This week, the Ninth Circuit addresses the employment status of job applicants made to take drug tests and the availability of an award of attorney’s fees under Federal Rule of Civil Procedure 41(d).
The Court holds that job applicants to supermarket chain were not employees at the time of mandatory pre-employment drug test, and therefore not entitled to compensation for the taking the test.
Panel: Judges Schroeder, Thomas, and Bea, with Judge Schroeder writing the opinion.
Key Highlight: “Drug testing, like an interview or pre-employment physical examination, is an activity to secure a position, not a requirement for those already employed.”
Background: Plaintiff Alfred Johnson represents a class of former employees at WinCo Foods. Defendant WinCo Foods is supermarket chain that requires job applicants to take a mandatory drug test as part of their contingent job offer. Plaintiffs sued WinCo in California state court, seeking reimbursement for the expenses required to take the drug test; in short, they argued that they were WinCo employees at the time of the test and therefore entitled to compensation for their time and travel. WinCo removed the case to federal court under the Class Action Fairness Act. The district court granted summary judgment for WinCo, finding that the class members were not WinCo employees at the time of the drug test. Plaintiffs appealed.
Result: The Ninth Circuit affirmed. The panel addressed Plaintiffs’ two arguments in turn. First, the panel held that the “control test” for employment does not apply. Plaintiffs argued that they were employees at the time of the drug test because they were under the “control” of WinCo. However, the Court determined that the control test was inapplicable because plaintiffs were not actually working for WinCo at the time of the drug test; rather, they were job applicants. Second, the panel held that the drug test is not a condition subsequent to employment. Plaintiffs argued that they were employees prior to the drug test, but that WinCo could terminate the employment contract in the event of a negative test. Again, the panel disagreed. The panel held that any employment offer was contingent on a successful drug test. Therefore, the drug test is a condition precedent, not a condition subsequent.
MOSKOWITZ V. AMERICAN SAVINGS BANK
The Court holds that attorney’s fees are not recoverable as “costs” as a matter of right under Federal Rule of Civil Procedure 41(d).
Panel: Judges Wardlaw, Bea, and Cain, Jr. (W.D. La.), with Judge Bea writing the opinion, and Judge Wardlaw concurring in part and dissenting in part.
Key Highlight: “‘Costs’ is a term which has a long-standing definition that does not inherently include attorney’s fees.”
Background: Plaintiff Craig Moskowitz filed a class action against American Savings Bank, F.S.B. (“ASB”) for allegedly sending text messages to his mobile phone without the consent required by the Telephone Consumer Protection Act. Moskowitz’s phone had texted ASB’s short code number—a short telephone number a business can use to send and receive text messages—and the short code number sent back automated responses. Moskowitz first sued in a district court in Connecticut, but voluntarily dismissed that suit after ASB moved to dismiss for lack of personal jurisdiction. Moskowitz then sued in the district court for the District of Hawaii. ASB moved for summary judgment and for costs under Rule 41(d) to recoup costs it had incurred defending the earlier suit in Connecticut. The district court granted ASB’s summary judgment motion, concluding that each text message from Moskowtiz’s mobile phone constituted prior express consent for each of ASB’s reply texts to his mobile phone. The district court granted ABS’s request for costs from the Connecticut litigation, including attorney’s fees, under Rule 41(d).
Result: The Ninth Circuit affirmed in part and reversed in part. On the merits, the Court concluded that the district court correctly granted summary judgment to ASB on Moskowitz’s claims because the type of messages Moskowitz sent ASB provided the express consent required for each of ASB’s responsive text messages. On the issue of costs, the Court reversed the district court’s decision to award attorney’s fees to ASB under Rule 41(d). Under Rule 41(d), the Court explained, a court may award “costs” incurred in other litigation to a party if the plaintiff dismissed that litigation and then filed another suit based on the same claims against the same defendant. Although the Ninth Circuit had not yet decided whether attorney’s fees are available as “costs” under Rule 41(d), the other circuits have interpreted Rule 41(d) “costs” in four ways. The Sixth Circuit has held that attorney’s fees are never available under Rule 41(d) because the rule does not explicitly provide for them. The Eighth Circuit has found an award of attorney’s fees under Rule 41(d) to not be an abuse of discretion. The Third, Fourth, Fifth, and Seventh Circuits have each held that courts may award attorney’s fees as costs under Rule 41(d) if the substantive statute underlying the claim provides for attorney’s fees, and the Second, Fourth, and Tenth Circuits have held that courts have the discretion to award attorney’s fees pursuant to Rule 41(d) whenever there is proof of bad faith, vexatiousness, wanton actions, or forum shopping in the filing of the original action. The Ninth Circuit concluded that Rule 41(d) “costs” do not include attorney’s fees as a matter of right, and thus reversed the district court’s award of attorney’s fees in favor of ASB as a matter of right under Rule 41(d). “Costs” is a term, the Court explained, which has a long-standing definition that does not inherently include attorney’s fees. The Court did not decide on way or the other if attorney’s fees are available under Rule 41(d) if the underlying statute so provides or if bad faith is shown because the TCPA does not provide for the award of attorney’s fees to the prevailing party and bad faith had not been alleged, much less proven.
Judge Wardlaw concurred in part and dissented in part. She agreed with much of the majority’s opinion, but would have vacated, rather than reversed the district court’s award of attorney’s fees with instructions to first determine whether Moskowitz acted in bad faith before deciding to award fees. Judge Wardlaw would have joined the circuits that hold that Rule 41(d) provides for an award of attorney’s fees as part of costs where the underlying statute that is the basis of the original action would do so or in cases where the court finds that a plaintiff acted in bad faith. The American Rule is that each litigant pays his own attorney’s fees, win or lose, unless a statute or contract provides otherwise. But a review of the text and history of Rule 41(d) evinces a sufficiently specific and explicit intent by Congress to provide courts with the discretion to depart from the American Rule and include attorney’s fees as an award of “costs” under Rule 41(d). In particular, a previous version of Rule 41(d) made clear that Congress wanted courts to have discretion to award fees and while the language was subsequently amended, the amended was intended to be solely stylistic. Rule 41(d), Judge Wardlaw continued, would be rendered toothless if attorney’s fees were excluded in all cases because costs associated with defending a lawsuit are overwhelmingly due to attorney’s fees, not court fees. An award with fees actually deters litigants from abusing the system, an award without them is barely a slap on the writ.