When a plaintiff voluntarily dismisses an action and then refiles it in federal court, “the court may,” under Rule 41(d)(1), “order the plaintiff to pay all or part of the costs of that previous action…” The goal of the rule is to deter plaintiffs from forum shopping.
Court fees, printing costs, costs to procure transcripts, and compensation for court-appointed interpreters have typically been considered costs that can be recovered under Rule 41(d)(1). But these costs often pale in comparison to the fees that defendants pay to their attorneys.
Under Rule 41(d)(1), can a court order a plaintiff to pay attorney’s fees?
Circuits have taken three different approaches to resolving this issue. The Sixth Circuit has held that attorney’s fees are not recoverable under the rule. The Second, Eighth, and Tenth Circuits have upheld awards of attorney’s fees under Rule 41(d) regardless of the underlying suit. And the Fourth, Fifth, and Seventh Circuits only allow for recovery of attorney’s fees when the statute under which the suit is brought allows a successful defendant to recover them.
The Sixth Circuit
In Rogers v. Wal-Mart Stores, Inc., the Sixth Circuit held that attorney’s fees could not be awarded under Rule 41(d) for a “simple” reason: “the rule does not explicitly provide for them.” The court reasoned that “the law generally recognizes a difference between the terms ‘costs’ and ‘attorney fees,’” and that “where Congress has intended to provide for an award of attorney fees, it has usually stated as much.”
The Sixth Circuit concluded that Rule 41(d) does not “evince an intent to provide” attorney’s fees, applying the Supreme Court’s test from Key Tronic Corp. v. U.S. for determining whether a statute authorizes awarding attorney’s fees when it does not do so explicitly. In reaching this conclusion, the court reviewed other parts of the Federal Rules of Civil Procedure (“FRCP”) that allow for the recovery of costs. Costs and attorney’s fees are listed as separate elements that can be recovered in rules 30(g)(2), 37(a)(4), 37(c), and 56(g), and thus, an interpretation of Rule 41(d) allowing the awarding of attorney’s fees would render words in other parts of the federal rules surplusage, the court reasoned. It also pointed to 28 U.S.C. § 1920, which lists costs that can be recovered under Rule 54(d) and does not include attorney’s fees, as evidence that “cost” was not intended to encompass attorney’s fees under the federal rules.
The Second, Eighth, and Tenth Circuits
In 2018, the Second Circuit addressed the issue in Horowitz v. 148 South Emerson Associates LLC. Like the Sixth Circuit, the Second Circuit concluded that neither Rule 41(d) nor the FRCP in general were explicit in including attorney’s fees as a part of costs.
But the Second Circuit concluded that Rule 41(d) did “evince an intent to provide” attorney’s fees. The purpose of Rule 41(d), the court reasoned, is “to serve as a deterrent to forum shopping and vexatious litigation,” and this purpose would be “greatly limited” if Rule 41(d) did not provide for attorney’s fees because oftentimes attorney’s fees account for a significant proportion of a defendant’s total cost. If attorney’s fees could not be awarded to the defendant in Horowitz, for example, the only costs that could be awarded under Rule 41(d) would be a $15 delivery fee and a $60.48 transcript fee. The court was “unconvinced such small payments would effectively deter litigants . . . from forum shopping or otherwise embarking on a course of vexatious litigation.”
While the Eighth and Tenth Circuits considered the issue before the Second Circuit did, neither directly addressed the issue of whether “costs” included attorney’s fees. In Meredith v. Stovall (2000), the Tenth Circuit held that “under the language of Rule 41(d), the decision whether to impose costs and attorney’s fees is within the discretion of the trial court.” And in Evans v. Safeway Stores, Inc (1980), the Eighth Circuit issued an unpublished decision concluding that the district court did not abuse its discretion in awarding attorney’s fees.
The Fourth, Fifth, and Seventh Circuits
The Seventh Circuit addressed this issue in Esposito v. Piatrowski (2000). The court extended the rationale of the Supreme Court’s decision in Marek v. Chesney (1985) in which the Court analyzed whether Rule 68, which also allows the recovery of costs without specifying further, allows for the recovery of attorney’s fees. In Marek, the Court held that “Rule 68 was intended to refer to all costs properly awardable under the relevant substantive statute” because the Advisory Committee was aware of the many statutes that allowed for recovery of attorney’s fees in particular cases, and therefore “given the importance of ‘costs’ to the Rule, it is very unlikely that this omission was mere oversight.”
The Seventh Circuit adopted this rationale for interpreting “costs” in Rule 41(d): “Like Rule 68, Rule 41(d) refers to ‘costs,’ but fails to define the term, and furthermore, neither the rule nor the Advisory Committee Notes address the question of whether attorney’s fees may be included in an award of costs. Because Rule 41(d) does not refer to costs any differently than does 28 U.S.C. § 1920, which provides the statutory specification of allowable costs [under rule 54(d)], fees may be included as costs only where the underlying statute so provides.”
The Seventh Circuit ruled, therefore, that attorney’s fees were only recoverable when a prevailing defendant could recover in the initial suit. In Esposito, the suit was a civil rights action arising under 42 U.S.C. § 1983. Because the initial suit had not been “frivolous, unreasonable, or groundless,” a requirement for the recovery of attorney’s fees by a successful defendant in an action under Section 1983, the court held that the statute under which the action arose did not allow recovery of attorney’s fees by the defendant.
In Andrews v. America’s Living Centers, LLC (2016), the Fourth Circuit adopted the Seventh Circuit’s rationale in an action arising under the Fair Labor Standards Act. It explained that the Seventh Circuit’s rule in Esposito “strikes the right balance between upholding the American Rule and furthering the goal of Rule 41(d) to deter forum shopping and vexatious litigation on the part of the plaintiff.” But, as in Esposito, because the plaintiff’s initial suit “was not undertaken in bad faith, vexatiously, wantonly, or for oppressive reasons,” the standard for recovery of attorney’s fees by a prevailing defendant under the FLSA, attorney’s fees were not recoverable. The Fifth Circuit adopted the same rule in Portillo v. Cunningham the following year.
Because of the rarity of the situation, the question of whether attorney’s fees can be awarded under Rule 41(d) is one that is unlikely to be resolved soon. Even so, it is a question that affects the extent to which plaintiffs are incentivized to refile their cases in federal courts. It is also one that reflects a broader difference in methods between circuits in determining whether a cost-awarding provision in the FRCP allows for attorney’s fees, and therefore, it is an issue that may develop as courts address similar fee-shifting clauses.
Further Reading: Does Rule 41(d) Authorize an Award of Attorney’s Fees? by Edward X. Clinton Jr.