Minnesota and the American Rule: The Recoverability of Attorneys’ Fees Following In Re Silicone Implant Insurance Coverage Litigation

In the United States, a successful litigant is generally not entitled to recover attorneys\u27 fees from the opposing party absent specific statutory or contractual authorization. This basic principle is commonly referred to as the American Rule. Minnesota recognized and adopted the American Rule roughly 125 years ago. A limited number of exceptions to this longstanding rule exist, but Minnesota courts have generally been reluctant to expand or add to these exceptions. In Minnesota, an exception to the American Rule exists for fees incurred in a declaratory action to establish insurance coverage but only if the insurer has breached its duty to defend. The Minnesota Supreme Court created this exception almost forty years ago, and there have been numerous attempts to expand it, including the recent attempt by 3M and its amicus allies, the Commissioner of Commerce and the Minnesota Trial Lawyers Association. The Minnesota Supreme Court rejected this most recent attempt to expand the Morrison exception to the American Rule in In re Silicone Implant Insurance Coverage Litigation and reaffirmed that attorneys\u27 fees are recoverable in a declaratory judgment action only when the insurer breaches its contract with the insured by refusing to defend. This article will outline the historical underpinnings of the American Rule and its development under Minnesota law. It will also analyze the Morrison exception and the import of the Minnesota Supreme Court\u27s adherence to the narrow exception to the American Rule it carved out roughly four decades ago