2nd Circuit Tosses Fees Paid to Expert Witness

MANHATTAN (CN) - Fees paid to an expert witness should not have been awarded in a wage-and-hour lawsuit because it violates the Fair Labor Standards Act, the Second Circuit ruled Wednesday.

In the underlying lawsuit, former contract employees of Capala Brothers Inc. sued the company over unpaid wages. A countersuit filed by the company alleged the employees had committed conversion and engaged in tortious interference with contracts, among other charges.

After seven years of litigation, a jury found Capala Brothers guilty of violating labor laws. The district court awarded the plaintiffs' attorneys nearly $600,000 in fees and expenses, of which $10,000 were reimbursements to accountant Glenn Pannenborg, who gave testimony on behalf of the plaintiffs during the trial.

The judge hearing the case had denied about $1,000 in addition expenses for Pannenborg because those costs were associated with Capala Brothers' countersuit.

Capala Brothers appealed the fee award, saying the district court abused its power, and argued that expert fees were not payable under the Fair Labor Standards Act.

The Second Circuit agreed, ruling Wednesday that, except for per diem and travel allowances, fees paid to expert witnesses are not covered by the federal labor law.

The court cited several U.S. Supreme Court rulings that clearly stated witness fees were not reimbursable unless explicitly stated by the particular federal statute being used to sue.

"The Supreme Court has made clear on multiple occasions that, absent explicit statutory authorization, a district court may not award reimbursement for expert fees" beyond certain allowances, the per curiam opinion states.

The court remanded the case back to the district court, in order to determine if New York State's labor law covers such expenses.

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