The Value of a Dollar: Prevailing Party Entitlement to Attorney's Fees Under the ADA

Called upon to adjudicate a notable disability discrimination medical examination case, the U.S. Court of Appeals in Chicago has ruled that a court order requiring defendant Rent-A-Center to destroy plaintiffs' management test results conferred a benefit on class action plaintiffs sufficient to make them prevailing parties eligible for an award of reasonable attorney's fees under the Americans with Disabilities Act. Karraker v. Rent-A-Center,No. 06-2617 (7th Cir. July 9, 2007).

Plaintiffs, a class of all past and present employees of Rent-A-Center in Illinois who, seeking promotions, took a management test that included a Multiphasic Personality Inventory ("MMPI") component, maintained that the MMPI was an improper medical test under the ADA. Although the district court already ordered Rent-A-Center to destroy the test results and not to consider the scores or answers in making any employment decisions, it denied plaintiffs' request for attorney's fees. The appeals court reversed.

Guiding the Seventh Circuit's decision for the plaintiffs was a Supreme Court case holding that a plaintiff who sued for $17 million and won $1 in nominal damages could be considered a prevailing party. Farrar v. Hobby, 506 U.S. 103 (1992). In Farrar, the Supreme Court explained that "a plaintiff 'prevails' when actual relief on the merits of his claim materially alters the legal relationship between the parties by modifying the defendant's behavior in a way that directly benefits the plaintiff." Unlike the $1 award in Farrar, the relief at issue in Karraker was an injunction ordering Rent-A-Center to destroy test results that it had ceased using even before plaintiffs filed their lawsuit.

According to the Seventh Circuit, destruction of the results of improperly administered tests—even if the results are no longer being used—is a benefit worth at least as much as the $1 award in Farrar. Defendant's argument that there was no evidence it ever disclosed the test results or ever intended to do so did not convince the Court otherwise. The Court explained, "Without the injunction, there would be nothing to prevent the company from either disclosing the results in the future or allowing their dissemination through negligence."

The Court did not consider the reasonableness of plaintiffs' request for attorney's fees, an issue that was remanded to the district court for further consideration.

As this case demonstrates, monetary relief is not the only basis for finding a party a "prevailing party" entitled to reasonable attorney's fees under the ADA.