Texas Business Owners Lose Bid for Fees Over Israel Boycott Law

Five Texas business owners aren’t entitled to $342,000 in legal fees stemming from their challenge to a state law barring government contracts for companies that boycott Israel, a federal appeals court in New Orleans ruled Wednesday.

The US Court of Appeals for the Fifth Circuit overturned the fee award, finding that under the circumstances of the case, the lawsuit’s success in obtaining a short-lived injunction didn’t make the business owners “prevailing parties” under federal civil rights law.

Judge Edith H. Jones, writing for the appeals court, noted that the preliminary injunction against the statute was issued after Texas lawmakers began the process of amending it to exempt sole proprietors like the plaintiffs. The case was later ruled moot.

The court acknowledged that a plaintiff who wins a preliminary injunction may count as a prevailing party if the changes making the case moot were a direct response to the injunction itself, or part of an effort to avoid paying fees. But the exemption for sole proprietors was introduced before the injunction was issued, Jones said.

The amendment “almost certainly was not precipitated by the court’s decree,” and there’s “no basis to infer that the Texas legislature was motivated by a desire to preclude attorneys’ fees,” she wrote.

Judges Stuart Kyle Duncan and Carolyn Dineen King joined the ruling.

The state is represented by its attorney general’s office. The business owners are represented by CAIR Legal Defense Fund and John T. Floyd Law Firm.

The case is Amawi v. Paxton, 5th Cir., No. 21-50360, 9/7/22.