Litigants will no longer be considered the "prevailing party" — and thus won't be eligible for attorney fees — if they achieve courtroom victories via preliminary injunction instead of a final judgment, the U.S. Supreme Court has found, in a ruling that's expected to be a blow to legal advocacy groups.

In a 7-2 decision issued Tuesday, the majority said the "transient victory" of a preliminary injunction is not enough to declare a litigant the prevailing party, only a final ruling that results in a material change between the parties that's both "judicially sanctioned and enduring."

"Because preliminary injunctions do not conclusively resolve the rights of parties on the merits, they do not confer prevailing party status," the majority said.

"Prevailing party" is a legal term of art which, in the context of civil rights lawsuits, allows legal advocacy groups to recoup attorney fees and costs if they successfully strike down unconstitutional laws or government policies.

Enshrined in Section 1988 of Title 42 of the U.S. Code in 1976, the prevailing party fee-shifting framework has since become a cornerstone of the U.S. system of private civil rights enforcement.

There is widespread disagreement over how often those types of suits are resolved by preliminary injunction rather than by final rulings, but a flurry of amicus briefs from advocacy groups warned that a ruling that narrows the definition of prevailing party would hurt their finances and make it harder to bring cases.

That assessment was shared by groups from the left-leaning American Civil Liberties Union to the archconservative Alliance Defending Freedom.

Writing in dissent, Justice Ketanji Brown Jackson said Tuesday's decision directly contradicts what Congress set out to do when it wrote Section 1988: bypass an earlier Supreme Court ruling in order to encourage legal advocacy groups to bring private lawsuits enforcing citizens' constitutional rights. Justice Sonia Sotomayor joined Justice Jackson's dissent.

"Without irony, the majority reads a statute that was 'enacted to ensure that private citizens have a meaningful opportunity to vindicate their civil rights' … as if Congress meant to make private civil rights enforcement harder to achieve," Justice Jackson wrote.

Before Tuesday's ruling, every appellate court in the nation had previously held that preliminary injunctions can be the basis for declaring a litigant the prevailing party, although their respective standards differed from circuit to circuit.

The underlying lawsuit is a civil rights class action filed on behalf of indigent Virginia drivers, challenging a state law that automatically suspended residents' driver's licenses if they failed to pay traffic fines and court fees.

Represented by the nonprofit Legal Aid Justice Center and a McGuireWoods team, the drivers argued the law left poor Virginians trapped — unable to pay off fees and fines without driving to work, and unable to drive to work without paying off fees and fines. Nearly 1 million residents, a sixth of the state, were ultimately ensnared in that Kafkaesque vise, according to court documents.

The drivers won a preliminary injunction that essentially suspended enforcement of the law for 16 months while further litigation played out. The Virginia Legislature then repealed the law and the district court later dismissed the case as moot, making it impossible for the drivers to secure a final judgment despite achieving everything they'd set out to do.

That left the question of who would pay for "six years of research and individual casework, five years of legislative and administrative advocacy" and "four years of litigation," as the LAJC described its efforts in a 2020 announcement.

On appeal, a Fourth Circuit panel initially said the drivers could not be considered the "prevailing party" because they hadn't secured a final judgment. But after agreeing to rehear the case en banc, the entire Fourth Circuit ruled in August 2023 the circuit's old, one-size-fits-all rule had "become a complete outlier" and overturned it, siding with the drivers.

The rule adopted by the Fourth Circuit held that a litigant can be considered a "prevailing party" if "a plaintiff obtains a preliminary injunction that (a) provides her with concrete, irreversible relief on the merits of her claim by materially altering the parties' legal relationship, and (b) becomes moot before final judgment such that the injunction cannot be reversed, dissolved or otherwise undone by a later decision."

Gerald F. Lackey, commissioner of the Virginia Department of Motor Vehicles, then took the case to the Supreme Court. Lackey argued the Fourth Circuit's new analysis was too permissive, because it rewards litigants for prevailing on a simple likelihood-of-success standard and gives too much weight to nonjudicial acts, in this case the repeal of a law.

On Tuesday the majority largely agreed with that argument, on largely procedural and technical grounds.

"A plaintiff who wins a transient victory on a preliminary injunction does not become a 'prevailing party' simply because external events convert the transient victory into a lasting one," the majority said.

The majority also said the new standard, which eliminates preliminary injunctions from consideration when determining a prevailing party, would serve "the interests of judicial economy."

"A straightforward, bright-line rule is easy to administer," the majority said.

"If Congress determines that the rule we adopt today is unwise," the majority continued, "it may amend the statutory language."

On Tuesday, Angela Ciolfi, executive director of the LAJC, said she hoped that's exactly what would happen.

"There's no question this is a bad day for the little guy," Ciolfi said. "It's especially disheartening at a time when our civil rights enforcement apparatus within the federal government is being dismantled piece by piece, meaning litigants with lesser means will be increasingly reliant on private litigation to enforce our civil rights laws."

"Which is why hopefully Congress will fix this," she added.

A spokesperson for the Office of the Attorney General of Virginia, meanwhile, said the state was gratified by Tuesday's ruling.

"We are pleased with the U.S. Supreme Court's decision holding that a conclusive ruling on the merits is required for an award of attorneys' fees," the spokesperson said. "Preliminary injunctions do not confer prevailing-party status."

The drivers are represented by Brian D. Schmalzbach, Jonathan Todd Blank, Matthew A. Fitzgerald and John Justin Woolard of McGuireWoods LLP, and Angela Adair Ciolfi and Patrick Stephen Levy-Lavelle of the Legal Aid Justice Center.

Lackey is represented by Virginia Attorney General Jason S. Miyares and Andrew Nathan Ferguson, Erika L. Maley, M. Jordan Minot and Graham K. Bryant of the Virginia Attorney General's Office, and Maya M. Eckstein, Trevor S. Cox and David M. Parker of Hunton Andrews Kurth LLP.

The case is Gerald F. Lackey v. Damian Stinnie et al., case number 23-621, in the U.S. Supreme Court.

--Editing by Robert Rudinger.

Update: This article has been updated with additional counsel information.