Argument recap: Finding simple rules is not always so simple
on Dec 10, 2013 at 10:21 am
Litigants and attorneys have taken to heart the Court’s admonitions that jurisdictional rules should be “simple, clear, and certain,” based on uniform, bright lines, and capable of easy administration. Or, as Justice Alito put it in Monday’s argument in Ray Haluch Gravel Co. v. Central Pension Fund, in a question to Ray Haluch’s counsel, the Court is looking for “the rule that trips up the fewest lawyers.” The argument illustrates a problem, however: Sometimes two competing rules both satisfy that requirement.
At issue in the case is whether a judgment on the merits resolving everything except contractual attorney’s (and other, non-attorney’s) fees is a final and appealable order under 28 U.S.C. § 1291. If it is, then the appeal by the pension fund was untimely; if it is not, then the fund’s appeal of the second judgment, which resolved the fees, was timely. Hovering over the entire conversation is the meaning and scope of the Court’s decision in Budinich v. Becton Dickinson Co. (1989), in which the Court held that a judgment leaving unresolved statutory attorney’s fees for work in the litigation is final and appealable. And in a moment of candor, Justice Scalia insisted that the recovery of fees in this case was less important than the rule the Court would adopt.
Arguing for Ray Haluch, Dan Himmelfarb urged the Court to apply the bright line of Budinich to contractual fees: If the merits are decided, liability determined, and damages awarded, with only a pending request for fees remaining to be resolved, that decision is final and the notice of appeal must be filed within thirty days. It does not matter whether the source of the fees is statute or contract; it does not matter whether the fees are for attorneys or others, such as experts or auditors (which were sought in this case); and it does not matter whether the fees accrued prior to the filing of litigation or in the course of the litigation. All such fees are “incurred in an effort to vindicate the underlying right,” rather than as a measure of the value of the underlying right violated, and thus are covered by Budinich.
Himmelfarb then defended that view against a range of questions. Addressing Budinich’s reference to fees “for the litigation,” he argued that this limits the case to fees incurred in the present litigation, as opposed to a case in which an attorney who incurred fees in a previous case brings a separate action against the former client to recover past fees. But Justice Scalia, who wrote Budinich, was skeptical, saying (to laughter) “I don’t think that’s what I meant.” In response to questions from Justices Alito and Sotomayor, Himmelfarb acknowledged that this would produce two appeals — one for the first merits judgment and one for the fees decision. But this is consistent with Section 1291, which defines a final decision as one that leaves nothing to be resolved or one that leaves only issues that are collateral to the merits. Budinich, he insisted, means that attorney’s fees are collateral to the merits. And that should not change based on the source of authority (statute or contract) for the fees. Justice Sotomayor raised the issue of Federal Rule of Civil Procedure 54(d), which allows a party to seek attorney’s fees via motion. Himmelfarb argued that the rule allows a party to choose between seeking fees via motion or submitting them to the court as part of the claim. Budinich means that if a party seeks fees via motion, it becomes a collateral issue subject to that finality rule.
Arguing for the pension fund, James Feldman offered his own bright-line rule: Attorney’s fees due under a contract are always a form of damages, indistinguishable from any other form of relief for a breach of that contract. Thus, a judgment cannot be final until contractual fees have been resolved. Contractual fees are simply different than Budinich’s statutory fees. The latter typically are “prevailing party” fees, awarded in the court’s discretion to a party who has prevailed on the merits in litigation. By contrast, contracts describe what happens in the event of a breach, including identifying all the fees, costs, and other expenses that the non-breaching party can recover for a breach, not only for prevailing in litigation, but also for acting under and carrying out an agreement. And recovery of such fees is not subject to judicial discretion.
But, Justice Breyer suggested, this means there is a clear rule either way. Picking the appropriate rule thus becomes not a question of clarity but one of simplicity — what are ordinary lawyers going to think and what are they going to want? Feldman identified several reasons that Ray Haluch’s rule was not best for ordinary lawyers. First, it would set a “trap for the unwary,” as lawyers are likely to miss the appeals deadline by failing to file a notice in response to the first, non-fee decision; that risk is absent under the pension fund’s position, since the notice is not due until contractual fees are resolved. The only risk is a too-early appeal, but that is less problematic or damaging and easily cured by filing a second notice of appeal at the appropriate time. Second, applying Ray Haluch’s approach would create piecemeal appeals, something Section 1291 and the final judgment rule seek to avoid. A party will have to file separate appeals — one of the merits decision, one of the fees decision — although Chief Justice Roberts noted that the appeals likely could be consolidated in the court of appeals.
Justice Ginsburg twice questioned Feldman about Federal Rule of Civil Procedure 58(e). Amended in 1993 in response to Budinich, the rule provides that a court may rule on a motion for attorney’s fees (under Rule 54(d)), deferring the period for filing a notice of appeal. But if the initial judgment leaving fees unresolved is not final, Rule 58(e) becomes unnecessary, since no appeal is possible until fees are decided. Moreover, the rule does not distinguish between contractual and statutory fees. In fact, Feldman insisted, it does distinguish, because contractual fees are, by their nature, proved as part of the substantive claims in the case.
On rebuttal, Himmelfarb emphasized the administrative ease of applying Budinich to all fee requests; by treating all as collateral, the court need not spend time figuring out whether fees were owed under a statute, a contract, or both. He also rejected the pension fund’s premise that statutory fees are always different than contract fees; some statutory fees look like (and are labeled as) damages, while many contractual fees are straightforward awards to prevailing parties, including prevailing defendants. Budinich recognized that statutory fees could be categorized any way and chose to treat them as a non-merits issue. Contractual fees similarly can be categorized any way and there is no reason to treat them differently.