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Media Alerts - National Amusements, Inc. v. Borough of Palmyra et al. - Third Circuit
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May 14, 2013
  National Amusements, Inc. v. Borough of Palmyra et al. - Third Circuit
Headline: Party that obtained a consent order on its request for preliminary relief but lost on the merits is not entitled to attorneys' fees as a prevailing party

Area of Law: 42 U.S.C. §§ 1983, 1988

Issue(s) Presented: Whether a party obtaining some preliminary relief through a consent order is a "prevailing party" entitled to attorneys' fees under 42 U.S.C. § 1988

Brief Summary: The Borough of Palmyra shut down a flea market run by National Amusements, Inc. (NAI), after unexploded munitions were found on the site. NAI sued for violations of its constitutional rights under 42 U.S.C. § 1983 and New Jersey law and moved for a preliminary injunction. In the meantime, the parties agreed to a Consent Order allowing NAI to resume flea market operations with safety restrictions. The district court subsequently granted Palmyra's motion for summary judgment and denied NAI's motion for attorneys' fees under 42 U.S.C. § 1988. On appeal, the Third Circuit affirmed the grant of summary judgment on the constitutional and state-law claims and the denial of attorneys' fees. It held that where a party obtains some relief pursuant to a consent order but eventually loses on the merits of its claims, it is not a "prevailing party" entitled to attorneys' fees.

Extended Summary (if applicable): In 2002, the Borough of Palmyra, NJ, contracted for a site inspection of the parcel where National Amusements, Inc. (NAI), ran its open-air flea market, as part of the borough's plans to redevelop the sit. After inspectors found unexploded munitions on the site, which had been used by the U.S. Army as a weapons-testing facility, the borough ordered the market to be shut down for five months.

NAI sued for violations of its constitutional rights under 42 U.S.C. § 1983 and New Jersey law. It alleged that the borough's action violated its right to procedural due process, constituted a taking without just compensation, and was arbitrary and capricious under New Jersey law. NAI also moved for a preliminary injunction that would allow the market to reopen, but in the meantime, the parties agreed to a Consent Order allowing NAI to resume flea market operations with safety restrictions.

NAI claimed that it was entitled to attorneys' fees related to the consent order under 42 U.S.C. § 1988, which allows a court to award attorneys' fees to a party prevailing on its § 1983 claim. The district court subsequently granted Palmyra's motion for summary judgment and denied NAI's motion for attorneys' fees, holding that any "prevailing party" status conferred by the Consent Order was based on NAI's state law claim, not its constitutional action.

On appeal, the Third Circuit affirmed the grant of summary judgment on the constitutional and state-law claims and the denial of attorneys' fees. In affirming summary judgment for the borough, it held that NAI was not denied due process of law because "a municipality need not conduct a pre-deprivation hearing before acting to prevent the public from walking around a surface littered with live explosives." It then held that the borough's emergency action to close the market was an exercise of police power that did not require just compensation. Finally, it held that even if valid alternatives would have kept the market open, the borough did not act arbitrarily and capriciously under state law by choosing to temporarily close the market.

In affirming the denial of attorneys' fees, the Third Circuit departed from the District Court's reasoning and held that where a party obtains some relief pursuant to a consent order but eventually loses on the merits of its claims, it is not a "prevailing party" entitled to attorneys' fees. NAI effectively "won a battle, but it lost the war." The purpose of § 1988, to provide effective access to the courts for those with civil rights grievances, "is not furthered by awarding fees when a plaintiff includes constitutional claims in its complaint and achieves a modicum of interim relief before these claims can be disposed of on the merits."

The full opinion is available at http://www.ca3.uscourts.gov/opinarch/121630p.pdf

Panel (if known): Fuentes, Chagares and Barry, JJ.

Argument Date: 3/21/13

Argument Location:

Date of Issued Opinion: 5/9/13

Docket Number: 12-1630, 12-2386

Decided: Affirmed

Case Alert Author: April Donahower

Counsel: Marc D. Haefner, Nicole B. Dory, Kevin J. Coakley, for Appellant; Richard L. Goldstein, Walter F. Kawalec, for Appellee

Author of Opinion: Barry, J.

Circuit: 3d Circuit

Case Alert Circuit Supervisor: Susan L. DeJarnatt

    Posted By: Susan DeJarnatt @ 05/14/2013 10:33 AM     3rd Circuit  

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