Gupta v. Headstrong, Inc.
20-3657-cv
| 2d Cir. | Oct 19, 2021Background
- Gupta, an H‑1B employee of Headstrong/Genpact, alleged unpaid wages and filed a Department of Labor complaint and a federal suit in 2017.
- In 2008 the parties signed a settlement agreement in which Gupta agreed not to sue over unpaid wages and agreed to pay Headstrong "reasonable attorneys' fees" if he breached.
- Gupta nevertheless filed the administrative complaint and subsequent federal litigation, prompting Headstrong to seek attorney’s fees under the 2008 settlement.
- Gupta moved for an award of his own attorney’s fees and litigation costs, arguing statutory fee-shifting under the H‑1B statute and that he was a prevailing party.
- The district court denied Gupta’s fee and cost requests (finding no statutory or contractual basis and that Gupta was not a prevailing party) and awarded Headstrong ~ $100,000 in fees under the settlement for Gupta’s breach.
- Gupta appealed; the Second Circuit affirmed, concluding no statute or contract authorized Gupta’s fees or costs, and that the contractual fee-shifting provision entitled Headstrong to fees for Gupta’s breach.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Gupta can recover attorney’s fees under the H‑1B statute | Gupta: 8 U.S.C. §1182(n)(2)(C)(i)(I) permits courts to award attorney’s fees for unpaid wages | Headstrong: The statute only authorizes administrative remedies by the Secretary of Labor, not judicial fee awards | Court: No — statute does not clearly depart from the American Rule; it authorizes administrative remedies, not court‑ordered fees |
| Whether Gupta is entitled to litigation costs as a prevailing party | Gupta: He prevailed and so should recover costs under Fed. R. Civ. P. 54(d)(1) | Headstrong: Gupta did not obtain a judicially sanctioned change in legal relationship (no judgment or court‑ordered relief) | Court: No — Gupta did not secure the kind of judicially sanctioned change required to be a prevailing party |
| Whether Headstrong can recover fees under the 2008 settlement for Gupta’s breach | Gupta: Settlement should not entitle Headstrong to fees (challenged enforcement/amount) | Headstrong: Contract expressly awards "reasonable attorneys' fees" to Headstrong if Gupta breached | Court: Yes — New York law enforces contractual fee provisions when language is unmistakably clear; Gupta breached by re‑litigating, so Headstrong entitled to fees |
| Whether the district court abused its discretion in the amount awarded to Headstrong | Gupta: The award was excessive, and Headstrong’s wealth should limit fees | Headstrong: Fee amount is reasonable under prevailing lodestar/factors | Court: No — district court applied appropriate reasonableness factors and did not abuse discretion in awarding ~ $100,000 |
Key Cases Cited
- McDaniel v. County of Schenectady, 595 F.3d 411 (2d Cir. 2010) (standard of review for fee awards)
- Kickham Hanley P.C. v. Kodak Ret. Income Plan, 558 F.3d 204 (2d Cir. 2009) (abuse-of-discretion framework)
- Peter v. Nantkwest, 140 S. Ct. 365 (2019) (statutory fee‑shifting requires specific and explicit congressional intent)
- Alyeska Pipeline Serv. Co. v. Wilderness Soc'y, 421 U.S. 240 (1975) (American Rule and requirement for explicit statutory waiver)
- CRST Van Expedited, Inc. v. E.E.O.C., 578 U.S. 419 (2016) (definition of prevailing party: judicially sanctioned change in legal relationship)
- Lyte v. Sara Lee Corp., 950 F.2d 101 (2d Cir. 1991) (settlement can, in some circumstances, create prevailing‑party status)
- McGuire v. Russell Miller, Inc., 1 F.3d 1306 (2d Cir. 1993) (federal courts enforce contractual fee‑shifting under state law)
- Hooper Assocs., Ltd. v. AGS Computers, Inc., 74 N.Y.2d 487 (N.Y. 1989) (New York requires unmistakably clear contract language to award contractual attorney’s fees)
- F.H. Krear & Co. v. Nineteen Named Trustees, 810 F.2d 1250 (2d Cir. 1987) (factors for assessing reasonableness of attorney’s fees)