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Identify Who Pays the Lawyers, or that Settled Lawsuit May Come Back to Haunt You

August 18, 1999
Related Topics: Miscellaneous Legal Issues, Featured Article
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Issue: You thought you'd seen the last of Edward's employment discrimination lawsuit when you settled it for $45,000. As part of the settlement, Edward agreed to release:

  • all claims, charges, or demands asserted or assertable in the lawsuit,
  • all claims, charges, or demands arising from or relating to the relationship with Edward,
  • any rights and claims Edward may have under Title VII of the Civil Rights Act of 1964.

No reference was made to attorney fees. A "Stipulation of Dismissal with Prejudice" was also executed. Now, post-settlement, Edward is seeking to recover another $30,427 in attorney fees. What are his chances?

Answer: Very good. The U.S. Court of Appeals for the Third Circuit rejects a "silence equals waiver" rule. That court applies a bright-line test, which requires that any waiver of attorney fees be specific and express.

Expect to pay Title VII attorney fees, even if the plaintiff doesn't succeed completely.
A prevailing plaintiff in a Title VII suit is entitled to attorney fees in all but special circumstances. Attorney fees may even be awarded to an unsuccessful claimant if the claimant performed a valuable public service in bringing the claim. A "prevailing plaintiff" is someone who succeeded on any significant issue in the litigation that achieves some of the benefit sought in the lawsuit, including those who receive only nominal damages.

Say so (in writing), if you don't want to pay.
A waiver of a claim for attorney fees can be made a condition for settling a discrimination claim. However, the presumption that prevailing plaintiffs are entitled to attorney fees is so strong that a "global agreement" (standard settlement language), which purports to extinguish all claims, may be insufficient. The Third Circuit, for example, will not consider the course of the settlement negotiations or the parties' expectations.

Parties to a settlement agreement who want to eliminate a claim for attorney fees should do so specifically and expressly in the terms of the agreement. Include a provision that specifically addresses attorney fees and unambiguously states that a claim for attorney fees is encompassed within the agreement.

Cite: Torres v. Metropolitan Life Insurance Company, 3dCir, No. 97-5709, filed June 24, 1999.

Source: CCH Incorporated is a leading provider of information and software for human resources, legal, accounting, health care and small business professionals. CCH offers human resource management, payroll, employment, benefits, and worker safety products and publications in print, CD, online and via the Internet. For more information and other updates on the latest HR news, check our Web site at http://hr.cch.com.

The information contained in this article is intended to provide useful information on the topic covered, but should not be construed as legal advice or a legal opinion.

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