As we noted last week, this time of year brings eventful decision days at the Ohio Supreme Court. And Wednesday, Oct. 12, continued the trend with the Supreme Court’s decision allowing recovery of appellate attorney fees by prevailing parties who obtain and successfully defend punitive-damage awards in Cruz v. English Nanny & Governess School.
In Cruz, the plaintiffs initially prevailed in a wrongful termination suit at trial and were awarded compensatory damages, punitive damages and attorney fees. The trial court granted defendants remittitur, reducing the damages for the plaintiffs, and limited the attorney fees based upon the contingent fee agreement. The defendants appealed the verdict and the plaintiffs cross-appealed the remittitur and attorney fees. The Eighth District Court of Appeals overruled the defendants’ assignments of error, but found merit in the plaintiffs’ and remanded the case to the trial court to reconsider the remittitur and attorney fees. On remand, plaintiffs amended the attorney fees to include their appellate attorney fees. The trial court denied the remittitur, reinstated the jury award and granted the amended attorney fees, including all the costs incurred on appeal.
The defendants appealed a second time, challenging the remittitur decision and calculation of attorney fees. The Eighth District affirmed the trial court’s remittitur decision. But the Eighth District reversed the award of appellate attorney fees.
Multiple appellate districts misinterpreted Ohio law regarding recovery of appellate attorney fees
The Supreme Court previously held that appellate attorney fees may be recoverable in Klein v. Moutz. The Supreme Court noted in Cruz that multiple appellate courts, including the Eighth District in this case, had misinterpreted Klein as limited to cases involving remedial statutes. The issue in Klein was whether the trial court could award appellate attorney fees, not whether appellate attorney fees could be awarded at all.
As the majority explained in Cruz, the common-law punitive-damages exception to the American rule allows recovery of attorney fees when punitive damages are awarded. And the common law never prohibited recovery of reasonable attorney fees incurred when successfully defending the judgment on appeal. Therefore, the Supreme Court held in Cruz that prevailing parties are permitted to recover attorney fees that they incur defending their judgment in cases warranting punitive damages. Furthermore, the attorney fees are not included in the cap on punitive damages.
Majority and dissent engaged in tit-for-tat criticism
In dissent, Justice Kennedy, in an opinion joined by Justice DeWine, maintained that the award of appellate attorney fees in Cruz would “have an immediate chilling effect” on the fundamental right of appeal. Justice Kennedy further described the majority opinion as “a gross, misguided expansion of the common-law American rule.” The majority dismissed the dissent’s concerns as “exaggerated claims that we have taken ‘a giant leap and forever change[d] the American rule.’”
To us at Ohio Appellate Insights, the Cruz majority’s confirmation of the potential recovery of appellate attorney fees is enough to justify a close review of the decision by appellate practitioners. But the pointed critiques, complete with footnote asides and the dissent’s direct refutation of the majority’s criticisms, make this opinion even more interesting to read. This continues the trend of the direct sniping we saw in last week’s elections case, although it is less personal in tone. We are confident there are still more interesting decisions yet to come before year-end, so stay tuned!