On July 21, 2014, the Second Circuit issued a decision in Carter v. Incorporated Village of Ocean Beach, 13-815-CV, affirming an award by the EDNY of attorneys’ fees to defendants in a civil rights action.
In Carter, the “[p]laintiffs, five former seasonal and part-time police officers . . . pursued a variety of wrongful termination and defamation claims against” a collection of defendants, including Suffolk County and several of its employees and agencies (the “County Defendants”). The plaintiffs dismissed some of their claims and the EDNY “granted summary judgment to all Defendants” on the remaining claims. After that ruling was affirmed by the Second Circuit, the EDNY “awarded attorney’s fees and costs to the County Defendants.” The plaintiffs appealed. The Second Circuit affirmed.
One issue raised by the plaintiffs was that the EDNY awarded fees to the County Defendants on claims that were not addressed by the EDNY summary judgment decision. The Second Circuit rejected the argument, explaining:
Plaintiffs rely on Nemeroff v. Abelson, 620 F.2d 339, 350‐51 (2d Cir. 1980) (per curiam), which observed that generally the defendant is not considered the prevailing party when, as here, there is a voluntary dismissal of the action by the plaintiff with prejudice. Plaintiffs argue that they therefore cannot be held liable for any fees and costs that the County Defendants would have incurred anyway to defend against the claims that were dismissed voluntarily. But Nemeroff’s general statement of fee-shifting law was dictum because the order of dismissal in that case expressly reserved defendants’ right to move for costs. The court had no occasion to apply the rule it posited. Moreover, the only authority Nemeroff cited, Mobile Power Enterprises, Inc. v. Power Vac, Inc., 496 F.2d 1311, 1312 (10th Cir. 1974), has since been overruled by a unanimous en banc Tenth Circuit, which explained that Mobile Power was illogical, a misreading of both the Federal Rules and earlier precedent, and contrary to the decisions of most other courts. Nemeroff is also in tension with subsequent case law from the Supreme Court. In Buckhannon, the Supreme Court held that, to prevail for purposes of attorney’s fees, a party (the plaintiff in that case) must have gained through the litigation a material alteration of the legal relationship of the parties. A voluntary dismissal of an action with prejudice works such alteration, because it constitutes an adjudication on the merits for purposes of res judicata, and any action so dismissed could not be brought again. Because the Nemeroff dictum suggests to the contrary, and has no redeeming justification, we reject it.
(Internal quotations and citations omitted) (emphasis added). Having dealt with the precedent of Nemeroff, the Second Circuit went on to affirm because the combination of their victory on summary judgment and the voluntary dismissal meant that “the victory for the County Defendants was total,” and that the plaintiffs “are barred by res judicata from relitigating any of” their claims.
With respect to the plaintiffs’ state law claims, over which the EDNY declined to exercise jurisdiction (and thus which were not determined on the merits by the EDNY), the Second Circuit explained:
Other courts have ruled that a declination to exercise supplemental jurisdiction is insufficient to confer prevailing party status on a defendant, since those claims could later be refiled. In the circumstances of this case, however, a state court had dismissed the state law claims on the pleadings before the district court resolved the motion for attorney’s fees in the federal case. Accordingly, there was no chance that these claims would be refiled, and the defendants are properly considered prevailing parties on these claims. Moreover, the state law claims against the County Defendants were frivolous for the same reason that the federal claims were frivolous: the County Defendants had nothing to do with the alleged improper termination and the defamation underlying Plaintiffs’ complaint.
Plaintiffs argue that even if the state law claims were frivolous, fees cannot be imposed without adjudication of these claims by the federal court. This argument is implicitly at odds with [the Supreme Court’s decision in] Fox, in which the district court granted summary judgment on the federal claims (which were frivolous) and remanded the state claims (which were not). The issue was how to allocate between work associated with the former and work associated with the latter; the Supreme Court held that plaintiffs could be liable only for costs and fees that the defendant would not have incurred but for the frivolous claims. If Plaintiffs were correct, there would have been no need in Fox to draw a line between claims that were frivolous and those that were not: claims remanded to state court would never be subject to fee-shifting.
(Internal citations omitted). Finally, as to the plaintiffs’ argument that “no fees should have been awarded as to all their” claims other than federal civil rights claims, the Second Circuit explained that:
The state claims in Fox were not specifically listed in § 1988. Under Plaintiffs’ logic, the Court would have disposed of the appeal by explaining that fees associated with those claims were unavailable, without reference to frivolousness. More importantly, Plaintiffs’ argument distorts the text of § 1988, which provides that in any action or proceeding to enforce a federal civil rights provision, the prevailing party may be entitled to fees. Plaintiffs’ action sought to enforce (inter alia) federal civil rights provisions, and the County Defendants prevailed.
(Internal quotations omitted).