Reference no: EM133810450

Question

An out-of-state citizen sued a police department in a federal diversity case, alleging negligent retention of an officer who had used excessive force against him. Even though discovery established this claim with undisputed video evidence, the department refused to settle. Ultimately, the court granted the citizen summary judgment, reasoning he had established all elements of his claim as a matter of law. The court then awarded the citizen attorneys' fees on the ground that the department had defended the claim in bad faith. Under a 1973 U.S. Supreme Court decision, federal courts have inherent equitable power to award attorneys' fees for "bad faith" litigation conduct even if no fee-shifting statute applies. The rationale is that the policies supporting the American rule, where each party pays its own attorneys' fees, do not apply to parties acting in bad faith, who need to be deterred and punished for such conduct. By contrast, courts in the state where the federal court sits never award attorneys' fees without a fee-shifting statute. If the law permitting attorneys' fees is challenged on appeal, how should the appellate court rule?

A. The appellate court should uphold the award because the federal rule authorizing attorneys' fees for bad.