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The Supreme Court Meant What It Said About the Finality of Judgments

Twenty-five years after the Supreme Court first explained how an unresolved attorney’s fee issue impacts the finality of a district court’s decision, the Court once again addressed this surprisingly confusing question last week. This question has far-reaching practical implications for litigants and appellate practitioners alike because the date a decision is “final” starts the 30-day clock on the time to file an appeal. A litigant who fails to file a notice of appeal within the 30-day window forever loses the right to appeal the district court’s adverse decision.

This is what happened to the unfortunate pension funds in Ray Haluch Gravel Co. v. Central Pension Fund of Int’l Union of Operating Eng’rs, No. 12-992 (Jan. 15, 2014). In Ray Haluch, several pension funds (Funds) sued Ray Haluch Gravel Co. for failure to make certain payments to the Funds which were required by federal law. The Funds also sought attorney’s fees pursuant to both federal law and the terms of a collective bargaining agreement (CBA) the Funds had with the company. The district court decided the amount of unpaid benefits the company owed the Funds on June 17, 2011, and the attorney’s fees to which the Funds were entitled on July 25. Unhappy with the district court’s calculations, the Funds appealed both of the district court’s decisions on Aug. 15, 2011 – less than 30 days after the attorney’s fee award but more than 30 days after the court’s calculation of benefits owed. On appeal, the First Circuit concluded that the Funds’ appeal of both decisions was timely because the fees awarded to the Funds under the CBA were really part of the Funds’ overall damages so the district court’s decision was not “final” until both the benefits and attorney’s fee questions were resolved.

Because federal appellate courts had thoroughly split (4-4) on this issue even after guidance from the Court in Budinich v. Becton Dickinson & Co., 486 U.S. 196 (1998), the Supreme Court took the case and decided unanimously against the Funds. According to the Supreme Court, “[w]hether the claim for attorney’s fees is based on a statute, a contract, or both, the pendency of a ruling on an award for fees and costs does not prevent, as a general rule, the merits judgment from becoming final for purposes of appeal.”

The Funds asserted several arguments that, at first blush, might support their position. First, they argued that the district court’s calculation of benefits was not really “final” for appellate purposes because the attorney’s fees were really part of the merits of the claim against the company. The Supreme Court had rejected that argument in Budinich, but the Funds argued that, in that case, the basis for attorney’s fees was statutory. Here, the right to attorney’s fees derived from the contract between the Funds and the company that provided the right to benefits; so the fees and benefits were really part of the same award and should be considered together. Second, the Funds argued that, because some of the fees were incurred before the litigation began, that somehow exempted these decisions from Budinich’s observation that “[a]s a general matter, . . . a claim for attorney’s fees is not part of the merits of the action to which the fees pertain.”

The Supreme Court rejected those arguments however. Instead, it concluded that “operational consistency and predictability” in applying the rules governing when to file an appeal required a “uniform rule” regardless of the basis for the right to attorney’s fees. Having different types of attorney’s fee awards have different effects on when appeals should be filed would only engender greater unpredictability in an area that requires certainty and clarity. The myriad of contractual or statutory obligations giving rise to attorney’s fees created simply confusion and not a logical starting point for the appellate process. The Court therefore opted to reemphasize the Budinich rule that unresolved motions for attorney’s fees and costs did not impact when a district court judgment becomes “final” for appellate purposes.

While perhaps not resolving an emotionally divisive issue, the Court’s decision here does provide clarity to an issue that has divided appellate courts for 25 years. In deciding that the Funds’ appeal was untimely, the Court again demonstrated the truism that federal litigation often turns on simply understanding civil procedure.

© 2019 BARNES & THORNBURG LLP

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About this Author

Brian Casey Business & Securities Litigation Attorney
Partner

Brian Casey is a partner in the Litigation Department of Barnes & Thornburg's South Bend, Indiana, office. He concentrates his practice on business litigation, particularly securities and ERISA litigation, as well as appellate practice.

Brian has represented issuers, and their directors and officers in private securities fraud class actions, SEC and Department of Labor investigations and enforcement actions, as well as investigations by the Department of Justice and the Internal Revenue Service. He has represented ERISA plan sponsors, plan administrators, and plan fiduciaries in...

574-237-1285
Mark Crandley Litigation Attorney
Partner

Appellate adviser and litigator Mark Crandley is at his best when faced with high-stakes claims that involve issues of critical importance and concern. After nearly two decades of practice, Mark knows what does and does not work. Clients and colleagues alike rely upon him for his judgement and leadership throughout the dispute resolution process.

Mark focuses his practice on appeals, constitutional and government law, commercial litigation, and the resolution of probate disputes. He has represented government entities and businesses in courts across the country, and is valued for his skill in creating effective and efficient litigation strategies, particularly in expedited litigation.

As co-chair of the firm’s Appeals and Critical Motions practice and a founder and chair of the firm’s Government Litigation group, Mark has represented clients in scores of appeals in both state and federal courts. He has argued before the Indiana Supreme Court on numerous occasions and has also argued before the U.S. Court of Appeals for Seventh Circuit and for the Sixth Circuit Court, the Indiana Court of Appeals and the Ohio Court of Appeals. Mark has also authored dozens of amicus curiae briefs, including amicus briefs submitted to the U.S. Supreme Court. Mark collaborates with other Barnes & Thornburg attorneys to produce an annual review examining the Indiana Supreme Court’s docket that is published by the Indiana Law Review.

Mark’s practice includes representing local governments in litigation throughout the state of Indiana. He has litigated a broad spectrum of constitutional and municipal law issues, including cases involving municipal utilities, annexation, municipal finance, government contracting, the Home Rule Act, zoning and the federal and Indiana constitutions. He has represented clients in cases of first impression regarding access to public records, public-private partnerships, municipal reorganization, and election issues. He has defended complex constitutional challenges to a variety of state laws and local ordinances. In addition, Mark regularly speaks on topics affecting state and local governments and has co-taught a law school class on the Indiana Constitution.

Mark’s commercial litigation practice includes litigation in both state and federal court, where he has tried cases both to the bench and to juries. He has represented clients in cases involving breach of contract, Articles 2, 3, 4 and 9 of the Uniform Commercial Code, trade secrets and various forms of trade regulation.

Mark also represents individuals and corporate fiduciaries in probate disputes. He has tried multiple trust and guardianship cases throughout Indiana and on appeal.

Prior to rejoining the firm in 2005, Mark served as in-house counsel for the city of Indianapolis, representing the city in complex civil rights litigation and appeals in state and federal courts. As a result, Mark has an inside perspective on how government agencies operate and what drives their decision-making process, often a key component of effectively representing them today.

Before launching his legal career, Mark worked as a newspaper reporter and editor.

317-261-7924
Peter J. Rusthoven, Barnes Thornburg Law Firm, Indianapolis, Corporate, Finance and Litigation Law Attorney
Partner

Peter J. Rusthoven, a partner in the Indianapolis, Indiana office, has a multi-dimensional practice. His business experience includes transactional and corporate governance work, in areas ranging from manufacturing to publishing to healthcare. He was active in drafting Indiana's corporation statute and official comments and has frequently written and spoken on corporate change-of-control issues. In the governmental services area, he is experienced in gaming and alcoholic beverage licensing and other regulatory and legislative services matters.

317-231-7299