STORY FROM: Reinsurance & Arbitration

Sanctions Must Be Limited to Fees Incurred Due to Bad Faith Conduct, High Court Rules

WASHINGTON, D.C. — In sanctioning a party’s bad faith litigation conduct by ordering it to pay the other party’s legal fees, the award must be limited to the fees the innocent party incurred solely due to the misconduct, the U.S. Supreme Court has unanimously held.

In an April 18 opinion written by Justice Elena Kagan, the high court explained that such a sanction must be compensatory, rather than punitive, and the court must establish a causal link between the litigant’s misbehavior and the legal fees paid by the opposing party.

Justice Neil Gorsuch did not participate in the consideration or ...

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