Andrews v. America's Living Ctrs., LLC

• Decision Date: 28 June 2016
• Docket Number: No. 15–1658,15–1658
• Citation: 827 F.3d 306
• Parties: Stella Andrews, individually and on behalf of similarly situated persons, Plaintiff–Appellant, v. America's Living Centers, LLC, a for profit limited liability corporation, organized under the laws of the State of North Carolina, doing business as; Carolina Living Center ; Carolina Living Center #1 ; Zion Hill Living Center; Golden Harvest Living Center #1; Golden Harvest Living Center #2; Union Mills Living Center #1; Union Mills Living Center #2; Union Mills Living Center #3; Four Seasons Family Care Home ; Transylvania Living Center ; Kenneth Hodges, individually & as mbr/mgr of America 's Living Ctrs LLC, & owner &/or mgr of Carolina Living Ctrs; Carolina Living Ctr 1; Golden Harvest Living Ctrs 1 & 2; Union Mills Living Ctrs 1, 2 & 3; Four Seasons Family Care Home ; & Transylvania Living Ctr, Defendants–Appellees. John J. Korzen, Amicus Supporting Appellees.
• Court: U.S. Court of Appeals — Fourth Circuit

827 F.3d 306

Stella Andrews, individually and on behalf of similarly situated persons, Plaintiff–Appellant

v.America's Living Centers, LLC, a for profit limited liability corporation, organized under the laws of the State of North Carolina, doing business as; Carolina Living Center ; Carolina Living Center #1 ; Zion Hill Living Center; Golden Harvest Living Center #1; Golden Harvest Living Center #2; Union Mills Living Center #1; Union Mills Living Center #2; Union Mills Living Center #3; Four Seasons Family Care Home ; Transylvania Living Center ; Kenneth Hodges, individually & as mbr/mgr of America 's Living Ctrs LLC, & owner &/or mgr of Carolina Living Ctrs; Carolina Living Ctr 1; Golden Harvest Living Ctrs 1 & 2; Union Mills Living Ctrs 1, 2 & 3; Four Seasons Family Care Home ; & Transylvania Living Ctr, Defendants–Appellees.

John J. Korzen, Amicus Supporting Appellees.

No. 15–1658

United States Court of Appeals, Fourth Circuit.

Argued: May 10, 2016

Decided: June 28, 2016

ARGUED: Joseph H. Cassell, Eron Law, P.A., Wichita, Kansas, for Appellant. Ashley S. Escoe, Rolf Garcia–Gallont, Wake Forest University School of Law, Winston–Salem, North Carolina, for Court–Assigned Amicus Counsel. ON BRIEF: John J. Korzen, Court–Assigned Amicus Counsel, Wake Forest University School of Law, Winston–Salem, North Carolina.

Before TRAXLER, Chief Judge, GREGORY, Circuit Judge, and Joseph F. ANDERSON, Jr., Senior United States District Judge for the District of South Carolina, sitting by designation.

Vacated, reversed, and remanded for proceedings consistent with this published opinion. Judge Gregory

wrote the opinion, in which Chief Judge Traxler and Senior Judge Anderson joined.

GREGORY

, Circuit Judge:

Stella Andrews appeals the district court's dismissal of her action in light of her failure to pay attorneys' fees from a prior action under Federal Rule of Civil Procedure 41(d)

. While we conclude that Rule 41(d) may permit the award of attorneys' fees under certain circumstances, those circumstances are not present here. We thus vacate, reverse, and remand.

I.

Andrews first filed suit against Defendants¹ under the Fair Labor Standards Act (“FLSA”) on June 4, 2010. On July 29, 2010, Defendants moved to dismiss under Federal Rule of Civil Procedure 12(b)(6)

, to which Andrews responded on September 15, 2010. In the response, Andrews stated that she was “prepared as the Court may direct and allow to submit an Amended Complaint setting forth her allegations in more detail.” J.A. 206. In a subsequent order setting a hearing, the magistrate judge noted that this was not a proper request, as the local rules prohibited making a motion within a response to another motion and Andrews had missed the twenty-one-day deadline provided in Federal Rule of Civil Procedure 15(a)(1) for unilaterally amending the complaint after a motion to dismiss. On October 19, 2010, the day before the hearing on the motion to dismiss, Andrews filed a motion for leave to amend with a proposed amended complaint.

The magistrate judge heard argument on both motions and provided the three following 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.” Id. at 132–33.

Andrews decided to voluntarily withdraw her complaint under Federal Rule of Civil Procedure 41(a)(1)

. On November 3, 2010, Andrews dismissed her first action and filed a second complaint, which she served on Defendants in February 2011. Defendants then moved to stay the second action and for costs under Rule 41(d). Defendants sought $25,437.75 for attorneys' fees and other expenses that had been incurred in defending the first action. The magistrate ordered that Defendants be awarded those fees that related to the motion to dismiss, and the district court affirmed, finding that an award of attorneys' fees was proper under Rule 41(d) and that Andrews's conduct amounted to vexatious litigation, for which fees could be recovered.

This case has been before us twice before: in 2013, Andrews appealed before an amount had been determined, and we dismissed the appeal as interlocutory and unappealable. Andrews v. Am.'s Living Centers, LLC , 503 Fed.Appx. 199, 201 (4th Cir. 2013)

. On remand, the district court awarded $13,403.75 in attorneys' fees to Defendants and stayed the case pending payment. In 2015, Andrews appealed without paying the costs and before the case was dismissed for nonpayment. After oral argument, we granted Andrews's motion for voluntary dismissal and dismissed the case. Andrews v. Am.'s Living Centers, LLC , 13–1695 (4th Cir. Mar. 24, 2015). On remand, the district court dismissed the second action for failure to pay the awarded attorneys' fees. Andrews timely appealed.

II.

We first consider whether and under what circumstances Rule 41(d)

permits an award of attorneys' fees as a component of “costs,” an open question in this Circuit. The proper scope of a rule of procedure is a question of law subject to de novo review. Marex Titanic, Inc. v. Wrecked & Abandoned Vessel , 2 F.3d 544, 545 (4th Cir. 1993).

Federal Rule of Civil Procedure 41(d)

provides,

If a plaintiff who previously dismissed an action in any court files an action based on or including the same claim against the same defendant, 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.

Fed. R. Civ. P. 41(d)

.

As is apparent from the text, Rule 41

does not explicitly permit attorneys fees. Nevertheless, courts have noted that the purpose of Rule 41(d) is “to serve as a deterrent to forum shopping and vexatious litigation.” Simeone v. First Bank Nat'l Ass'n , 971 F.2d 103, 108 (8th Cir. 1992) ; see also Esposito v. Piatrowski , 223 F.3d 497, 501 (7th Cir. 2000) (citing Simeone , 971 F.2d at 108 ); Wright & Miller, 9 Fed. Prac. & Proc. Civ. § 2375 (3d ed.) (citing cases). This includes attempts to “gain any tactical advantage by dismissing and refiling th[e] suit.” Rogers v. Wal–Mart Stores, Inc. , 230 F.3d 868, 874 (6th Cir. 2000) (citation omitted) (alteration in original). With this purpose in mind, some courts have determined that Rule 41(d) permits an award of attorneys' fees. As one court has explained, “Surely, Congress intended that that provision of the federal rules have some ‘teeth.’ ” Behrle v. Olshansky , 139 F.R.D. 370, 374 (W.D. Ark. 1991).

Several of our sister circuits have considered the question now before us, producing an apparent split of authority. The Eighth and Tenth Circuits, for example, have both upheld an award of attorneys' fees under Rule 41(d)

, albeit without much explanation. Meredith v. Stovall , 216 F.3d 1087 (10th Cir. 2000) (unpublished); Evans v. Safeway Stores, Inc. , 623 F.2d 121, 122 (8th Cir. 1980) ; see also Robinson v. Bank of Am., N.A. , 553 Fed.Appx. 648, 651 (8th Cir. 2014) (unpublished) (relying on Evans ).

Meanwhile, based on the language of the rule itself, the Sixth Circuit has held that attorneys' fees are not included in costs. Rogers , 230 F.3d at 874

. The Rogers court reasoned, “Where Congress has intended to provide for an award of attorney fees, it has usually stated as much and not left the courts guessing. Further, the law generally recognizes a difference between the terms ‘costs' and ‘attorney fees' and we have no desire to conflate the two terms.” Id. The court recognized that attorneys' fees may be permissible where the structure “evinces an intent to provide” them, id. at 875 (quoting Key Tronic Corp. v. United States , 511 U.S. 809, 815, 114 S.Ct. 1960, 128 L.Ed.2d 797 (1994) ), but was unpersuaded that the structure mandated costs to include attorneys' fees in this context, where other provisions in the Federal Rules explicitly provided for attorneys' fees. Id. (citation omitted).

Between these two goalposts, the Seventh Circuit has held that attorneys' fees are not generally awardable under Rule 41(d)

“unless the substantive statute which formed the basis of the original suit allows for the recovery of such fees as costs (or unless such fees are specifically ordered by the court).” Esposito , 223 F.3d at 501. In so holding, the court first determined that nothing in the text of the rule indicated that Congress intended to “alter” the “American Rule,” under which attorneys' fees are not generally recoverable. Id. at 500 (citing Key Tronic , 511 U.S. at 815, 114 S.Ct. 1960 ; Alyseka Pipeline Serv. Co. v. Wilderness Soc'y , 421 U.S. 240, 247, 95 S.Ct. 1612, 44 L.Ed.2d 141 (1975) ).

The Esposito

court then considered Marek v. Chesny , 473 U.S. 1, 105 S.Ct. 3012, 87 L.Ed.2d 1 (1985), where the Supreme Court held that the costs provided for in Federal Rule of Civil Procedure 68 did not include attorneys' fees. Id. Like Rule 41(d), Rule 68(d) allows for an award of costs but does not define the term. See Fed. R. Civ. P. 68(d). Determining that the authors of the Federal Rules were familiar with the American Rule and its exceptions, the Marek Court held that “the most reasonable inference is that the term ‘costs' in Rule 68 was intended to refer to all costs properly awardable under the relevant substantive statute or other authority.” 473 U.S. at 9, 105 S.Ct. 3012. “Thus, absent congressional expressions to the contrary, where the underlying statute defines ‘costs' to include attorney's fees, we are satisfied such fees are to be included as costs for purposes of Rule 68.” Id. As the plaintiff had sued under 42 U.S.C. § 1983, and a prevailing party in a § 1983 action may be awarded attorneys' fees “as part of the costs,” 42 U.S.C. § 1988(b), “such fees are subject to the cost-shifting provision of Rule 68. This ‘plain meaning’ interpretation of the interplay between Rule 68 and § 1988 is the only construction that gives meaning to each word in...