Stella Andrews v. America's Living Centers, LLC, 827 F.3d 306

Andrews sued defendants under the FLSA in June 2010; defendants moved to dismiss and Andrews sought to amend her complaint.
At a hearing the magistrate offered three options, including voluntary dismissal and refiling; Andrews voluntarily dismissed the first suit under Rule 41(a)(1) and refiled a more detailed complaint the same day.
Defendants moved under Federal Rule of Civil Procedure 41(d) for costs, seeking attorneys’ fees incurred defending the first action; the magistrate and district court awarded fees and stayed the refiled case pending payment.
The district court found Andrews’s dismissal-and-refiling amounted to vexatious litigation that warranted fee-shifting; the court awarded $13,403.75 and later dismissed the case for nonpayment.
On appeal, the Fourth Circuit considered (1) whether Rule 41(d) permits attorneys’ fees as “costs,” and (2) whether Andrews’s conduct justified fee-shifting under exceptions to the American Rule.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether Rule 41(d) permits recovery of attorneys’ fees as “costs.”	Rule 41(d) does not automatically allow defendant fee recovery; costs should be read narrowly.	Rule 41(d) serves to deter forum-shopping and may include attorneys’ fees as part of costs.	Rule 41(d) does not as a matter of right authorize attorney-fee awards; fees are recoverable only if the underlying statute allows fees or the court makes a separate bad-faith finding.
Whether fees were warranted here (bad faith, vexatiousness, or statutory basis).	Andrews: dismissal was prompted by magistrate’s option and she refiled to correct pleading defects; conduct was not vexatious or in bad faith.	Defendants: dismissal-and-refiling delayed resolution, increased defense costs, and avoided adverse rulings, warranting fee-shifting.	The court held Andrews’s conduct was not vexatious or in bad faith and FLSA does not authorize fees for prevailing defendants; the fee award was improper.

Marek v. Chesny, 473 U.S. 1 (1985) (Rule 68’s “costs” do not include attorneys’ fees absent a statute authorizing them)
Key Tronic Corp. v. United States, 511 U.S. 809 (1994) (courts should infer statutory intent before displacing the American Rule)
Alyeska Pipeline Serv. Co. v. Wilderness Soc’y, 421 U.S. 240 (1975) (exception to American Rule permits fees where party acted in bad faith or for oppressive reasons)
Esposito v. Piatrowski, 223 F.3d 497 (7th Cir. 2000) (attorneys’ fees under Rule 41(d) recoverable only when underlying statute defines costs to include fees, or court makes a bad-faith finding)
Rogers v. Wal-Mart Stores, Inc., 230 F.3d 868 (6th Cir. 2000) (declining to equate “costs” with attorneys’ fees under Rule 41(d))
Marex Titanic, Inc. v. Wrecked & Abandoned Vessel, 2 F.3d 544 (4th Cir. 1993) (scope of procedural rules is a question of law reviewed de novo)