Some guidance on attorneys' fees in student disability cases

Civil rights lawyers are well aware that, upon winning the case, they will recover attorneys' fees from the losing side. That it true in cases brought under Title VII and the other employment discrimination statutes, as well as constitutional claims under 42 U.S.C. 1983. Not so true for student disability claims brought under the Individuals with Disabilities in Education Act (IDEA). The victorious lawyer has to jump through a hurdle in order to recover fees.

The case is NGB v. New York City Department of Education, decided on July 24. In IDEA cases, the plaintiff's lawyer can only recover fees if the plaintiff was "substantially justified" in rejecting the school district's settlement offer. If not, then no attorneys' fees for any work incurred post-rejection. This rule puts the plaintiff and their lawyers in a tough spot, as they have to carefully analyze the settlement offer, much like a Rule 68 offer in other cases.

In this case, a hearing officer ruled in favor of the plaintiff, who claimed their child was denied a free appropriate public education due to disability. After plaintiff filed this federal lawsuit seeking attorneys' fees, the City offered $17,000. Plaintiff rejected the offer. The district court eventually ruled on the attorneys' fees petition, awarding plaintiff approximately $14,500, about $2,500 less than the City's offer. However, the district court also said plaintiff was "substantially justified" in rejecting the $14,500 offer, as recovering less money than the defendant offered does not always mean the plaintiff was not justified in accepting the offer. As plaintiff had sought more money in the fee motion than $14,500, and had a good faith belief that the district court would have awarded plaintiff that additional money, the plaintiff acted reasonably in proceeding with the fee motion in the first instance.

The Court of Appeals (Calabresi, Lohier and Karas [D.J.]), affirms this reasoning, deciding for the first time "what standard applies in evaluating substantial justification under the IDEA's fee-shifting provision." So the Court looks to Supreme Court cases under the Equal Access to Justice Act, which also has a substantial justification test when it comes to attorneys' fees settlement offers. The Supreme Court holds the standard for substantial justification is "justified to a degree that could satisfy a reasonable person." This is a "reasonableness" test. Following the reasoning of a Third Circuit case that has already explored this issue, the Second Circuit holds that "it is inimical to the purpose of the IDEA to force prevailing parents to accept an offer that they reasonably and in good faith belief faith to provide adequate compensation." In other words, if the parent acted reasonably in saying No to the offer, they may recover fees through an attorneys' fees petition in the district court.

The Second Circuit finds the district court did not abuse its discretion in ruling on the attorneys' fees motion and finding the parent had substantial justification to reject the settlement offer, thus allowing the parent to recover fees incurred post-rejection. This is so even though the trial court awarded plaintiff less money than the settlement offer. The district court's careful analysis on the plaintiff's good faith was not an abuse of discretion, the general rule guiding attorneys' fees motions in federal court. As the Second Circuit often defers to the trial court's judgment on attorneys' fees, plaintiff wins this appeal.