Entitlement to Attorney’s Fees Under FDUTPA
Florida’s Deceptive and Unfair Trade Practices Act, F.S. §501.201 et seq. , is a potentially powerful tool to redress unfair and deceptive trade practices as well as unfair methods of competition. However, uncertainty over the thrust of its provision permitting recovery of reasonable attorneys’ fees by the prevailing party poses a problem for potential plaintiffs and their attorneys in evaluating whether to assert a FDUTPA claim.
Prior to an amendment in 1994, FDUTPA provided for the mandatory award of reasonable attorneys’ fees to the prevailing party. Plaintiffs thus faced an unambiguous exposure to fees incurred by successful defendants,1 inevitably providing a substantial disincentive to the assertion of all but the clearest of FDUTPA claims. The statute was amended in 19942 to provide that the award of fees to the prevailing party was no longer mandatory, but rather discretionary. However, there appears to be no case law construing the fee provision in its current form.
In the author’s anecdotal personal experience, numerous attorneys who would otherwise be inclined to assert FDUTPA claims still refrain from doing so in light of continuing uncertainty over the circumstances in which their clients might be exposed to fee-shifting. These members of the bar include antitrust attorneys representing corporate clients as well as attorneys representing individual consumers or contemplating the assertion of consumer classwide claims. Furthermore, the discretionary nature of the provision is a caution with respect to projecting the potential upside or downside of a potential case. Both plaintiffs’ and defense counsel face the issue of what to inform their clients about the likelihood of fee shifting. The statute thus invites a comprehensive search for guidance and standards to govern the award of fees.
The Statutory Provisions
FDUTPA currently provides, at §521.2105:
In any civil litigation resulting from an act or practice involving a violation of this part. . . the prevailing party, after judgment in the trial court and exhaustion of all appeals, if any, may receive his or her reasonable attorneys’ fees and costs from the nonprevailing party. . . .
The trial judge may award the prevailing party the sum of reasonable costs in the action plus a reasonable legal fee for the hours actually spent on the case as sworn to in an affidavit.
On its face, the current provision does not set forth differing standards for plaintiffs and defendants. If those standards are the same, prevailing plaintiffs would still face a significant disincentive to filing suit.
There is essentially no legislative history pertaining to the change, one of a number of consumer protection measures contained in the same bill, other than a statement in the Journal of the Senate characterizing it as “providing for discretionary award of attorneys’ fees to the prevailing party in an action for an unfair and deceptive trade practice.”3
Related Public Policy Enforcement Precedent
Other relevant precedent, however, strongly suggests that prevailing plaintiffs should generally be awarded attorneys’ fees, while prevailing defendants should be awarded such fees only when plaintiff’s FDUTPA claim is frivolous or groundless.
In Standard Guaranty Insurance Co. v. Quanstrom, 555 So. 2d 828 (Fla. 1990), the Florida Supreme Court addressed whether use of a contingency fee multiplier is mandatory or discretionary in setting a reasonable attorney’s fee to be awarded to a prevailing insured under F.S. §627.428 (judgment against insurer under an insurance contract). The court, as part of its analysis, found it
appropriate to place attorneys’ fee cases into the following three categories: (1) public policy enforcement cases; (2) tort and contract claims; and (3) family law, eminent domain, and estate and trust matters. . . . The first category relates to public policy enforcement cases, which led to the development of the lodestar approach. These cases generally present discrimination, environmental, and consumer protection issues. As noted, the primary purpose of these fee-authorizing statutes is to encourage individual citizens to bring civil actions to enforce statutory policy.
555 So. 2d at 833.
The court then provided two examples of cases in category (1): a discrimination case, Blanchard v. Bergeron, 489 U.S. 87 (1989), and, in fact, a FDUTPA case, La Ferney v. Scott Smith Oldsmobile, Inc., 410 So. 2d 534, 536 (Fla. 5th DCA 1982). La Ferney upheld an attorneys’ fee award that exceeded the actual damages awarded to the plaintiff. The Florida Supreme Court quoted the Fifth DCA’s reasoning that
[t]he Florida Deceptive Trade Practices Act depends for enforcement on its “enforcing authority” and the injured consumers. If, because of the small sums involved, consumers cannot recover in full their attorney fees, they will quickly determine it is too costly and too great a hassle to file suit, and individual enforcement of this act will fail. The First District Court of Appeal said in Marshall v. W. & L. Enterprises Corp., 560 So. 2d 1147, 1148 (Fla. 1st DCA 1978): “The obvious purpose of the ‘little FTC Act’ is to make consumers whole for losses caused by fraudulent consumer practices. . . . These aims are not served if attorney fees are not included in the protection.” [555 So. 2d at 834–35]
Florida’s highest court thus deems individual FDUTPA enforcement actions to have a public policy vindicating purpose akin to that of the civil rights antidiscrimination statutes. Accord, Cohen v. Office Depot, 204 F.3d 1069, 1082 (11th Cir. 2000). We can therefore look to attorneys’ fee precedent under antidiscrimination law for guidance as to how to interpret §501.2105.
Prevailing Plaintiffs
Blanchard was a case alleging violations of 42 U.S.C. §1983. The applicable attorneys’ fee statute, 42 U.S.C. §1988, provides: “In any action or proceeding to enforce a provision of §§1981, 1982, 1983, 1985, and 1986 of this title. . . or Title VI of the Civil Rights Act of 1964, the court, in its discretion, may allow the prevailing party, other than the United States, a reasonable attorneys’ fee as part of the costs.” As is discussed further herein, in Blanchard the Court held that a contingent fee contract does not place an automatic ceiling on the amount of fees which can be awarded, as a “reasonable” fee may exceed the amount called for by the contract.
In the course of its analysis the Court explained that the discretion allowed by §1988 “is not without limit: the prevailing party [plaintiff in that case] should ordinarily recover an attorney’s fee unless special circumstances would render such an award unjust.” 489 U.S. at 89 n.1 (quoting Newman v. Piggie Park Enterprises, Inc., 390 U.S. 400, 402 (1968), and Hensley v. Eckerhart, 461 U.S. 424, 429 (1983) (such rule applies to prevailing plaintiff; Christiansburg rule applies to prevailing defendant)).
Thus Quanstrom, by relying on Blanchard, which in turn relied on Newman and Hensley, implies that a plaintiff prevailing on a FDUTPA claim should ordinarily recover its reasonable attorneys’ fees, unless the court makes a finding that on the facts of the case it would be unjust.
Prevailing Defendants
The Hensley opinion also referred to the standard under which fees should be awarded to prevailing defendants. The Court cited an earlier decision under Title VII of the Civil Rights Act of 1964, Christiansburg Garment Co. v. EEOC, 434 U.S. 412, 421–22 (1978), where it had reached the issue of a defendant’s entitlement to attorneys’ fees under a fee provision, i.e., 42 U.S.C. §2000e-5(k),4 that is essentially the same as §1988. Christiansburg held that
a district court may in its discretion award attorneys’ fees to a prevailing defendant in a Title VII case upon a finding that the plaintiff’s action was frivolous, unreasonable or without foundation, even though not brought in subjective bad faith. . . or that the plaintiff continued to litigate after it clearly became so.
434 U.S. at 421–22. Accord, Hensley, 461 U.S. at 429 n.2; U.S. v. Crosby, 59 F.3d 1133, 1137 (11th Cir. 1995).
Christiansburg categorically rejected the argument that because the attorneys’ fee statute simply addressed the “prevailing party,” it reflected a legislative intent that the same standard be applied to prevailing plaintiffs and prevailing defendants. The Court reasoned:
But the permissive and discretionary language of the statute does not even invite, let alone require, such a mechanical construction. The terms of §[1988] provide no indication whatever of the circumstances under which either a plaintiff or a defendant should be entitled to attorneys’ fees. And a moment’s reflection indicates that there are at least two strong equitable considerations counseling an attorney’s fee award to a prevailing Title VII plaintiff that are wholly absent in the case of a prevailing Title VII defendant.
First. . . the plaintiff is the chosen instrument of Congress to vindicate “a policy that Congress considered of the highest priority.” [citation] Second, when a district court awards counsel fees to a prevailing plaintiff, it is awarding them against a violator of federal law. As the Court of Appeals clearly perceived, “these policy considerations which support the award of fees to a prevailing plaintiff are not present in the case of a prevailing defendant.” [citation] A successful defendant seeking counsel fees under [§2000e-5(k)] must rely on quite different equitable considerations. [434 U.S. at 418–19].
The Court went on to explain such “different equitable considerations” in terms of a fair adversary process presupposing a vigorous defense as well as a vigorous prosecution, and not providing a disincentive to the interposition of such a defense in resisting a groundless action. Id.
On the above analysis, the standard for awarding attorneys’ fees to prevailing defendants under FDUTPA does not appear much different from the standard for any plaintiff’s exposure to fee-shifting upon filing and prosecuting any suit in circuit court under F.S. §57.105.5
Given that Florida’s Supreme Court has placed FDUTPA in the same category as civil rights discrimination law with respect to the public policy considerations underlying attorney fee awards, FDUTPA’s provision for discretionary attorney fee awards to prevailing parties should be interpreted the same as the civil rights laws’ similar provisions.6 Following that model will help ensure that serious and nonfrivolous private enforcement suits are not discouraged by the prospect of having to pay fees to defendants, while at the same time discourage groundless FDUTPA claims and help ensure that defendants will not ultimately have to bear the expense of fighting off such claims.
Additional Support from Florida Civil Rights Law
Florida’s Civil Rights Act of 1992 provided that in a civil action thereunder, the court in its discretion may allow the prevailing party a reasonable attorneys’ fee as part of the costs. It further stated, “It is the intent of the Legislature that this provision for attorneys’ fees be interpreted in a manner consistent with federal case law involving a Title VII action.” (Emphasis added.) F.S. §760.11(5). The legislature thereby endorsed the federal fee-shifting precedent for the state statutory scheme.
In enacting legislation the legislature is presumed to be aware of prior court decisions on the same subject matter.7 Thus, it is presumed to have been aware in 1992 as well as 1994 that Florida’s highest court had previously placed FDUTPA in the same category, in terms of construction of attorneys’ fee provisions, as civil rights statutes. Absent any indication in FDUTPA’s language or legislative history to the contrary, that awareness in turn suggests a legislative intent that FDUTPA’s fee provisions be interpreted and applied analogously to state civil rights act fee provisions. That the legislature did not explicitly repeat this reference to federal precedent on fee-shifting in the 1994 amendment to FDUTPA is of little moment. In fact, it would have made no sense to insert analogous language into §501.2105 with respect to federal case law on attorneys’ fees in unfair and deceptive trade practices cases, since there is none. The Federal Trade Commission Act, 5 U.S.C. §41 et seq., does not provide a private cause of action.8
FAA Precedent
The fee provision of the Florida Antitrust Act (FAA) lends still further support to the above analysis. That act is substantively related to FDUTPA. In it, the legislature expressly provided that persons injured in their business or property by reason of a violation shall be awarded reasonable attorneys’ fees, while prevailing defendants shall be awarded such fees only when “the court finds there was a complete absence of a justiciable issue of either law or fact raised by the plaintiff.” F.S. §542.22(1). An established principle of statutory interpretation requires that two statutes having the same purpose be construed harmoniously to the extent possible. Wakulla County v. Davis, 395 So. 2d 540, 542 (Fla. 1981); City of Jacksonville v. Cook, 765 So. 2d 289, 292 (Fla. 1st DCA 2000).
FDUTPA covers unfair methods of competition, and FAA and FDUTPA have essentially the same purpose, as the First DCA observed in Mack v. Bristol-Meyers Squibb Co., 673 So. 2d 100, 110 (1996), rev. dismissed, 689 So. 2d 1068:
It has been consistently recognized that the federal consumer and antitrust statutes were enacted to deal with closely related aspects of the same problem—the protection of free and fair competition. . . since both the Florida DTPA and the Florida Antitrust Act are patterned after their federal counterparts, we may assume that they too, in part, relate to the same purposes—the protection of free, fair and effective competition.
Mack held FDUTPA provides a cause of action for unfair methods of competition to indirect as well as direct purchasers, whereas FAA provides a claim only to direct purchasers. As discussed in a prior article, the two statutes nevertheless have a great overlap in their coverages of anticompetitive conduct.9
For FDUTPA to permit prevailing antitrust defendants to recover attorneys’ fees under the same standard as prevailing plaintiffs would provide a disincentive to the filing of meritorious suits to combat anticompetitive conduct. Such a construction would be wholly inconsistent with the encouragement of such suits provided by FAA’s fee provisions. Such a construction of FDUTPA is therefore, on this ground as well, highly disfavored.
Further Applications of the Standards
Christiansburg and its progeny, as well as FDUTPA case law, flesh out details in the application of the standards for awarding fees to plaintiffs and defendants. The fact that a plaintiff ultimately loses does not in itself render his or claim unreasonable or without foundation. “The course of litigation is rarely predictable. Decisive facts may not emerge until discovery or trial. The law may change or clarify in the midst of litigation. Even when the law or facts appear questionable or unfavorable at the outset, a party may have an entirely reasonable ground for bringing suit.” Christiansburg, 434 U.S. at 422.
On this subject, pre-1994 FDUTPA case law held that when a lawsuit brought under FDUTPA is dismissed because FDUTPA is inapplicable to and does not cover the stated fact situation, defendant is entitled to fees. Rustic Village, Inc. v. Friedman, 417 So. 2d 305 (Fla. 3d DCA 1982); Brown v. Gardens by the Sea South Condominium Ass’n, 424 So. 2d 181 (Fla. 4th DCA 1983); accord, Target Trailer v. Feingold, 632 So. 2d 198 (Fla. 3d DCA 1994) (prevailing party in suit invoking FDUTPA entitled to fees regardless of the basis on which it prevails). Christiansburg’s “frivolous, unreasonable or without foundation standard” would appear to limit fee-shifting in such circumstances to instances when, as under F.S. §57.105, the plaintiff has failed to make a “good faith argument for the extension, modification, or reversal of existing law or the establishment of new law [or clarification of current law], as it applied to the material facts, with a reasonable expectation of success.”
Nor does the fact that a defendant prevails on summary judgment in itself render plaintiff’s claim frivolous, unreasonable, or without foundation. Noyes v. Channel Products, Inc., 935 F.2d 806 (6th Cir. 1991). However, when a plaintiff fails to oppose a summary judgment motion because it lacks a basis for doing so, defendant will be awarded fees. Turner v. Sunguard Business Systems, Inc., 91 F.3d 1418 (11th Cir. 1996).
Ghodrati v. Miami Paneling Corp., 770 So. 2d 181 (Fla. 3d DCA 2000), confirmed that §521.2105, to the effect that fees may be awarded only “after judgment in the trial court and exhaustion of all appeals,” means such party must obtain a net judgment in its favor to be entitled to fees. There, although the plaintiff had obtained a directed verdict on the FDUTPA count, it suffered an adverse judgment on other counts and was held not entitled to fees. Of course, in cases where multiple claims are asserted, plaintiff must succeed on the FDUTPA claim to be entitled to fees thereunder. Heindel v. Southside Chrysler-Plymouth, 476 So. 2d 266 (Fla. 1st DCA 1985). Where plaintiff obtains judgment and succeeds on its FDUTPA claim but fails on some other claim(s), it is defendant’s burden in seeking apportionment of fees to show that some of plaintiff’s legal work was devoted to matters entirely unrelated to proving its FDUTPA claim. Smith v. Bilgin, 534 So. 2d 852 (Fla. 1st DCA 1988).
Determining the Fee Itself
Section 501.2105(3) permits “a reasonable legal fee for the hours actually spent on the case.” As Quanstrom explained, the federal courts developed the “lodestar” approach of determining attorneys’ fees for the statutory public policy enforcement cases. 555 So. 2d at 831. The Florida Supreme Court had ruled in Florida Patient’s Compensation Fund v. Rowe, 472 So. 2d 1145 (Fla. 1985), that the lodestar approach considers numerous factors to arrive at a reasonable number of hours expended, multiplied by a reasonable hourly rate. Those factors are a) the time and labor required; b) the novelty and difficulty of the questions; c) the skill requisite to perform the legal service properly; d) the preclusion of other employment by the attorney due to acceptance of the case; e) the fee customarily charged in the locality for similar services; f) time limitations imposed by the client or the circumstances; g) the amount involved; h) the experience, reputation, and ability of the attorneys; i) the “undesirability” of the case; j) the nature and length of the professional relationship with the client; and k) awards in similar cases. That lodestar amount may then be adjusted by two additional factors: l) whether the fee is fixed or contingent; and m) the results obtained, which refers to whether the party was unsuccessful on other claims, and permits a downward adjustment if work done on unsuccessful claims was unrelated to the [FDUTPA] claim at issue. Rowe, 472 So. 2d at 1151; Quanstrom, 555 So. 2d at 834. See also Bilgin, 534 So. 2d 852. Quanstrom further opined: “[W]e agree with the Court in Blanchard and find that [all the above] factors should be considered to determine a reasonable attorney’s fee in these cases. . . . ” 555 So. 2d at 834. See GMAC v. Laesser, 791 So. 2d 517 (Fla. 4th DCA 2001) (applying pre-1994 provision to cause of action arising pre-1994).
In Bell v. U.S.B. Acquisition Co., 734 So. 2d 403 (Fla. 1999), the Florida Supreme Court confirmed that the lodestar contingency adjustment factor means that a court is “authorized to award a greater fee based on the contingent nature of the fee agreement. . . [which] would be analogous to a court’s application of a multiplier [in tort and contract cases].”10 734 So. 2d at 411.
Conclusion
The standard(s) for the discretionary award of prevailing party attorneys’ fees under FDUTPA have not yet been articulated in FDUTPA cases. Vindication of FDUTPA’s public policy enforcement purpose militates that prevailing plaintiffs ordinarily be awarded their reasonable attorneys’ fees, barring circumstances that would render such an award unjust. It further militates that fee awards to prevailing defendants be limited to those actions that are frivolous or groundless in fact or law. Florida precedent classifying statutory fee-shifting provisions, federal civil rights fee-shifting precedent, and Florida civil rights and antitrust statutory provisions together strongly support this interpretation. The amounts of fees awarded are determined under the lodestar approach, with possible adjustments based on lack of success on other claims and whether there was a contingency fee agreement.
1 See, e.g., S.H. Investment v. Kincaid, 495 So. 2d 768, 772 (Fla. 5th D.C.A. 1986); Caplan v. 1616 East Sunrise Motors, Inc., 522 So. 2d 920, 921 (Fla. 3d D.C.A. 1988); Smith v. Bilgin, 534 So. 2d 852, 854 (Fla. 1st D.C.A. 1988); Target Trailer, Inc. v. Feingold, 632 So. 2d 198 (Fla. 3d D.C.A. 1994).
2 See Hubbel v. Aetna Casualty & Insurance Co., 758 So. 2d 94, 101 n.10 (Fla. 2000) (dissent of Lewis, J.).
3 26th Regular Session, February 8 through April 15, 1994, at March 16, 1994 (SB 580). See also Tape #1 (of 2), Professional Regulation Committee hearing, February 15, 1994, concerning, inter alia, consumer protection matters (SB 580), supplied by the Florida State Archives.
4 “In any action or proceeding under this subchapter the court, in its discretion, may allow the prevailing party. . . a reasonable attorney’s fee.”
5 I.e., actual or constructive knowledge that a claim or defense when initially presented to the court or at any time before trial a) was not supported by the material facts necessary to establish the claim or defense; or b) would not be supported by the application of then-existing law to those material facts, unless the claim or defense was initially presented to the court as a good faith argument for the extension, modification, or reversal of existing law or the establishment of new law, as it applied to the material facts, with a reasonable expectation of success.
6 Christiansburg, in discussing the “sparse legislative history” of §2000e-5(k), notes the reference in the legislative debates to including the provision in order to “make it easier for a plaintiff of limited means to bring a meritorious suit.” 434 U.S. at 420. This reference arguably raises an issue as to whether a prevailing plaintiff’s financial condition is a factor to be taken into account in determining whether to award it fees. However, neither Blanchard nor Christiansburg interpreted the provisions as to the court’s discretion to subsume an inquiry into financial means. Furthermore, the related Florida Antitrust Act (see text, infra) has never been interpreted to impose such a “means test,” even though in many situations only business retailers, as direct purchasers of a product, will have standing to assert FAA claims while subsequent individual consumers cannot bring claims. See Mack v. Bristol-Meyers Squibb Co., 673 So. 2d 100, 110 (1996), rev. dismissed, 689 So. 2d 1068. There is nothing in the language or legislative history of FDUTPA to support making such financial distinctions between plaintiffs.
7 Florida Wildlife Federation v. State, 390 So. 2d 64, 67 (Fla. 1980).
8 See Holloway v. Bristol-Myers Corp., 485 F.2d 986 (D.C. Cir. 1973): Baum v. Great Western Cities, Inc., 703 F.2d 1197, 1209 (10th Cir. 1983).
9 See David J. Federbush, FDUTPA for Civil Antitrust: Additional Conduct, Party, and Geographic Coverage; State Actions for Consumer Restitution, 76 Fla. B.J. 52 (Dec. 2002).
10 A number of district court opinions have addressed whether the court may consider and use a “multiplier” in certain circumstances in Florida statutory public policy enforcement cases. Some have permitted consideration, and some of those have actually used multipliers. See, e.g., Meli Investment Corp. v. O.R., 621 So. 2d 676 (Fla. 3d D.C.A. 1993); Boardman Petroleum v. Tropic Tint Juniper, 668 So. 2d 308 (Fla. 4th D.C.A. 1996); Olde Discount Corp. v. Amsel, 800 So. 2d 667 (Fla. 5th D.C.A. 2001). Other decisions, employing different rationales, have explicitly held use of multipliers prohibited. See, e.g., Stewart Select Cars, Inc. v. Moore, 619 So. 2d 1037 (Fla. 4th D.C.A. 1993); accord, Corvette Shop & Supplies, Inc. v. Coggins, 779 So. 2d 529 (Fla. 2d D.C.A. 2000). Bell, however, is currently the most authoritative Florida decision on the factors that go into determining a reasonable fee in public policy enforcement cases, and none of the district court decisions cited above which were issued subsequent to Bell addressed or even cited it in any way. However, a district court decision citing Bell approved use of a multiplier under a public interest oriented statute. Munao, Munao, Munao and Munao v. Homeowners Association of La Buona Vita Mobile Home Park Inc., 740 So. 2d 73 (Fla. 4th D.C.A. 1999) (Fla. Stat. §723.033, prohibiting unconscionable rent in mobile home parks). But see Sterling Casino Lines, L.P. v. Chestnut, 825 So. 2d 484, 486 (Fla. 5th D.C.A. 2002) (affirming per curiam attorneys’ fee award in discrimination case; dissenting opinion of Judge Cobb cited Bell in observing that “the fact that the fee was contingent is not a factor in considering an hourly rate” but did not address generally whether contingency factor should or should not lead to adjustment of lodestar amount).
David J. Federbush practices in Bethesda, Md. He was a senior litigator for many years at the FTC. Mr. Federbush subsequently has had a commercial and plaintiffs’ litigation practice in Miami and the Washington, D.C. area. He graduated summa cum laude from Yale University in 1971 and received his J.D. from Stanford Law School in 1976.
