In litigation, the “American Rule” applies …. unless Congress states otherwise. Unless the NLRB states otherwise.
That is the lesson employers can take away from a recent Board case, Camelot Terrace. The facts of the case are pretty dry — the employer arguably engaged in bad-faith bargaining. One remedy in this situation is that the employer has to foot the negotiating expenses for the union.
But the NLRB took it one step further and ordered the company to also pay the litigation expenses for both the Union and the NLRB. This contravenes what is commonly referred to as the “American Rule” — in that each side bears its own litigation expenses. Like every issue in the law, there are exceptions to this, but, under a 1975 Supreme Court case, these exceptions are supposed to come straight from Congress — here’s the quote from the Supreme Court:
“Circumstances under which attorney’s fees are to be awarded and the range of discretion of the courts in making those awards are matters for Congress to determine”
In a case before the DC Circuit some years ago, that court specifically found that nothing in the National Labor Relations Act gives the NLRB the authority to impose attorney’s fees on the losing party. In Camelot Terrace, the Board relied on a broad but extremely rarely used exception to the “American Rule” for “bad-faith.” The DC Circuit did not directly rule on that issue in the prior case, only because the NLRB abandoned the argument.
The end result for employers is simple: the current NLRB believes that it can force you to pay litigation costs for both the Union and the Board in an unfair labor practice case. The Courts might ultimately disagree, but, for now, Camelot Terrace could require you to pay up.