No Zipes Shield for State Intervenors: Sixth Circuit Holds § 2403(b) Subjects States to § 1988 Fee Liability as Parties

Introduction

This published Sixth Circuit opinion resolves a recurring but underdeveloped question at the intersection of fee-shifting, sovereign immunity, and state intervention to defend statutes: when a State intervenes under 28 U.S.C. § 2403(b) to defend the constitutionality of a state law and loses, can it be ordered to pay a prevailing plaintiff’s attorneys’ fees under 42 U.S.C. § 1988—without any heightened “frivolousness” showing? Answer: Yes. The court holds that § 2403(b)’s “liabilities of a party as to court costs” includes § 1988 fees in § 1983 litigation; sovereign immunity does not bar such an award; and the Supreme Court’s Zipes rule for “blameless intervenors” does not protect a State that intervenes to defend an unconstitutional statute.

The case arises from Michigan’s former practice of keeping surplus proceeds from tax-foreclosure sales. After Gratiot County foreclosed on and sold Donald Freed’s home to satisfy $1,110 in taxes, it retained the entire $42,000 sale price. Freed brought a § 1983 Takings Clause claim. Michigan intervened under § 2403(b) to defend the constitutionality of the General Property Tax Act (GPTA). Following a years-long litigation path—bookended by the Supreme Court’s Knick decision and the Michigan Supreme Court’s Rafaeli decision—Freed prevailed on his core takings theory (though not on a broader “equity” damages theory) and then sought attorneys’ fees. The district court awarded fees but reduced both hours and rates by 35% and apportioned 95% to the County and 5% to the State.

On appeal, the Sixth Circuit (Judge Ritz) affirms that both Gratiot County and the State of Michigan are liable for fees, clarifies the governing standards for state-intervenor fee liability, and vacates the fee calculation for insufficient explanation, remanding for a properly reasoned lodestar analysis.

Summary of the Opinion

• Prevailing party status: Freed qualified as a “prevailing party” under § 1988 because the courts conclusively resolved his claim on the merits and awarded enduring relief that altered the parties’ legal relationship (citing Lackey v. Stinnie).
• Liability for fees:
  • Gratiot County: Liable under § 1988; County concedes liability.
  • State of Michigan: Liable under § 1988 notwithstanding sovereign immunity, because § 2403(b) makes an intervening State “subject to all liabilities of a party as to court costs,” and in § 1983 litigation “court costs” include attorneys’ fees.
• Zipes does not apply: The Supreme Court’s Zipes rule (limiting fee awards against “blameless” intervenors to instances of frivolousness) does not protect a State that intervenes to defend an unconstitutional statute; such a State is “blameworthy,” not “innocent,” and § 2403(b) treats it as a party for cost purposes.
• Fee calculation vacated: The district court’s across-the-board 35% reductions to both hours and rates lacked a sufficiently specific explanation under Hensley/Fox/Perdue. The court must identify, with reasonable specificity, why rejected hours were not reasonably expended and how the selected hourly rate reflects the prevailing market rate and analogous awards.
• Partial success and intervening precedent: While degree of success is the “most critical” factor, the court is not required to reduce fees merely because some arguments failed or because intervening precedents (Knick, Rafaeli) assisted the plaintiff; any reduction must be explained.
• No proportionality requirement: Fees in § 1983 cases need not be proportional to damages (City of Riverside v. Rivera).
• Apportionment: The Sixth Circuit does not disturb the 95%/5% split but signals the district court may wish to explain any apportionment by reference to relative culpability and litigation focus (Avenue Grille).

Analysis

Precedents Cited and Their Role

• Knick v. Township of Scott, 588 U.S. 180 (2019): Abrogated pre-Knick ripeness barriers (partially abrogating Wayside Church) and permitted federal takings claims without first seeking state compensation; enabled Freed’s federal suit to proceed (Freed I).
• Rafaeli, LLC v. Oakland County, 952 N.W.2d 434 (Mich. 2020): Held under Michigan’s constitution that former owners have a right to surplus proceeds from tax-foreclosure sales. This undergirded the recognition of a compensable taking of surplus proceeds.
• Freed I, 976 F.3d 729 (6th Cir. 2020): Reversed dismissal for lack of jurisdiction post-Knick, clearing the path for the merits.
• Freed II, 81 F.4th 655 (6th Cir. 2023): Affirmed partial summary judgment for Freed, setting damages as surplus sale proceeds minus tax debt (rejecting the broader “equity” measure); dismissed claims against the treasurer on qualified-immunity grounds; noted Michigan’s § 2403(b) posture for costs.
• 28 U.S.C. § 2403(b): Authorizes state intervention to defend a statute’s constitutionality and declares the State “subject to all liabilities of a party as to court costs.” Critical textual anchor for state fee liability.
• Arizonans for Official English v. Arizona, 520 U.S. 43, 70 n.25 (1997): Recognized that § 2403(b) does not expose intervening states to damages but does subject them to court costs.
• Hutto v. Finney, 437 U.S. 678, 695 (1978): Court costs have traditionally been awarded against states despite Eleventh Amendment immunity; supports fee awards as costs.
• Sullivan Cnty. v. Home Indem. Co., 925 F.2d 152, 153 (6th Cir. 1991): In § 1983 cases, § 1988 attorneys’ fees are treated as “costs,” harmonizing with § 2403(b).
• Independent Fed’n of Flight Attendants v. Zipes, 491 U.S. 754 (1989): Intervenors in Title VII cases are liable for fees only if their participation was frivolous, unreasonable, or without foundation; the Sixth Circuit holds this does not apply to state intervenors defending unconstitutional statutes in § 1983 cases.
• Jenkins ex rel. Agyei v. Missouri, 967 F.2d 1248, 1251 (8th Cir. 1992); Brat v. Personhuballah, 883 F.3d 475, 483–84 (4th Cir. 2018); Planned Parenthood of Cent. N.J. v. Att’y Gen. of N.J., 297 F.3d 253, 264–65 (3d Cir. 2002): Sister circuits recognizing no Zipes shield for state intervenors defending unconstitutional enactments.
• Hensley v. Eckerhart, 461 U.S. 424 (1983): Governs fee awards: “prevailing party,” lodestar method, and degree of success as “most critical” factor; requires a “concise but clear” explanation.
• Fox v. Vice, 563 U.S. 826, 838 (2011): District courts need not be “green-eyeshade accountants,” may estimate and make across-the-board reductions, but must provide a reasonably specific explanation.
• Perdue v. Kenny A., 559 U.S. 542, 558 (2010): Requires a “reasonably specific explanation” for each aspect of fee determinations.
• Northcross v. Board of Education, 611 F.2d 624 (6th Cir. 1979): Cautioned against arbitrary or conclusory reductions; now tempered by Fox and later cases.
• Reed v. Rhodes, 179 F.3d 453 (6th Cir. 1999), and Johnson v. Georgia Highway Express, 488 F.2d 714 (5th Cir. 1974): Johnson factors may inform adjustments, typically after the lodestar is set.
• Ne. Ohio Coalition for the Homeless v. Husted, 831 F.3d 686 (6th Cir. 2016): Abuse-of-discretion review; factors for reasonable rate (market rate, analogous awards, court’s experience) and clarity required in explanations.
• City of Riverside v. Rivera, 477 U.S. 561 (1986): No proportionality requirement between fees and damages in § 1983 cases.
• Webb v. Board of Education, 471 U.S. 234 (1985): Exclude hours not directly related to litigation when calculating lodestar.
• Lackey v. Stinnie, 145 S. Ct. 659 (2025): Clarifies “prevailing party” status—enduring, merits-based relief altering the legal relationship.
• Will v. Michigan Dept. of State Police, 491 U.S. 58 (1989); Tennessee v. Garner, 471 U.S. 1 (1985): States are not “persons” under § 1983 for damages; relevant to why Michigan could not be a damages defendant but still could owe costs.
• Avenue Grille, Inc. v. Rootstown Twp., 113 F.3d 1234, 1997 WL 219740 (6th Cir. 1997) (table): Consider relative culpability and litigation focus when apportioning fees among multiple government defendants.

Legal Reasoning

• Prevailing party and entitlement:
  • Applying Lackey v. Stinnie, the court confirms Freed prevailed by obtaining a merits judgment awarding just compensation (surplus minus debt), which altered the legal relationship with the County and, by extension, with the State as the defender of the GPTA process.
  • Thus, § 1988(b)’s entitlement to a “reasonable attorney’s fee” is triggered.
• State fee liability under § 2403(b) and § 1988:
  • Text controls: § 2403(b) states that an intervening State “shall … be subject to all liabilities of a party as to court costs.”
  • In § 1983 litigation, “court costs” include § 1988 attorneys’ fees (Sullivan County v. Home Indem. Co.).
  • Sovereign immunity does not bar court costs (Hutto), and Arizonans for Official English recognizes § 2403(b) exposes States to costs (though not damages).
  • Because Michigan intervened solely to defend the statute’s constitutionality and lost, it is analogous to a defendant and therefore liable for fees like any losing party.
• No Zipes carve-out for State intervenors defending unconstitutional laws:
  • Zipes protects “blameless” or “innocent” intervenors (e.g., unions protecting seniority); it hinges on the “crucial connection” between legal wrongdoing and fee liability.
  • States intervening to defend unconstitutional statutes are “blameworthy” in the Zipes sense: they are responsible for enacting or enforcing the challenged statute and argue against the plaintiff’s constitutional rights.
  • Consistent with the Third, Fourth, and Eighth Circuits, the Sixth Circuit declines to extend Zipes to state intervenors in this posture.
• Lodestar calculation and the necessity of reasoned explanation:
  • The court vacates the district court’s 35% across-the-board reductions to hours and rates because the explanation was too cursory.
  • Hours: A court may use estimates and across-the-board cuts (Fox) but must connect the cut to identified categories of unreasonable time (duplication, overstaffing, non-litigation tasks, excessive increments), explaining why the rejected hours were not reasonable (Hensley; Minor).
  • Rate: The district court must anchor the reasonable hourly rate in the prevailing market rate, considering analogous awards and its own experience (Husted), and articulate why its chosen rate is appropriate.
  • Johnson factors: They may be used after the lodestar is set (Reed), but the district court should be clear whether they affected the award.
• Degree of success and intervening precedent:
  • Degree of success is the “most critical factor” (Hensley), and Freed partially prevailed (lost “equity” theory; claims against the treasurer were dismissed).
  • However, reductions for partial success are not mandatory (Planned Parenthood Sw. Ohio v. DeWine). If applied, the court must explain the quantum of reduction.
  • Intervening precedents (Knick and Rafaeli) do not automatically justify a fee reduction; they often confirm, not replace, counsel’s work. Here, Freed had already briefed the issues, and Knick removed only one of several barriers; Rafaeli was grounded in state law while Freed advanced federal takings claims.
• No proportionality rule:
  • City of Riverside v. Rivera forecloses any argument that fees must be proportional to the damages recovered. Civil-rights fee awards serve broader public purposes and can exceed damages.
• Apportionment between the County and the State:
  • Although not disturbed, the court signals that any allocation (here, 95% County/5% State) should be explained by relative culpability and the allocation of counsel’s effort (Avenue Grille).

Impact

• State Attorneys General and § 2403(b) interventions:
  • States intervening to defend statutes in § 1983 cases within the Sixth Circuit face full § 1988 fee exposure when they lose, without any Zipes “frivolousness” safe harbor.
  • This ruling aligns the Sixth Circuit with the Third, Fourth, and Eighth Circuits, reducing forum-based uncertainty and disincentivizing perfunctory defenses of constitutionally suspect laws.
  • Expect more careful state cost-benefit assessments, enhanced coordination with local defendants, and, in some cases, earlier settlement positions.
• Prevailing civil-rights plaintiffs:
  • Expanded fee recovery: Plaintiffs can recover fees from both local governments and the State when the State intervenes to defend a statute’s constitutionality and loses.
  • Leverage and access to counsel are strengthened, particularly in structural and constitutional litigation.
• District courts’ fee orders:
  • More detailed lodestar explanations will be necessary. Across-the-board percentage reductions remain permissible, but they must be tethered to identified categories of unreasonable time or market-supported rate adjustments.
  • Reliance on intervening precedent is not, by itself, a sound basis for substantial reductions.
  • Courts should articulate any Johnson-factor effects and apportionment rationales between multiple government defendants.
• Substantive takings litigation:
  • While this opinion does not alter the damages measure settled in Freed II (surplus proceeds minus debt), it ensures fee-shifting applies robustly even where individual damages are modest—critical in tax-foreclosure takings cases with systemic implications.

Complex Concepts Simplified

• § 2403(b) Intervention:
  • Federal statute allowing a State to intervene in any case where the constitutionality of a state statute is challenged. By intervening, the State becomes liable for “court costs” like any other party.
• “Prevailing Party” (post-Lackey v. Stinnie):
  • A litigant who wins enduring, merits-based relief that changes the legal relationship between the parties—for example, a judgment awarding compensation or injunctive relief.
• Lodestar Method:
  • The basic fee calculation: reasonable hours reasonably expended multiplied by a reasonable hourly rate. Courts may then adjust (up or down) based on case-specific factors, chiefly the degree of success.
• Johnson Factors:
  • Twelve discretionary considerations (e.g., time and labor, novelty and difficulty, customary fee, results obtained) that may inform adjustments after setting the lodestar.
• Zipes “Blameless Intervenor” Rule:
  • In Title VII, intervenors who are not wrongdoers pay fees only if their litigation positions were frivolous. The Sixth Circuit holds this protection does not apply to state intervenors defending unconstitutional statutes in § 1983 cases.
• Sovereign Immunity vs. Court Costs:
  • States often cannot be sued for damages without consent, but “court costs” (which include § 1988 fees in § 1983 cases) can be assessed against States in certain contexts, including when they intervene under § 2403(b).
• Takings/Surplus Proceeds:
  • When the government sells property for unpaid taxes, the Constitution requires it to return sale proceeds exceeding the debt; keeping the surplus is a taking requiring just compensation.

What the District Court Must Do on Remand

• Recalculate the lodestar with a “reasonably specific explanation.”
• If reducing hours:
  • Identify categories of unreasonable time (e.g., travel/administrative tasks, quarter-hour increment inflation, duplication) and explain why such time was not reasonably necessary.
  • Use across-the-board estimates if appropriate, but link the percentage to the identified categories.
• If reducing the rate:
  • Determine and articulate the prevailing market rate, considering Michigan market data, counsel’s experience, complexity, results, analogous case awards, and the court’s own experience.
• Address degree of success with specificity, including the rejected “equity” theory and qualified-immunity outcome for the treasurer, and explain any effect on the fee.
• Clarify whether Johnson factors influenced any adjustment beyond the lodestar.
• Optionally expand on apportionment (County vs. State) by referencing relative culpability and which defendant drove the litigation workload.

Conclusion

Freed v. Thomas establishes a clear and consequential rule for fee liability in constitutional litigation: a State that intervenes under § 2403(b) to defend the constitutionality of a statute and loses is liable, as a party, for the prevailing plaintiff’s attorneys’ fees under § 1988, without any Zipes “blameless intervenor” shield and without sovereign-immunity protection against court costs. This aligns the Sixth Circuit with other circuits and will shape State intervention strategies going forward.

Equally important, the court reinforces lodestar discipline: district courts retain wide discretion, but percentage cuts to hours or rates must be anchored in specific, case-linked reasoning and reliable evidence of market rates. Degree of success remains central, but intervening favorable precedent is not itself a discount trigger; nor is there any proportionality requirement between fees and damages in § 1983 actions.

Key takeaways:

• § 2403(b) makes state intervenors liable for § 1988 fees as “court costs” in § 1983 cases.
• Zipes does not protect States defending unconstitutional statutes from fee awards.
• Lodestar determinations require a clear, fact-based explanation; broad cuts must be justified.
• Partial success may justify adjustments, but not automatically; proportionality is not required.

This decision will reverberate in civil-rights litigation across the Sixth Circuit, enhancing plaintiffs’ access to counsel, encouraging careful state litigation choices, and refining fee-order practices in district courts.