U.S. Fourth Circuit - The FindLaw 4th Circuit Court of Appeals Opinion Summaries Blog

FRCP 41(d) Provides Limited Right to Recover Attorney's Fees, 4th Rules

Things got a little better for parties seeking to recover attorney's fees in the Fourth Circuit this week. On Tuesday, the Fourth ruled that Federal Rule of Civil Procedure 41(d), which seeks to deter forum shopping and "vexatious" lawsuits, allows courts to award attorney's fees, but with limits.

Some courts have fully rejected the idea that Rule 41(d) entitles parties to recover attorney's fees, while others have awarded them almost as a matter of right. The Fourth Circuit's decision places it firmly between these two extremes, allowing recovery of fees only where the underlying statute defines costs to include attorney's fees, or where plaintiffs had acted in bad faith and vexatiously.

Rule 41(d) Across the Circuits

Rule 41(d) states that:

If a plaintiff who previously dismissed an action in any court files an action based on or including the same claim against the same defendant, the court: (1) may order the plaintiff to pay all or part of the costs of that previous action ... "

The rule is silent as to whether attorney's fees are included in those costs, and circuit courts are split on the issue. As the Fourth Circuit notes, both the Eighth and Tenth Circuits have upheld awards of attorney's fees under Rule 41(d), "albeit without much explanation."

The Sixth Circuit, however, has taken the opposite approach, finding no authority to award fees under Rule 41(d). As the Sixth reasoned in that decision, when Congress typically wants to depart from the American Rule, it is usually pretty explicit.

The Seventh Circuit has taken a more moderate approach. Noting that Congress didn't alter the American Rule with Rule 41(d), it also found that, absent congressional expression to the contrary, "costs" are "costs" -- including attorney's fees, so long as the underlying statute defines costs to include attorney's fees. This is the reasoning the Fourth Circuit adopted as well, holding that:

A court may... within its discretion, award attorney's fees where it makes a specific finding that the plaintiff had acted "in bad faith, vexatious, wantonly, or for oppressive reasons," a well-established exception to the American Rule.

What Counts as Vexatious Litigation? Not This.

Somewhat ironically, in the same decision announcing that attorney's fees could be awarded under Rule 41(d), the Fourth Circuit decided they could not be awarded in this particular case. The facts giving rise to this week's opinion stem from litigation under the Fair Labor Standards Act. Stella Andrews brought suit against a North Carolina assisted care company. Faced with a Rule 12(b)(6) motion to dismiss, Andrews botched her attempt to amend her complaint, failing to file a separate motion to amend and missing the deadline.

Andrews then withdrew her complaint and filed a new complaint on the very same day. Defendants moved for costs under Rule 41(d) and were initially awarded $25,437.75 in attorney's fees.

But while the FLSA allows for plaintiffs to recover attorney's fees, it is silent as to whether fees are available when a defendant prevails. An award under Rule 41(d) on a statutory basis "would be improper," the Fourth concluded.

And while Andrews both voluntarily dismissed and refiled her suit in a single day, her conduct did not rise to the level of vexatious, the Fourth found. Quoting Black's Law, the court explained that "by its plain language, vexatious means 'without good or probable cause or excuse.'" Here, though, the court itself had invited Andrews to dismiss her suit, stating that the plaintiff "can just stand up and say, I want to take a dismissal," and also that the plaintiff "can be free to file another complaint."

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