So many litigants envision having the opposing party pay their legal fees after litigation, based predominantly on the unwavering confidence that they are unequivocally in the right. I respect that – the innate sense of justice and confidence in our legal system. However, an award of attorney’s fees is elusive, more akin to the distant snapping of a twig during a nighttime stroll through the graveyard or a shadow only seen out of the corner of one’s eye.
Generally speaking, U.S. courts operate on the “American Rule” by which each of the litigants is responsible for their own, respective attorney’s fees. More specifically, these fees are awarded only after a (non-exhaustive) three-factor test established by the Supreme Court: (1) whether the plaintiff’s claims were “objectively reasonable” and/or “frivolous,” (2) whether the suit was brought with any improper motivation or bad faith conduct, and (3) considerations of compensation and deterrence. Last year’s case of Horror Inc. v. Miller sets forth an illustrative analysis of this test.
Victor Miller is the hero who wrote the 1979 screenplay for Friday the 13th, the slasher film featuring—spoiler alert—the vengeance of Jason Voorhees’ mother whose son drowned, ostensibly due to the negligence of iniquitous Camp Crystal Lake counselors. The film has gone on to earn millions of dollars over the course of 10 sequels and a reboot. In 2016, Miller issued a §203(a) termination notice of his initial ($9,000) contract with the production company. Horror Inc., not wanting to renegotiate for or lose its valuable franchise, filed for a declaratory judgment that the script was a work-made-for-hire and, thus, not vulnerable to statutory termination of a license. Horror Inc. lost its case by summary judgment, then on appeal. Miller subsequently filed for attorney’s fees.
The court first ruled that Horror Inc.’s claim (that declaratory judgments did not warrant an award of attorney’s fees) was objectively unreasonable but not frivolous. It was objectively unreasonable because there was plenty of precedent stating that §505 of the Copyright Act allows for attorney’s fees for any civil action involving properly registered copyrights. However, a complaint is only frivolous “where it lacks an arguable basis either in law or in fact” and the court found there was an arguable basis for this objectively unreasonable claim. This factor weighed against awarding attorney’s fees.
The court then ruled that Horror Inc.’s suit was brought with improper motivation. The plaintiff had supplemented its declaratory claim with breach of contract, slander of title, and unfair trade practices. The court characterized these allegations of tortious conduct as an attempt to intimidate Miller from exercising his termination rights. This factor weighed in favor of awarding attorney’s fees.
With one factor weighing against attorney’s fees, and another factor weighing in favor, the court evaluated considerations of compensation and deterrence. It found that Miller’s successful defense of his termination right was consistent with Congress’s purpose for establishing such termination. Additionally, it found that a fee award would deter “similarly situated plaintiffs from bringing unreasonable claims” against authors asserting this right in good faith. Attorney’s fees awarded!
Certainly, the spookiest part of this decision is that a plaintiff can file something objectively unreasonable but not frivolous. Nevertheless, the above represents a standard analysis for determining whether an award of attorney’s fees is even possible. Such windfalls would appear to be a sort of litigation “jump scare”: always lurking, but difficult to predict
