No Reimbursement for Expert Witness Fees, U.S. Appellate Court Rules

$10,000 in reimbursements for expert witness fees were recently denied by a U.S. Court of Appeals, overruling a district court's award. In a case where attorneys' fees of $583,000 were allowed, which was nearly double the damages awarded to the plaintiffs, the U.S. Second Circuit agreed with the defendant that the expert witness fees, except for per diem and travel allowances, could not be reimbursed because they were not specifically allowed by the federal statute used — in this case, the Fair Labor Standards Act (FLSA).

In the 2007 case, Gortat v. Capala Brothers, Inc., ¹ seven construction workers accused their Brooklyn employer, Capala Brothers Inc., of not paying them time and a half for overtime, as required by FLSA. The workers claimed they were paid between $15 to $20 per hour for the time the spent at job sites, but that they spent time driving company trucks to and from work sites, which pushed the weekly hours worked over 40, and for which they were not paid at the overtime rate.

The expert witness, accountant Glenn Pannenborg, testified on behalf of the plaintiffs during the trial. After nearly eight years in the courts, after a jury finally found Capala Brothers guilty of violating labor laws, the appellate court has now remanded the case back to the district court to determine if New York State's labor law covers such expert witness expenses under fee-shifting provisions. In the end, neither expert witness fees nor attorney's fees may ever be paid: the Capala Brothers, who operated a 30-to-50-employee roofing company for 15 years prior to the case, filed for bankruptcy protection a month before the court decision.

In making its ruling, the appellate court was following precedent set in several cases where the U.S. Supreme Court has ruled that expert witness fees may not be reimbursed unless the federal statute at issue explicitly states otherwise. While many federal and state statutes do provide for the recovery of expert witness fees, and give the courts discretion in awarding reimbursements, generally the "American Rule" holds: each side pays its own costs of litigation.

In the past, the U.S. Supreme Court has held that a federal court "may tax" certain items, including expert witness fees, as costs against the losing party, under Federal Rule of Civil Procedure 54 and 28 U.S.C. section 1920, but not beyond the amount allowed by statute or other rule.²

Unless the parties contracted for the recovery of the fees or there is a statutory basis for recovery, expert fees are not normally reimbursed in state or federal courts. Some states grant the courts broad discretion in their statutes of general civil procedure, expressly giving the court authority to tax expert witness fees as costs. In states without broad judicial discretion, the specific statute sued under may allow recovery of expert witness fees. Some of these statutory authorizations allow for an award of attorney's fees as an element of litigation costs, but do not specifically include expert witness fees, which are separate elements.³

While the attorney's clients are normally obligated to pay expert witness fees regardless of the court decision, those fees may in reality never be paid. Fee arrangments have often been a point of contention with expert witnesses who made assumptions not spelled out in their retainers. While experts may charge an upfront fee, that fee often does not cover everything. The attorney's clients may expect to wait until they receive their award, which can take many years, and then the award may never materialize.