“Bad-Faith” Alone Is Not Enough: The Second Circuit Re-Affirms Strict Limits on § 1988 Fee Awards After Nominal-Damages Verdicts

1 Introduction

Knights v. City University of New York, No. 24-2887-cv (2d Cir. June 16, 2025), is the Second Circuit’s most recent examination of when a civil-rights plaintiff who wins only nominal damages may nevertheless recover sizable attorney’s fees under 42 U.S.C. § 1988. The panel—Judges Nardini, Lee, and Merriam—vacated a \$75,000 fee award and instructed the district court to deny fees outright, holding that the district court impermissibly relied on the defendant’s alleged pre-litigation “bad faith” to justify the award.

Although the decision was issued as a summary order (and therefore lacks formal precedential effect under Second Circuit Local Rule 32.1.1), it provides a clear, quotable articulation of a rule that will shape fee-shifting motions in the Circuit: in cases governed by Farrar v. Hobby and Pino v. Locascio, a plaintiff who secures nothing more than nominal damages is ordinarily entitled to no fee, and allegations of the defendant’s pre-litigation “bad faith” do not create an exception.

2 Case Background

Parties: Rogelio Knights, Jr. (plaintiff–appellee); City University of New York (CUNY) (defendant–appellant); with two individual CUNY employees named but not parties to the fee appeal.
Factual Setting: Knights, a temporary employee at Bronx Community College, was terminated following a Title IX investigation conducted at LaGuardia Community College. CUNY later rescinded the firing, paid him the remaining thirteen days of his contract, and expunged the record, then convinced an arbitrator to dismiss Knights’s name-clearing grievance as moot.
District-Court Litigation: Knights sued under 42 U.S.C. § 1983, asserting multiple due-process claims. Only a “stigma-plus” claim against CUNY survived summary judgment. A jury found for Knights but awarded \$1 in nominal damages.
Attorney’s-Fee Proceedings: The district judge twice awarded Knights substantial fees (\$75,000), reasoning that CUNY’s conduct forced “protracted and costly” litigation. Each time CUNY appealed.

3 Summary of the Judgment

The Second Circuit held that the district court abused its discretion in awarding fees. Applying Farrar v. Hobby, 506 U.S. 103 (1992), and Pino v. Locascio, 101 F.3d 235 (2d Cir. 1996), the Court reiterated that fee awards are “usually not appropriate” when a civil-rights plaintiff recovers only nominal damages. Because Knights neither achieved a meaningful public interest benefit nor established a novel legal rule, and because the district court relied on CUNY’s purported bad faith rather than Knights’s “degree of success,” the fee award could not stand. The case was remanded with instructions to deny the fee application entirely.

4 Analysis

4.1 Precedents Cited and Their Influence

Farrar v. Hobby, 506 U.S. 103 (1992) – The Supreme Court held that when a plaintiff receives only nominal damages after seeking substantial relief, “the only reasonable fee is usually no fee at all.” Farrar sets the default rule that nominal success seldom warrants fees.
Pino v. Locascio, 101 F.3d 235 (2d Cir. 1996) – The Second Circuit applied Farrar, describing fee awards in nominal-damages cases as “rare,” permissible mainly when (i) the plaintiff raises a novel legal question that benefits the public, (ii) obtains an injunction or declaratory relief with systemic effect, or (iii) vindicates an important constitutional principle affecting others.
Chabad Lubavitch of Litchfield County v. Litchfield Historic District Commission, 934 F.3d 238 (2d Cir. 2019) – Cited for the abuse-of-discretion standard.
Rossbach v. Montefiore Medical Center, 81 F.4th 124 (2d Cir. 2023) – Clarifies that courts may sanction litigation-related bad faith under their inherent power, but distinguishes such sanctions from § 1988 fee awards.
Other citations (e.g., Huebner v. Midland Credit Mgmt., 897 F.3d 42 (2d Cir. 2018)) address the specificity required for bad-faith findings.

These authorities framed the analytical box: unless Knights fit within the narrow Farrar/Pino exceptions, fees were unavailable. The district court tried to carve out a new exception—pre-litigation “bad faith” by the defendant—but the panel rejected that innovation as inconsistent with binding precedent.

4.2 The Court’s Legal Reasoning

Standard of Review
Fee awards under § 1988 are reviewed for abuse of discretion. An abuse occurs if the district court (a) makes a legal error, (b) relies on clearly erroneous facts, or (c) renders a decision outside the range of permissible choices.
Degree of Success
The “most critical factor” (Farrar) is the plaintiff’s degree of success. Knights asked for \$4.3 million at trial and received \$1. He obtained no prospective relief and no novel legal ruling. Under Farrar/Pino, this outcome presumptively requires no fee.
Bad Faith is Irrelevant Under § 1988
The district court justified fees by labeling CUNY’s mootness strategy a “bad-faith gambit.” The Second Circuit distinguished between (a) sanctions for litigation misconduct and (b) compensatory fee-shifting under § 1988. Section 1988 focuses on results, not on the moral quality of the defendant’s pre-litigation conduct. Knights never moved for sanctions, and the record lacked a “high degree of specificity” supporting a finding of bad faith.
No Exception Applied
The panel found none of the Pino exceptions satisfied:
- No novel constitutional principle was established (the law of stigma-plus claims was settled).
- No injunctive or declaratory relief was granted.
- No systemic benefit accrued beyond Knights’s moral vindication.

4.3 Impact of the Judgment

Even as a summary order, Knights will influence district-court decision-making and litigant behavior:

Fee Petitions in Nominal-Damages Cases
Plaintiffs’ counsel must now squarely address Farrar/Pino and cannot rely on the defendant’s pre-suit conduct to obtain fees.
Strategic Decision-Making by Defendants
Governmental entities may feel less pressure to settle fee claims after nominal verdicts, knowing that “bad faith” arguments are unavailing.
Clarification of Distinct Doctrines
The panel delineates the boundaries between (a) inherent-power sanctions, (b) Rule 11 sanctions, and (c) Section 1988 fee-shifting.
Labor-and-Employment “Stigma-Plus” Litigation
Employees seeking name-clearing hearings will find that a technical win without tangible damages rarely translates into fee recovery, potentially chilling marginal claims.

5 Complex Concepts Simplified

42 U.S.C. § 1988: A federal statute that permits prevailing parties in specified civil-rights actions to recover “a reasonable attorney’s fee.” It is an exception to the American Rule (each side bears its own fees).
Nominal Damages: A token sum (often \$1) awarded when a legal wrong occurred but no actual, compensable harm was proven.
Stigma-Plus Claim: Under the Due Process Clause, reputation injury (“stigma”) plus loss of a tangible right (e.g., employment) can equal a protected liberty interest, requiring due process such as a name-clearing hearing.
Name-Clearing Hearing: An opportunity for an employee to contest allegations that impugn reputation and may hinder future employment.
Bad-Faith Sanctions vs. § 1988 Fees: Sanctions punish misconduct during litigation and can be imposed regardless of the merits. § 1988 fees compensate a prevailing civil-rights plaintiff based on success in the case; misconduct before the suit ordinarily does not affect entitlement.
Summary Order: A non-precedential decision resolving an appeal without a published opinion. It can be cited under Fed. R. App. P. 32.1 but lacks binding precedent.

6 Conclusion

Knights v. CUNY powerfully restates a simple yet often contested principle: a dollar does not buy a fee award. Unless a nominal-damages verdict also produces wide-ranging legal or equitable benefits, courts must ordinarily deny fees under § 1988. The decision closes an attempted loophole—labeling the defendant’s underlying conduct “bad faith”—and reaffirms that fee entitlement turns on the plaintiff’s courtroom success, not the defendant’s pre-litigation morality. For litigators in the Second Circuit, the message is unmistakable: when only a symbolic victory is realistically attainable, budget accordingly.