Tuesday, January 25, 2011

9th Circuit Makes it Harder for Employers to Recover Attorney's Fees in Frivolous Claims in Multi-Count Suits

A recent decision by the Court of Appeals for the Ninth Circuit has held that even if an employer carries its burden of showing that some of a plaintiff’s claims are “frivolous, unreasonable or without foundation”—itself no easy task—the employer can only recover those fees “exclusively” attributable to defending against the frivolous claims. What this means is that, for example, if an attorney spends time preparing for or attending a deposition or hearing, or drafting a motion, pertaining to both frivolous and non-frivolous claims, the employer cannot recover any fees for that work, even on a pro rata basis.

In the case, the plaintiff filed a complaint alleging ten separate claims for relief and the district court, after all ten were resolved through dispositive motions, found that five of the ten counts were frivolous. From the Nixon Peabody story on the opinion:
The employer—which had incurred over $315,000 in attorney’s fees in total—sought recovery of approximately $10,000 in fees specifically attributable to the frivolous claims, over $250,000 in “general fees” (i.e., fees not allocated to any particular claim), and over $50,000 in non-taxable costs (i.e., expenses from computerized legal research, factual investigation, and photocopying). The district court then calculated the amount attributable to the frivolous claims by taking the “general fees” and dividing them equally across the plaintiff’s ten claims, and then “allocating to each claim for which it determined fees to be appropriate one-tenth of the total general fees.” It then reduced that number by half to take the plaintiff’s financial hardship into account. With respect to costs, the district court used a similar formula, awarding a prorated amount of defendants’ requested expenses based on whether or not costs were recoverable for the specific frivolous claim at issue.

The Ninth Circuit reversed and remanded for a new fees and costs determination. It stated that federal law encourages plaintiffs to bring civil rights claims, in part, by making the recovery of attorney’s fees by a successful plaintiff “a matter of course,”
while making the recovery of attorney’s fees by a successful defendant much more difficult.
Thus, employers on the West Coast have some serious hurdles when defending against a complaint that throws ""everything and the kitchen sink," so to speak. However, I do not think this decision will incentivize plaintiff attorneys to pile on frivolous claims just to induce settlement because there can still be repercussion for an attorney who intentionally files frivolous claims without due diligence. At the end of the day it does no one any good to file claims that will eventually get dismissed and simply wastes precious time and resources.

The case is Harris v. Maricopa County Superior Court, Case No. 09-15833.

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