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Fee award reversed in refiled suit

A plaintiff who refiles a complaint after a voluntary dismissal may have to pay the opposing party’s attorney’s fees, the 4th U.S. Circuit Court of Appeals said on June 28.

The appeals court outlined the conditions for awarding fees, but overturned a $13,404 fee award in an overtime pay case for failure to meet those conditions.

Although the plaintiff refiled her suit against her employer on the same day she took her voluntary dismissal, a three-judge panel said she had not acted in bad faith, as the magistrate judge had described refiling as one of three options available to the plaintiff when facing the defendants’ motion to dismiss.

Federal appeals courts have split on the issue of attorney’s fee awards under Fed. R. Civ. P. 41(d). The rule allows a district court to award “costs” for a refiled suit, and some courts have read “costs” to include the other side’s lawyer bills. The 8th and 10th Circuits have upheld fee awards under Rule 41(d), while the 6th Circuit has said that attorney’s fees are not included in costs.

The 4th Circuit decided to go with a 7th Circuit approach, holding that fees are not generally available under Rule 41(d) unless the substantive statute on which a plaintiff is suing allows for recovery of fees as costs, or the district court specifically orders fees for “vexatious” conduct by the plaintiff.

When plaintiff Stella Andrews appeared in a North Carolina federal court on the defendants’ motion to dismiss her suit under the Fair Labor Standards Act, the magistrate judge told her she had three options. The court could recommend that the district court dismiss the case, he could rule on her late motion for leave to amend, or she could “just stand up and say, I want to take a dismissal” and “be free to file another complaint.”

Andrews dismissed her first action and filed a second complaint later that same day.

The defendants went back to court, asking for $25,438 for attorney’s fees and other expenses incurred in defending the first action. The district court agreed that Andrews’ behavior had the effect of increasing the costs of defending the previous action, wasting judicial resources and avoiding an adverse ruling. The court ordered Andrews to pay $13,404 in fees.

A unanimous panel reversed the order to pay attorney’s fees. Under the 4th Circuit’s newly adopted test, the defendant employer was not eligible for a fee award under the FLSA, and Andrews’ conduct in dismissing, then refiling, the suit did not warrant a fee award.

The magistrate judge’s descriptions of Andrews’ “options at the hearing – which at least included, if not encouraged, voluntary dismissal,” meant her conduct in refiling her FLSA suit could not be deemed vexatious, said Judge Roger L. Gregory in Andrews v. America’s Living Centers LLC.