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Fees must be set before review

By: dmc-admin//February 18, 2004//

Fees must be set before review

By: dmc-admin//February 18, 2004//

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Easterbrook

“This is not an appropriate occasion for [appellate review], because we cannot be sure what the dismissal order would have provided, yet its details could affect the question whether plaintiffs are prevailing parties.”

Hon. Frank Easterbrook
7th Circuit Court of Appeals

Unless attorney fees owing under Rule 37 have been quantified, the decision whether to award fees in the first instance is unreviewable, the Seventh Circuit held on Feb. 13.

Abraham V. Sonii and Rufus Jones brought an employment discrimination case against General Electric Company, in Illinois federal court, and the parties settled the case in October 2000.

At that time, it was widely believed that settlement made the plaintiff a “prevailing party” entitled to attorneys’ fees. Seven months later, however, the United States Supreme Court disapproved that view in Buckhannon Board & Care Home, Inc., v. West Virginia Department of Health & Human Resources, 532 U.S. 598 (2001). The court stated in a footnote that achieving a settlement falls short of prevailing unless the settlement yields a consent decree or some equivalent form of judicial imprimatur.

Subsequently, the Seventh Circuit held in T.D. v. LaGrange School District, 349 F.3d 469, 478-79 (7th Cir. 2003), that a disposition similar to a consent decree — mandatory language entered as a judgment, or the judge’s signature in lieu of the litigants’ — may suffice to confer prevailing-party status, but that a private settlement followed by dismissal of the lawsuit does not.

The district judge denied the plaintiffs’ request for legal fees, as prevailing parties, but held they were entitled to fees for discovery abuse, without setting an amount.

The plaintiffs appealed the denial of fees as prevailing parties, but the Seventh Circuit dismissed the appeal for lack of jurisdiction in a decision by Judge Frank Easterbrook.

No Final Judgment

The court first held that jurisdiction was lacking because the district court has yet to enter a final judgment. The court found that, while the settlement contemplated the complaint would be dismissed with prejudice, that step has not been accomplished.

The court acknowledged that postjudgment decisions on requests for attorneys’ fees are appealable independently of the merits, but noted that appellate review of pre-judgment decisions about fees is deferred until the litigation is over.

The court also acknowledged that, sometimes a court will proceed as if a promised disposition had been entered, but found, “this is not an appropriate occasion for that treatment, because we cannot be sure what the dismissal order would have provided, yet its details could affect the question whether plaintiffs are prevailing parties.”

What the court held

Case: Sonii v. General Electric Co., No. 03-2818.

Issue: Can the court of appeals review a district court decision on attorney’s fees in the absence of quantification of those fees by the district court?

Holding: No. Where it is unclear whether the district court considered the plaintiff a “prevailing party,” and the fees have not been quantified, jurisdiction is lacking.

The court added, “The parties agreed that the suit eventually would be dismissed with prejudice. The parties’ stipulation says that this would be done only after all questions about attorneys’ fees had been resolved, and perhaps this implies that appeal must precede the final disposition, but litigants cannot manipulate appellate jurisdiction in this fashion. Dismissal must come first, and it is the district judge’s responsibility to enter an appropriate order.”

The court found that the district judge could implement the parties’ agreement in at least three ways: (1) a one-line order of dismissal; (2) a dismissal reserving jurisdiction to enforce the underlying contract; and (3) a dismissal incorporating the settlement
contract as a judgment of the court.

Furthermore, the court found these would have different consequences under Buckhannon and T.D.: the first would not make the plaintiffs prevailing parties; the third would do so; and the second would be ambiguous, for neither Buckhannon nor T.D. definitively resolves the consequences of an order that suffices to preserve federal jurisdiction to enforce the pact, but still treats it as a private contract rather than a judgment.

The court concluded, “That the judge denied plaintiffs’ request for fees suggests that she had in mind option (1) rather than option (3), but a mental assumption falls short of a final decision. Plaintiffs have briefed the appeal on the assumption that the judge’s inaction equates to option (2), but all this shows is that loose ends need to be tied up before anything happens in this court.”

The court also found jurisdiction lacking, because additional disputes about attorneys’ fees remain pending in the district court.

The court noted that the plaintiffs sought fees on two theories: that they were prevailing parties and hence entitled to reimbursement of all legal expenses; and that GE engaged in discovery abuse so that plaintiffs are entitled to fees pursuant to Rule 37.

Links

7th Circuit Court of Appeals

Related Article

Case Analysis

Although the district court rejected the first theory, it agreed with the second, and directed the plaintiffs to file a statement of the attorneys’ fees incurred as a result of GE’s misconduct.

However, instead of filing a statement of fees, plaintiffs appealed. The court concluded, “This means that the fees owing under Rule 37 have not been quantified, and while questions about attorneys’ fees remain pending an appeal is premature in this case.” The court cited In re Modern Textile, Inc., 900 F.2d 1184 (8th Cir. 1990); and Liberty Mutual Insurance Co. v. Wetzel, 424 U.S. 737 (1976) for the holding that no appeal is possible when a district court has determined liability but has yet to award damages.

The court reasoned that hearing the appeal would create a risk of multiple appeals: “first we would decide the prevailing party question, then the district judge would make the Rule 37 award, and then both sides might appeal again, contesting either the award (for General Electric may believe that it is in the right) or the amount (plaintiffs may want more, and General Electric may believe that the award is excessive).”

Accordingly, the court dismissed the appeal for lack of jurisdiction, and directed the district court to enter a final judgment that makes clear whether the plaintiffs qualify as prevailing parties.

Click here for Case Analysis.

David Ziemer can be reached by email.

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