COLUMBUS, Ohio (Legal Newsline) - Plaintiffs who win a case involving punitive damages can recover the legal fees they incurred defending the judgment on appeal, the Ohio Supreme Court ruled, in a decision a dissenting justice said will discourage defendants from exercising their right to appeal.
The case involved two women who sued English Nanny & Governess School over the school’s response to an alleged case of child abuse. Christina Cruz, a student, told Heidi Kaiser, a school employee, that while on an interview for a potential job she saw what she thought was evidence the father was sexually abusing his daughter.
Kaiser claimed she was fired after telling the school the alleged abuse needed to be reported to the authorities and Cruz claimed the school’s director, Sheilagh Roth, threatened to “blackball” her from employment over the incident.
A jury awarded the two women about $390,000 in economic and punitive damages, which after an appeal the trial court reduced to $194,000. Although the plaintiffs had contingency-fee agreements that would have given their lawyers a percentage of the damages, the court ordered the defendants to pay $464,000 in legal fees, including fees from defending the judgment on appeal. The defendants appealed again, and the appeals court ruled the plaintiffs can’t recover fees from an appeal unless the case involves a statute with a provision allowing for it.
The Ohio Supreme Court reversed that finding, ruling that judges can award fees earned in a successful appeal. The court’s majority said the “American rule” that generally requires each side to cover their own legal fees contains an exception for cases involving punitive-damages awards.
The decision, written by Justice Melody Stewart, drew a strong dissent from Justice R. Patrick DeWine, who said the threat of paying the other side’s fees will discourage defendants from exercising their right to appeal. He called the majority opinion a “gross, misguided expansion of the common-law American rule.”
“Now, in every case in which attorney fees are awarded at the trial-court level upon an award of punitive damages, an award of appellate-attorney fees will necessarily follow,” he wrote. “And it is easy to predict the outcome—a chilling effect on a litigant’s substantive right of first appeal.”
The majority said the dissent overstated the threat, since judges still must decide whether to award legal fees, and the amount plaintiffs can recover. But DeWine said the decision subjects defendants like Nanny School to potentially ruinous costs if they pursue appeals. In this case, for example, he said it is possible the plaintiffs will win additional fees for having won what he considered a change in the law allowing them to recover fees from their previous appeals.
“Today’s majority decision will also serve as a cautionary tale for others: when will another judicially created expansion occur, and will litigants see it coming?” he wrote.