WHO’S PAYING? A REVIEW OF RULE 41(D)’S AUTHORIZATION OF ATTORNEY FEE AWARDS

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By: Will Johnson

Associate Editor, American Journal of Trial Advocacy

Federal Rule of Civil Procedure 41(d) governs situations in which the plaintiff voluntarily dismisses an action and subsequently refiles the same or similar case in a different jurisdiction.[1] In such situations, the rule permits the court to order the plaintiff pay all or part of the costs of the previously dismissed action.[2] Recently, an explosion of litigation concerning Rule 41(d) has left United States Courts of Appeals split on whether the rule allows for the recovery of attorneys’ fees as “costs” of the previously dismissed actions.[3] Typically, attorneys’ fees are not awardable as “costs” to the prevailing party under the so-called “American Rule” unless Congress has carved out an exception to the rule.[4] Notably, four different circuits have established strong stances on the award of attorneys’ fees pursuant to Rule 41(d) within the last two years after a sixteen year period of stagnation.[5] As a result, three prominent interpretations of Rule 41(d) exist, with three courts ruling attorneys’ fees are always awardable as costs,[6] one court ruling attorneys’ fees are never awardable as costs,[7] and four courts finding middle ground by ruling attorneys’ fees are awardable as costs if the underlying substantive statute of the action brought allows for the award of attorneys’ fees.[8] This article explores Rule 41(d) and its intent and provides a survey of each available circuit’s position of the award of attorneys’ fees as “costs” pursuant to Rule 41(d).

RULE 41(d)

The plain text of Federal Rule of Civil Procedure 41(d) provides:

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; and (2) may stay the proceedings until the plaintiff has complied.[9]

At its core, Rule 41(d) is intended to discourage forum shopping and vexatious litigation by the plaintiff.[10] Functionally, although the statute uses only the word “costs” and does not explicitly permit attorneys’ fees, courts have noted statutory ambiguity regarding the ambiguity of “costs” and have reached various outcomes: in some cases, statutory provisions of “costs” have been found to not include attorneys’ fees[11]; while in other cases, statutory language allows for the inclusion of attorneys’ fees as “costs,”[12] and others are dependent on if the underlying statutory basis of the suit allows for it.[13] Justifications for the variance in interpretation range from fulfilling the public policy deterrence goals of the rule,[14] to strictly following the statute’s plain language,[15] to reasoning by analogy in light of the treatment of other similarly vague statutes.[16] As one may imagine, finding the pulse of the legislature when determining the definition of “costs” is no easy task.

CIRCUIT OVERVIEW

The Always Awardable Rule

            The Eighth, Tenth, and Second Circuits have adopted what may be termed the “Always Awardable Rule,” which permits the award of attorneys’ fees as costs pursuant to Rule 41(d) at the judge’s discretion.[17] Importantly, the Second Circuit held the purpose of Rule 41(d) would be “substantially undermined were the awarding of attorneys’ fees to be precluded.”[18] The court reasoned Rule 41(d)’s purpose to deter forum shopping and vexatious litigation is unmistakable and undisputed, and that purpose would be handicapped if district courts were barred from assessing attorneys’ fees as costs.[19]

The Never Awardable Rule

            In 2000, the Sixth Circuit became the only circuit court to adopt what may be termed the “Never Awardable Rule” when it found attorneys’ fees are never permissible as costs pursuant to Rule 41(d) in Rodgers v. Wal-Mart Stores, Inc..[20] In total, the Sixth Circuit reasoned because Congress did not explicitly include attorneys’ fees as costs in Rule 41(d), and Congress was not so unambiguous in its drafting as to read in an implicit permission for attorneys’ fees, including attorneys’ fees as “costs” would be to improperly judicially circumvent the intent of the legislature.[21]

The Underlying Statute Rule

            The Third, Fourth, Fifth, and Seventh Circuits have all adopted what may be termed the “Underlying Statute Rule.”[22] Stated simply, the Underlying Statute Rule allows for the recovery of attorneys’ fees as costs pursuant to Rule 41(d) only if the underlying statute in the plaintiff’s original suit allows for the recovery of attorneys’ fees as costs.[23] In choosing to adopt the Underlying Statute Rule, the Third Circuit notably reasoned the Always Awardable interpretation defies the American Rule, that each litigant pay its own attorneys’ fees, too heavily because Rule 41(d) is silent on the award of attorneys’ fees as costs.[24] The court also found issue with the Never Awardable interpretation, reasoning that the drafters of Rule 41(d) had likely vaguely defined the term “costs” for good reason, therefore an “analysis beyond the plain language” was necessary to determine Congress’ intent.[25]

MOVING FORWARD

            The inclusion of attorneys’ fees as “costs” pursuant to Rule 41(d) is an area of law undergoing rapid development. With the addition of four new circuit opinions within the last two years, all but four circuits now have precedential rulings governing the availability of fees under Rule 41(d). Importantly, though, the sister circuits who have ruled on the matter have all adopted bright-line positions that are readily distinguishable from one another. In addition, the lack of stance from the District of Columbia, Ninth, and Eleventh Circuits pose an interesting opportunity for development, as they are particularly influential and may shift the majority balance in one direction. Alternatively, if all three courts agreed on a new rule, they could create a plurality of opinion among the circuit courts, with three different interpretations of the rule holding heavy weight.


[1] Fed. R. Civ. P. 41(d)

[2] Id.

[3] See Horowitz v. 148 South Emerson Associates LLC, 888 F.3d 13 (2d Cir. 2018); Garza v. Citigroup Inc., 881 F.3d 277 (3rd Cir. 2018); Portillo v. Cunningham, 872 F.3d 728 (5th Cir. 2017); Andrews v. America’s Living Centers, LLC, 827 F.3d 306 (4th Cir. 2016); Robinson v. Bank of America, N.A., 553 Fed.Appx. 648 (8th Cir. 2014); Meredith v. Stovall, 216 F.3d 1087 (10th Cir. 2000); Rogers v. Wal-Mart Stores, Inc., 230 F.3d 868 (6th Cir. 2000); Esposito v. Piatrowski, 223 F.3d 497 (7th Cir. 2000); Evans v. Safeway Stores, Inc., 623 F.2d 121 (8th Cir. 1980).

[4] See Runyon v. McCrary, 427 U.S. 160, 185-86 (1976); Alyeska Service Pipeline Co. v. Wilderness Society, 421 U.S. 240, 247 (1975).

[5] See Horowitz v. 148 South Emerson Associates LLC, 888 F.3d 13 (2d Cir. 2018); Garza v. Citigroup Inc., 881 F.3d 277 (3rd Cir. 2018); Portillo v. Cunningham, 872 F.3d 728 (5th Cir. 2017); Andrews v. America’s Living Centers, LLC, 827 F.3d 306 (4th Cir. 2016).

[6] See Horowitz v. 148 South Emerson Associates LLC, 888 F.3d 13 (2d Cir. 2018); Meredith v. Stovall, 216 F.3d 1087 (10th Cir. 2000); Evans v. Safeway Stores, Inc., 623 F.2d 121 (8th Cir. 1980).

[7] Rogers v. Wal-Mart Stores, Inc., 230 F.3d 868 (6th Cir. 2000).

[8] See Garza v. Citigroup Inc., 881 F.3d 277 (3rd Cir. 2018); Portillo v. Cunningham, 872 F.3d 728 (5th Cir. 2017); Andrews v. America’s Living Centers, LLC, 827 F.3d 306 (4th Cir. 2016); Esposito v. Piatrowski, 223 F.3d 497 (7th Cir. 2000).

[9] Fed. R. Civ. P. 41(d).

[10] Simeone v. First Bank Nat’l Assn., 971 F.2d 103, 108 (8th Cir. 1992).

[11] Horowitz, 888 F.3d at 24(referencing Roadway Express, Inc. v. Piper, 447 U.S, 752, 759 (1980); Hines v. City of Albany, 862 F.3d 215, 220-21 (2d Cir. 2017)).

[12] Id. at 24-25 (referencing Andrews, 827 F.3d at 311 n.2.)

[13] Id. at 25 (referencing Marek v. Chesny, 473 U.S. 1, 9 (1985); Adsani v. Miller, 139 F.3d 67, 79 (2d Cir. 1998)).

[14] Id. at 25-26.

[15] Rogers, 230 F.3d at 874.

[16] Esposito, 223 F.3d at 500-01 (citing Marek v. Chesny, 473 U.S. 1, 9 (1985)).

[17] See Robinson v. Bank of America, N.A., 553 Fed.Appx. 648, 649 (8th Cir. 2014); Meredith v. Stovall, 216 F.3d 1087 (10th Cir. 2000); Horowitz v. 148 South Emerson Associates LLC, 888 F.3d 13 (2d Cir. 2018).

[18] Horowitz, 888 F.3d at 25.

[19] Id. (quoting Andrews, 827 F.3d at 309 (internal citations omitted)).

[20] Rogers v. Wal-Mart Stores, Inc., 230 F.3d 868 (6th Cir. 2000).

[21] Id. at 875-76.

[22] See Garza v. Citigroup Inc., 881 F.3d 277, 283-84 (3rd Cir. 2018); Andrews v. America’s Living Centers, LLC, 827 F.3d 306, 311 (4th Cir. 2016); Portillo v. Cunningham, 872 F.3d 728, 738-39 (5th Cir. 2017); Esposito v. Piatrowski, 223 F.3d 497, 501-02 (7th Cir. 2000).

[23] Id.

[24] Garza, 881 F.3d at 281-82 (quoting Baker Botts L.L.P. v. ASARCO LLC, 135 S.Ct. 2158, 2164 (2015) (internal citations omitted)).

[25] Id. (quoting Marek, 471 U.S. at 8).

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