[Posted June 28, 2016] In a matter of first impression in this circuit, the Fourth Circuit today explains when a district court may award attorney’s fees as a component of costs upon a Rule 41 dismissal. The case is Andrews v. America’s Living Centers, LLC.

Andrews sued an entity that I assume was her former employer, plus several related entities and one individual, under the Fair Labor Standards Act. At a subsequent hearing on a motion to dismiss, she chose a Rule 41(a)(1) dismissal. The defendants sought an award of costs under Rule 41(d) since this was a second dismissal, including within that petition a claim for their attorney’s fees. The court awarded $13K in fees.

The procedural history is more complex than that, but this much is enough to frame the appellate issue. The Fourth today notes that there’s a split in the circuits over whether a Rule 41(d) costs award can include attorney’s fees. On the one hand, the rule says costs but doesn’t mention attorney’s fees. Congress knows how to spell attorney’s fees when it needs to, so the Sixth Circuit has held that costs don’t include fees. The Eighth and Tenth Circuits have gone the other way, though they didn’t explain why.

The Seventh Circuit has taken a middle ground. If the underlying suit allows for an award of fees, then the district court may allow a fee recovery on a Rule 41 second dismissal. Fees may also be awarded where the plaintiff’s actions are in bad faith, or are vexatious, wanton, or oppressive. This is the approach that the Fourth Circuit adopts today:

This rule strikes the right balance between upholding the American Rule and furthering the goal of Rule 41(d) to deter forum shopping and vexatious litigation on the part of the plaintiff.

Applying this new rule, the court reverses the fee award. FLSA does allow for a recovery of fees, but only for a successful plaintiff; not for a defendant as here. And the court finds no evidentiary support in the record for a finding that the dismissal was in bad faith or was vexatious, etc.