Supreme Court Limits an Employer’s Ability to Recoup Attorney’s Fees

By Eric B. Meyer

In an employment discrimination action asserted under federal law, an employee-plaintiff may recover a reasonable attorney’s fee if the plaintiff prevails. So too may an employer-defendant recover fees if it prevails and the court determines that the plaintiff’s suit is frivolous.

But what happens if an employee-plaintiff asserts multiple claims against an employer-defendant and only some of them are deemed frivolous? What, if anything, may the defendant recover in attorney’s fees?

No fees for overlapping work on frivolous/non-frivolous claims

According to a recent U.S. Supreme Court decision in Fox v. Vice, a court may award reasonable attorney’s fees to a prevailing defendant — but only for those fees that the defendant would not have incurred but for the frivolous claims.

What does that mean? Let’s give an example:

In Fox v. Vice, the plaintiff packaged non-frivolous state-law claims with frivolous federal civil rights claims. During the litigation, the plaintiff conceded that his federal claims were meritless. The defendant then asked the trial court to award the defendant all attorney’s fees that it had incurred, which the trial court did — even though the state-law allegations had not been found frivolous. The court did not require the defendants to separate out the work that their attorneys had done on the two sets of claims. It also declined to reduce the fee award to reflect the surviving state-law claims, noting that both sides had focused on the frivolous federal claims.

The Supreme Court determined that the incorrect standard had been applied to determine the attorney’s fees award. That is, the award of attorney’s fees presupposed that the defendants’ attorneys would have done much the same work even if Fox had not asserted his frivolous claims.

In the Supreme Court’s opinion, the “defense entailed proof or denial of essentially the same facts… the attorneys would at least have conducted similar fact-gathering activities–taken many of the same depositions, produced and reviewed many of the same documents, and so forth.”

Moreover, the Supreme Court underscored that the lower court found that the “trial preparation, legal research, and discovery” done in the federal court could “be used by the parties in the state court proceedings.” Accordingly, the decision to award full attorney’s fees “failed to take proper account of this overlap between the frivolous and non-frivolous claims.”

Takeaways for employers — are there any?

Before we get all incensed about yet another employee-friendly SCOTUS opinion, let’s get some perspective:

This was a unanimous Supreme Court opinion. So, even the more conservative-leaning Justices joined in.
I realize that unanimity doesn’t necessarily make it right, but was this really so shocking? (I’ll bet Denny Green wasn’t surprised). But, seriously, the Court’s reasoning does make sense. Allowing a defendant to recover attorney’s fees for work performed on non-frivolous claims would result in a windfall by relieving the defendant of normal litigation costs that the defendant would have had to spend anyway to defendant the non-frivolous claims.
In practice, this scenario doesn’t come up that often. I don’t know about all of you but I can count on one finger the number of times that I have successfully gotten a court to deem a plaintiff’s claims frivolous.

So are we really going to change the way we defend cases in order to tee up potential claims for attorney’s fees and costs? Maybe more detailed billing entries could help.

6/8/11: Legal research re: frivolous ADEA claim – 0.8
6/8/11: Legal research re: non-frivolous, but nonetheless meritless, FMLA claim – 0.7

(I can’t decide if I am being sarcastic or not). Maybe, I’ll just move to Texas, where everything is bigger and loser pays.

This was originally published on Eric B. Meyer’s blog, The Employer Handbook.