Court Opinion

ID: 8213394
Source: CourtListenerOpinion
Date Created: 2022-10-12 13:07:04.289259+00
Date Added: 2024-06-11T16:42:22.543947
License: Public Domain

[Until this opinion appears in the Ohio Official Reports advance sheets, it may be cited as Cruz
v. English Nanny & Governess School, Slip Opinion No. 2022-Ohio-3586.]

                                          NOTICE
      This slip opinion is subject to formal revision before it is published in an
      advance sheet of the Ohio Official Reports. Readers are requested to
      promptly notify the Reporter of Decisions, Supreme Court of Ohio, 65
      South Front Street, Columbus, Ohio 43215, of any typographical or other
      formal errors in the opinion, in order that corrections may be made before
      the opinion is published.

                          SLIP OPINION NO. 2022-OHIO-3586
CRUZ ET AL., APPELLANTS, v. ENGLISH NANNY & GOVERNESS SCHOOL ET AL.,
                                        APPELLEES.
  [Until this opinion appears in the Ohio Official Reports advance sheets, it
may be cited as Cruz v. English Nanny & Governess School, Slip Opinion No.
                                     2022-Ohio-3586.]
Torts—Attorney fees—Prevailing parties who were awarded reasonable attorney
        fees along with a punitive-damages award at trial may also recover
        attorney fees that they incur in successfully defending their judgment on
        appeal—Court of appeals’ judgment reversed.
   (No. 2020-1247—Submitted January 25, 2022—Decided October 12, 2022.)
              APPEAL from the Court of Appeals for Cuyahoga County,
                              No. 108767, 2020-Ohio-4216.
                                   _________________
        STEWART, J.
        {¶ 1} In this discretionary appeal, we are asked to decide whether prevailing
parties who were awarded reasonable attorney fees along with a punitive-damages
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award in a tort case involving malicious conduct may also recover the attorney fees
that they incur in successfully defending their judgment. The Eighth District Court
of Appeals held that they may not and reversed the trial court’s award of attorney
fees relating to the prevailing parties’ appeal. 2020-Ohio-4216, ¶ 58-60. The
Eighth District concluded that “Ohio law does not permit recovery of appellate
attorney fees except in cases involving remedial statutes,” and because “[p]laintiffs’
claims were not based on any remedial statute,” they were “not entitled to recovery
of attorney fees generated in defending their judgment.” Id. at ¶ 58. We disagree
and therefore reverse the Eighth District’s judgment.
                  I. FACTS AND PROCEDURAL HISTORY
       {¶ 2} In November 2011, plaintiffs-appellants, Christina Cruz and Heidi
Kaiser, filed a complaint against defendants-appellees, English Nanny &
Governess School (the “School”), English Nannies, Inc. (the “Placement Agency”),
Sheilagh Roth, and Bradford Gaylord (collectively, “defendants” or the “EN&G
defendants”).   Cruz alleged claims of negligent and intentional infliction of
emotional distress, wrongful termination against public policy, defamation, and
breach of contract. Kaiser alleged claims of wrongful termination against public
policy and defamation.
       {¶ 3} In May 2015, the case proceeded to a 26-day jury trial. The following
evidence was presented at trial.
       {¶ 4} Roth founded the School, which had been training certified
professional nannies and governesses since 1985. Roth was the executive director
of the School, and Gaylord was the director of operations for the Placement
Agency, which placed graduates of the School with families requesting a nanny or
a governess. All graduates of the School entered into an “exclusive placement
agreement,” whereby the Placement Agency promised to “make all possible efforts
to arrange interviews for students with perspective employers,” and the students

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agreed to give “exclusive placement rights” to the agency for three months
following graduation.
         {¶ 5} Cruz graduated from the School in June 2011, and Kaiser worked as
a placement coordinator at that time, matching students who had graduated from
the School with families looking for a nanny. Shortly after Cruz graduated, Kaiser
arranged for her to spend a weekend interviewing with a single father and his two
minor daughters. While on the interview, Cruz witnessed what she believed was
the father engaging in sexual activity with one of his daughters. As soon as Cruz
returned home, she called Kaiser and told her about the suspected sexual abuse.
Kaiser then relayed Cruz’s account of the suspected sexual abuse to Gaylord.
         {¶ 6} Kaiser testified that Roth and Gaylord told her to tell Cruz “not to
report” the abuse to social services. Kaiser refused to do so and warned Cruz that
Roth and Gaylord “wanted [Cruz] blackballed.” Roth and Gaylord terminated
Kaiser approximately one week after Kaiser told Gaylord that Cruz saw what she
believed was sexual abuse.
         {¶ 7} Roth and Gaylord discouraged Cruz from reporting the sexual abuse
to social services. Gaylord purportedly stated that if Cruz reported the abuse, he
would make sure that she did not work in the nanny profession. Roth and Gaylord
ultimately withheld employment opportunities from Cruz.           A licensed social
worker at the School, who also taught a course on recognizing and preventing child
abuse, testified that Roth told her that Cruz could not be trusted and was “unstable.”
At trial, Roth testified that she had stopped attempting to place Cruz based on
alleged concerns over Cruz’s mental health and because Cruz had supposedly asked
to be released from the exclusive-placement agreement. However, in an August
2011 letter that Roth sent to Cruz, Roth blamed the inability to find a placement for
Cruz on “the current economy,” which Roth said had made the business “extremely
slow.”

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         {¶ 8} The jury found in favor of Cruz and against the defendants on her
claim of intentional infliction of emotional distress and awarded her $150,000 in
compensatory damages ($75,000 for noneconomic damages and $75,000 for
economic damages). The jury also found in favor of Cruz on her breach-of-contract
claim against the Placement Agency but awarded her only $10 in compensatory
damages.      Additionally, the jury awarded Cruz punitive damages against the
Placement Agency in the amount of $50,000, against Roth in the amount of
$68,750, and against Gaylord in the amount of $50,000, plus reasonable attorney
fees.1
         {¶ 9} With respect to Kaiser, the jury found in her favor against the School
and the Placement Agency on her claim of wrongful discharge in violation of public
policy. The jury awarded her $20,000 in compensatory damages. The jury also
awarded Kaiser punitive damages against the School and the Placement Agency in
the amount of $54,000 each, plus reasonable attorney fees.
         {¶ 10} The parties filed several postverdict motions, including Cruz and
Kaiser’s motion for attorney fees and expenses and defendants’ motion for a
mistrial, motion to cap plaintiffs’ punitive-damages awards, motion for judgment
notwithstanding the verdict, and motion for a new trial and remittitur. The trial
court denied defendants’ motions for a mistrial, judgment notwithstanding the
verdict, and for a new trial, but it granted defendants’ motions for remittitur and to
cap punitive damages. The court reduced Cruz’s economic damages from $75,000
to zero, reduced her punitive damages against the Placement Agency from $50,000
to zero, and reduced her punitive damages against Gaylord from $50,000 to

1. The jury also found in favor of the School on its counterclaim against Cruz for breach of contract,
awarding the School $8,262.24. Additionally, the jury found in favor of Cruz against the School
for punitive damages but awarded her $0 in punitive damages. The jury further found that the
School should not be liable for Cruz’s attorney fees.

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$28,258. The court also reduced Kaiser’s punitive damages against the Placement
Agency to zero and against the School to $10,311.
        {¶ 11} Regarding attorney fees, Cruz and Kaiser’s attorneys requested fees
in the amount of $540,277.11 based on the lodestar calculation (i.e., reasonable
hourly rate multiplied by the number of hours worked). After a subsequent hearing
on attorney fees, the trial court determined that the lodestar amount should be
$191,000 plus expenses, for a total of $208,782.87. But because Cruz and Kaiser
had signed a contingency-fee agreement, the trial court ordered defendants to pay
only $95,308.97 in attorney fees and expenses.2 However, on plaintiffs’ motion for
reconsideration, the trial court awarded an additional $30,195.48 in litigation
expenses, bringing the total award of attorney fees and expenses to $125,504.45.
        {¶ 12} The EN&G defendants appealed and Cruz and Kaiser cross-
appealed. See Cruz v. English Nanny & Governess School, Inc., 2017-Ohio-4176,
92 N.E.3d 143 (8th Dist.). Defendants appealed the trial court’s decision denying
their motions for directed verdict and judgment notwithstanding the verdict with
respect to Cruz’s claim for intentional inflection of emotional distress and Kaiser’s
claim for wrongful discharge. Id. at ¶ 1. Cruz appealed the trial court’s decision
granting defendants’ motion for remittitur regarding her economic damages, and
Cruz and Kaiser appealed the trial court’s judgment regarding attorney fees. Id. at
¶ 2.
        {¶ 13} The Eighth District overruled the EN&G defendants’ assignments of
error but found merit to Cruz’s argument in her cross-appeal that the trial court
erred when it granted defendants’ motion for remittitur. Id. at ¶ 62, 83, 90. The

2. The trial court’s determination was based on 40 percent (the contingency-fee amount) of
$194,066.76 (plaintiffs’ “net amount of compensatory and punitive damages”), which amounted to
$77,626.70 plus $17,782.27 in litigation expenses to nonattorney third parties. We note, however,
that the total amount is incorrect because those numbers add up to $95,408.97, not $95,308.97.

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appellate court reversed the trial court’s judgment and remanded for the trial court
to reconsider the remittitur motion under the correct criteria. Id. at ¶ 90, 126.
        {¶ 14} The Eighth District also concluded that the trial court abused its
discretion when it calculated the reasonable amount of attorney fees, because the
trial court had limited its review to attorney fees incurred by only one attorney even
though the evidence showed that other members of the plaintiffs’ litigation team
also worked on the case. Id. at ¶ 105. The appellate court further held that the trial
court erred when it “deviat[ed] from the lodestar amount based solely on the
contingency fee agreement.” Id. The court reversed the trial court’s decision
regarding attorney fees and instructed the trial court to reconsider Cruz’s and
Kaiser’s motion for attorney fees. Id. at ¶ 126.
        {¶ 15} On remand, Cruz and Kaiser moved to modify their motion for
attorney fees, which included a request for “fees incurred in appellate litigation.”3
The EN&G defendants opposed Cruz and Kaiser’s motion to modify attorney fees.
        {¶ 16} The trial court denied the EN&G defendants’ motion for remittitur
and reinstated the jury’s $75,000 award for Cruz’s economic damages. The court
also awarded Cruz and Kaiser $463,677.08 in attorney fees and expenses, which
included attorney fees that they incurred for 480.4 hours of posttrial work from July
8, 2015, to September 14, 2017.
        {¶ 17} The EN&G defendants appealed a second time, challenging the trial
court’s decision regarding remittitur and its calculation of attorney fees. 2020-
Ohio-4216, at ¶ 1. The Eighth District affirmed the trial court’s decision denying
remittitur, id. at ¶ 25, but reversed in part and affirmed in part the trial court’s award
of attorney fees, id. at ¶ 35, 50, 58, 60. Relevant here, the Eighth District reversed

3. The dissenting opinion points out that “[n]owhere in the [Eighth District’s] mandate was there a
directive for the trial court to determine appellate-attorney fees.” Dissenting opinion, ¶ 67. The
court of appeals’ mandate, however, did not prohibit Cruz and Kaiser from filing an updated motion
regarding attorney fees that they had subsequently incurred defending their judgment on appeal.

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the portion of the trial court’s award of attorney fees for appellate work, concluding
that “Ohio law does not permit recovery of appellate attorney fees except in cases
involving remedial statutes,” and that because “[p]laintiffs’ claims were not based
on any remedial statute,” they were “not entitled to recovery of attorney fees
generated in defending their judgment.” Id. at ¶ 58.
       {¶ 18} Cruz and Kaiser appealed to this court, and we accepted their sole
proposition of law for review:

       Parties who are awarded their reasonable attorney-fees [sic] as part
       of a punitive damages award at trial may, in the presiding court’s
       discretion, recover fees reasonably incurred over the entire course
       of the lawsuit, including at the appellate level.

See 161 Ohio St.3d 1420, 2021-Ohio-254, 161 N.E.3d 713.
                            II. LAW AND ANALYSIS
            A. The Underpinnings of the Eighth District’s Decision
       {¶ 19} Cruz and Kaiser argue that the Eighth District erred when it relied
on Jay v. Massachusetts Cas. Ins. Co., 5th Dist. Stark No. 2009CA00056, 2009-
Ohio-4519 and LaFarciola v. Elbert, 9th Dist. Lorain No. 08CA009471, 2009-
Ohio-4615, in support of its holding that Ohio law does not permit recovery of
attorney fees incurred at the appellate level except when a remedial statute so
provides. Cruz and Kaiser contend that “[n]either the Eighth District below, nor
the Jay or LaFarciola decisions on which it relied, offer a satisfying explanation”
for prohibiting prevailing parties from recovering their appellate-attorney fees
incurred defending a judgment that included a punitive-damages award.
       {¶ 20} The plaintiffs in Jay and LaFarciola were awarded punitive damages
and attorney fees at trial. Jay at ¶ 2; LaFarciola at ¶ 3. The defendants in both
cases subsequently challenged various parts of the plaintiffs’ awards in the trial

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court or on appeal. Jay at ¶ 2; LaFarciola at ¶ 4. The plaintiffs subsequently sought
attorney fees that they incurred successfully defending their judgments. Jay at ¶ 3;
LaFarciola at ¶ 5. The trial courts denied the plaintiffs’ motions, and Jay and
LaFarciola appealed to the Fifth and Ninth District Courts of Appeals, respectively.
Jay at ¶ 4; LaFarciola at ¶ 6-7.
       {¶ 21} In both Jay and LaFarciola, the appellate courts relied on this court’s
decision in Klein v. Moutz, 118 Ohio St.3d 256, 2008-Ohio-2329, 888 N.E.2d 404,
to conclude that appellate-attorney fees may be recovered only when there is a
remedial statute permitting recovery of attorney fees. Jay at ¶ 11-13; Lafarciola at
¶ 11-13.
       {¶ 22} In Klein, the plaintiffs (the Kleins) sued their landlord, alleging that
he had failed to timely return their security deposit as required by R.C. 5321.16(B).
Klein at ¶ 4. They sought statutory damages under R.C. 5321.16(C), which permits
a tenant to “recover property and money due to him, together with damages in an
amount equal to the amount wrongfully withheld, and reasonable attorneys fees.”
The trial court awarded damages to the Kleins but denied their request for attorney
fees. Klein at ¶ 4. The Kleins appealed. Id. The Ninth District Court of Appeals
reversed the trial court’s decision and instructed the trial court to award reasonable
attorney fees to the Kleins. Klein v. Moutz, 9th Dist. Summit No. 23132, 2006-
Ohio-4974, ¶ 11.
       {¶ 23} On remand, “the trial court awarded the Kleins the attorney fees they
had incurred at the trial level, but denied their fees associated with the appeal.”
Klein, 118 Ohio St.3d 256, 2008-Ohio-2329, 888 N.E.2d 404, at ¶ 5. The Kleins
again appealed, and the Ninth District affirmed the trial court’s decision denying
attorney fees associated with the appeal. Klein v. Moutz, 9th Dist. Summit No.
23473, 2007-Ohio-3242. The Ninth District held that under R.C. 5321.16, the
Kleins were entitled to costs that they incurred on appeal, including attorney fees,
but the court concluded that only an appellate court could award such costs. Id. at

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¶ 7-8. The Ninth District explained, “App.R. 24 permits this Court to award ‘fees
allowed by law.’ App.R. 24, however, does not grant the trial court authority to
award appellate costs in any manner.” Id. at ¶ 6. The appellate court affirmed the
trial court’s decision, agreeing that the trial court “lacked authority under R.C.
5312.16 [sic] to award the costs of an appeal that occurred before this Court.” Id.
at ¶ 8.
          {¶ 24} The question presented to this court in Klein, 118 Ohio St.3d 256,
2008-Ohio-2329, 888 N.E.2d 404, was “ ‘[w]hether a trial court has the authority
to tax costs under R.C. 5321.16 which were incurred at the appellate level.’ ” Id.
at ¶ 2, quoting 115 Ohio St.3d 1419, 2007-Ohio-5056, 874 N.E.2d 537. We
answered the question in the affirmative and held that “[b]oth trial and appellate
courts have authority to determine and tax costs under R.C. 5321.16(C) for attorney
fees incurred at the appellate level.” Id. at syllabus.
          {¶ 25} We explained in Klein that “R.C. 5321.16 is a remedial statute
intended to compensate the tenant for a wrongfully withheld deposit at no expense
to the tenant.” Id. at ¶ 13. We noted that “[t]he trial court is in a better position to
determine a fee award, for it may hold a hearing, take testimony, create a record,
and otherwise evaluate the numerous factors associated with calculating an
attorney-fee award.” Id. We further stated that there was “no limiting language in
the statute that preclude[d] a trial court from considering fees incurred at the
appellate level.” Id.
          {¶ 26} We noted in Klein that our decision was “consistent with judgments
by appellate courts authorizing trial courts to assess attorney fees incurred on appeal
to a prevailing plaintiff under other remedial statutes.” Id. at ¶ 15, citing Tanner v.
Tom Harrigan Chrysler Plymouth, Inc., 82 Ohio App.3d 764, 613 N.E.2d 649 (2d
Dist.1991) (Consumer Sales Practices Act, R.C. Chapter 1345), Gibney v. Toledo
Bd. of Edn., 73 Ohio App.3d 99, 596 N.E.2d 591 (6th Dist.1991) (Civil Rights
Attorney’s Fees Awards Act of 1976, 42 U.S.C. 1988), and Royster v. Toyota Motor

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Sales, U.S.A., Inc., 92 Ohio St.3d 327, 332, 750 N.E.2d 531 (2001) (Ohio’s Lemon
Law, R.C. 1345.71 et seq.). And we stated that “[t]his practical approach furthers
an important objective of the statute, i.e., to ensure that the tenant incurs no expense
when seeking return of the deposit wrongfully withheld.”                     Id. at ¶ 17. We
concluded that a tenant may petition either the trial court or the court of appeals for
“R.C. 5321.16(C) attorney fees that have been incurred on appeal.” Id. at ¶ 13.
         {¶ 27} The Fifth District decided Jay, 5th Dist. Stark No. 2009CA00056,
2009-Ohio-4519, about one week before the Ninth District decided LaFarciola, 9th
Dist. Lorain No. 08CA009471, 2009-Ohio-4615.4 Both appellate courts declined
to hold that plaintiffs who were awarded punitive damages in their lawsuits could
recover attorney fees that they incurred defending their judgments on appeal. Jay
at ¶ 13; LaFarciola at ¶ 13-15. The Fifth and Ninth Districts concluded that this
court’s holding in Klein, 118 Ohio St.3d 256, 2008-Ohio-2329, 888 N.E.2d 404,
was limited to plaintiffs’ recovery of appellate-attorney fees in cases where there is
a remedial statute permitting attorney fees. Jay at ¶ 15; LaFarciola at ¶ 11-12.
         {¶ 28} The Fifth District found it imperative that “the cause of action in
Klein was based on a remedial statute,” which was not the case in Jay. Jay at ¶ 11.
The Fifth District concluded, “A thorough reading of Klein reveals that the Supreme
Court’s decision to permit a trial court to determine appellate fees was meant to be
read in harmony with statutory provisions that permit such an award; it was not
meant to be liberally construed so as to apply to any determination of appellate fees
and costs.” (Emphasis sic.) Id.
         {¶ 29} The Ninth District in LaFarciola, explicitly following Jay, explained
that the plaintiffs in LaFarciola had argued that they were “entitled to appellate
attorney fees in light of the jury verdict which awarded attorney fees pursuant to

4. Jay was decided by a visiting panel of three judges from the Ninth District that included two of
the same judges who decided LaFarciola.

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the award of punitive damages.” LaFarciola at ¶ 13. But the court found “no
controlling legal authority to support this proposition.” Id. The court further
explained, “[T]he ‘American rule’ does not permit a prevailing party to recover
attorney fees in the absence of statutory authorization,” id. at ¶ 14, citing Sorin v.
Warrensville Hts. School Dist. Bd. of Edn., 46 Ohio St.2d 177, 179, 347 N.E.2d 527
(1976), and that “a move away from a deeply rooted policy regarding the awarding
of attorney fees is best left as a matter of legislative concern,” id.
        {¶ 30} In this case, the Eighth District relied on Jay and LaFarciola to
conclude that because Cruz’s and Kaiser’s claims were not based on a remedial
statute, they were not entitled to recover attorney fees that they expended defending
their judgments on appeal. 2020-Ohio-4216, at ¶ 58.
        {¶ 31} Cruz and Kaiser maintain that the Eighth District erred when it relied
on Jay and LaFarciola. They argue that although this court discussed Ohio’s
Landlord-Tenant Act, R.C. Chapter 5321, in Klein, 118 Ohio St.3d 256, 2008-Ohio-
2329, 888 N.E.2d 404, as well as cases involving other remedial statutes, we did
not explicitly limit recovery of appellate-attorney fees to cases in which a remedial
statute was involved.
        {¶ 32} The EN&G defendants argue that “[t]he entirety of this Court’s
rationale was based on the statutory language at issue in that case, namely [R.C.]
5321.16(C).” (Boldface and emphasis sic.) They quote the syllabus in Klein,
asserting that it “distills the statutory basis of its decision in a single sentence:
‘[b]oth trial and appellate courts have authority to determine and tax costs under
R.C. 5321.16(C) for attorney fees incurred at the appellate level.’ ” (Boldface,
italics, and brackets sic.) The defendants further point to other sections of our
decision in Klein in which we discuss R.C. 5321.16(C) or discuss the fact that the
plaintiffs’ appellate-attorney fees were authorized because the case was brought
under a remedial statute. They argue that based on this court’s emphasis on

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remedial statutes, it is clear that the “decision extended only to cases involving
other remedial statutes.” (Boldface and italics sic.)
       {¶ 33} The EN&G defendants, as well as the appellate courts in Jay and
LaFarciola and the Eighth District in this case, have misinterpreted our decision in
Klein. Notably, the issue in Klein was not whether appellate-attorney fees could be
awarded at all; rather, the issue was whether the trial court could award appellate-
attorney fees. Klein addressed appellate-attorney fees in relation to remedial
statutes because there was a remedial statute at issue in that case. But there is
nothing in our decision in Klein that limits recovery of appellate-attorney fees by a
prevailing party to only those cases in which there is a remedial statute permitting
recovery of attorney fees.
        B. The “American Rule” and the Punitive-Damages Exception
       {¶ 34} Cruz and Kaiser contend that because the “American rule” already
allows for an award of attorney fees when a jury finds that punitive damages are
warranted, allowing attorney fees that are incurred defending a judgment on appeal
would not create a new exception to the American rule. They also argue that
allowing appellate-attorney fees following a punitive-damages award would further
the punitive and deterrent purposes of awarding exemplary damages and more fully
compensate prevailing parties who were injured by malicious conduct.
       {¶ 35} “Ohio has long adhered to the ‘American rule’ with respect to
recovery of attorney fees: a prevailing party in a civil action may not recover
attorney fees as a part of the costs of litigation.” Wilborn v. Bank One Corp., 121
Ohio St.3d 546, 2009-Ohio-306, 906 N.E.2d 396, ¶ 7. “The American Rule has
roots in our common law reaching back to at least the 18th century.” Baker Botts,
L.L.P. v. ASARCO, L.L.C., 576 U.S. 121, 126, 135 S.Ct. 2158, 192 L.Ed.2d 208
(2015), citing Arcambel v. Wiseman, 3 U.S. 306, 1 L.Ed. 613 (1796). The rationale
behind the American rule is that because “litigation is at best uncertain one should
not be penalized for merely defending or prosecuting a lawsuit, and that the poor

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might be unjustly discouraged from instituting actions to vindicate their rights if
the penalty for losing included the fees of their opponents’ counsel.” Fleischmann
Distilling Corp. v. Maier Brewing Co., 386 U.S. 714, 718, 87 S.Ct. 1404, 18
L.Ed.2d 475 (1967).
       {¶ 36} However, there are three well-established exceptions to the
American rule: (1) when a statute creates a duty to pay attorney fees, (2) when the
losing party acted in bad faith, and (3) when the parties contracted to shift the fees.
Wilborn at ¶ 7. It is the second exception that is relevant here. As we explained in
Phoenix Lighting Group, L.L.C. v. Genlyte Thomas Group, L.L.C., 160 Ohio St.3d
32, 2020-Ohio-1056, 153 N.E.3d 30, ¶ 9:

       An exception to the American rule allows an award of attorney fees
       to the prevailing party as an element of compensatory damages
       when the jury finds that punitive damages are warranted. Zoppo v.
       Homestead Ins. Co., 71 Ohio St.3d 552, 558, 644 N.E.2d 397
       (1994); New York, Chicago & St. Louis RR. Co. v. Grodek, 127 Ohio
       St. 22, 24-25, 186 N.E. 733 (1933) (“facts which justify the
       infliction of exemplary damages will also justify the jury in adding
       the amount of counsel fees to the verdict, not as a part of exemplary
       damages, but as compensatory damages”). See Galmish v. Cicchini,
       90 Ohio St.3d 22, 35, 734 N.E.2d 782 (2000).

       {¶ 37} Since the earliest cases at common law, juries in Ohio have been
permitted to include reasonable attorney fees as part of compensatory damages
when the jury also awards exemplary or punitive damages. Roberts v. Mason, 10
Ohio St. 277 (1859), paragraph two of the syllabus. “[I]n cases where the act
complained of is tainted by fraud, or involves an ingredient of malice, or insult, the
jury, which has power to punish, has necessarily the right to include the

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consideration of proper and reasonable counsel fees in their estimate of damages.”
Id. at 282, citing Sedgwick, Measure of Damages, 95-97, Linsley v. Bushnell, 15
Conn. 225 (1842), Noyes v. Ward, 19 Conn. 250 (1848), and Marshall v. Betner,
17 Ala. 832 (1850).
       {¶ 38} At common law, recovery of reasonable attorney fees has always
been permitted when punitive damages are awarded. See Columbus Fin., Inc. v.
Howard, 42 Ohio St.2d 178, 183, 327 N.E.2d 654 (1975), citing Roberts, 10 Ohio
St. 277, Peckham Iron Co. v. Harper, 41 Ohio St. 100 (1884), and Davis v. Tunison,
168 Ohio St. 471, 155 N.E.2d 904 (1959). Moreover, there is nothing at common
law prohibiting prevailing parties who were awarded punitive damages at trial from
recovering reasonable attorney fees that they incurred defending their judgment on
appeal. Therefore, based on the punitive-damages exception to the American rule,
which was well established at common law, we hold that prevailing parties who
were awarded reasonable attorney fees along with a punitive-damages award may
also recover attorney fees that they incur in successfully defending their judgment
on appeal. Accordingly, the Eighth District erred when it held that Cruz and Kaiser
could not recover their appellate-attorney fees. Permitting prevailing parties to
recover attorney fees that they incurred defending their judgment furthers the
purpose of awarding attorney fees as an element of compensatory damages in cases
warranting punitive damages.
       {¶ 39} When a defendant is found liable for having acted in bad faith or for
malicious tortious conduct and is ordered to pay attorney fees along with a punitive-
damages award, the victims of that conduct should not always be required to bear
the cost of successfully defending their judgment. To hold that prevailing parties
who were awarded punitive damages may never receive attorney fees for defending
their judgments would undermine the entire purpose of awarding compensatory
attorney fees for victims of defendants’ malicious or bad-faith conduct.

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         {¶ 40} Moreover, it is well established that prevailing parties may recover
reasonable attorney fees that they incurred defending their judgment when the other
two exceptions to the American rule are at issue, which are: (1) when a statute
creates a duty to pay attorney fees, Klein, 118 Ohio St.3d 256, 2008-Ohio-2329,
888 N.E.2d 404, at syllabus, and (2) when the parties contracted to shift the fees,
Calypso Asset Mgt., L.L.C. v. 180 Indus., L.L.C., 10th Dist. Franklin Nos. 20AP-
122 and 20AP-124, 2021-Ohio-1171, ¶ 4, 32 (defendants recovered their appellate-
attorney fees pursuant to a fee-shifting provision in the parties’ agreement that
permitted the prevailing party to recover attorney fees). Therefore, not permitting
prevailing parties who were awarded punitive damages to recover attorney fees that
they incur in defending their judgment on appeal would go against established
common-law exceptions to the American rule. And as this court stated in Klein,
when a statute provides for an award of attorney fees to a prevailing plaintiff in
addition to other available damages, the “practical approach” of permitting trial
courts to determine the reasonable amount of attorney fees incurred at the appellate
level “furthers [the] important objective” of ensuring that a plaintiff does not incur
additional expenses when defending a judgment that lawfully awarded damages
under the statute. Id. at ¶ 17. Similarly, allowing courts to determine the reasonable
amount of attorney fees incurred at the appellate level when punitive damages were
awarded also ensures that a prevailing party who was wronged by malicious
conduct will not have to incur more expenses to defend his or her judgment on
appeal.5
         {¶ 41} The EN&G defendants contend that this court’s holding in Klein was
based on “centuries of precedent in Ohio and throughout the United States that it is
the legislature—and not the judiciary—that is best equipped to weigh the public

5. The dissenting opinion finds noteworthy the fact that the jury was not instructed that attorney fees
could include fees incurred in any appeal of the judgment. Dissenting opinion at ¶ 60. But this is
irrelevant. The jury also was not instructed that attorney fees were limited to those incurred at trial.

                                                  15
                             SUPREME COURT OF OHIO

policy considerations inherent in creating exceptions to the well-established
‘American Rule’ that parties are responsible for their own attorney’s fees.”
(Boldface and italics sic.) The EN&G defendants cite this court’s decision in Sorin,
46 Ohio St.2d 177, 347 N.E.2d 527, in support of their argument, specifically
pointing to the following statement: “We are well aware that the ‘American rule’
has been criticized in recent years, but, in our view any departure from such a
deeply-rooted policy as the exclusion of attorney fees as costs is a matter of
legislative concern.” (Footnote omitted.) Id. at 179-180 (citing several law-review
articles discussing the American rule).
       {¶ 42} Sorin, however, is simply not relevant to the present case. First,
Sorin had nothing to do with attorney fees incurred on appeal. Second, we
concluded in Sorin that the plaintiff was not entitled to attorney fees because there
was no exception to the American rule in that case, i.e., the statute at issue did not
permit attorney fees, punitive damages were not awarded, and there was no fee-
shifting contract. Id. at 183. Here, we have an exception to the American rule—
Cruz and Kaiser received an award of punitive damages. Therefore, we are not
departing from any policy—deeply-rooted or otherwise.
       {¶ 43} The EN&G defendants also rely heavily on the United States
Supreme Court’s decision in Alyeska Pipeline Serv. Co. v. Wilderness Soc., 421
U.S. 240, 95 S.Ct. 1612, 44 L.Ed.2d 141 (1975), pointing out that it is “strikingly
similar” to Sorin. But just as in Sorin, Alyeska Pipeline had absolutely nothing to
do with the punitive-damages exception to the American rule. Rather, the court
held that “it is not for us to invade the legislature’s province by redistributing
litigation costs” when there is no exception to the American rule. Alyeska Pipeline
at 271. Again, in the present case, Cruz and Kaiser were awarded attorney fees
pursuant to a well-established exception to the American rule, i.e., the malicious
conduct of the defendants. Therefore, Alyeska Pipeline does nothing to further the
EN&G defendants’ position.

                                          16
                                     January Term, 2022

                   C. R.C. 2315.21 and Caps on Punitive Damages
         {¶ 44} The common-law right to exemplary or punitive damages in a tort
action is now codified in R.C. 2315.21. The statute provides that punitive damages
may not be recovered from a defendant unless the evidence shows that “[t]he
actions or omissions of that defendant demonstrate malice or aggravated or
egregious fraud, or that defendant as principal or master knowingly authorized,
participated in, or ratified actions or omissions of an agent or servant that so
demonstrate.” R.C. 2315.21(C)(1). “[T]he burden of proof shall be upon a plaintiff
in question, by clear and convincing evidence, to establish that the plaintiff is
entitled to recover punitive or exemplary damages.” R.C. 2315.21(D)(4).
         {¶ 45} In 2005, the General Assembly enacted legislation to impose caps
on punitive-damage awards in tort actions at two times the amount of the
compensatory damages. R.C. 2315.21(D)(2)(a), Am.Sub.S.B. No. 80, 150 Ohio
Laws, Part V, 7,915, 7,970-7,971.6               When enacting punitive-damages caps,
however, the legislature expressly carved out an exception for attorney fees: “Any
attorney’s fees awarded as a result of a claim for punitive or exemplary damages
shall not be considered for purposes of determining the cap on punitive damages.”
R.C. 2315.21(D)(2)(c). The General Assembly specifically contemplated that
attorney fees may be awarded above and beyond the caps when punitive damages
are awarded.       And notably, despite the dissenting opinion’s statement to the
contrary, dissenting opinion, ¶ 76-77, the statute’s reference to attorney fees is not
limited to only those fees incurred at trial. The caps on punitive damages will
therefore not affect a prevailing party’s award of appellate-attorney fees.

6. R.C. 2315.21(D)(2)(b) provides, “If the defendant is a small employer or individual, the court
shall not enter judgment for punitive or exemplary damages in excess of the lesser of two times the
amount of the compensatory damages awarded to the plaintiff from the defendant or ten per cent of
the employer’s or individual’s net worth when the tort was committed up to a maximum of three
hundred fifty thousand dollars.”

                                                17
                             SUPREME COURT OF OHIO

       {¶ 46} While discussing the amendments to R.C. 2315.21, the dissenting
opinion notes that “[h]ad the General Assembly intended to authorize an award of
attorney fees for appellate counsel when an award of punitive or exemplary
damages is awarded, it would have said so, but it did not.” Dissenting opinion at
¶ 77. That is not so. Attorney-fee awards have long been permitted at common
law when punitive damages are awarded. When amending R.C. 2315.21, the
General Assembly did not statutorily modify this rule (although it could have). In
fact, the General Assembly explicitly stated that attorney-fee awards “shall not be
considered” when determining caps on punitive damages (emphasis added), R.C.
2315.21(D)(2)(c), thus, preserving the common-law rule.
                             D. Lodestar Calculation
       {¶ 47} Permitting reasonable attorney fees to be awarded to prevailing
parties for defending a judgment on appeal when punitive damages were awarded
will also make the lodestar calculation more accurate. The lodestar is the “ ‘starting
point for determining the amount of a reasonable fee,’ ” i.e., “ ‘the number of hours
reasonably expended on the litigation multiplied by a reasonable hourly rate.’ ”
Bittner v. Tri-County Toyota, Inc., 58 Ohio St.3d 143, 145, 569 N.E.2d 464 (1991),
quoting Hensley v. Eckerhart, 461 U.S. 424, 433, 103 S.Ct. 1933, 76 L.Ed.2d 40
(1983). In Phoenix Lighting, 160 Ohio St.3d 32, 2020-Ohio-1056, 153 N.E.3d 30,
we noted:

               It is simple economics that an attorney charges an hourly rate
       that takes into account the difficulty of the question involved, the
       opportunity cost, the time limitations imposed by the client, the skill
       requisite to perform a legal service, the attorney’s professional
       relationship with the client, and the fee customarily charged in the
       jurisdiction for similar legal services.

                                          18
                                January Term, 2022

Id. at ¶ 17, citing In re Sears, Roebuck & Co. Front-Loading Washer Prods. Liab.
Litigation, 867 F.3d 791, 792 (7th Cir.2017). We also observed that in Sears,
Roebuck & Co., the Seventh Circuit Court of Appeals “reject[ed] lodestar
enhancement based on the complexity of the case, the degree of success, and the
public interest advanced by the litigation ‘because novelty and complexity
influence the base fee—the more novel and complex a case, the more hours will be
billed and the higher the hourly billing rates will be.’ ” Phoenix Lighting at ¶ 17,
quoting Sears, Roebuck & Co. at 792.
       {¶ 48} Likewise, it is simple economics that permitting prevailing parties to
recover reasonable attorney fees for defending their judgments more accurately
reflects the number of hours that attorneys expend on a case, which will make the
lodestar calculation more reasonable, fair, and correct.
       {¶ 49} The dissenting opinion proclaims that “[i]n the past, any time this
court has determined that appellate-attorney fees could be awarded, it has done so
on the basis of the language of a statute.” Dissenting opinion at ¶ 71, citing Klein,
118 Ohio St.3d 256, 2008-Ohio-2329, 888 N.E.2d 404 and Royster, 92 Ohio St.3d
327, 750 N.E.2d 531. But the dissent is mistaken. In Klein and Royster, this court
allowed a prevailing party to recover reasonable appellate-attorney fees because a
statute permitted an award of attorney fees—even though the statute did not
expressly authorize recovery of appellate-attorney fees. See Royster at 332 (Ohio’s
Lemon Law, R.C. 1345.75, permits prevailing consumers to recover “reasonable
attorney fees”); Klein at ¶ 13 (R.C. 5321.16(C) states that prevailing tenants may
recover “reasonable attorney fees”). Similar to a prevailing party’s recovering
appellate-attorney fees when there is a statute permitting recovery of attorney fees
(one exception to the American rule), prevailing parties may recover appellate-
attorney fees when punitive damages are awarded (another exception to the
American rule).

                                         19
                                  SUPREME COURT OF OHIO

         {¶ 50} Despite the dissent’s exaggerated claims7 that we have taken “a giant
leap and forever change[d] the American rule,” dissenting opinion at ¶ 79, we have
done no such thing. The American rule already permits an award of attorney fees
when punitive damages are awarded. The dissent just chooses to ignore this fact.
                                     III. CONCLUSION
         {¶ 51} When parties are awarded punitive damages at trial, they may also
recover reasonable attorney fees that they incur successfully defending their
judgments on appeal. This rule is consistent with the punitive-damages exception
to the American rule established at common law centuries ago, is not limited by
statutory caps on punitive damages, and will make the lodestar calculation more
accurate. Accordingly, we reverse the judgment of the Eighth District Court of
Appeals with respect to the award of attorney fees for postverdict work and reinstate
the trial court’s judgment regarding the same.
                                                                            Judgment reversed.
         O’CONNOR, C.J., and FISCHER, DONNELLY, and BRUNNER, JJ., concur.
         KENNEDY, J., dissents, with an opinion joined by DEWINE, J.
                                     _________________
         KENNEDY, J., dissenting.
         {¶ 52} Today, the American rule, the “bedrock principle” of our adversarial
system that each side in litigation is responsible for the cost of their own attorney
fees, becomes clay. See Hardt v. Reliance Std. Life Ins. Co., 560 U.S. 242, 252-
253, 130 S.Ct. 2149, 176 L.Ed.2d 998 (2010), quoting Ruckelshaus v. Sierra Club,

7. The dissent also declares that we have created some sort of windfall provision for prevailing
plaintiffs by allowing an award of appellate-attorney fees, decrying that “[n]ow, in every case in
which attorney fees are awarded at the trial-court level upon an award of punitive damages, an award
of appellate-attorney fees will necessarily follow.” (Emphasis sic.) Dissenting opinion at ¶ 79. But
this cautionary tale completely discounts the fact that the court determines a fee-award amount for
posttrial work, including appellate-attorney fees, based on the court’s sound discretion in
determining whether the requested amounts are warranted and appropriate. This means that the
court could award a sum of zero.

                                                20
                                 January Term, 2022

463 U.S. 680, 684, 103 S.Ct. 3274, 77 L.Ed.2d 938 (1983) (“ ‘Our basic point of
reference’ when considering the award of attorney’s fees is the bedrock principle
known as the ‘ “American Rule” ’ ”). Without a basis in law, the majority declares
that in a civil case, an appellant may have taxed as costs the appellee’s attorney
fees if the appellant exerts his or her substantive right of first appeal to the court of
appeals.
        {¶ 53} The impact of this decision is easy to predict. It will have an
immediate chilling effect on the right of first appeal guaranteed by the General
Assembly for defendants against whom the most serious judgment in a civil case
has been rendered—an award of punitive damages and attorney fees. Today’s
majority decision will also serve as a cautionary tale for others: when will another
judicially created expansion occur, and will litigants see it coming?
        {¶ 54} Because the majority reverses the appellate court’s judgment
denying appellants an award of appellate-attorney fees, I dissent.
                 I. Constitutional rights and statutory authority
        {¶ 55} An appellant’s right to appeal a judgment against him or her is
conferred by statute. Article IV, Section 3(B)(2) of the Ohio Constitution states
that Ohio’s courts of appeals “shall have such jurisdiction as may be provided by
law to review and affirm, modify, or reverse judgments or final orders of the courts
of record inferior to the court of appeals within the district.” (Emphasis added.)
The General Assembly has granted litigants the substantive right to appeal in civil
cases in R.C. 2505.03(A), which provides:

                Every final order, judgment, or decree of a court and, when
        provided by law, the final order of any administrative officer,
        agency, board, department, tribunal, commission, or other
        instrumentality may be reviewed on appeal by a court of common

                                           21
                              SUPREME COURT OF OHIO

       pleas, a court of appeals, or the supreme court, whichever has
       jurisdiction.

       {¶ 56} The legislature, which confers a right of first appeal, specifically
allows for the award of appellate-attorney fees in R.C. 2323.51. However, pursuant
to R.C. 2323.51(B)(1), an award of appellate-attorney fees is limited to when the
appellant engages in frivolous conduct in the prosecution of the appeal. R.C.
2323.51(A)(2)(a) identifies frivolous conduct as conduct that satisfies any of the
following definitions:

                 (i) It obviously serves merely to harass or maliciously injure
       another party to the civil action or appeal or is for another improper
       purpose, including, but not limited to, causing unnecessary delay or
       a needless increase in the cost of litigation.
                 (ii) It is not warranted under existing law, cannot be
       supported by a good faith argument for an extension, modification,
       or reversal of existing law, or cannot be supported by a good faith
       argument for the establishment of new law.
                 (iii) The conduct consists of allegations or other factual
       contentions that have no evidentiary support or, if specifically so
       identified, are not likely to have evidentiary support after a
       reasonable opportunity for further investigation or discovery.
                 (iv) The conduct consists of denials or factual contentions
       that are not warranted by the evidence or, if specifically so
       identified, are not reasonably based on a lack of information or
       belief.

                                           22
                                January Term, 2022

        {¶ 57} R.C. 2323.51(B)(1) further provides that “[a]t any time not more
than thirty days after the entry of final judgment in a civil action or appeal, any
party adversely affected by frivolous conduct may file a motion for an award of
court costs, reasonable attorney’s fees, and other reasonable expenses incurred in
connection with the civil action or appeal.” (Emphasis added.) This is consistent
with App.R. 23, which authorizes an award of appellate-attorney fees when a court
of appeals determines that an appeal is frivolous.
        {¶ 58} Here, plaintiffs-appellants, Christina Cruz and Heidi Kaiser, did not
allege that defendants-appellees, English Nanny & Governess School, English
Nannies, Inc., Sheilagh Roth, and Bradford Gaylord (collectively, the “Nanny
School defendants”) engaged in frivolous conduct during any of the appeals in this
case. There was no appellate-attorney-fee award by the court of appeals pursuant
to R.C. 2323.51. The General Assembly, which created the substantive right to
appeal, has not authorized attorney fees as punishment for the legitimate appeal of
a judgment but instead allows them only for the abuse of the right to appeal.
        {¶ 59} Despite the substantive right that the General Assembly affords
appellants and the limitation on an award of appellate-attorney fees, the majority
holds that Cruz and Kaiser can obtain appellate-attorney fees. This is a gross,
misguided expansion of the common-law American rule. Before examining the
common law and the statutes that are implicated, it is useful to look at the relevant
facts here.
                                     II. Facts
        {¶ 60} At trial, the jury was instructed that after it reached its general
verdict, it would decide at a subsequent hearing whether Cruz and Kaiser were
entitled to punitive damages and attorney fees. The jury was told that if it
determined that attorney fees should be awarded, the amount of the attorney fees
would be determined at a separate hearing without the jury’s participation. The
jury interrogatory asked, “As a punishment to discourage others from committing

                                         23
                             SUPREME COURT OF OHIO

similar wrongful acts, should [the] defendant * * * be held liable for the reasonable
attorney fees of counsel employed by [the plaintiff]?” The jury was not instructed
that attorney fees could include fees incurred in any appeal of the judgment. The
jury determined that trial-attorney fees should be awarded to Cruz and Kaiser in an
unspecified amount.
       {¶ 61} The Nanny School defendants appealed multiple issues concerning
the merits of the case, and Cruz and Kaiser cross-appealed. Cruz argued against
the trial court’s imposition of remittitur with respect to her economic damages, and
both Cruz and Kaiser asserted that the amount of attorney fees awarded to them
should not have been discounted based on what their attorneys would have been
paid pursuant to their contingency-fee agreement. See Cruz v. English Nanny &
Governess School Inc., 2017-Ohio-4176, 92 N.E.3d 143, ¶ 46, 84, 91 (8th Dist.).
       {¶ 62} The Eighth District Court of Appeals affirmed the trial court’s
judgment on the assignments of error raised by the Nanny School defendants and
sustained Cruz’s assignment of error on the remittitur issue and Cruz and Kaiser’s
assignment of error regarding attorney fees. Id. at ¶ 90, 106. With respect to trial-
attorney fees, the appellate court held that the trial court erred by basing its award
on the amount that would have been generated under the contingency-fee
agreement and by not crediting the work of other members of Cruz and Kaiser’s
lead attorney’s firm. Id. at ¶ 105.
       {¶ 63} The Eighth District remanded the matter to the trial court for it to
reconsider Cruz and Kaiser’s motion for attorney fees, this time applying the two-
part test from Bittner v. Tri–County Toyota, Inc., 58 Ohio St.3d 143, 569 N.E.2d
464 (1991). The court of appeals explained that “[w]hen determining the amount
of attorney fees, a trial court is guided by a two-step determination. The trial court
first calculates the ‘lodestar’ by multiplying the number of hours reasonably
expended by a reasonable hourly rate, and, second, decides whether to adjust that
amount based on the reasonableness factors listed in Prof.Cond.R. 1.5(a).” Cruz at

                                         24
                                 January Term, 2022

¶ 97, citing Bittner at syllabus. The court of appeals explained that “a contingency-
fee agreement is one of many factors that a court should consider in determining
the reasonableness of attorney fees—not the determining factor.” Id. at ¶ 102.
        {¶ 64} On remand from the court of appeals, Cruz and Kaiser filed a motion
to modify the attorney-fee award, which also included a new request for the trial
court to award appellate-attorney fees. Relying on Turner v. Progressive Corp.,
140 Ohio App.3d 112, 746 N.E.2d 702 (8th Dist.2000), the trial court granted the
motion, concluding that “[p]laintiffs are entitled to attorney’s fees for
representation during the appellate process.” The trial court then awarded roughly
$128,000 in appellate-attorney fees, bringing the total attorney-fee award to over
$421,000.
        {¶ 65} Among other things, the Nanny School defendants appealed the
award of appellate-attorney fees. The Eighth District reversed the trial court’s
judgment on that issue and held that the trial court erred when it awarded appellate-
attorney fees. 2020-Ohio-4216, ¶ 58, 60. Cruz and Kaiser appealed the reversal of
the appellate-attorney-fee award to this court.
        {¶ 66} Before addressing the majority’s decision, it is important to address
a significant procedural defect in this case: on remand from the Eighth District, the
trial court went beyond the mandate of the appellate court.
                     III. The mandate of the appellate court
        {¶ 67} R.C. 2505.39 provides that “[a] court that reverses or affirms a final
order, judgment, or decree of a lower court upon appeal on questions of law, shall
not issue execution, but shall send a special mandate to the lower court for
execution or further proceedings.” As set forth above, in Cruz, 2017-Ohio-4176,
92 N.E.3d 143, the appellate court held that the trial court erred in its award of trial-
attorney fees by reducing the fee award based on the terms of the contingency-fee
agreement. The Eighth District reversed the trial court’s decision and indicated that
it must comply with the Bittner test on remand. Id. at ¶ 97, 102, 126. Nowhere in

                                           25
                              SUPREME COURT OF OHIO

the court of appeals’ mandate was there a directive for the trial court to determine
appellate-attorney fees. Instead, the mandate from the Eighth District was for the
trial court to reconsider the award of attorney fees it had already made. Id. at ¶ 126
(“on remand, the trial court is ordered to * * * reconsider plaintiff’s motion for
attorney fees”). The motion for attorney fees that the appellate court referred to did
not contain a request for appellate-attorney fees. And “[a]bsent extraordinary
circumstances, such as an intervening decision by the Supreme Court, an inferior
court has no discretion to disregard the mandate of a superior court in a prior appeal
in the same case.” Nolan v. Nolan, 11 Ohio St.3d 1, 462 N.E.2d 410 (1984),
syllabus.
          {¶ 68} Moreover, the trial court’s reliance on Turner, 140 Ohio App.3d 112,
746 N.E.2d 702, in support of its conclusion that Cruz and Kaiser were entitled to
appellate-attorney fees was misguided. In Turner, the court of appeals noted that
appellate-attorney fees were available pursuant to a statute, the Fair Labor
Standards Act, 29 U.S.C. 201 et seq., and the appellate court specifically ordered
the trial court to award appellate-attorney fees. Turner at 118. Here, there is no
statute authorizing the award of appellate-attorney fees, and there was no mandate
from the appellate court to award them. The mandate from the court of appeals was
specific. It ordered the trial court to reconsider the amount of trial-attorney fees
because the trial court had failed to properly calculate them. Cruz at ¶ 126. That
is all.
          {¶ 69} The trial court lacked any authority—statutory, common-law, or by
order of a superior court—to award appellate-attorney fees. In my view, the trial
court’s improper exercise of its jurisdiction on remand is by itself sufficient reason
to affirm the Eighth District’s judgment reversing the trial court’s award of
appellate-attorney fees. But because the majority reverses the appellate court’s
judgment by expanding the common law, I address the decision of the majority,
starting with consideration of the American rule.

                                          26
                                 January Term, 2022

                    IV. The common law—the American rule
        {¶ 70} There is no common-law right for Cruz and Kaiser to be awarded
appellate-attorney fees in this case. “[T]he general ‘American rule’ does not permit
the prevailing party to recover attorney fees, in the absence of statutory
authorization, as part of the costs of litigation.” Sorin v. Warrensville Hts. School
Dist. Bd. of Edn., 46 Ohio St.2d 177, 179, 347 N.E.2d 527 (1976). “The rationale
behind the creation and perpetuation of the aforesaid rule is that ‘[t]he subject of
costs is one entirely of statutory allowance and control.’ ” (Emphasis added and
brackets sic.) Id., quoting State ex rel. Michaels v. Morse, 165 Ohio St. 599, 607,
138 N.E.2d 660 (1956).
        {¶ 71} In the past, any time this court has determined that appellate-attorney
fees could be awarded, it has done so on the basis of the language of a statute. See
Klein v. Moutz, 118 Ohio St.3d 256, 2008-Ohio-2329, 888 N.E.2d 404; Royster v.
Toyota Motor Sales, U.S.A., Inc., 92 Ohio St.3d 327, 750 N.E.2d 531 (2001). The
question in those cases was whether the statute at issue that allowed attorney fees
also permitted an award of appellate-attorney fees.         In each case, this court
determined that the relevant statute did allow appellate-attorney fees as well as trial-
attorney fees. See Klein at ¶ 18 (applying R.C. 5321.16(C)); Royster at 332
(applying R.C. 1345.71 et seq.). Here, there is no attorney-fees-granting statute for
this court to construe. There is, however, a judicially created exception to the
American rule that is relevant in this case.
        {¶ 72} “[I]n cases where the act complained of is tainted by fraud, or
involves an ingredient of malice, or insult, the jury, which has power to punish, has
necessarily the right to include the consideration of proper and reasonable counsel
fees in their estimate of damages.” (Emphasis added.) Roberts v. Mason, 10 Ohio
St. 277, 282 (1859). This exception, which permits the award of attorney fees
incurred at trial, has evolved into the current exception that applies to cases in which
punitive damages are awarded: “An exception to the American rule allows an award

                                          27
                             SUPREME COURT OF OHIO

of attorney fees to the prevailing party as an element of compensatory damages
when the jury finds that punitive damages are warranted.” Phoenix Lighting Group,
L.L.C. v. Genlyte Thomas Group, L.L.C., 160 Ohio St.3d 32, 2020-Ohio-1056, 153
N.E.3d 30, ¶ 9.
       {¶ 73} But the exception is limited. The consideration of attorney fees as a
result of an award of punitive damages is a determination made at trial and cannot
include the consideration of appellate-attorney fees, because those fees are an
unknown.
       {¶ 74} In R.C. 2315.21, the General Assembly has recognized this limited
exception for the award of trial-related attorney fees.
                                 V. R.C. 2315.21
       {¶ 75} R.C. 2315.21 is part of a statutory scheme in R.C. Chapter 2315 that
covers trial procedure. R.C. 2315.21 was amended in Senate Bill 80 by the 125th
General Assembly in a statutory package commonly known as “tort reform.” See
Am.Sub.S.B. No. 80, 150 Ohio Laws, Part V, 7915, 7969.
       {¶ 76} The statute establishes when punitive or exemplary damages may be
awarded, R.C. 2315.21(C), and places caps on the award of punitive and exemplary
damages, R.C. 2315.21(D)(2)(a) and (b). The language of the statute does not
expressly authorize an award of attorney fees when punitive or exemplary damages
are awarded; rather, in detailing the extent of the caps, it merely recognizes the
common-law principle that an award of trial-attorney fees may be granted as a result
of a claim for punitive or exemplary damages. R.C. 2315.21(D)(2)(c).
       {¶ 77} Had the General Assembly intended to authorize an award of
attorney fees for appellate counsel when an award of punitive or exemplary
damages is awarded, it would have said so, but it did not. “The courts will presume
that the legislative branch of government knows the existing condition of the law,
whether common law or statute law[,] and that the legislative branch does not
intend to change the pre-existing law unless the Legislature clearly shows an

                                         28
                                    January Term, 2022

intention to do so.” (Internal citations omitted.) Wachendorf v. Shaver, 149 Ohio
St. 231, 248, 78 N.E.2d 370 (1948) (Hart, J., dissenting). The General Assembly
knows how to authorize the award of appellate-attorney fees when it wants to, and
it has done so in other statutes.
        {¶ 78} For instance, under R.C. 3105.73(A), “[i]n an action for divorce,
dissolution, legal separation, or annulment of marriage or an appeal of that action,
a court may award all or part of reasonable attorney’s fees and litigation expenses
to either party.” (Emphasis added.) And appellate-attorney fees can be awarded
under certain circumstances pursuant to R.C. 2335.39, a statute that allows for
compensation to eligible parties in civil actions or appeals involving the state. And
as set forth above, this court has interpreted other statutes as permitting an award
of appellate-attorney fees.
        {¶ 79} Despite the procedural posture of this case and the lack of any
statutory authority, the majority takes a giant leap and forever changes the
American rule that each party to litigation pays their own attorney fees. Now, in
every case in which attorney fees are awarded at the trial-court level upon an award
of punitive damages, an award of appellate-attorney fees will necessarily follow.
And it is easy to predict the outcome—a chilling effect on a litigant’s substantive
right of first appeal.
                  VI. Chilling effect of today’s majority decision
        {¶ 80} The major shift undertaken by the majority today lies within the
province of the legislature, not this court. As stated above, “the rationale behind
the creation and perpetuation of the [American rule] is that ‘[t]he subject of costs
is one entirely of statutory allowance and control.’ ” (Second brackets sic.) Sorin,
46 Ohio St.2d at 179, 347 N.E.2d 527, quoting Michaels, 165 Ohio St. at 607, 138
N.E.2d 660. Therefore, “a move away from a deeply rooted policy regarding the
awarding of attorney fees is best left as a matter of legislative concern.” LaFarciola
v. Elbert, 9th Dist. Lorain No. 08CA009471, 2009-Ohio-4615, ¶ 14, citing Sorin at

                                            29
                             SUPREME COURT OF OHIO

179-180. And the chilling effect the majority’s decision will have on litigants’ right
of first appeal guaranteed by Ohio law is unmistakable.
       {¶ 81} The General Assembly, empowered by the Ohio Constitution, has
afforded every litigant a right of first appeal. And the legislature has limited an
award of appellate-attorney fees to situations involving frivolous conduct and some
other narrowly defined kinds of cases. The majority’s decision today not only
impinges on an appellant’s right of first appeal by authorizing a judicially created
sanction against the appellant in the form of appellate-attorney fees but, perhaps
unwittingly, also punishes certain litigants for filing discretionary appeals to this
court. Taken to its logical conclusion, the majority’s reasoning would permit an
award of appellate-attorney fees incurred in this appeal. In fact, at oral argument,
Cruz and Kaiser’s counsel related an intention to pursue attorney fees for their
appeal to this court.
       {¶ 82} This case has been appealed to the court of appeals twice. Cruz’s
and Kaiser’s own cross-appeals kept this case alive after the Nanny School
defendants’ first appeal, and following Cruz and Kaiser’s defeat in the court of
appeals in the second appeal, they appealed here. We determined that this case was
one of great general interest and accepted jurisdiction because we thought it was an
important case for our state, see Ohio Constitution, Article IV, Section 2(B)(2)(e).
But is the majority really going to hold the Nanny School defendants responsible
for the appellate-attorney fees here so that the majority can change Ohio law? On
remand, the trial court will have no reason to believe otherwise.
       {¶ 83} The majority places no limits on its holding. Therefore, the Nanny
School defendants have significant exposure to incurring even greater costs. They
will be paying appellate-attorney fees for arguments made by Cruz and Kaiser
about appellate-attorney fees that were not awarded below. Obviously, there is
little motivation for Cruz and Kaiser or any other party who sits in their position to
do anything more than continually appeal if someone else is paying the bill.

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                                   January Term, 2022

       {¶ 84} The result is a harsh dichotomy: a defendant who has a substantive
right of first appeal that is chilled by the prospect of paying appellate-attorney fees
for both sides and a plaintiff who can generate larger and larger awards with each
appeal. This enlargement of the awarding of attorney fees to encompass the basic
right of first appeal with nothing more than a punitive-damage award will certainly
have a chilling effect. This is an affront to the American rule.
               VII. The majority’s comments about this dissent
       {¶ 85} The majority takes aim at this dissent in several places in its opinion.
I address those criticisms here.
                                   A. Limited remand
       {¶ 86} In response to this dissent’s recognition of the limited nature of the
remand from the court of appeals, see Cruz, 2017-Ohio-4176, 92 N.E.3d 143, at
¶ 126, the majority states that “[t]he court of appeals’ mandate * * * did not prohibit
Cruz and Kaiser from filing an updated motion regarding attorney fees that they
had subsequently incurred defending their judgment on appeal,” majority opinion,
¶ 15, fn. 3. But the majority confuses the role of the appellate court and the
appellate court’s remand power. The role of an appellate court is to review the trial-
court proceedings and the trial court’s decisions and determine whether any error
occurred. See App.R. 12(A)(1). Appellate courts are bound by standards of review
when undertaking that review, and when an assignment of error raises a question
of law, the appellate court reviews it de novo. Portage Cty. Bd. of Dev. Disabilities
v. Portage Cty. Educators’ Assn. for Dev. Disabilities, 153 Ohio St.3d 219, 2018-
Ohio-1590, 103 N.E.3d 804, ¶ 23.
       {¶ 87} The relevant question before the appellate court in this case was
whether the trial court erred in calculating trial-attorney fees. The appellate court
concluded that the trial court had improperly “deviat[ed] from the lodestar amount”
when determining trial-court attorney fees. Cruz at ¶ 105. The appellate court
stated the proper legal standard, id. at ¶ 97, 102, and remanded the matter to the

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                             SUPREME COURT OF OHIO

trial court for it to apply the correct legal standard to determine an award of trial-
attorney fees, id. at ¶ 126. The majority’s statement that the appellate court did not
tell the parties what they could not do stands the traditional role of the appellate
court in the American justice system on its head.
       {¶ 88} Appellate courts do not list for the parties what they may not do on
remand.    Such an admonition could be limitless and therefore impossible to
achieve, reaching beyond mere review of what occurred below and thereby blurring
the line between neutral and detached judicial review and advocacy. Appellate
courts tell trial courts what the law is and what the trial court must do on remand.
Here, the trial court exceeded that mandate. “A trial court may not vary the mandate
of an appellate court, but is bound by that mandate on the questions of law decided
by the reviewing court.” Transamerica Ins. Co. v. Nolan, 72 Ohio St.3d 320, 323,
649 N.E.2d 1229 (1995).
          B. The General Assembly’s preservation of the common-law rule
       {¶ 89} The majority opinion actually supports this dissent’s point that the
General Assembly failed to broaden the availability of attorney fees to include
appellate-attorney fees when it recognized the availability of an award of attorney
fees when a jury finds that punitive damages are warranted, see R.C.
2315.21(D)(2)(c).    The majority is correct when it says that the legislature
“preserv[ed] the common-law rule.” That is precisely the point: the General
Assembly did not expand the common-law rule and extend the potential award of
attorney fees to include appellate-attorney fees.
                 C. The majority creates a new common-law right
       {¶ 90} When discussing this dissent’s citations to Klein, 118 Ohio St.3d
256, 2008-Ohio-2329, 888 N.E.2d 404, and Royster, 92 Ohio St.3d 327, 750 N.E.2d
531, the majority inadvertently bolsters the dissent. The majority declares that this
dissent is mistaken when this dissent says that “ ‘[i]n the past, any time this court
has determined that appellate-attorney fees could be awarded, it has done so on the

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                                January Term, 2022

basis of the language of a statute.’ ” (Brackets added in majority opinion.) Majority
opinion at ¶ 49, quoting dissenting opinion at ¶ 71. Yet the majority goes on to
admit that in Klein and Royster—the only cases in which this court has allowed
appellate-attorney fees—“this court allowed a prevailing party to recover
reasonable appellate-attorney fees because a statute permitted an award of attorney
fees—even though the statute did not expressly authorize recovery of appellate-
attorney fees.” (Emphasis sic.) Majority opinion at ¶ 49. But that is the very point
that this dissent is making here: in Klein and Royster, this court was interpreting
the text of a statute when it determined that appellate-attorney fees were available
in those cases. In Klein, this court pointed out that the statute at issue was “a
remedial statute intended to compensate the tenant for a wrongfully withheld
deposit at no expense to the tenant.” Klein at ¶ 13. In Royster, this court determined
that the plaintiff-appellant was eligible for recovery under Ohio’s Lemon Law
statutory scheme, which included an entitlement to attorney fees, see R.C.
1345.75(A). Royster at 332.
       {¶ 91} Today, for the first time, however, this court is not basing an award
of appellate-attorney fees on the interpretation and application of a statute. The
majority is basing this award on its own expansion of the common law. The
majority ignores the fact that this court has never exercised that power in the
century and a half that it has recognized the availability of attorney fees in cases in
which an award of punitive damages has been granted. The majority says that this
dissent “just chooses to ignore [the] fact” that the American rule “already permits
an award of attorney fees when punitive damages are awarded.” (Emphasis
deleted.) Majority opinion at ¶ 50. But that statement is simply untrue. This dissent
acknowledges not only the common-law history of the availability of attorney fees
in cases involving punitive damages, but also the General Assembly’s recognition
of that common-law principle in the statutory provision establishing that punitive-
damage caps do not include an award of trial-attorney fees, R.C. 2315.21(D)(2)(c).

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                            SUPREME COURT OF OHIO

What the majority chooses to ignore is the fact that this court has never expanded
the American rule under the common law to include an award of stacked appellate-
attorney fees in cases in which punitive damages have been awarded—until now.
                                VIII. Conclusion
       {¶ 92} “It has long been established in Ohio that an award of attorney fees
must be predicated on statutory authorization or upon a finding of conduct which
amounts to bad faith.” Vance v. Roedersheimer, 64 Ohio St.3d 552, 556, 597
N.E.2d 153 (1992). The awarding of appellate-attorney fees to the victorious party
is contrary to the American rule, which is at the center of our adversarial system.
Because there is no statute that authorizes the appellate-attorney fees requested
here, I would affirm the judgment of the Eighth District Court of Appeals.
Therefore, I dissent.
       DEWINE, J., concurs in the foregoing opinion.
                              _________________
       The Pattakos Law Firm, L.L.C., Peter Pattakos, and Rachel Hazelet, for
appellants.
       Mark A. Novak; and Dinn, Hochman & Potter, L.L.C., and Edgar H. Boles,
for appellees.
       Paul W. Flowers Co., L.P.A., Louis E. Grube, and Paul W. Flowers, urging
reversal for amicus curiae Ohio Association for Justice.
       The Mellino Law Firm, L.L.C., and Calder Mellino, urging reversal for
amicus curiae Cleveland Academy of Trial Attorneys.
       Law Offices of John C. Camillus, L.L.C., and John C. Camillus, urging
reversal for amicus curiae Ohio Employment Lawyers’ Association.
                              _________________

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