The United States Supreme Court has settled a split of authority among nine different courts of appeals from across the country in a decision affecting any federal case seeking attorney fees. In Ray Haulch Gravel Co. v. Central Pension Fund of the Int’l Operating Engineers, __U.S.__, 2014 WL 127952 (Jan. 15, 2014), the court returned to a question that it has addressed 25 years before: When does a request for attorney fees toll the time for an appeal?
In Haluch Gravel, an employee benefit fund sued an employer for underfunded benefits and sought attorney fees under both a statute and a contract. The district court entered a judgment for a portion, but not the full amount of the claimed underfunding, and deferred awarding attorney fees until later. The fund did not appeal that ruling. Instead, only after the district court awarded attorney fees over five weeks later did it then appeal the rulings on both the merits and the attorney fees.
The employer argued that the appeal on the merits should be dismissed because that ruling was a final judgment and was not appealed within the 30-day deadline. The Court of Appeals for the First Circuit rejected this argument and held that when attorney fees are derived from a contract, as opposed to a statute, they are part of the merits so that there was no final judgment until the fees had been awarded. Id. at *4. The First Circuit’s position was consistent with decisions by the Third, Fourth, Eighth, and Eleventh Circuits, but contrary to those of the Second, Fifth, Seventh, and Ninth Circuits.
The Supreme Court stepped in to settle this division of authority and reversed the First Circuit. It began its analysis by harking back to its decision of a quarter century before in Budnich v. Becton Dickinson & Co., 486 U.S. 196 (1988) holding that a request for attorney fees does not keep a judgment from becoming final and appealable. The fund gave two reasons for why the Budnich decision did not apply. First, it argued that because it sought fees by contract, they should be deemed part of the merits. The court found that this to be a distinction without a difference. Permitting appellate jurisdiction to hinge on such a distinction, the court stated, would compromise “operational consistency and predictibility,” especially since it is not always clear if fees are derived from statute or contract and also because many fee-shifting provisions are complex. Further, any concerns about piecemeal appeals was “counterbalanced by the interest in determining with promptness and clarity whether the ruling on the merits will be appealed.” 2014 WL 12752 at *7-8. The court also pointed out that Federal Rule of Civil Procedure 58(e) allows a trial court to expressly suspend the time for appeal, if a timely motion for fees has been made. Id. at *8. Yet in this case, the parties did not invoke Rule 58(e) to toll the appeal time.
The court was also unpersuaded by the fund’s second argument that the certain fees incurred before the filing of suit were not part of the litigation and thus were part of the damages on the merits. Id. The court noted that in contrast to a “freestanding contract action” claiming fees, the pre-filing fees in this case (investigation, research, and drafting) were directly related to the litigation so that the delay in awarding them did not toll the time for appeal.
The Haluch Gravel decision settles over 20 years of conflicting authority among the federal courts of appeals. And it makes plain that a request for attorney fees will not stop the appeal clock — unless the district court itself expressly tolls the time.