Partially Successful Plaintiff is Prevailing Party, Entitled to Attorney's Fees, Says Second DCA

       Florida's Second District Court of Appeals                                                                    

Employment agreements often contain provisions that entitle the prevailing party to recover attorney’s fees in the event of litigation relating to the agreement. But who is the prevailing party when the plaintiff recovers only a fraction of what she was seeking to recover? That was the issue in a recent case decided by Florida’s Second District Court of Appeals, Hingson v. MMI of Florida, Inc., Case No. 2D07-5215 (Fla. 2d DCA, March 18, 2009).

            The plaintiff, Valerie Hingson, was employed by MMI of Florida and Magnecel Services (the “Employers”) as an account executive. Her employment agreement contained a provision for attorney’s fees to the Employers if they prevailed “[i]n any legal action or other proceeding involving, arising out of or in any way relating to this Agreement.” After she was terminated, Hingson brought suit to recover commissions that were allegedly due to her. Following a non-jury trial, the trial court awarded Hingson damages of $31,659. 

            Hingson sought and was awarded attorney’s fees under the employment agreement and pursuant to section 448.08, Florida Statutes, which allows the prevailing party in an action for unpaid wages to recover its costs and attorney’s fees. (On the employment agreement claim, the trial court applied section 57.105(7), Florida Statutes, which makes unilateral attorney’s fees provisions in contracts reciprocal by operation of law.). 

            However, the Employers also sought to recover their attorney’s fees on the grounds that Hingson had recovered only a fraction of the several hundred thousand dollars she had sought. The trial court agreed and determined that the Employers had prevailed on the significant issues in the litigation. Thus, the trial court awarded the Employers their fees, and offset that amount against Hingson’s fees.  Hingson appealed.

            The Second District Court of Appeals court affirmed the award of fees to Hingson, but reversed the award to the Employers. “The trial court specifically found that the Employers breached the employment agreement,” the court noted. “Although Hingson did not recover the total amount she sought, she prevailed as to her claim that the Employers breached the agreement and were liable to her for damages, and the Employers did not prevail in any affirmative relief.” Thus, the court ruled that it was Hingson, not the Employers, who had prevailed on the significant issues in the litigation. 

            The Hingson case illustrates a common theme in employment litigation: When the plaintiff is entitled to recover attorney’s fees as the prevailing party, the court will typically deem the plaintiff the prevailing party even if she recovers only a fraction of what she was seeking. This is the general rule under federal statutes such as the Fair Labor Standards Act and Title VII. And although the trial court in Hingson did not apply this general rule, the appellate court did. It appears that under Florida law, a plaintiff who proves the employer breached the employment agreement, and who recovers any portion of the relief sought, will generally be deemed the prevailing party.

 

Considering Defenses to Cancellation of Employment Contracts During Economic Crisis

Will employers who have been affected by the current economic crisis be able to defend themselves if they cancel employment contracts?  That's the question posed by a recent white paper issued by my firm, Epstein Becker & Green, P.C. 

There's no easy to answer to this question.  The white paper examines several potential defenses, including force majeure, impossibility of performance, impracticability of performance, and commercial frustration of purpose.  But I agree with the authors' statement that "[i]n the employment context, an argument that changed financial conditions should excuse performance could meet the same reception as elsewhere; courts may be reluctant to lavish sympathy on a contracting employer seeking relief from its freely undertaken obligations where contract terms do not specify untenable risks that the parties agree will excuse performance." 

My takeaway from this white paper is that employers are best served by preserving the at-will employment relationship.  Failing that, careful drafting of employment contracts to anticipate economic downturns is the next best option.  Relying on legal defenses to excuse performance of employment contracts should be viewed as a last resort.