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Lopsided Fee-Shifting Provisions Cross Ideological Divides

Oct. 4, 2022, 4:09 PM

Second Amendment and abortion rights advocates may have found common ground in opposing two nearly identical, very unusual, and allegedly unconstitutional one-way fee-shifting provisions contained in controversial laws passed in Texas and California.

Texas’ law, the Texas Heartbeat Act, created a private right of action authorizing anyone to sue to enforce a ban on nearly all abortions after six weeks of fetal age. California’s law, which takes effect Jan. 1, 2023, creates a private right of action authorizing anyone to sue to enforce certain categories of the state’s criminal gun laws.

Both statutes use the same structural and procedural mechanisms—a private right of action, plus a lopsided fee-shifting device—to avoid preemptive challenges to the laws. The Texas law came first; California’s was explicitly modeled after it and would become inoperative, under an express statutory provision, in the event the Texas law is found unconstitutional by either its highest court or the US Supreme Court.

One-way fee-shifting provisions aren’t uncommon, despite the usual rule that each party pays its own way in litigation. But what makes the fee-shifting provisions here so unusual is how they define a prevailing party, according to Thomas D. Rowe Jr., a professor at Duke University School of Law.

Under both the California and Texas statutes, if the plaintiff loses on a single claim, they’re liable for all of the government’s attorneys’ fees, even if the law is declared unconstitutional. And even if the plaintiff achieves total success and wins on all of their claims, there’s no reciprocal right to recover attorneys’ fees from the government.

The only time, in effect, that the government must pay its own way is if it loses on all counts. In all other circumstances, the plaintiffs and their lawyers are jointly and severally on the hook for the government’s fees.

If these one-way fee-shifting provisions prove to be effective and permissible, more states might discourage constitutional challenges to questionable laws by making them cost-prohibitive for both plaintiffs and their counsel.

They “could be used as a sort of not-so-visible way of discouraging certain kinds of litigation,” John Leubsdorf, a professor at Rutgers Law School, said.

Usually, fee-shifting statutes are meant to create incentives for plaintiffs to pursue meritorious lawsuits to enforce government policy where adequate incentives might not otherwise exist, not to discourage lawsuits, according to Leubsdorf.

It’s highly unusual to see provisions that discourage litigation by requiring plaintiffs to pay the government’s attorneys’ fees unless they succeed on every claim, he said.

“I’ve never seen anything that goes that far. It’s quite routine for a court to limit fee awards to successful claims, where the claims are on very different issues. But this is someone who hasn’t really lost,” Leubsdorf said.

Merits, Policy

The laws containing the fee-shifting provisions face ongoing legal challenges in both Texas and California.

In both challenges, the plaintiffs claim that the fee-shifting structure violates the supremacy clause because it conflicts with federal law and impermissibly burdens the First Amendment right to petition the government.

The plaintiffs in the California lawsuit—a group of gun sellers, plaintiffs’ attorneys, and gun rights organizations—additionally claim that the law violates the equal protection clause because it singles out the right to seek relief for Second Amendment violations for disfavored treatment.

Strict scrutiny ought to apply, and the law fails that test because there’s “no compelling interest for targeting a particular type of civil rights litigant for unfavorable treatment when exercising the fundamental right to assert constitutional claims,” they argue.

That suit, filed in the US District Court for the Southern District of California on Sept. 26, targets only the fee-shifting provision, which means the discrete issue could be reached there relatively quickly.

Leubsdorf said that he thinks the preemption issue could be difficult to get around.

Anyone suing on Second Amendment grounds will likely file their suit in federal court, where a challenge is most likely to succeed. Those lawsuits are going to fall squarely within 42 U.S.C. §1983, Leubsdorf said.

But Rowe was skeptical that those theoretical plaintiffs would prevail, and called the equal protection claim particularly “shaky.”

Regardless, the fee-shifting scheme is “troubling” as a matter of policy and fairness, Rowe said.

Like Rowe, Paul Bland, Executive Director for Public Justice said his primary concerns were about the policy implications of the fee-shifting scheme than than their legality.

“I am really unsympathetic to the gun companies,” Bland said. “Having said that, I really hate the approach of a law or a contract that is set up in such a way to try to make it impossible for somebody to bring a case when they think their rights are violated.”

“It’s a really dangerous approach to the law he said,” he said.

To contact the reporter on this story: Holly Barker in Washington at hbarker@bloombergindustry.com

To contact the editors responsible for this story: Rob Tricchinelli at rtricchinelli@bloomberglaw.com; Nicholas Datlowe at ndatlowe@bloomberglaw.com; Andrew Harris at aharris@bloomberglaw.com