Today the Supreme Court granted certiorari in one case of potential interest to the business community. Amicus briefs in support of the petitioners are due on April 15, 1999, and amicus briefs in support of the respondent are due on May 17 (because May 15 is a Saturday). Any questions about this case should be directed to Alan Untereiner (202-778-0656) or Donald Falk (202-778-0174) in our Washington office.

Clean Water Act — Mootness of Private Lawsuit Seeking Civil Penalties for Discontinued Environmental Violations — Availability of Attorneys' Fees Under "Catalyst" Theory. The Supreme Court granted certiorari in Friends of the Earth v. Laidlaw Environmental Services (TOC), Inc., No. 98-822, to determine whether a citizen suit seeking injunctive relief and civil penalties under the Clean Water Act (CWA), 33 U.S.C. § 1365, becomes moot because the defendant has come into compliance with the Act while the action was pending. The Court also granted certiorari to decide whether, if an action does become moot for that reason, a citizen plaintiff nonetheless may be entitled to attorney's fees as "prevailing or substantially prevailing party." Id. § 1365(d).

Laidlaw operates a hazardous waste incinerator that discharges wastewater into the North Tyger River in South Carolina. In June 1992, the plaintiffs filed a citizen suit under the CWA, alleging that the plant had violated the terms of its discharge permits and committed various reporting and monitoring violations. The district court conducted a hearing on liability in 1995 but deferred resolution of the case until a related state administrative hearing was completed.

In January 1997, the district court found that Laidlaw had violated the CWA. Although a small fraction of the violations took place after the complaint was filed, the court found that Laidlaw had been in substantial compliance with its permit since August 1992, shortly after the filing and more than four years before the court's decision. As a result, the district court denied plaintiffs' request for injunctive relief but imposed a civil penalty of $405,800. 956 F. Supp. 568 (D.S.C. 1997).

The Fourth Circuit vacated and remanded with instructions to dismiss the complaint. 149 F.3d 303 (1998). The day before the case was argued on appeal, the Supreme Court decided Steel Co. v. Citizens for a Better Environment, 118 S. Ct. 1003 (1998), holding held that a private citizen lacked standing to sue for violations of the Emergency Planning and Community Right-To-Know Act because, before the complaint was filed, the defendant had brought up to date all filings required under that Act. In particular, the Court held that the payment of civil penalties to the United States Treasury did not "redress a cognizable Article III injury" to the private plaintiff. Id. at 1019 n.4. The Fourth Circuit relied on Steel Co. to conclude that the citizen suit against Laidlaw was moot "because the only remedy currently available to Plaintiffs — civil penalties payable to the government — would not redress any injury Plaintiffs have suffered." 149 F.3d at 307. The court of appeals also held, in a footnote, that plaintiffs' "failure to obtain relief on the merits of their claims precludes any recovery of attorneys' fees or other litigation costs." Id. at 307 n.5.

The Fourth Circuit's holding on mootness appears to be in some tension with Gwaltney of Smithfield, Ltd. v. Chesapeake Bay Foundation, 484 U.S. 49, 64-67 (1987), in which the Court held that private plaintiffs had standing to seek civil penalties under the CWA even after injunctive relief had been denied (and the plaintiffs had not appealed the denial). The court of appeals' conclusion that post-complaint compliance moots a CWA citizen action also appears to conflict with decisions interpreting the CWA after Gwaltney but before Steel Co. See, e.g., Comfort Lake Ass'n v. Dresel Contracting, Inc., 138 F.3d 351 (8th Cir. 1998). And the Fourth Circuit's holding that attorneys' fees are unavailable in these circumstances arguably is in tension with Hewitt v. Helms, 482 U.S. 755, 761 (1987), a civil rights case in which the Court held that plaintiffs may be deemed prevailing parties under private attorney general provisions where, "under pressure of the lawsuit," the defendant "alters his conduct (or threatened conduct) towards the plaintiff that was the basis for the suit." See also Gwaltney, 484 U.S. at 67 n.6 (suggesting that a similar standard may apply under the CWA). Several courts of appeals have held that private plaintiffs may receive attorneys' fees as prevailing parties even if they obtain no relief, so long as the litigation was a "catalyst" for the defendant to change its conduct. See, e.g., Zinn by Blankenship v. Shalala, 35 F.3d 273, 274-76 (7th Cir. 1994).

This case is of obvious interest to businesses that are subject to regulation under the Clean Water Act and other federal statutes that permit private citizens to bring civil enforcement actions. The attorneys' fee issue is of even broader importance, as courts have applied "catalyst" theories under a wide range of environmental, civil rights, and consumer protection statutes.

This Mayer, Brown, Rowe & Maw Supreme Court Docket Report provides information and comments on legal issues and developments of interest to our clients and friends. The foregoing is not a comprehensive treatment of the subject matter covered and is not intended to provide legal advice. Readers should seek specific legal advice before taking any action with respect to the matters discussed herein.