which had reviewed various aspects of the case a total of five times.

Richlin Security Service Company in 1990 and 1991 entered into two contracts with the INS to provide private security guard services at Los Angeles International Airport. Due to mutual mistake between the parties, the INS misclassified Richlin's employees as “Guard I” instead of “Guard II” under a wage classification scheme set forth in the Service Contract Act, 41 U.S.C. 351 et seq.. This resulted in Richlin's employees being underpaid for several years.

The U.S. DEPARTMENT OF LABOR in 1995 recognized the misclassification and determined that the Richlin's employee were entitled to back wages. The Labor Department's conclusion at that time was that Richlin was responsible for payment of these wages. Richlin in turn filed a claim with the government, seeking to recover $1.5 in back wages and related taxes. Richlin argued that the original contract between the company and the INS should have included these amounts.

The contracting officer with the INS reviewed Richlin's claim and concluded in March 1996 that the claim should be denied. Richlin then appealed the claim to the Department of Transportation Board of Contract Appeals, where Richlin requested that the contract be reformed. The Board agreed in part but refused to reform the contracts until the LABOR DEPARTMENT took formal action. The Federal Circuit affirmed the Board's decision in 1998. Meissner v. Richlin Sec. Serv. Co., 155 F.3d 566 (Fed. Cir. 1998).

Subsequent to the Federal Circuit's affirmation, Richlin and the Labor Department entered into an agreement pertaining to the wages. The agreements specified the following: (1) that Richlin's employees were owed $636,818.72 in back wages; (2) that the back wages were to be paid into an escrow account administered by Richlin's counsel; (3) that any excess funds were to be remitted to the Labor Department; and (4) that the Labor Department agreed that, by virtue of the obligations undertaken in the agreement, the obligations to the former employees of Richlin had been liquidated and satisfied. However, the Board of Contract Appeals denied Richlin's request to complete reformation of the contract notwithstanding the agreement with the Labor Department. On appeal, the Federal Circuit disagreed with the Board, holding that because Richlin did not stand to benefit from the payment of the back wages, the Board should award Richlin the amount of these wages according to the agreement. Richlin Sec. Serv. v. Rooney, 18 Fed. Appx. 843 (Fed. Cir. 2001).

In 2003, Richlin filed a claim for the attorney's and paralegal fees under the Equal Access to Justice Act (EAJA), 5 U.S.C. 504 (2000). This claim focused on the work conducted by the law office of Gilbert J. Ginsburg, who had represented Richlin since 1994. The paralegal billing rates, which were based on market value , had increased from $50 per hour in 1994 to $135 per hour in 2003. Under the EAJA, if a party prevails in an adversarial action against an administrative agency , the agency must pay to the prevailing party “fees and other expenses incurred by that party in connection with that proceeding,” unless the agency's adjudicative officer determines that the agency's position was substantially justified or that the circumstances of the case would make such an award unjust. “Fees and other expenses” by statute include “reasonable attorney or agent fees,” and the statute specifies that the amount of fees should be based on “prevailing market rates for the kind and quality of the services furnished.” However, attorney's fees are capped at $125 per hour in the absence of special circumstances that justify an amount above this.

The Board of Contract Appeals in 2005 determined that paralegal fees were not attorney's fees under the statute. The Board awarded the paralegal expenses at a rate of $35 per hour, which reflected the cost of the paralegal services to the law firm. Richlin had requested a total award of $51,901.10 for the paralegal fees. The Board instead awarded Richlin a total of $10,594 for these fees. Richlin appealed the Board's decision to the Federal Circuit, which affirmed. According to the majority of the panel, the paralegal costs should be considered “other costs” under the EAJA. The court thus allowed the determination of $35 per hour for these costs to stand. Richlin Sec. Serv. v. Chertoff, 472 F.3d 1370 (Fed. Cir. 2006).

Richlin appealed the decision to the U.S. Supreme Court, which granted certiorari in November 2007. In its briefs, Richlin stressed that the Federal Circuit's decision conflicted with at least four other circuits. Moreover, Richlin argued that the Court's decision in Missouri v. Jenkins, 491 U.S. 274, 109 S. Ct. 2463, 105 L.Ed. 2d 229 (1989) controlled the outcome of Richlin's case. In Jenkins, the Court determined that a litigant could recover paralegal fees under the Civil Rights Attorney's Fees Awards Act of 1976, 42 U.S.C. 1988, which allows parties to recover attorney's fees but says nothing specifically about paralegal fees. In that case, the Court determined that the term “attorney's fees” also encompassed the paralegal fees.

In an opinion by Justice Samuel Alito, the Court agreed with Richlin and reversed the Federal Circuit. According to Alito's opinion, the text of the statute differentiated between “fees” and “expenses,” and the amounts billed for paralegal services should be considered fees and not expenses. Accordingly, the amount should not only reflect the cost for these services as incurred by the litigant, but should be calculated at prevailing market rates.

The Court was likewise persuaded by the decision in Jenkins to resolve the potential ambiguity in the EAJA. Moreover, the Court rejected the government's argument that the legislative history of the EAJA supported the position that the statute does not cover the paralegal's fees. Richlin Sec. Serv. Co. v. Chertoff, No. 06-1717, 2008 WL 2229175 (2008).

Justice Antonin Scalia and Clarence Thomas refused to join parts of the opinion, especially the parts pertaining to legislative history analysis. However, neither of the justices filed a dissenting opinion as to these parts.