A recent Corporate Counsel story, “D.C. Circuit Knocks NLRB Bid for Attorney Fees” reports that, after proving that a company violated labor laws, can the National Labor Relations Board (NLRB) force the wrongdoer to pay its costs and attorney fees as a punishment?  Not according to the U.S. Court of Appeals for the D.C. Circuit.

The appeals court recently heard an appeal by HTH Corp, a hospitality company that the NLRB had found liable for a litany of labor violations, like illegally firing a union activist and banning union representatives from hotel premises.  HTH didn’t appeal the NLRB’s finding of liability, but it did challenge the extraordinary remedies imposed by the NLRB, including a requirement that HTH pay the labor board and the labor union involved in the case for attorney fees incurred.

In a ruling, the D.C. Circuit vacated the board’s decision to grant attorney fees.  The court rejected the NLRB’s argument that its request was permissible under the bad faith exception to the American rule, which allows federal courts to shift attorney fees to parties when one party acts in bad faith or in a particularly egregious manner.

Senior Circuit Judge Stephen Williams emphasized in the court’s opinion that as “a creature of statute” the NLRB only has “those powers conferred upon it by Congress.”  Unlike a federal court, he writes, the board or one of its administrative law judges cannot apply the bad-faith exception and demand attorney fees unless the NLRA grants it power to do so.

Jim Walters, a partner at Fisher Phillips, says that because HTH was a repeat offender this was a good case for the NLRB to use to test whether it could get attorney fees.  “But at the end of the day, the agency just didn’t have the authority,” Walters says.

If the board ever did manage to get court approval for charging the opposing party with attorney fees under the NLRA, it would be a windfall for the agency, says Howard Wexler, an associate at Seyfarth Shaw.  He pointed out that other employment statutes provide for payment of attorney fees to prevailing plaintiffs, like Title VII of the Civil Rights Act and the Fair Labor Standards Act.

“I guess you can’t fault them for trying,” says Wexler of the labor board. “But at least here the D.C. Circuit didn’t give it to them.”