Horvath v. United States

MICHAEL HORVATH, Plaintiff, v. UNITED STATES, Defendant.

No. 16-688C

United States Court of Federal Claims

February 5, 2021

NOT FOR PUBLICATION

Nicholas M. Wieczorek, Clark Hill PLLC, Las Vegas, NV, for the plaintiff.

Galina I. Fomenkova, Commercial Litigation Branch, Civil Division, U.S. Department of Justice, Washington, D.C., Jane M. Brittan, U.S. Secret Service, of counsel, for the defendant.

MEMORANDUM OPINION AND ORDER

HERTLING, Judge

In October 2020, the Court, after denying the plaintiff's motion for class certification, entered judgment for the plaintiff in this case, a suit for overtime pay brought by a U.S. Secret Service member. Following entry of judgment, the plaintiff and his counsel parted ways. The plaintiff's counsel has moved, without authorization from the plaintiff, for attorneys' fees and expenses under the Equal Access to Justice Act ("EAJA"), 28 U.S.C. § 2412(d).¹ The defendant has moved to strike the plaintiff's counsel's motion for lack of standing.

The plaintiff's counsel is neither entitled to seek an award of attorneys' fees under the EAJA under the circumstances presented nor able to overcome the proscription of the Anti-Assignment Act, 31 U.S.C. § 3727. Accordingly, the Court finds that the plaintiff's counsellacks standing to seek attorneys' fees and expenses under the EAJA and grants the defendant's motion to strike the plaintiff's counsel's application.²

I. BACKGROUND

Secret Service Special Agent Michael Horvath, on behalf of himself and similarly situated U.S. Secret Service and Diplomatic Security Service special agents, sought backpay allegedly illegally denied by a regulation that the Federal Circuit found inconsistent with the governing statute. The Federal Circuit remanded the case in 2018 for this Court to consider whether class certification was appropriate. Horvath v. United States, 896 F.3d 1317, 1322 (Fed. Cir. 2018).

Because the Secret Service demonstrated that Mr. Horvath was not denied overtime pay on account of the application of the invalidated regulation, his interests no longer sufficiently aligned with those of the potential class members to make him an adequate class representative. Accordingly, the Court denied the plaintiff's motion to certify a class.³ Horvath v. United States, 149 Fed. Cl. 735, 751 (2020).

Mr. Horvath established his entitlement to overtime pay on grounds independent of the invalidated regulation, and the parties reached a settlement that the amount of damages due to Mr. Horvath was $3,419.81. (ECF 77.) The Court entered final judgment for the plaintiff in the amount of $3,419.81, in full satisfaction of his claim. (ECF 80.)

After the Court entered final judgment, the plaintiff's counsel, Mr. Nicholas Wieczorek, submitted a bill of costs and moved for attorneys' fees and expenses under the EAJA. (ECF 82 & 83.) The complaint had been filed by his previous law firm, Morris Polich & Purdy LLP. (ECF 82, Decl. of Nicholas M. Wieczorek ¶ 2.) Until his withdrawal from Morris Polich & Purdy in 2017, David J. Vendler was the plaintiff's original lead attorney on the case. (Id.) Mr. Wieczorek, currently with Clark Hill PLLC ("Clark Hill"), took over from Mr. Vendler and was the lead lawyer representing Mr. Horvath and the putative class from 2017 to 2020. (Id. ¶¶ 1, 3.)

Following entry of the judgment, Mr. Horvath ceased communicating with Mr. Wieczorek and Clark Hill "with respect to any post judgment motions including th[e] motion for award of attorney's fees." (Id. ¶ 7.) Clark Hill notified Mr. Horvath of its "withdrawal from further representation of his interests in this matter . . . based upon his declining to furthercooperate with [its] efforts to obtain an award of attorney's fees and costs in this matter . . . ." (Id. ¶ 8.) As a result of the severed attorney-client relationship, Mr. Horvath did not authorize, participate in, or approve of his counsel's motion.

Until their relationship was terminated, his attorneys represented Mr. Horvath pursuant to a contingency-fee agreement from June 1, 2016. (ECF 87, Decl. of Nicholas M. Wieczorek ¶ 2.) This fee agreement, initially between Morris Polich & Purdy and Mr. Horvath and assumed by Clark Hill, included several relevant provisions:

• "[T]his is contingency fee contract and Client shall have no obligation to pay any fee unless there is recovery" (id. ¶ 3);

• "[A]ll costs related to the Action will be advanced by Attorneys. To the extent that there is a recovery in the Action by way of settlement or judgment, all of Attorneys' costs and fees shall be paid to Attorneys on a first-dollar-out basis" (id. ¶ 4);

• "Attorneys and Client agree that all Attorneys' fees or costs which are approved by the Court are the sole and exclusive property of Attorneys" (id. ¶ 5); and

• "Client may discharge Attorneys at any time. Client recognizes that if Client terminates Attorneys without cause, Attorneys may seek to recover the reasonable value of Attorneys' services from Client, or, alternatively, at Client's option, Client may choose to withdraw as class representative and allow Attorneys to continue as class counsel and to prosecute the class action case with another representative plaintiff." (Id. ¶ 6.)

This agreement was the only agreement entered between Mr. Horvath and his attorneys regarding services provided as part of this case, and it was never modified or revoked. (Id. ¶¶ 2, 7.)

The defendant has moved to strike the plaintiff's counsel's motion for attorneys' fees and expenses for lack of standing. (ECF 85.) The issue has been fully briefed.

II. DISCUSSION

As a threshold jurisdictional issue, the "'party invoking federal jurisdiction bears the burden of establishing [the] elements [of standing].'" Myers Investigative and Sec. Servs., Inc. v. United States, 275 F.3d 1366, 1369 (Fed. Cir. 2002) (quoting Lujan v. Defs. of Wildlife, 504 U.S. 555, 561 (1992)) (modifications in original). Standing requires (1) an "injury in fact" (2) "fairly traceable to the challenged action of the defendant" (3) "likely" to be "redressed by a favorable decision." Friends of the Earth, Inc. v. Laidlaw Env't Servs. (TOC), Inc., 528 U.S. 167, 180-81 (2000).

To establish standing, the plaintiff's counsel must first demonstrate an "injury in fact." He may establish an injury in fact by showing that there has been "an invasion of a legally protected interest." Lujan, 504 U.S. at 560. The plaintiff's counsel "must be within the class of persons legally protected by the statute under which [he] seeks relief." Willis v. Gov'tAccountability Off., 448 F.3d 1341, 1344 (Fed. Cir. 2006). In other words, he must have "a right to claim fees under the statute." Id. Alternatively, if no statute grants him such a right, the plaintiff's counsel also may establish an injury in fact by showing that he has a right through assignment. See Sprint Commc'ns Co. v. APCC Servs., Inc., 554 U.S. 269, 271 (2008) (holding that an assignee of a legal claim for money owed has standing).

A. Right to Claim Fees

The EAJA provides that "a court shall award to a prevailing party . . . fees and other expenses . . . incurred by that party in any civil action . . . brought by or against the United States . . . unless the court finds that the position of the United States was substantially justified or that special circumstances make an award unjust." 28 U.S.C. § 2412(d)(1)(A) (emphasis added).

The Supreme Court has held that the term "prevailing party," as used in the EAJA, refers to the actual litigant, not the litigant's attorney. Astrue v. Ratliff, 560 U.S. 586, 593 (2010) ("The fact that the statute awards to the prevailing party fees in which her attorney may have a beneficial interest or a contractual right does not establish that the statute 'awards' the fees directly to the attorney."). Because the EAJA grants the right to the litigant, not the attorney, attorneys "lack any substantive rights sufficient to confer standing." Shealey v. Wilkie, 946 F.3d 1294, 1298 (Fed. Cir. 2020).

The plaintiff's counsel notes that the litigant in Shealey had discharged his attorneys, hired new counsel, and filed a written objection to the former attorneys' request for fees. (ECF 87 at 6 n.2.) While the Federal Circuit did at points in the opinion consider the relevance of the litigant's opposition to the fee request, the holding in Shealey was not dependent on the litigant's objection to his former attorneys' request. The Federal Circuit instead relied on Ratliff, its earlier decision in Willis, and the plain language of the EAJA to hold that attorneys lack any substantive rights under the EAJA to confer standing on their own. See Shealey, 946 F.3d at 1298. The right to assert a claim under the EAJA remains Mr. Horvath's and does not belong to Mr. Wieczorek or Clark Hill. See id. at 1297-98. The absence of an objection from Mr. Horvath is irrelevant to the issue of whether Mr. Wieczorek and Clark Hill have standing to seek attorneys' fees under the EAJA.

Mr. Horvath ceased communicating with his counsel "with respect to any post judgment motions including th[e] motion for award of attorney's fees." (ECF 82, Decl. of Nicholas M. Wieczorek ¶ 7.) Clark Hill withdrew "from further representation of [Mr. Horvath's] interests in this matter . . . based upon his declining to further cooperate with [its] efforts to obtain an award of attorney's fees and costs in this matter . . . ." (Id. ¶ 8.) Mr. Horvath has chosen not to exercise his right under EAJA; his attorney cannot exercise that right without him. See Willis, 448 F.3d at 1346 ("The client's lack of interest does not transfer the client's right to the attorney.").

The plaintiff's counsel argues that "[t]he contingency fee contract transferred to counsel the rights to fees since it incurred the time and advanced the costs of litigation." (ECF 87 at 3.) To show that the plaintiff was obligated to turn over to his counsel any award of fees under the EAJA, the plaintiff's counsel relies on Phillips v. Gen. Servs. Admin., 924...