Employment Law Daily Law firm can recover fees for associate’s work defending discrimination suit against it
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Wednesday, August 10, 2016

Law firm can recover fees for associate’s work defending discrimination suit against it

By Dave Strausfeld, J.D. A law firm that was forced to defend against an attorney’s sex discrimination claims beyond the point where she should have known they were baseless was entitled to recover its attorneys’ fees, held the First Circuit, finding that the district court did not abuse its discretion in granting the fee award. Although the Supreme Court held in Kay v. Ehrler that pro se litigants, including attorneys who represent themselves, cannot seek attorneys’ fees under the Civil Rights Attorney’s Fees Awards Act of 1976, that rule does not apply to an attorney who represents his or her own law firm, because an organization is not comparable to a pro se individual litigant. Consequently, the law firm could recover legal fees for work performed in this litigation by one of its salaried associates (Fontanillas-Lopez v. Morell Bauza Cartagena & Dapena, LLC, August 5, 2016, Kayatta, W.). Upon being fired from her job, a tax attorney brought suit against her former law firm employer for sexual harassment, gender discrimination, and retaliation under Title VII and Puerto Rico law. When the district court dismissed her suit on summary judgment, the law firm moved to recover its attorneys’ fees. Granting the motion, the district court ordered the attorney to pay the law firm $53,000 in legal fees it had accrued after the moment at which she should have been aware her claims were groundless. That revelatory moment, according to the district court, was the taking of her deposition testimony. No way to surrender. In Christiansburg Garment Co., the Supreme Court ruled that a Title VII plaintiff may be assessed an opponent’s attorney’s fees for bringing a "frivolous, unreasonable, or groundless" claim, or for continuing to litigate a claim "after it clearly became so." Here, the attorney devoted little argument to whether or not her claims were frivolous. Instead, she vigorously contested that she sought to continue to litigate them. She stressed that, shortly after the district court warned her she might be facing an attorneys’ fee award for pursuing a frivolous suit, she filed a voluntary motion to dismiss her case with prejudice. As she saw it, she should not be saddled with her opponents’ attorneys’ fees for continuing to litigate after she voluntarily agreed to dismiss her case with prejudice. Essentially, the district court "refused to allow her to surrender." Surrender must be unconditional. The problem with her argument, the appeals court found, was that her motion to dismiss her case was conditioned on not being assessed attorneys’ fees. In essence, she told the district court, "I will continue to litigate these frivolous claims unless the defendants surrender any argument that my litigation of the claims to date has been frivolous." In these circumstances, her "conspicuously conditional" offer to dismiss her suit—which the district court denied—was "tantamount" to continuing to litigate groundless claims. Accordingly, the district court did not abuse its discretion when it decided to award the law firm its legal fees even for the time period after her voluntary motion to dismiss her case. Law firm can recover fees for associate’s work. Mounting an alternative attack on the fee award, the attorney argued that at least a portion of the award in the law firm’s favor was barred as a matter of law by the Supreme Court’s 1991 decision in Kay v. Ehrler, which held that pro se litigants, including attorneys who represent themselves, cannot seek attorneys’ fees under the Civil Rights Attorney’s Fees Awards Act of 1976. In the tax attorney’s view, the law firm "was representing itself" in this litigation because one of its two attorneys was its own salaried associate, and under Kay it had no claim to compensation for this associate’s work. "This argument fails," the appeals court declared, because Kay itself distinguishes between an organization and a pro se individual litigant, stating that an "organization is always represented by counsel, whether in-house or pro bono, and thus, there is always an attorney-client relationship." Moreover, the circuits that have considered the question (apparently all outside the Title VII context) appear to hold that Kay does not prohibit the award of fees to an attorney who represents his or her own law firm. "We agree with our sister circuits’ straightforward reading of Kay and see no reason, moreover, not to apply Kay’s generally applicable reasoning in the Title VII context," the appeals court wrote. Consequently, the law firm was not prohibited from seeking attorneys’ fees for work that its salaried associate contributed to this litigation, which appeared to be the lion’s share.

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