ANDREWS v. AM. LIVING CTRS., LLC, NO. 15-1658

Decided: June 28, 2016

The Fourth Circuit vacated, reversed, and remanded for further proceedings.

In June 2010, Plaintiff, Stella Andrews, filed a lawsuit under the Fair Labor Standards Act (FLSA).  Defendants moved to dismiss under Federal Rule of Civil Procedure 12(b)(6) on July 29, 2010.  Andrews responded by stating she would submit an Amended Complaint setting forth her allegations in more detail if the court permitted it.  The magistrate judge stated that Andrews request was not proper and she had missed the 21-day deadline to amend her complaint.  Andrews filed a motion for leave to amend with a proposed amended complaint on October 19, 2010, one day before the hearing on the motion to dismiss.  At the hearing on the motion to dismiss, the magistrate judge stated there were three options for the parties: “(1) he could rule on the motion to dismiss, recommending that the district court dismiss the case; (2) he could rule on the motion for leave to amend; (3) or Andrews ‘c[ould] just stand up and say, I want to take a dismissal . . . plaintiff can be free to file another complaint.’”  Andrews decided to take a voluntary dismissal and on November 3, 2010, she filed her second complaint.  Defendants moved to stay the second action and for costs under Rule 41(d), seeking $23,437.75 for attorneys’ fees and other expenses.  Defendants were awarded fees relating to the motion to dismiss and the district court affirmed the award stating, “Andrews’ conduct amounted to vexatious litigation, for which fees could be recovered.”  On appeal to the Fourth Circuit in 2013, the court dismissed Andrews’ appeal as interlocutory and unappealable.  The district court then awarded Defendants $13, 403.75 in attorneys’ fees; Andrews appealed the award without paying the costs.  Andrews’ case was then dismissed for nonpayment.  The Fourth Circuit granted Andrews’s motion for voluntary dismissal and the district court dismissed Andrews’s second action for nonpayment.  Andrews appealed.

On appeal, the Court began its analysis by determining whether and under what circumstances attorneys’ fees could be awarded under Rule 41(d).  Rule 41(d) stated if a plaintiff took a voluntary dismissal and then refilled an action based on the same claim; the court “(1) may order the plaintiff to pay all or part of the costs of that previous action; and (2) may stay the proceedings until the plaintiff has complied.”  Rule 41(d) is in place to avoid forum shopping and vexatious litigation but attorneys’ fees are not explicitly permitted.  The Court recognized the split of authority on whether Rule 41(d) included the award of attorneys’ fees.  The Court relied on the analysis and conclusion of the Seventh Circuit in Esposito v. Piatrowski, 223 F.3d 497, 501 (7th Cir. 2000) which held “‘a party may recover reasonable attorneys’ fees as part of its ‘costs’ under Rule 41(d) only where the underlying statute defines costs to include attorneys’ fees.’”  The Court also stated attorneys’ fees were permitted if the court “makes a specific finding that the plaintiff has acted ‘in bad faith, vexatiously, wantonly, or for oppressive reasons,’ a well-established exception to the American Rule.”

The Court concluded awarding attorneys’ fees to Defendants was not permitted under the FLSA, “which provides that when a plaintiff prevails a court ‘shall . . . allow a reasonable attorney’s fee to be paid by the defendant.’”  The Court then determined whether Andrews’ behavior warranted attorneys’ fees to be awarded. The magistrate judge stated Andrews’ voluntarily taking a dismissal “‘delayed the resolution of this case, increased the costs of defending this action, and wasted the judicial resources of the Court.’”  The district court concluded Andrews acted vexatiously by taking the voluntary dismissal to avoid a negative ruling on the motion to dismiss while trying “‘to get it right.’”  The Court disagreed recalling vexatious’ meaning of “‘“without reasonable or probable cause or excuse.”’” The Court concluded Andrews’ behavior was not vexatious because Andrews followed the district court’s option to dismiss the first lawsuit and refile after amending the complaint.  The Court also noted Andrews refilled the lawsuit the very same day as taking the voluntary dismissal; “this fact is insufficient evidence of vexation.”  Andrews’ complaints were also not “‘virtually identical’” with the second complaint being more detailed in the allegations; therefore, not warranting Andrews’ conduct being labeled vexatious.  Therefore, the Court concluded Defendants were not entitled to attorneys’ fees because the FLSA does not provide attorneys’ fees for defendants but rather prevailing plaintiffs and Andrews’s conduct was not vexatious in order to permit attorneys’ fees.

Accordingly, the Court vacated, reversed, and remanded for further proceedings.

Full Opinion

Alicia E. Morris

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