The justices of the U.S. Supreme Court considered Tuesday whether an award of contractual attorney fees is part of a final judgment, or a collateral determination made after a judgment.
The answer in the case of Ray Haluch Gravel Co. v. Central Pension Fund, No. 12-992, will have a major effect on when appeals may be timely filed.
The case originates from a collective bargaining agreement between a Massachusetts landscaping supply company and the pension fund of a local union. The agreement required the company to make contributions to the union fund, and provided that the fund would be entitled to reasonable attorney fees and costs if it were to win a judgment against the landscaping company based on the contract.
The fund sued the company in federal district court for its unpaid obligations, and sought attorney fees under both the collective bargaining agreement and the Employee Retirement Income Security Act.
On June 17, 2011, the district court issued an order awarding damages to the fund for $26,897.41 in unpaid remittances, and said the attorney fees claim would be addressed in a separate decision. That decision came on June 25, when the court awarded $34,688.15 in fees. Both awards were considerably smaller than what was sought by the fund.
The fund appealed the rulings more than 30 days after the June 17 order.
The landscaping company argued that the appeal was untimely because the June 17 order constituted a final judgment which started the 30-day clock for filing an appeal, and the attorney fees award was a collateral issue.
But 1st U.S. Circuit Court of Appeals disagreed. Noting a split among courts on the issue, the court rejected the company’s 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 limits for appeal under Fed. R. App. P. 4(a)(1)(A). Instead, the court found that a contractual attorney fees award is part of the merits of the case. The final judgment in the case, therefore, was on June 25 and the appeal was timely.
The Supreme Court granted the company’s petition for certiorari.
‘Need for clarity’
Dan Himmelfarb, a partner in Mayer Brown LLP’s Washington office, argued on the landscaping company’s behalf that Budinich created a clear, binding and workable rule for determining when the appellate clock starts to run.
“Budinich emphasized the need for clarity, consistency, predictability and practicality in jurisdictional rules,” Himmelfarb said. In contrast, “the 1st Circuit’s rule is case-specific, fact-intensive, abstract, and hard to apply — in short, the very antithesis of a uniform and bright-line rule.”
“What if they had listed those fees in their complaint, and what if they had argued for them as part of the bench trial?” asked Justice Elena Kagan.
Himmelfarb said that attorney fees are different from a merits damages award, in part because fees often continue to accrue even after the litigation has concluded.
“Litigants generally think about these two different categories of things,” Himmelfarb said. “It’s understandable that this is the way they did it.”
James A. Feldman, a Supreme Court litigator with a solo practice in Washington, argued on the fund’s behalf that specified contractual claims, including attorney fees, fall within the merits of a case and must be adjudicated before the time limit to file an appeal begins to run.
“All damages claims, no matter how small or large, have to be resolved before a judgment is final,” Feldman argued.
“In a case with a jury, would you submit the question of the amount of attorney’s fees to the jury?” asked Justice Anthony M. Kennedy.
“The amount of the fees frequently waits later [for a judge’s ruling] for practical reasons,” said Feldman.
“Well, that seems to me to indicate that there’s a final judgment when the verdict is rendered,” Kennedy said. “Then it’s just a collateral matter as to what the fees will be.”
Feldman said the existence of the contract changes the formula.
“When people get together and make a contract and they decide about their mutual obligations and the consequences of somebody breaching that contract, they are defining what [are] the merits of a contract claim,” he said.
A ruling is expected later this term.