A recent Law.com story by Riley Brennan, “Ohio Courts Clarify ‘Prevailing Party’ Owed Attorney Fees in Deceptive Trade Practices Case”, reports that, in a question of first impression for Ohio courts, the First Appellate District looked to define the meaning of the term “prevailing party” in terms of attorney fees pursuant to the Ohio Deceptive Trade Practices Act.  The meaning of “prevailing party” was at the center of a case before the court, with the question arising after a jury found in favor of the plaintiffs, Niv Goomai and Bar Hajbi, on their allegations that the defendants, H&E Enterprise and Avi Ohad, violated the Deceptive Trade Practices Act (DTPA) and breach of contract claims.  The jury only awarded damages on the breach of contract claim, and therefore, as there were no damages awarded on the DTPA claim.

The trial court denied “statutorily-available attorney fees,” citing the plaintiff’s failure to prevail on the deceptive trade practices claim and denied attorney fees as a result.  On appeal, Goomai claimed the lower court erred in failing to properly interpret and apply the DTPA attorney fee provision found in Ohio Revised Code 4165.03(B).  Goomai argued that “he was a prevailing party under the DTPA by virtue of the jury’s verdict finding that H&E violated the DTPA,” while H&E argued that in order to be a prevailing party under R.C. 4165.03(B), “a party must obtain not only a judgment in its favor, but also a remedy,” according to the appellate court’s Oct. 27 opinion. 

The Court of Appeals for the First Appellate District of Ohio agreed, holding the question in the case regarded the applicability of a statutory fee-shifting provision. In looking at what it means to be a “prevailing party” under R.C. 4165.03(B), the court used “ordinary principles of statutory interpretation” to guide its resolution, according to the opinion authored by Judge Jennifer Kinsley.  As the term isn’t defined by the statute, the court looked to Black’s Law Dictionary definition, which defines “prevailing party” as “[a] party in whose favor a judgment is rendered, regardless of the amount of damages awarded.”

According to the court, under this definition, “the relief obtained is immaterial to a party’s status; what matters is whether the party obtained judgment in its favor.”  “Our review of R.C. 4165.03 supports this conclusion. In construing statutory terms, courts read statutes as a whole and do not dissociated words and phrases from their context. … Looking at the language of R.C. 4165.03 as a whole, we are persuaded that ‘prevailing’ in the context of the DTPA means that the party obtained judgment in its favor, regardless of whether the party obtained a remedy in furtherance of that judgment,” Kinsley wrote.

“For one, the DTPA permits recovery of attorney fees from a plaintiff who knowingly pursues a groundless DTPA claim,” the judge continued.  “In such circumstances, a prevailing defendant would obtain no relief other than a judgment in its favor, but that defendant would still be entitled to attorney fees from the plaintiff under R.C. 4165.03(B).  If we were to read the statute as requiring a party to obtain a remedy in order to prevail, we would effectively eliminate the ability of prevailing defendants to obtain attorney fees and undermine the intent of the legislature in the process.  And courts do not read language out of statutes.”

According to the court, Subsection B specifies that courts “may award in accordance with this division reasonable attorney’s fees to the prevailing party in either type of  civil action authorized by division (A) of this section.”  “This clear statutory language defines attorney fees eligibility by the type of action, not by the type of remedy.  If the legislature intended to make prevailing party status dependent upon obtaining one of the remedies outlined in R.C. 4165.03(A), it could easily have said so,” Kinsley wrote.  “Its decision not to do so is indicative of its intent to untangle attorney fees from any other type of remedy recovered in a DTPA case.”

In 2017, Ohad helped Goomai purchase a property in the Camp Washington neighborhood of Cincinnati, with the two entering into an agreement that Ohad and H&E would renovate the property for $50,000, with the project set to be completed by January 2018.  However, after H&E failed to deliver on their promises, and the renovation project never materialized, Goomai sold the property for $50,000, which was at a loss on his investment.  Goomai went on to sue H&E, including claims for breach of contract, fraudulent misrepresentation, and violation of the DTPA. H&E filed a counterclaim against Goomai for breach of contract, with only the DTPA claim permitting the recovery of statutory attorney fees if Goomai prevailed.

The jury didn’t receive instructions about the applicability of the attorney fees provision, or the implications of its allocation of damages if it decided to award no damage on the DTPA claim, said the court.  The jury ultimately found against Goomai on the fraudulent misrepresentation claim, and agaisnt H&E on its counterclaim, awarding $30,604.09 in damages on the breach of contract claim and no damages on the DTPA claim.  However, a Hamilton County judge denied Goomai’s motion for an award of attorney fees, “on the basis that Goomai was not a prevailing party within the meaning of the DTPA, because the jury did not award damages on that claim,” the opinion said.

The three-judge appellate panel court concluded that the term “prevailing party” in R.C. 4165.03(B) “supports the conclusion that obtaining a judgment, even one without an award of damages, entitles a party to see attorney fees.” Judges Robert C. Winkler and Ginger Bock concurred.  In reaching this determination, the court sustained Goomai’s assignment of error, reversed the trial court’s decision, and remanded the case back to the trial court to consider the amount of attorney fees Goomai is entitled.

A recent Law.com story by Riley Brennan, “3^rd Circ. Clarifies When District Courts Can Award Attorney Fees on Remand”, reports that, in a precedential decision, the U.S. Court of Appeals for the Third Circuit concluded that district courts lack the authority to award attorney fees under 28 U.S.C. Section 1447(c) when a case has been properly removed from state court but subsequently remanded based on a forum-selection clause.  In an opinion, authored by Third Circuit Judge David J. Porter, the court vacated a district court’s awarding of attorney fees to the Medical Associates of Erie, concluding that, because a forum-selection clause isn’t a removal defect and doesn’t deprive the district court of subject matter jurisdiction, the court can’t remand and award attorney fees under 28 U.S.C. Section 1447(c).

The Medical Associates of Erie (MAE) and Michael B. Zaycosky originally entered into an employment contract but couldn’t agree on when Zaycosky promised to start his employment, leading MAE to sue Zaycosky in the state court, as prescribed in the contract between the two parties.  However, Zaycosky removed the suit to federal court, leading MAE to move for remand to enforce the contract’s forum-selection clause and for an award of attorney fees.  The district court had remanded and granted MAE 30 days to petition for costs and fees, with MAE timely submitting a petition for $29,517.25.

Zaycosky opposed the petition, arguing the district court “lacked authority under 28 U.S.C. § 1447(c) to award costs and attorney fees for a remand based on a forum-selection clause, and, alternatively, that a fee award was not warranted because he had an objectively reasonable basis for removal.”  The district court rejected Zaycosky’s arguments and awarded MAE its requested amount.

On appeal, the Third Circuit looked to answer whether courts can award attorney’s fees against the “American Rule,” which holds that court’s presume “[e]ach litigant pays his own attorney’s fees, win or lose, unless a statute or contract provides otherwise.”  “Courts may award fees when Congress provides ‘a sufficiently ‘specific and explicit’ indication of its intent to overcome the American Rue’s presumption against fee shifting,’” the court said, determining the question on appeal was whether “§ 1447(c) specifically and explicitly indicates Congress’s intent to allow fee shifting when courts enforce a forum-selection clause.”

Ultimately, the court agreed with Zaycosky’s argument that “§ 1447(c) allows fee shifting only for remands where removal failed to meet the statutory requirements or where the court lacks subject matter jurisdiction over the removed case.”

According to the court, Section 1447(c) limits a plaintiff’s ability to challenge the removal of a case and limits a district court’s authority to remedy abuses of the removal procedure.  Further, while plaintiffs “may move for remand at any time if the district court lacks subject matter jurisdiction,” “they must challenge removal defects within thirty days after the filing of the notice to remove.”

“Courts, meanwhile, may issue ‘[a]n order remanding’ and ‘may require payment of the just costs and any actual expenses, including attorney fees, incurred as a result of the removal,’” noted Porter.  And as a result of the Supreme Court maintaining that “the distinction between ‘properly removed’ cases and cases ‘failing in subject-matter jurisdiction,” since Congress amended § 1447 in 1996, the court reads § 1447(c) as authorizing “courts to shift fees when remanding cases removed without subject matter jurisdiction and cases defectively removed.”

The court further examined whether an order remanding to enforce a forum-selection clause authorizes courts to shift fees, holding that “a remand pursuant to a forum selection clause does not fall within the reasons for remand listed in § 1447(c),” per the court’s 2015 decision in Carlyle Investment Management v. Moonmouth.

The court applied the Supreme Court’s holding that a “forum-selection clause has no bearing” regarding whether a case meets the statutory requirements of venue, to the case, ultimately determining that the district court “had subject matter jurisdiction under § 1332, so it may not remand and award fees under § 1447(c) for a failure of subject matter jurisdiction.”  Further, Mae didn’t identify a defect in the removal, with MAE failing to argue before the district court that Zaycosky failed to satisfy the statutory requirements of removal, arguing instead “that the forum-selection clause was the single obstacle to removal.”

According to the court, “an enforceable forum-selection clause is not a removal defect,” with Zaycosky having “had a statutory right to remove, and he did so according to the statutory requirements, so his removal was proper.”  Therefore, the district court could not award fees under § 1447(c) based on a defective removal.  However, the inability to award fees under the statute didn’t foreclose the power to remand, as Section 1447(c) doesn’t occupy the filed for permissible remands.

Per the court’s 1991 ruling in Foster v. Chesapeake Insurance, “a forum-selection clause an be ‘a proper, non-statutory ground for remand.’”  Since the Third Circuit’s Foster ruling, the Supreme Court has declared that the appropriate way to enforce a forum-selection clause pointing to a state forum is through the doctrine of forum non conveniens, of which the “traditional remedy” of outright dismissal.  However, according to the court, it doesn’t eliminate remand as an available remedy for removed cases.

“Nor is Section 1447(c) the only deterrent against abusing removal. Rule 11 requires attorneys and unrepresented litigants to certify that every pleading, written motion, or other paper presented to the court is not presented ‘for any improper purpose, such as to harass, cause unnecessary delay, or needlessly increase the cost of litigation,’” said the court.

“We presume each litigant bears its own fees and costs, and we do not see a specific and explicit indication of Congress’s intent to displace that presumption for remands not specified in § 1447(c),” concluded the court, vacating the fee award.  “A remand to enforce a forum selection clause is not a remand specified in § 1447(c).  Accordingly, we hold that the District Court lacked the authority to award attorney fees under § 1447(c) when Zaycosky properly removed a case within the District Court’s subject matter jurisdiction.”

A recent Law 360 article by Theodore Boutrous, Lee Crain, and Randi Kira Brown of Gibson Dunn LLP, “How NY SLAPP Defendants Can Recover Fees in Fed. Court”, reports on attorney fee recovery in New York SLAPP suits in federal court.  This article was posted with permission.  The article reads:

Meritless defamation lawsuits have long plagued media defendants.  These strategic lawsuits against public participation, often called SLAPP suits, are designed to chill speech.  States across the country have been experimenting with statutes to address this problem for over 30 years. New York — a jurisdiction that many newspapers, magazines, publishing houses and television networks call home — did not have a strong solution to this problem for many years, but the 2020 amendments to New York's anti-SLAPP law were meant to change that.

Among other things, New York's anti-SLAPP law protects defamation defendants by raising the standard of proof on defamation claims for plaintiffs and by providing for fee shifting, allowing victorious defamation defendants to recover the costs they spent in their defense.  Fee-shifting provisions are essential components of anti-SLAPP laws, as the purpose of SLAPP suits is often to punish and chill the exercise of speech rights by imposing litigation costs.

There is so far no federal anti-SLAPP law. Defamation defendants therefore often must consider whether, and to what extent, state anti-SLAPP laws apply in federal court.  If not, a litigious SLAPP plaintiff need only forum-shop to try to avoid any of the provisions of state anti-SLAPP statutes, including state anti-SLAPP fee-shifting rules.  In other words, if that plaintiff files a defamation claim in federal court, she can argue she is no subject to the specter of fee-shifting because the anti-SLAPP law only applies in state court.

Federal courts have been split as to whether certain anti-SLAPP laws apply in federal court under the U.S. Supreme Court's Erie doctrine from the 1938 case Erie Railroad Co. v. Tompkins.  Under that doctrine, courts consider whether an anti-SLAPP law is procedural or substantive and, if procedural, whether it conflicts with the Federal Rules of Civil Procedure.  

New York's anti-SLAPP law was specifically designed to avoid this problem.  How?  Legislative innovation.  Unlike other anti-SLAPP laws, New York law doesn't only create a motion-based procedural vehicle for a defendant to defeat a defamation claim and recover attorney fees.  Instead, a key innovation New York adopted to help SLAPP defendants was to establish a substantive cause of action for defendants to seek fee shifting for SLAPP lawsuits — effectively an anti-SLAPP tort.

Specifically, New York's fee-shifting provision provides a defendant the right to "maintain an action, claim, cross claim or counterclaim to recover damages, including costs and attorney's fees, from any person who commenced or continued [a SLAPP] action," according to Section 70-a(1) of the New York Civil Rights Law.

So far, though, federal courts in New York have not consistently allowed parties to recover these fees, seemingly due to confusion about how the statute works and the best ways to invoke it in federal court.  For example, in Executive Park Partners LLC v. Benicci Inc. in May, the U.S. District Court for the Southern District of New York refused to apply the fee-shifting provision of the anti-SLAPP statute, holding that the plaintiff cannot file a motion for fees in federal court.

An anti-SLAPP motion, brought under Rule 3211(g) of the New York Civil Practice Law and Rules, conflicts with the Federal Rules of Civil Procedure, the court said, and is thus inapplicable in federal court.  By contrast, in 2021, the U.S. District Court for the Northern District of New York applied the fee-shifting provision in Harris v. American Accounting Association, though without addressing the difference between an anti-SLAPP fee-shifting motion and a cause of action to seek those same fees.

The Southern District of New York appears to have suggested last year in Carroll v. Trump that even a counterclaim is not cognizable in federal court because a Section 3211(g) motion is inapplicable, though the court failed to specifically address why a substantive claim was subject to the same Erie analysis as a state-law motion.  By contrast, in March, the Southern District of New York expressly recognized in Max v. Lissner that an anti-SLAPP claim is cognizable in federal court, even if an anti-SLAPP motion is not.

Given this conflicting backdrop and the state of uncertainty, defamation defendants seeking to invoke New York's anti-SLAPP law in federal court need to tread carefully in deploying it.  Simply filing a motion under the statute for fees may well result in a denial under Erie.  But New York law doesn't limit defendants to mere motion practice.  When a defendant prevails on a defamation claim, they should invoke their rights under the anti-SLAPP statute to counterclaim or bring a new action entirely under the statute to recover their fees — as the New York anti-SLAPP statute expressly allows.

And bringing such a substantive cause of action — essentially a substantive anti-SLAPP tort — will effectuate the Legislature's intent to ensure that the anti-SLAPP statute's protections are available in federal or state court.  It will ensure that courts will see the New York anti-SLAPP statute for what it is: A statute that confers substantive rights on defendants that plaintiffs can't try to forum-shop their way out of simply by filing in federal court.

A recent Law 360 story by Celeste Bott, “In a First, Dior Wants Fee Award For Beating BIPA Suit”, reports that Christian Dior says it should be the first defendant awarded attorney fees in a case under Illinois' biometric privacy law, urging a federal judge who threw out class claims against it to reject the argument that the law only allows for the recovery of fees for prevailing plaintiffs.  U.S. District Judge Elaine Bucklo in February dismissed the Illinois Biometric Information Privacy Act suit brought by lead plaintiff Delma Warmack-Stillwell, holding that an exemption under BIPA for data captured "from a patient in a health care setting" freed Christian Dior Inc. from the suit over its online tool for users to virtually try on sunglasses.

Warmack-Stillwell qualified as a patient because Dior's virtual try-on tool "facilitates the provision of a medical device that protects vision," the judge said.  In May, Dior argued that Judge Bucklo should award it attorney fees and costs, saying BIPA's plain language makes clear that a "prevailing party" may recover its attorney fees and that the Illinois Supreme Court has held that prevailing parties include defendants.

Dior claimed those fees were particularly warranted in this case, citing two other lawsuits that were dismissed by Illinois federal judges under the same health care exemption — one before Warmack-Stillwell's case was filed and one tossed about a week after hers was filed.  "These decisions were dispositive of this case, such that pursuing these claims would necessarily be wasteful," Dior claimed. "Plaintiff filed and pursued a lawsuit premised on a repeatedly-rejected theory of liability and increased the costs of this lawsuit with wasteful discovery demands."

Warmack-Stillwell, meanwhile, contends that no BIPA case has ever awarded fees to a defendant and says that BIPA provides a "prevailing party" may seek to recover its fees "for each violation," a phrase that necessarily implies further the word "proven" and therefore applies only to plaintiffs, she said.

In Dior's response contesting that interpretation, it cited the Illinois Supreme Court's recent holding in Cothron v. White Castle, which said claims accrue each time data is unlawfully collected and disclosed rather than simply the first time.  There, the justices cautioned against an "interpretation-by-assumption approach in the context of BIPA itself" by forbidding parties from creating "new elements or limitations not included by the legislature."

"In Cothron, it acknowledged that its ruling could result in 'annihilative liability' and that 'there is no language in [BIPA] suggesting legislative intent to authorize a damages award that would result in the financial destruction of a business,'" Dior said.  "And yet, because it found the statutory language was clear, those sort of policy judgments are reserved for the legislature. The same result applies here."

Judge Bucklo should also reject the plaintiff's other argument that the term "prevailing party" in BIPA should exclude defendants because the law's purpose is to protect consumers, Dior said in its reply.  "Of course, the Illinois Consumer Fraud Act was also intended to protect consumers, but that did not stop the Supreme Court from holding that its prevailing party provision applied to prevailing defendants as well," Dior said.

A recent Law 360 story by Hope Patti, “SoCal Edison Says Insurer Can’t Cut LA Wildfire Defense Fees”, reports that an insurer must pay in full Southern California Edison Co.'s counsel fees related to more than 20 negligence suits over the September 2020 Bobcat wildfire, the company told a California federal court, saying the carrier forfeited the right to limit counsel fees when it breached its insurance contract.  The utility company argued in a motion for partial summary judgment that Greenwich Insurance Co. cannot rely on California Civil Code Section 2860 to impose lower billable rates on SoCal Edison's defense counsel.

The insurer is required to comply with U.S. District Judge John F. Walter's January ruling in which he held that Greenwich breached its duty to defend and must reimburse SoCal Edison's defense fees and costs incurred in the underlying suits, the utility company said.  "Indeed, California law is clear that a breaching insurer loses its rights to control the insured's defense, choose the insured's counsel, and limit defense counsel's rates to rates paid to insurer appointed counsel," SoCal Edison said, adding that "Greenwich cannot now, after being found in breach, find safe harbor in Section 2860's fee provisions."

SoCal Edison and parent company Edison International were hit with a number of suits in Los Angeles Superior Court after the Bobcat wildfire broke out in the Angeles National Forest in September 2020.  The suits alleged that the fire may have been caused by tree branches and other vegetation that came into contact with SoCal Edison's conductors.  The company sought coverage from Greenwich under a commercial general liability policy that the insurer issued to Utility Tree Service LLC, which SoCal Edison hired to provide vegetation services where the fire started, but the insurer repeatedly denied its duty to defend.

SoCal Edison filed the present action in August, seeking a declaration that the insurer owes coverage under the CGL policy and asserting claims for breach of contract and bad faith.  In December, Greenwich told the court it has no defense obligations to the utility company because the underlying suits don't accuse UTS of negligence.  However, the court ruled in January that SoCal Edison clearly established that Greenwich has a duty to defend.  "Notwithstanding this court's order, Greenwich has refused to reimburse Edison's fees in full, instead advising that it would pay only a fraction of the fees incurred by significantly reducing the hourly rate of Edison's defense counsel," SoCal Edison said.

Because Greenwich breached its duty to defend, the insurer cannot take advantage of any rights it may have once had under Section 2860, including any statutory limitations on independent counsel's fees, SoCal Edison contended.  "Greenwich must be ordered to pay Edison's reasonable defense fees and costs in full and at the previously negotiated marketplace rates, for the Bobcat wildfire lawsuits until the lawsuits conclude," the company said, adding that its defense fees are contractual damages that the insurer must pay because of its breach.

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