FOR PUBLICATION
UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT
UNITED STATES OF AMERICA,
Plaintiff-Appellee, No. 07-56549
v. D.C. No.
CV-05-06703-
$186,416.00 IN U.S. CURRENCY,
Defendant. SVW-SH
Central District of
California,
UNITED MEDICAL CAREGIVERS Los Angeles
CLINIC, INC., ORDER
Claimant-Appellant.
Filed April 26, 2011
Before: Michael Daly Hawkins, Marsha S. Berzon, and
Richard R. Clifton, Circuit Judges.
Order;
Dissent by Judge Berzon
COUNSEL
Steven R. Welk, U.S. Department of Justice, for the plaintiff-
appellee.
Paul L. Gabbert, Santa Monica, California, for the claimant-
appellant.
Eric Honig, Marina Del Rey, California, for amicus curiae
National Association of Criminal Defense Lawyers.
5389
5390 UNITED STATES v. $186,416.00 IN U.S. CURRENCY
ORDER
Claimant United Medical Caregivers Clinic (“UMCC”)
prevailed in a civil forfeiture proceeding initiated by the
United States. See United States v. $186,416.00 in U.S. Cur-
rency, 590 F.3d 942 (9th Cir. 2009). The Civil Asset Forfei-
ture Reform Act (“CAFRA”) provides that in “any civil
proceeding to forfeit property under any provision of Federal
law in which the claimant substantially prevails, the United
States shall be liable for reasonable attorney fees and other lit-
igation costs reasonably incurred by the claimant.” 28 U.S.C.
§ 2465(b)(1)(A).
UMCC has moved for an award of attorney fees pursuant
to CAFRA and has specifically requested that the fee award
be paid directly to its counsel rather than to UMCC itself, as
the claimant. The government does not contest UMCC’s enti-
tlement to fees as a substantially prevailing party but has
objected to the amount sought by the motion and has opposed
the request that the fee award be paid directly to UMCC’s
attorney.
We refer the matter to the Appellate Commissioner to cal-
culate the amount of an appropriate fee award. We instruct the
Appellate Commissioner to use the lodestar method, and con-
clude that the actual fee agreement between UMCC and its
attorney may be taken into account but is not by itself deter-
minative in calculating the appropriate amount of the fee
award. As for the payee of the fee award, we conclude that
attorney fees awarded under CAFRA are payable to the
claimant, not to claimant’s attorney, so the fee awarded here
will be payable to UMCC.
1. The amount of the fee award
CAFRA does not specify precisely how fee awards should
be calculated. The statute simply provides that the govern-
ment is liable for “reasonable attorney fees and other litiga-
UNITED STATES v. $186,416.00 IN U.S. CURRENCY 5391
tion costs reasonably incurred by the claimant.” 28 U.S.C.
§ 2465(b)(1)(A).
This court has not yet addressed the proper method of
determining a fee award under CAFRA. Other courts have
used the lodestar method to determine the amount to be
awarded under CAFRA. See U.S. v. One Star Class Sloop
Sailboat, 546 F.3d 26, 37-8 (1st Cir. 2008); U.S. v. $60,201
in U.S. Currency, 291 F. Supp. 2d 1126, 1129-1130 (C.D.
Cal. 2003). In this case UMCC proposes that its fees be deter-
mined that way, but the government argues that the lodestar
approach should not be used and that the fee should primarily
be based on the actual agreement between UMCC and its
attorney. UMCC has declined to make its fee agreement avail-
able, and the government asks that its production be ordered.
The lodestar approach is the method customarily used to
determine attorney fees under fee-shifting statutes. See Blan-
chard v. Bergeron, 489 U.S. 87, 93-94 (1989) (the lodestar
method determines the statutory fee award under 42 U.S.C.
§ 1988); Nadarajah v. Holder, 569 F.3d. 906, 916 (9th Cir.
2009) (EAJA). We see no reason to depart from that approach
under CAFRA and conclude that the lodestar method should
be used in calculating fees in this case.
That does not mean that the actual fee agreement cannot be
relevant to the fee determination. Under § 1988 and EAJA,
the actual fee agreement does not act as a cap on the amount
of statutory attorney fees awarded. See Blanchard, 489 U.S.
at 93-94; Corder v. Gates, 947 F. 2d 374, 377-78 (9th Cir.
1991); Nadarajah, 569 F.3d. at 916. However, the agreement
can be considered when determining a reasonable fee under
the lodestar approach. See Blanchard, 489 U.S. at 93; Corder,
947 F. 2d at 377-8. We see no reason to depart from this prac-
tice in the CAFRA context, either. UMCC is required to dis-
close its agreement with its attorney.
This matter is referred to the Appellate Commissioner for
the purpose of determining the amount of reasonable attorney
5392 UNITED STATES v. $186,416.00 IN U.S. CURRENCY
fees and other litigation costs reasonably incurred by UMCC,
consistent with this order. The Appellate Commissioner may
issue an order awarding fees and other litigation costs. Any
such order is subject to a motion for reconsideration by this
panel. See Circuit Rule 39-1.9.
2. The CAFRA fee award should be paid to the claimant
CAFRA does not explicitly identify to whom an award for
fees and costs under that statute are to be paid. It simply says
that “the United States shall be liable for reasonable attorney
fees and other litigation costs reasonably incurred by the
claimant.” 28 U.S.C. § 2465(b)(1)(A).
Prior to CAFRA’s enactment in 2000, attorney fees could
be sought by successful claimants in forfeiture actions under
the Equal Access to Justice Act (“EAJA”), 28 U.S.C. § 2412
(d). See $60,201.00 U.S. Currency, 291 F. Supp. 2d at 1130.
EAJA provides that a court “shall award to a prevailing party
other than the United States fees and other expenses” in speci-
fied circumstances. 28 U.S.C. § 2412 (d)(1)(A). The language
used in CAFRA and EAJA is somewhat different. EAJA spe-
cifically assigns fee awards to “the prevailing party,” but
CAFRA does not, stating only that “the United States shall be
liable for reasonable attorney fees.” 28 U.S.C.
§ 2465(b)(1)(A).
UMCC reads this difference to mean that CAFRA fees
should go directly to attorneys instead of the prevailing liti-
gant. Following the Supreme Court’s recent decision in Ast-
rue v. Ratliff, 130 S. Ct. 2521 (2010), we conclude otherwise.
Ratliff resolved a longstanding circuit split on the question
of whether fee awards under EAJA were payable to the party
or the attorney by holding that EAJA awards are to be paid
to the prevailing litigant. Id. at 2525-29. In part, the Court
based its decision on the specific language in EAJA, noted
above, directing payments to the “prevailing party.”
UNITED STATES v. $186,416.00 IN U.S. CURRENCY 5393
“[P]revailing party is a ‘term of art’ that refers to the prevail-
ing litigant.” Id. at 2525. CAFRA does not contain similar
language directing fees to the prevailing party.
The Court’s decision in Ratliff did not stop there, however.
It went on to highlight the absence of language in EAJA
explicitly directing fees to attorneys. Comparing EAJA with
a provision in the Social Security Act making fee awards pay-
able “to such attorney,” see 42 U.S.C. § 406 (b)(1)(A), the
Court concluded that “given the stark contrast between the
SSA’s express authorization of direct payments to attorneys”
and the absence of such language in EAJA, it would not inter-
pret EAJA to “contain a direct fee requirement absent clear
textual evidence supporting such an interpretation.” Ratliff,
130 S. Ct. at 2527-28. As the Court noted, Congress “knows
how to make fees awards payable directly to attorneys where
it desires to do so.” Id. at 2527.
Ratliff counsels that in the absence of explicit instructions
from Congress awarding fees to the attorney, direct payment
to the attorney should not be presumed. Id. There is no such
explicit instruction in CAFRA.
Direct payment to the attorney is the exception, not the
rule. “The Supreme Court has made it clear that, in general,
statutes bestow fees on parties, not upon attorneys.” United
States ex rel. Virani v. Jerry M. Lewis Truck Parts & Equip-
ment, 89 F.3d 574, 577 (9th Cir. 1996). For example, attorney
fee awards under 42 U.S.C. § 1988 or under the antitrust laws
are payable to parties. See Evans v. Jeff D., 475 U.S. 717,
731-33 (1986); Gilbrook v. City of Westminster, 177 F.3d
839, 875 (9th Cir. 1999) (“In the absence of a contractual
assignment to counsel, § 1988 requires that attorney fee
awards be made directly to the prevailing party”); Image
Technical Service, Inc. v. Eastman Kodak Co., 136 F.3d 1354,
1357 (9th Cir. 1998) (“Any fee award in an antitrust case goes
to the successful plaintiff, not to plaintiff’s counsel.”). Unless
5394 UNITED STATES v. $186,416.00 IN U.S. CURRENCY
the statute specifies payment to the litigant’s attorney, pay-
ment to the attorney is not assumed.
UMCC argues that by not including EAJA’s language man-
dating fee awards to the “prevailing party” in CAFRA, Con-
gress signaled its intent to reject EAJA’s method of awarding
attorney fees. Without further evidence, the use of the passive
phrase “the United States shall be liable for reasonable attor-
ney fees” in CAFRA, rather than “shall award to a prevailing
party” in EAJA, cannot be read as a clear expression of con-
gressional intent to create a direct fee award to counsel. If, as
UMCC argues, Congress intended to liberalize fee awards in
forfeiture cases with CAFRA, it did so by eliminating EAJA’s
language exempting the government for payment of fees
where the “position of the United States was substantially jus-
tified,” not by providing for fee awards to be paid directly to
attorneys. 28 U.S.C. § 2465(b)(1)(A). Neither legislative his-
tory nor “clear textual evidence,” Ratliff, 130 S. Ct. at 2528,
supports UMCC’s contention that direct fee payment to coun-
sel was one of the reforms envisioned by Congress in CAFRA.1
UMCC attempts to extract a direct fee requirement from
two phrases in 28 U.S.C. § 2465(b)(1)(A) — that the govern-
ment is “liable for” attorney fees “incurred by the claimant”
(emphasis added). This effort is not persuasive. The word “li-
able,” as UMCC agrees, means to be “legally obligated.” See
Black’s Law Dictionary (9th ed. 2009). It does not indicate to
whom the liability is owed. UMCC is right that under fee-
shifting statutes, fees may be considered to be “incurred” by
the client even though the client was represented free of
charge. See Nadarajah, 569 F.3d. at 916 (EAJA); Phillips v.
1
While the legislative history does not clearly indicate the intended
recipient of the fee award, the remarks of CAFRA’s legislative supporters
suggest that it was intended to award “attorney fees and costs to property
owners who prevail against the government in civil forfeiture cases”
(emphasis added). Statement of Sen. Hatch, 145 Cong. Rec S. 14,629
(Nov. 16, 1999).
UNITED STATES v. $186,416.00 IN U.S. CURRENCY 5395
General Services Admin., 924 F.2d 1577, 1583 (D.C. Cir.
1991) (Civil Service Reform Act). But a statute that makes
the government “liable for” fees “incurred by” a party does
not necessarily entitle counsel to a direct fee award.
UMCC and amicus curiae National Association of Criminal
Defense Lawyers (NACDL), appearing in support of
UMCC’s position, offer policy justifications in support of
awarding the fees and costs to the claimant’s attorney directly
rather than to the client. If fee awards are paid to the claimant,
they argue, attorneys may not be paid for their work, thus
reducing the likelihood of competent representation and
defeating congressional intent. It is pointed out that CAFRA
fees due to be paid to the client may be offset in part or in full
by the client’s preexisting debts to the government, leaving
nothing to be paid to the attorney.2 That argument did not per-
suade the Supreme Court in Ratliff, however. The Court
explicitly noted that EAJA fees are “subject to offset where
a litigant has outstanding federal debts.” Ratliff, 130 S. Ct. at
2528. The government in that case actually asserted the right
to offset a debt owed by the claimant to the federal govern-
ment against the fee award, producing exactly the result pro-
jected by UMCC’s argument, but that did not lead the Court
to conclude that payment of EAJA fees should be made
directly to counsel. There is nothing in the background, text,
or purpose of CAFRA that suggests that the same result
should not apply to CAFRA fees. UMCC’s policy arguments
2
The papers filed in this case do not reveal whether or why this might
have practical impact in this case. The Supreme Court, speaking in partic-
ular with regard to fees awarded under 42 U.S.C. § 1988, has noted “the
practical reality that attorneys are the beneficiaries and, almost always, the
ultimate recipients of the fees” awarded under the statute. Ratliff, 130 S.
Ct. at 2529. We have not been informed about any offset the federal gov-
ernment might claim against UMCC. Nor have we been informed of any
other for concern on the part of UMCC’s attorney that he might not get
paid if the fee award is not paid directly to him. Nonetheless, the parties
have disputed the issue, and our order will need to identify to whom pay-
ment should be made.
5396 UNITED STATES v. $186,416.00 IN U.S. CURRENCY
must be made to Congress, which could draft the fee award
statute to specify payment to counsel. CAFRA was not writ-
ten that way.
We decline to order direct payment to counsel. The attor-
ney fees and litigation costs awarded in this case are payable
to UMCC as the successful claimant.
The motion is referred to the Appellate Commissioner for
further proceedings consistent with this order.
REFERRED TO THE APPELLATE COMMIS-
SIONER
BERZON, Circuit Judge, dissenting:
I respectfully dissent.
I agree with the majority’s conclusion that fees awarded
under the Civil Asset Forfeiture Reform Act (CAFRA) should
be determined using the lodestar approach. I do not agree,
however, that the CAFRA attorney fees provision requires
that attorney fees be paid directly to the client, rather than to
the attorney. I would hold that the statutory provision leaves
the question whether fees are paid to the attorney or to the cli-
ent to the discretion of the district court, to be determined on
a case-by-case basis.
A. Astrue v. Ratliff
The majority relies heavily for its interpretation of the
CAFRA attorney fees provision on Astrue v. Ratliff, 130 S.
Ct. 2521 (2010). Ratliff held that attorney fees under a partic-
ular statute, the Equal Access to Justice Act (EAJA), 28
U.S.C. § 2412(d), are paid directly to the client. Although I
agree that Ratliff is helpful as an interpretive guide, its guid-
UNITED STATES v. $186,416.00 IN U.S. CURRENCY 5397
ance leads, in my view, down quite a different path than the
one the majority follows.
The interpretative method used in Ratliff is heavily textual,
concentrating on the precise wording of EAJA. There is no
mention in Ratliff of any presumption that fees are usually
awarded to the attorney or to the client. Instead, the only pre-
sumption is that the terms, structure, and history of each stat-
ute should govern.
On examination, none of the factors that the Court found
persuasive in Ratliff as to why EAJA directs fees to the client
are present in CAFRA. And some of the factors relied on in
Ratliff support the conclusion that fees awarded under
CAFRA need not always be paid to the client.
First, and most importantly, the text of EAJA directs that
courts “shall award to a prevailing party . . . fees and other
expenses . . . incurred by that party . . . .” 28 U.S.C.
§ 2412(d)(1)(A) (emphasis added). The Court in Ratliff held
that “prevailing party” refers to the “prevailing litigant,” and
so concluded that the text of EAJA, literally read, directs that
fees must be paid to the litigant, meaning the client. 130 S. Ct.
at 2525.
CAFRA contains no such express direction. The CAFRA
attorney fees provision states only that “the United States
shall be liable for . . . reasonable attorney fees . . . .” 28
U.S.C. § 2465(b)(1). It doesn’t say to whom the United States
must pay the fees. Given the substantial weight that the Court
in Ratliff placed on the phrase “to a prevailing party,” the
absence of a parallel phrase in CAFRA is sufficient to subvert
any comparison to EAJA or reliance on Ratliff in this case.1
1
One of the few textual similarities between CAFRA and EAJA is the
phrase “attorney fees” itself. The Court in Ratliff rejected the argument
that use of that phrase established that fees were payable to the attorney;
the Court found the argument insufficient to overcome the opposite
5398 UNITED STATES v. $186,416.00 IN U.S. CURRENCY
Second, other textual differences between EAJA and
CAFRA further undermine the majority’s reliance on Ratliff’s
interpretation of EAJA. The Court’s interpretation was but-
tressed by subsections of EAJA that “distinguish the party
who receives the fees award (the litigant) from the attorney
who performed the work that generated the fees.” Id. at 2525-
26. For instance, EAJA requires a “prevailing party” to sub-
mit “an itemized statement from any attorney,” id. at 2526,
implying that the term “prevailing party” is not a reference to
the attorney. In contrast, no subsection of CAFRA differenti-
ates between the claimant and the claimant’s attorney.
Similarly, the text of EAJA “award[s] to a prevailing party”
“ ‘the reasonable expenses of expert witnesses’ and ‘any
study, analysis, engineering report, test, or project,’ ” yet no
party in Ratliff suggested that those costs were “payable
directly to the vendors who provide[d] the relevant services.”
Id. at 2527 (quoting 28 U.S.C. § 2412(d)(2)(A)). In other
words, the term “prevailing party” in EAJA could not be read
as including the prevailing litigant’s attorney without creating
the anomaly that “prevailing party” would also include other
vendors involved in the litigation. Thus, the Court held that
the term “prevailing party” referred to the prevailing litigant,
and that the text of EAJA treats “attorneys on par with other
service providers”—they all must recover their fees from the
litigant. Id.
CAFRA, unlike EAJA, does not use language awarding
expert expenses “to a prevailing party” or “to the claimant.”
Instead, CAFRA simply provides that the “United States shall
be liable for . . . attorney fees and other litigation costs . . . .”
requirement mandated by the “plain text” of EAJA—namely, that EAJA
awards fees to “prevailing parties.” 130 S. Ct. at 2526-27. Beyond sug-
gesting that we shouldn’t rest our interpretation of CAFRA solely on
inclusion of the phrase “attorney fees,” the Court’s treatment of the argu-
ment does not provide much guidance for the question before us.
UNITED STATES v. $186,416.00 IN U.S. CURRENCY 5399
28 U.S.C. § 2465(b)(1)(A). So the anomaly identified in
Ratliff that would arise if EAJA were interpreted to award
fees directly to the attorney doesn’t arise in CAFRA.
Third, the Court contrasted the language of EAJA to that of
the Social Security Act (SSA), which expressly authorizes
payment of fee awards directly to attorneys. Id. at 2527-28
(citing 42 U.S.C. § 406(b)(1)(A) (allowing for the “payment
to such attorney” of attorney fees)). The Court took this statu-
tory difference to suggest that “Congress knows how to make
fees awards payable directly to attorneys where it desires to
do so.” Id. That comparison is consistent with the notion that
a provision including statutory text different from both EAJA
and SSA connotes different results. In other words, Congress
has made fees payable directly to attorneys (SSA) and directly
to prevailing parties (EAJA), but CAFRA does neither, so
neither course should follow.
Finally, the textual differences between CAFRA and EAJA
are especially pertinent given that, prior to the passage of
CAFRA, forfeiture claimants had to rely on EAJA to seek fee
awards in forfeiture cases. See, e.g., United States v. 22249
Dolorosa St., 190 F.3d 977, 981-82 (9th Cir. 1999). As Con-
gress was presumably aware of the text of EAJA, the textual
divergence in CAFRA should be given some import. See, e.g.,
Corley v. United States, 129 S. Ct. 1558, 1567 (2009) (apply-
ing presumption that meaning should be ascribed to differ-
ences in statutory texts).
In sum, the Court’s analysis in Ratliff was a textual one, a
mode of analysis that points to a different result under
CAFRA than under EAJA. The Court made no mention of a
presumption that fees are ordinarily awarded to either the
party or the attorney.
Nor is any such presumption discernible in other caselaw.
The majority’s observation that statutes ordinarily bestow fees
on parties (not attorneys) might be correct as a descriptive
5400 UNITED STATES v. $186,416.00 IN U.S. CURRENCY
matter, see Maj. Op. at 5393-94, but the text of the statutes
identified by the majority specifically direct payment to par-
ties, and so cases interpreting those provisions provide no
guidance here.
For example, the majority relies on a statement in United
States ex rel. Virani v. Jerry M. Lewis Truck Parts & Equip-
ment, 89 F.3d 574 (9th Cir. 1996) that “[t]he Supreme Court
has made it clear that, in general, statutes bestow fees upon
parties, not upon attorneys.” Id. at 577. To support that propo-
sition, the Virani court cited cases that interpreted the attorney
fees provision in 42 U.S.C. § 1988. Id. (citing Evans v. Jeff
D., 475 U.S. 717, 731-33 (1986); Venegas v. Mitchell, 495
U.S. 82, 88 (1990); Willard v. City of Los Angeles, 803 F.2d
526, 527 (9th Cir. 1986)). The text of § 1988, unlike CAFRA,
directs fees to the “prevailing party.” See 42 U.S.C. § 1988(b)
(“[T]he court, in its discretion, may allow the prevailing party
. . . a reasonable attorney’s fee.” (emphasis added)).2 Like-
wise, the majority points to cases holding that fee awards in
antitrust cases go to successful plaintiffs, not plaintiffs’ coun-
sel. See Maj. Op. at 5393-94 (citing Image Technical Serv.,
Inc. v. Eastman Kodak Co., 136 F.3d 1354, 1357 (9th Cir.
1998)). But the text of the fees provisions pertinent to anti-
trust cases direct fees to the “person who shall be injured . . .
by reason of anything forbidden in the antitrust laws,” mean-
ing the plaintiff, not the plaintiff’s attorney. 15 U.S.C.
§ 15(a); id. § 26 (“[T]he court shall award the cost of suit,
including a reasonable attorney’s fee, to such plaintiff.”).
In other words, the cases identified by the majority simply
interpret provisions that expressly direct fees to plaintiffs
rather than to plaintiffs’ attorneys; they apply no presumption
of such a result. And, in fact, Virani itself (in which we
2
Moreover, the cases cited in Virani concern whether a client can waive
fees. Thus, the court in Virani meant only that the right to fees belongs
to the client and so is waivable by him as part of the litigation. The cases
actually do not address to whom fees are payable if awarded.
UNITED STATES v. $186,416.00 IN U.S. CURRENCY 5401
observed that statutes generally bestow fees on parties) did
not apply any such presumption. Instead, it held that the pay-
ment of fees under the False Claims Act must be made
directly to the plaintiff’s counsel, even though the text of the
provision at issue could be read as directing that fees be paid
to the client. See 89 F.3d at 578 (interpreting 31 U.S.C.
§ 3730(d)(1), which provides that “qui tam plaintiff[s]” “shall
also receive an amount for reasonable expenses which the
court finds to have been necessarily incurred, plus reasonable
attorneys’ fees and costs”). I therefore cannot agree with the
majority that after Ratliff, “a clear expression of congressional
intent to create a direct fee award to counsel” is necessary.
Maj. Op. at 5394. Instead, Ratliff counsels a statute-specific
approach to the question, devoid of any universal rule, pre-
sumption, or clear statement requirement.
B. The Statutory Text of CAFRA
Proceeding in that fashion, and so without the presumption
or clear statement requirement applied by the majority, I am
not persuaded that there are statute-specific reasons for con-
cluding that fees under CAFRA must always be paid directly
to the client.
To support its argument that CAFRA fees should be uni-
versally awarded to litigants, not attorneys, the government
first points out that the subsection containing CAFRA’s attor-
ney fee provision, 28 U.S.C. § 2465(b)(1), provides for the
award of three things: (1) attorney fees and litigation costs;
(2) post-judgment interest; and (3) either actual interest paid
to the government resulting from investment of the disputed
property or an imputed amount of interest where no interest
was actually earned. The government argues that, because
interest would almost certainly be paid directly to the claim-
ant, payment of attorney fees should not be treated differently.
But the statutory text of CAFRA does not require that con-
clusion. There is no reason to think that all payments provided
5402 UNITED STATES v. $186,416.00 IN U.S. CURRENCY
for by subsection (b)(1) should be payable to the same person.
Subsection (b)(1) provides that the “United States shall be lia-
ble for” those three payments, but it does not indicate to
whom they are to be paid. The neutral language, applicable to
all three kinds of payments, most sensibly contemplates pay-
ment to whomever is appropriate—for interest, to the claim-
ant, and for attorney fees, to the attorney or the client,
depending on circumstances such as whether the client has
already paid the fees.
Because there is nothing in subsection (b)(1) requiring that
fees be paid to the claimant, the government advances a dif-
ferent argument premised on another subsection of CAFRA.
The government points out that subsection (b)(2)(A) provides
that “[t]he United States shall not be required to disgorge the
value of any intangible benefits nor make any other payments
to the claimant not specifically authorized by this subsection.”
28 U.S.C. § 2465(b)(2)(A) (emphasis added). The govern-
ment maintains that the reference to “other payments to the
claimant” in (b)(2)(A) is a cross-reference to the three pay-
ments listed in subsection (b)(1), mentioned above. Therefore,
the argument goes, attorney fees are “payments to the claim-
ant,” not the attorney.
The government’s suggestion that subsection (b)(2)(A)
cross-references (b)(1) is, in my view, incorrect. Again, sub-
section (b)(2)(A) reads: “The United States shall not be
required to disgorge the value of any intangible benefits nor
make any other payments to the claimant not specifically
authorized by this subsection.” 28 U.S.C. § 2465(b)(2)(A)
(emphasis added). The “other payments to the claimant”
acknowledged in (b)(2)(A) is most naturally read as a refer-
ence to the “other payments to the claimant” that are men-
tioned in that same sentence “the value of any intangible
benefits.” Id. In contrast, with regard to the liability created
by subsection (b)(1), no “payments to the claimant” are “spe-
cifically authorized.” Rather, subsection (b)(1) establishes lia-
bility, but, as we have seen, that subsection does not indicate
UNITED STATES v. $186,416.00 IN U.S. CURRENCY 5403
the person to whom the payment is to be directed. So if one
reads subsection (b)(2)(A) as a cross-reference to subsection
(b)(1), the net effect seems to be the opposite of the one for
which the government argues: As subsection (b)(1) does not
specifically authorize “payments to the claimant,” it must be
that the payments specified in subsection (b)(1) are not to be
made to the claimant, but to someone else. That result, how-
ever, would be an odd and unlikely way of dictating that fee
awards are not made to claimants. The more sensible interpre-
tation is that subsection (b)(2)(A) is self-contained and does
not affect subsection (b)(1) at all.
The government next emphasizes that subsection (b)(1)(A)
reads “reasonable attorney fees and other litigation costs rea-
sonably incurred by the claimant.” 28 U.S.C. § 2465(b)(1)(A)
(emphasis added). According to the government, the statutory
scheme is compensatory and contemplates making a claimant
whole. The government maintains that ordering payment to
the claimant for those costs he agreed to pay would be consis-
tent with this compensatory scheme, whereas payment
directly to the attorney without regard to the actual payment
agreement would not further the statute’s compensatory goals.3
This argument is no more successful than the converse
argument—that the phrase “incurred by the claimant” indi-
cates that fees are to be paid to the attorney—correctly
rejected by the majority. As noted by the majority, EAJA, like
CAFRA, requires that recoverable fees be “incurred” by the
client, yet prevailing parties are entitled to fees under EAJA
even if they were represented free of charge. See Nadarajah
v. Holder, 569 F.3d 906, 916 (9th Cir. 2009). Just as “a statute
that makes the government ‘liable for’ fees ‘incurred by’ a
3
This argument dovetails with the government’s position, properly
rejected by the majority, that the traditional lodestar method is not the
appropriate standard for the calculation of fees under CAFRA, and instead
the calculation should be based on what the claimant agreed to pay his
counsel.
5404 UNITED STATES v. $186,416.00 IN U.S. CURRENCY
party does not necessarily entitle counsel to a direct fee
award,” Maj. Op. at 5395 (emphasis added), that language
likewise does not necessarily mean that the fees are payable
to the claimant rather than the lawyer.
Instead, the consideration that fees can be “incurred by” a
client who did not agree to or actually pay any fees indicates
to me that the choice of the neutral “is liable for” terminology
was deliberate, and connotes similar flexibility in determining
to whom the fees are to be paid. Paying fees directly to the
client in instances where the client did not pay the attorney,
or paid an amount less than market rates, could lead to a
windfall to the client, or to the client’s creditors. The majori-
ty’s position does not account for this windfall possibility at
all.
C. CAFRA Permits District Courts to Direct Fee
Awards to Litigants or Their Attorneys
The sum of the matter is that the statutory text of CAFRA
doesn’t expressly direct fees to the client or to the attorney,
and the textual arguments advanced by the government don’t
mandate a particular result. In other words, CAFRA isn’t
directly analogous either to EAJA (directing fees to the client)
or to SSA (directing fees to the lawyer).
What EAJA and the SSA do show, as already noted, is that
Congress is perfectly capable of making clear to whom the
court is to order payment of fees, yet chose in CAFRA to use
passive, neutral language. Compare 28 U.S.C. § 2412(d)
(EAJA) and 42 U.S.C. § 406(b)(1)(A) (SSA) with 28 U.S.C.
§ 2465(b)(1) (CAFRA). It did so even though fees were until
then being awarded in forfeiture circumstances under EAJA,
so there was a readily applicable model had Congress
intended for fees to be universally paid to claimants. See, e.g.,
22249 Dolorosa St., 190 F.3d at 981-82 (discussing applica-
tion of EAJA in forfeiture action).
UNITED STATES v. $186,416.00 IN U.S. CURRENCY 5405
This choice, it seems to me, is best implemented by permit-
ting district courts to direct fees to either the claimant or the
attorney, depending on the circumstances. District courts
faced with such a determination might consider: (1) the par-
ticulars of the agreement between the attorney and the client;
(2) the likelihood that the attorney would be adequately com-
pensated if fees were paid to the client; and (3) whether pay-
ment to the client or to the attorney would best further the
goals of CAFRA.
That approach would allow district courts to avoid the
windfall possibilities noted above. It would also correct an
anomaly identified by the government—namely, many of the
arguments in favor of awarding fees directly to the attorney
assume that the attorney has not already been compensated by
the client, but that often will not be the case, because some
clients will pay a retainer or an hourly fee. Where the client
has already paid the attorney an amount equivalent to the
award, then the client likely has a superior claim to the fee
award, and the district court can direct payment of the award
accordingly. Likewise, if the client has paid the attorney, but
less than the full amount of the award, the district court can
order the payment of fees appropriately, some to the client
and some to the attorney.
D. Final Considerations
For the reasons given, CAFRA’s statutory text is best inter-
preted as leaving the question up to district courts to deter-
mine on a case-by-case basis. That result is also preferable to
the majority’s approach, because other factors, discussed
below, indicate that universally awarding CAFRA fees
directly to clients rather than to attorneys is bad practice. I
recognize that many of these considerations also apply to
other attorney fees provisions, including ones like EAJA that
expressly direct fees to the client. But here we are interpreting
a provision that leaves the question open. Acknowledging
5406 UNITED STATES v. $186,416.00 IN U.S. CURRENCY
these considerations cautions against creating for the first time
a presumption that fees should always be paid to the client.
First, one might assume that the practical implications of
who first receives a fee award are minimal, because attorneys
and clients can enter into contracts dictating who will ulti-
mately receive the money. For example, while it is the party’s
right to “waive, settle, or negotiate” entitlement to receive
fees in a particular case, attorneys and clients can create pri-
vate fee arrangements limiting that ability. Venegas v. Mitch-
ell, 495 U.S. 82, 88 (1990). In other words, attorneys can
avoid the uncertainty that results from a party’s ability to
waive a right to receive fees by requiring a contractual agree-
ment that the party won’t waive that right. Contractual
arrangements can also dictate the ultimate distribution of an
award, regardless of whether the award is directly payable to
the prevailing party or to the attorney. See Gilbrook v. City of
Westminster, 177 F.3d 839, 875 (9th Cir. 1999) (“[Section]
1988 requires that attorney fee awards be made directly to the
prevailing party, with the ultimate disposition of the award
dependent on the contract between the lawyer and the cli-
ent.”).
But, as noted by the majority, fees paid directly to clients
may be offset by the client’s pre-existing debts to the govern-
ment, leaving nothing for the attorney. See Maj. Op. at 5395.
And, unlike a client’s ability to waive or negotiate an entitle-
ment to a fee award, it is not clear that parties can contract
around the uncertainty posed by offsets against debts owed by
a claimant to the government, as such debts might constitute
a lien superior to the attorney’s contractual or other
assignment-based right. Cf. Comm’r v. Banks, 543 U.S. 426,
437 (2005) (“State laws vary with respect to the strength of
an attorney’s security interest in a contingent fee and the rem-
edies available to an attorney should the client discharge or
attempt to defraud the attorney”). I don’t know whether such
an argument, if advanced by the government, would be meri-
torious. But the scenario threatens a plausible complication
UNITED STATES v. $186,416.00 IN U.S. CURRENCY 5407
that results from a blanket rule that fees are awarded to the
client.
Second, certain characteristics specific to asset forfeiture
caution against universally awarding CAFRA fees to claim-
ants. Asset forfeiture occurs in circumstances involving
crimes, and so CAFRA actions seem particularly likely to
involve clients who may not fulfill contractual obligations to
pay their attorneys. Moreover, if the government has seized
all or nearly all of the claimant’s property, the claimant may
not have the means to pay fees in advance, and the attorney
must agree to defer payment of fees until resolution of the
case. Finally, given the backdrop of CAFRA actions, clients
might be more likely to owe pre-existing debts to the govern-
ment, and therefore fees might be more likely to be subject to
offset in CAFRA actions than in other circumstances. In any
event, CAFRA’s purpose of facilitating legal representation
for claimants will be undercut if fees are always awarded to
the client, because lawyers will reasonably fear that they
might never actually receive compensation, and so they might
decline to represent CAFRA clients at all.
Third, whether attorney fees are paid directly to the client
or to the attorney has important tax consequences. For
instance, in Sinyard v. Commissioner, 268 F.3d 756 (9th Cir.
2001), a plaintiff brought suit under the Age Discrimination
in Employment Act (ADEA) against his former employer. Id.
at 757. The plaintiff entered into an agreement with a law firm
promising to the firm one third of any amount obtained in the
lawsuit. The parties eventually settled, and the district court
approved of a settlement agreement allocating one-third of the
settlement to “attorneys’ fees recoverable pursuant to [the
attorneys’ fees provision of the ADEA].” Id. at 757-58. The
fees were then paid directly to the law firm. The Commis-
sioner of the IRS later assessed a deficiency against the plain-
tiff for failure to report the attorney fees as income. Id. at 758.
We agreed with the Commissioner that the plaintiff was lia-
ble for the deficiency under the theory that the plaintiff had
5408 UNITED STATES v. $186,416.00 IN U.S. CURRENCY
bound himself to pay the law firm, and when the defendant
satisfied this obligation, its payment constituted a discharge of
the plaintiff’s obligation. Id. (citing Old Colony Trust Co. v.
Comm’r, 279 U.S. 716, 729 (1929)). We found that theory
applicable on the facts of Sinyard because “[u]nder the
ADEA, attorney’s fees are available to prevailing plaintiffs,
not to plaintiff’s counsel.” Id. at 759.
The logic of Sinyard suggests that the same result would
not be required if the attorney fees were ordered paid directly
to the attorney. If that were the case, then the defendant would
not have been satisfying an obligation owed by the plaintiff
to the law-firm, but rather it would have been satisfying its
own obligation to pay attorney fees to the attorney. As the
fees would never have been receivable by the client, they like-
wise would not have been taxable to the client.
A few years after Sinyard, the Supreme Court decided
Commissioner v. Banks, 543 U.S. 426 (2005). In that case, the
Court held that a money judgment or settlement paid to a
plaintiff’s attorney under a contingent-fee agreement must be
reported as income to the plaintiff. Id. at 430. The Court,
however, declined to decide the question addressed in Sinyard
—namely, whether attorney fees awarded under statutory fee-
shifting provisions (in that case, under § 1988) must be
treated as income to the plaintiff.4 Id. at 439.
The Court did recognize that if attorney fees were taxable
to the client, then a plaintiff could “lose[ ] money by winning
the suit.” Id. at 438. For instance, if the plaintiff sought only
injunctive relief, or if the damages awarded were otherwise
substantially less than attorney fees, then the tax loss could
result in a net after-tax loss for the plaintiff. Id. But the Court
4
The Court could avoid deciding that question, because in Banks
“[t]here was no court-ordered fee award;” the fee paid to the attorney upon
settlement “was calculated solely on the basis of the private contingent-fee
contract.” Id. at 439.
UNITED STATES v. $186,416.00 IN U.S. CURRENCY 5409
stated that such circumstances were unlikely to arise going
forward, because Congress enacted the American Jobs Cre-
ation Act of 2004 (AJCA) shortly after the claims in Banks
arose. The AJCA amended the Internal Revenue Code to
allow taxpayers to deduct “attorney fees and court costs paid
by, or on behalf of, the taxpayer in connection with” actions
brought under certain statutes that authorize fee awards. See
26 U.S.C. § 62(a)(20)-(21) & (e)(1)-(18).
Importantly, though, while AJCA would correct this taxa-
tion problem for attorney fees related to suits under a substan-
tial number of statutes—including actions under the Social
Security Act, 42 U.S.C. § 1395y(b)(3)(A); the False Claims
Act, 31 U.S.C. § 3730; the Fair Labor Standards Act of 1938,
29 U.S.C. §§ 201 et seq.; the Age Discrimination in Employ-
ment Act, 29 U.S.C. §§ 623, 633a; the Rehabilitation Act, 29
U.S.C. §§ 791, 794; the Employee Retirement Income Secur-
ity Act, 29 U.S.C. § 1140; the Family and Medical Leave Act,
29 U.S.C. § 2615; the Civil Rights Act of 1964, 42 U.S.C.
§§ 2000e-2 et seq.; the Fair Housing Act, 42 U.S.C. §§ 3604
et seq.; the Americans with Disabilities Act, 42 U.S.C.
§ 12112 et seq., and many others—the statute does not list
CAFRA, and so presumably it would not correct this problem
for the award of attorney fees under CAFRA.5 See 26 U.S.C.
§ 62(a)(20) & (e)(1)-(18).
In short, if fees are awarded directly to the client, they
might be taxed as income to the client, even where the client
is represented pro bono and the fees are immediately turned
over to the lawyer. And, unlike under most other fee-shifting
statutory provisions, the client apparently cannot deduct the
award from his income. These factors threaten the inequitable
5
EAJA is also absent from the statutes listed in AJCA, suggesting that
attorney fees awarded under EAJA might be taxed as non-deductable
income for the prevailing party, even where the client never sees the
money. The Court in Ratliff made no mention of the tax consequences of
its decision.
5410 UNITED STATES v. $186,416.00 IN U.S. CURRENCY
result of a net after-tax loss for the prevailing litigant, a result
that could be avoided if district courts had discretion to deter-
mine on a case-by-case basis whether attorney fees are
awarded to the attorney or to the client.
Conclusion
Leaving the question of to whom fees are to be paid up to
district courts to determine on a case-by-case basis is the
appropriate interpretation of the CAFRA attorney fees provi-
sion. I would so hold, and therefore respectfully dissent.
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