US high court tackles notice of appeals

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In a ruling that attorneys say ends the guessing game over when the clock starts to run on filing a notice of appeal in cases involving claims for attorney fees, the U.S. Supreme Court has declined to adopt standard that would vary depending on whether those fees are awarded pursuant to a statute or a contract.

The ruling in Ray Haluch Gravel Co. v. Central Pension Fund of Operating Engineers and Participating Employers, No 12-992, gives trial and appellate lawyers much-needed clarity, said Dan Himmelfarb, a partner in Mayer Brown LLP’s Washington office who argued the case at the high court for Ray Haluch, a supply company.

“If you want to appeal a merits decision, you had better file [a notice of appeal] after the initial ruling and not wait” for a ruling on attorney fees, Himmelfarb said.

The issue involves a common scenario for practitioners seeking to appeal a case in which a ruling on attorney fees is made after a separate ruling on the merits. Making a mistake can have significant repercussions for clients.

“A lot of mistakes are fixable. Not filing a timely notice of appeal is not fixable,” said Matthew Leerberg, an appellate attorney in the Raleigh, N.C. office of Smith Moore Leatherwood LLP. “If the 30-day clock runs out, you are out of luck.”

The justices’ ruling establishes a much-needed bright line rule that will end the uncertainty and guessing games.

“It was a mess, and we never knew when we were supposed to appeal and when we were not,” said Leerberg. “When you are applying a complicated test to your facts, and the stakes are high, if you decide wrong you could be losing the right to appeal. That is just a bad trap, and it was unnecessary.”

Need for ‘operational consistency’

The contract at issue in Ray Haluch was a collective bargaining agreement between a landscaping supply company and union pension fund. The pact included a provision providing for the award of attorney fees and costs if the fund were to win a judgment against the supply company on a contractual claim.

The fund filed suit alleging that the company failed to pay its obligations and won a judgment in district court on June 17, 2011 awarding damages for $26,897.41 in unpaid remittances. The court addressed the claim for attorney fees in a separate ruling a week later, awarding $34,688.15 in fees.

Both awards were far below the amount the fund sought in damages, so it filed a notice of appeal. The notice was filed more than 30 days after the June 17 order, but less than 30 days after the order for attorney fees.

The supply company argued that the notice of appeal was untimely, but the 1st U.S. Circuit Court of Appeals disagreed. It rejected the argument that the Supreme Court’s 1988 decision in Budinich v. Becton Dickinson and Co. created a bright-line rule that the judgment on the underlying merits of a case, not the attorney fees determination, triggered the time limit for appeal under Federal Rule of Appellate Procedure 4(a)(1)(A). Instead, the court held that because the attorney fees award was based on the contract and not on a statute as in Budinich, the clock did not start to run until the second order was issued.

But in a unanimous ruling, the Supreme Court reversed, holding that there was no distinction between contractual and statutory attorney fees awards.

Such a distinction creates confusion and unnecessary inconsistencies, the court reasoned.

“Were the jurisdictional effect [based] on whether the entitlement to fees is asserted under a statute, as distinct from a contract, the operational consistency and predictability stressed in Budinich would be compromised in many instances,” Justice Elena Kagan wrote. “Operational consistency is not promoted by providing for different jurisdictional effect to district court decisions that leave unresolved otherwise identical fee claims based solely on whether the asserted right to fees is based on a contract or a statute.”

Alternative result ‘bad for clients’

Attorneys said the new rule makes sense, given that a final determination on attorney fees can take months or even years.

“Some district courts take a long time to decide fee awards, and sometimes they do that for a reason,” Himmelfarb said. “They want to see what happens with the merits award on appeal.”

“It takes a year or longer to finish an appeal,” Leerberg said, adding that appeals over attorney fees can add additional time to a claim. “It could be years before a case is finished. That may be good for lawyers getting paid by the hour, but it’s bad for clients.”

Also, Himmelfarb said, many cases involve a combination of statutory and contractual claims so drawing the line between the two may not be so easy.

“You can have cases where you are requesting a fee under both” kinds of claims, he said. Follow @dcdicta