‘Too stringent’: Court tosses precedent, joins other circuits on attorneys’ fees for injunction wins

Joining every other circuit to decide the issue, a divided 4th U.S. Circuit Court of Appeals has overruled its precedent that preliminary injunctions can’t convey “prevailing party” status to a plaintiff, which precluded awards of attorney’s fees.

A Fourth Circuit panel upheld an earlier decision from the Western District of Virginia based on its 2002 holding in Smyth ex rel. Smyth v. Rivero but granted a rehearing en banc.

Writing for the majority, U.S. Circuit Judge Pamela A. Harris concluded that Smyth was “too stringent.”

“Although many preliminary injunctions represent only ‘a transient victory at the threshold of an action,’ some provide enduring, merits-based relief that satisfies all the requisites of the prevailing party standard,” she wrote. “Because the plaintiffs here ‘prevailed’ in every sense needed to make them eligible for a fee award, we vacate the district court’s denial of attorney’s fees and remand for further proceedings.”

Harris was joined by U.S. Circuit Chief Judge Albert Diaz, and U.S. Circuit Judges Paul V. Niemeyer, Robert B. King, Roger L. Gregory, James Andrew Wynn and Stephanie D. Thacker.

U.S. Circuit Judge A. Marvin Quattlebaum Jr., joined by U.S. Circuit Judges G. Steven Agee, Julius N. Richardson and Allison Jones Rushing, dissented.

“In my view, the majority’s decision misconstrues the meaning of ‘prevailing party’ under § 1988(b) and strays from Supreme Court precedent,” Quattlebaum wrote. “In contrast, Smyth is faithful to both.”

The opinion is Stinnie, et al., v. Newcomb (VLW 023-2-210).

Injunction granted

In 2018, the Western District of Virginia granted a preliminary injunction to indigent plaintiffs who alleged the suspension of their driver’s licenses by the state for unpaid court fees was unconstitutional.

The district court concluded that the plaintiffs were likely to succeed on the merits and satisfied the factors set forth by the U.S. Supreme Court in 2008’s Winter v. Natural Resources Defense Council, Inc.

The district court preliminarily enjoined enforcement of Virginia Code § 46.2-395 and ordered the reinstatement of the plaintiffs’ licenses. Over the plaintiffs’ objections, the court stayed the case when the Virginia General Assembly suspended the statute.

Once the legislature eliminated the statute, the district court dismissed the plaintiffs’ case as moot.

Fees denied

The plaintiffs requested attorneys’ fees under 42 U.S.C. § 1988(b), which gives the court discretion to award reasonable attorneys’ fees to the “prevailing party” in certain civil rights actions.

The state pointed to Smyth to argue that preliminary relief was “necessarily uncertain” and the product of an “incomplete examination of the merits” that “by no means represents a determination that the claim in question will or ought to succeed ultimately.”

The Fourth Circuit concluded in Smyth that preliminary injunctions were — without exception — “not the stuff of which legal victories are made.”

Although compelled to recommend denial, a magistrate judge noted that Smyth “stands alone,” and the plaintiffs would be prevailing parties under “a board consensus among other circuits,” which hold that a “merits-based preliminary injunction that is not undone or otherwise modified by a later court order may confer prevailing party status.”

The district court adopted the magistrate’s recommendation. After a panel of the Fourth Circuit rejected the plaintiffs’ argument to overturn Smyth, the court granted a rehearing en banc.

Three developments

While the Smyth court pointed to the lenient equitable standard for granting preliminary relief for its bright-line fees prohibition, Harris said three developments now compelled the court to revisit that holding.

First was the U.S. Supreme Court’s decision in Winter, which clarified that a plaintiff seeking preliminary relief must first make a “clear showing” that their claim will likely succeed on the merits.

“Winter’s stringent merits requirement means that we may revisit Smyth without opening the door to the risk that so concerned the court there: that a plaintiff may prevail, and thus be entitled to fees, based on a preliminary injunction that had virtually nothing to do with the merits of her claim,” Harris explained.

The second development was that Smyth had become a distinct outlier among other circuits.

“Since we decided Smyth, almost every other circuit has weighed in on the question before us. And all have concluded that a plaintiff whose case is rendered moot after she wins a preliminary injunction — so that the injunction by definition cannot be ‘reversed, dissolved, or otherwise undone’ by a later order — may qualify as a prevailing party in appropriate circumstances,” Harris said.

The courts explained in these cases that “although the plaintiff never secured a final judgment granting permanent injunctive relief, the preliminary injunction ended up affording all the relief that proved necessary,” the judge added.

Third, Congress enacted § 1988(b) “‘in furtherance of the policy of facilitating access to judicial process for the redress of civil rights grievances.’ Our circuit’s rule, however, may undermine that policy by allowing government defendants to game the system,” Harris observed.

“As this case so unfortunately demonstrates, instead of opening the courthouse doors to meritorious civil rights claimants, Smyth’s rule gives the government the key, allowing it to lock out civil rights plaintiffs whenever their success seems imminent,” the judge wrote.

Having overruled Smyth, the Fourth Circuit articulated a new standard.

“When a preliminary injunction provides the plaintiff concrete, irreversible relief on the merits of her claim and becomes moot before final judgment because no further court-ordered assistance proves necessary, the subsequent mootness of the case does not preclude an award of attorney’s fees,” Harris wrote.

‘Actual relief’

Not every preliminary injunction would provide the necessary “actual relief” to render a party prevailing, Harris cautioned.

“But here — where the district court enjoined a longstanding statute and ordered affirmative relief, much to the plaintiffs’ concreate benefit — this first requirement is easily satisfied,” she said.

It was clear that the plaintiffs’ relief was granted sufficiently on the merits.

“There is little question that a preliminary injunction entails a ‘judicially sanctioned change’ in the parties’ legal relationship,” Harris noted. “And any concerns we had about this judicially sanctioned change resting only on the equities and not ‘on the merits,’ … were addressed by the Supreme Court in Winter.”

The matter returns to the Western District to determine what fee is reasonable.