Today, the Court of Appeals affirmed the denial of a fee award to the Plaintiffs’ counsel in the Leandro matter. The case is Hoke County Board of Education v. State of North Carolina.
Plaintiffs filed a motion with the trial court seeking to have the State reimburse them for fees and costs paid to their attorneys in connection with the Leandro litigation. In Leandro I, the North Carolina Supreme Court that found that the North Carolina Constitution guaranteed children the opportunity to receive “a sound basic education” in public schools. In Leandro II, the Supreme Court affirmed the trial court’s conclusion that the State failed to meet its constitutional duty to provide students in Hoke County with the opportunity to obtain a sound basic education. Leandro II also affirmed the trial court’s order requiring the State to take corrective action to comply with the North Carolina Constitution. Since the Supreme Court decided Leandro II, the State has devoted additional financial resources to improve educational opportunities throughout the state, including the creation of the Disadvantaged Student Supplemental Fund (“DSSF”).
During the fourteen years since Leandro was initially filed, Plaintiffs’ counsel devoted over 17,000 hours to this matter. The resulting bill to the Plaintiffs was approximately $2.5 million. While the trial court commended Plaintiffs’ counsel for their “excellent work” and recognized that they “performed a significant public service,” it denied the Plaintiffs’ motion for fees on the grounds there were no statutory provisions or common law doctrines that permitted an award of attorneys’ fees.
On appeal, Plaintiffs initially argued that the trial court erred in denying their motion because they were contesting state action and therefore could to recover attorneys’ fees under North Carolina General Statutes Section 6-19.1. Section 6-19.1 gives courts the discretion to award attorneys’ fees to a prevailing party, other than the State, in a civil action “brought by the State or brought by a party who is contesting State action pursuant to G.S. 150B-43 or any other appropriate provision of state law[.]” The Court of Appeals rejected the Plaintiffs’ argument that they were “contesting state action” because the Leandro decisions were not based upon affirmative action by the state, but instead were based upon the State’s failure to act. The COA concluded that “[a]lthough the State may have failed to act, its failure to act in this instance cannot be extrapolated into ‘state action’ or viewed as the equivalent of ‘pressing a claim against’ plaintiffs as envisioned by the statute.”
Plaintiffs’ also argued that they were entitled to a share of the DSSF as attorneys’ fees under the common fund doctrine (“CFD”). The CFD allows an award of attorneys’ fees to a prevailing party who sought “the preservation, protection, or increase of a common fund or of common property[.]” In addition to establishing the existence of a common fund, the prevailing party must demonstrate that the class of persons benefiting from the lawsuit is small and easily identifiable, the benefits from the suit can be traced accurately, and the costs can be shifted to those benefiting from the decision with some precision. If the action benefits the public at large or “vindicates a general social grievance,” the CFD does not apply.
The COA held that Plaintiffs could not recover their fees from the DSSF under the CFD. In the COA’s opinion, the Leandro decisions vindicated a general social interest instead of individual complaints. This case also presented a situation where there was no precise way to ascertain the benefit received by each member of the public as a result of the decisions. Finally, the COA held that application of the CFD was inappropriate because the percentage of the DSSF awarded to each plaintiff for their attorneys’ fees would greatly exceeded their individual share of the DSSF.