Budinich v. Becton Dickinson & Co., 486 U.S. 196 (1988), established that a district court’s decision resolving the merits of a case is final for purposes of 28 U.S.C. § 1291 and must be appealed within 30 days, even if an unresolved motion for attorney’s fees is pending in the district court. In Budinich, the source of the attorney’s fee entitlement was a state statute. Since the case was decided, the circuits have split on whether a different rule should govern a claim for attorney’s fees based on a contract, on the theory that those fees are an item of damages, bound up in the merits, so that the merits decision of the district court is not final until the fee issue is resolved. The Second, Fifth, Seventh, and Ninth Circuits held that Budinich governs contractual fee claims, while the First, Third, Fourth, Eighth, and Eleventh Circuits held that it did not.

On January 15, the Supreme Court resolved the split, unanimously ruling in Ray Haluch Gravel Co. v. Central Pension Fund, No. 12-992,that the presence of an unresolved attorney’s fee motion never deprives the district court’s merits decision of finality, so that the time to appeal runs from the entry of that decision. In other words, Budinich created a bright-line rule.

The Court pointed out that, if it is desirable in a particular case to postpone the finality of the judgment so that attorney’s fees issues may be resolved in the same appeal as the merits, the district court may order, under FRCP 58(e) – if it acts before a notice of appeal has been filed and become effective – that a timely motion for attorney’s fees under FRCP 54(b)(2) have the same effect in postponing the finality of the judgment under FRAP 4(a)(4) as a motion under FRCP 59, so that the time to appeal the judgment does not begin to run until the fee motion is disposed of.