Labor & Employment Law Daily Wrap Up, ATTORNEYS’ FEES—7th Cir.: District court’s denial of attorneys’ fees to local union members in challenge to trusteeship not abuse of discretion, (Mar 25, 2025)

By Ronald Miller, J.D.

“As long as the district court provides some explanation for its decision, we will not overturn that decision unless no reasonable person would agree with it.”

A federal district court did not abuse its discretion in declining to award attorneys’ fees to members of a local union who successfully sued their parent union for imposing an illegal trusteeship, ruled the Seventh Circuit. The district court appropriately assessed the bad faith exception and reasonably concluded that the parent union’s bad faith imposition of the trusteeship did not create an overriding need to award fees. That was a legally sound and entirely reasonable decision, comfortably within the district court’s broad discretion. The district court likewise correctly analyzed the common benefit exception and reached a reasonable conclusion within its discretion. Accordingly, the district court’s decision declining to shift fees was not an abuse of discretion (Siddiqui v. National Association of Broadcast Employees & Technicians – Communications Workers of America, No. 24-2315 (7th Cir. Mar. 24, 2025)).

Trusteeship. This dispute between a parent union and members of one of its local unions began when the parent union placed the local under a temporary trusteeship in the wake of officer elections. The local members sued the parent union under Section 304 of the LMRDA for imposing the trusteeship illegally.

Attorneys’ fees. The district court agreed with the local members that the parent union had imposed the trusteeship in bad faith and granted a temporary restraining order, later converted to a preliminary injunction. After settlement negotiations, the district court entered a consent judgment at the parties’ request. The consent judgment converted the preliminary injunction into a permanent injunction that dissolved the trusteeship and required the parent union to pay the local union about $26,000 in trusteeship costs. That left only one decision for the district court: whether the local members were entitled to recover attorneys’ fees from the parent union. In the end, the district court denied the local members’ request for attorneys’ fees.

The local members appealed, arguing that the district court committed reversible error by declining to grant them attorneys’ fees given its bad faith and common benefit findings.

Abuse of discretion. As an initial matter, the appeals court rejected the members’ contention that its standard of review should be de novo. Rather, the appeals court pointed out that while any legal analysis related to fee determinations receives de novo review, this appeal did not present a question of legal analysis. The local members did not challenge the legal framework the district court set out for its fees determination, only the decision the court made after properly applying that framework. Thus, the appeals court reviewed the threshold decision of whether the local members were entitled to fees for abuse of discretion. The district court’s discretion to award attorneys’ fees encompassed both when to award fees and in what amount.

American Rule. The American Rule presumes against fee shifting. That is, “In the United States, the prevailing litigant is ordinarily not entitled to collect a reasonable attorneys’ fee from the loser.” Further, the bad faith and common benefit exceptions to the American Rule are permissive, not mandatory. Courts should preserve these exceptions “for situations in which overriding considerations indicate the need” to award attorneys’ fees.

The district court dutifully set out and applied the American Rule and two of its exceptions. It did not abuse its discretion when it then declined to exercise its equitable discretion to award attorneys’ fees.

Bad faith exception. The district court appropriately assessed the bad faith exception and reasonably concluded that the parent union’s bad faith imposition of the trusteeship did not create an overriding need to award fees. It found the parties’ subsequent good faith litigation served as a counterbalance. Further, it properly adhered to the rule that it should award attorneys’ fees only when “overriding considerations indicate the need.” That was a legally sound and entirely reasonable decision, comfortably within the court’s broad discretion.

Common benefit. The district court likewise correctly analyzed the common benefit exception and reached a reasonable conclusion within its discretion. Here, the district court found two common benefits. It determined that local members conferred a common benefit on all union members by vindicating the principle of local governance. But the district court did not think that benefit presented an overriding need to shift fees because it was not the primary motivator behind what the court deemed a hyperlocal, political fight.

The district court also found that the local members conferred a second common benefit by getting the parent union to pay for the costs of the trusteeship. But it concluded this benefit was modest, so it declined to spread attorneys’ fees across the membership of either the parent union or the local. Each of these conclusions was reasonable, and the district court was perfectly entitled to make them. It did not abuse its discretion by finding common benefits existed but not to a degree justifying fee shifting.

The case is No. 24-2315.

Judge: Kirsch, T.

Attorneys: Margaret A. Angelucci (Asher, Gittler & D’Alba) for Raza Siddiqui. Udiann Chartier (Chartier & Nyamfukudza) for National Association of Broadcast Employees & Technicians – Communications Workers of America Local 41.

Companies: National Association of Broadcast Employees & Technicians – Communications Workers of America

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