Supreme Court Clarifies Standard for Employer Attorney's Fees Awards

The American Rule is that each party in a lawsuit must bear its own attorney’s fees. The Civil Rights Attorney’s Fees Award Act of 1976, 42 U.S.C. § 1988, provides an exception to this rule in certain federal civil rights actions by permitting a court in its discretion to allow the prevailing party a reasonable attorney’s fee as part of costs. Title VII contains a similar provision (42 U.S.C. § 2000e-5(k)). The purpose of these provisions is to ensure effective access to the judicial process for persons with civil rights grievances.

It is well accepted and often repeated that a prevailing civil rights plaintiff should ordinarily recover his or her attorney’s fees unless special circumstances would render an award unjust. Most cases considering fee shifting provisions under Section 1988 and Title VII have involved a prevailing plaintiff. For example, in Hensley v. Eckerhart, 461 U.S. 424 (1983), the Supreme Court noted that a plaintiff may be considered a prevailing party for attorney’s fees purposes under Section 1988 if he or she succeeds on any significant issue in the litigation that achieves some of the benefits the party sought in bringing suit.

In Christiansburg Garment Co. v. EEOC, 434 U.S. 412 (1978), the Supreme Court confirmed that Section 1988 also authorizes an attorney’s fee award in favor of a prevailing defendant upon a finding that the plaintiff’s action was frivolous, unreasonable or without foundation. This month in Fox v. Vice (No. 10-114, June 6, 2011), the Supreme Court resolved a circuit court split on the standards for making such an award.

• First, as is the case for a prevailing civil rights plaintiff who may be awarded attorney’s fees even if not victorious on every claim, the court held that a defendant may be entitled to a fee award even if not all of the plaintiff’s claims were frivolous. The court wrote, “the presence of reasonable allegations in a suit does not immunize the plaintiff against paying for the fees that his frivolous claims imposed.” It is not all or nothing, and a court could even award fees to both parties.
• Second, when a lawsuit involves a mix of frivolous and non-frivolous claims, “a defendant may recover the reasonable attorney’s fees he expended solely because of the frivolous allegations.” Thus, the court made it clear that a plaintiff is only responsible for the incremental harm occasioned by a frivolous claim, holding that “Section 1988 permits the defendant to receive only the portion of his fees that he would not have paid but for the frivolous claim.” Put the other way, a defendant “may not receive compensation for any fees that he would have paid in the absence of the frivolous claims.”
• Lastly, as is commonly mentioned in attorney’s fee decisions, the court noted that a fee petition should not result in a second major litigation. The district court’s job “is to do rough justice, not to achieve auditing perfection.”

Given the Supreme Court’s decision in Fox and the fact that the burden is generally on the party seeking fees to establish the reasonableness of the amount requested, management counsel believing that there may be a basis for an award of attorney’s fees under a fee shifting statute are well advised to keep meticulous records regarding the time expended in defending the individual claims at issue.

For additional information regarding the Fox decision and potential strategies for recovering attorney’s fees in civil rights litigation, please contact the author or any other member of the McGuireWoods Labor and Employment Group.