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Pending Claim for Attorney

Pending Claim for Attorney's Fees Does Not Postpone Deadline to File Appeal from Judgment on the Merits

When an action is filed to recover benefits under § 502(a)(1)(B) of ERISA, or to enforce plan terms under other provisions of ERISA, the plaintiff generally includes a claim to recover attorney's fees and costs under § 502(g).


ERISA and Life Insurance News
(May 30, 2014)

It is not unusual for a court to decide the main claim first, and to defer consideration of the claim for fees until after judgment on the merits has been entered. In fact, some district courts provide by local rule that an award of fees may be requested by separate motion after a final judgment has been entered on the merits of the main claim. See, e.g., LR 54.2, N.D. Ga.

If the claim for fees and costs is not decided until more than 30 days after entry of the judgment on the merits, is it then too late to appeal from an adverse decision on the main claim? In other words, is there a “final decision” triggering the time to file a notice of appeal when judgment is entered only on the main claim? Or is the decision not final until judgment also is entered on the claim for attorney’s fees and costs?

Appellate Court Jurisdiction

The jurisdiction of federal courts of appeals is established by 28 U.S.C. § 1291, which provides that “[t]he courts of appeals … shall have jurisdiction of appeals from all final decisions of the district courts of the United States ….”

Rule 4 of the Federal Rules of Appellate Procedure provides generally that a “notice of appeal … must be filed … within 30 days after entry of the judgment or order appealed from.” Filing the notice of appeal too late is fatal to appellate review because “the timely filing of a notice of appeal in a civil case is a jurisdictional requirement.” Bowles v. Russell, 551 U.S. 205, 214 (2007).

While this seems straightforward, federal courts of appeals have reached different results when considering whether the time to file a notice of appeal begins to run when a judgment on the merits is entered, or when a subsequent judgment is entered on an ancillary claim to recover attorney’s fees.

In the context of a claim for fees authorized by a statute, that issue was resolved 26 years ago. In Budinich v. Becton Dickinson & Co., 486 U.S. 196 (1988), the Court held that a decision on the merits is a “final decision” for purposes of § 1291, even if a claim to recover statutory attorney’s fees remains unresolved.

Budinich left open, however, the question of whether a contract-based claim – as opposed to a statutory claim – to recover attorney’s fees is part of the merits, so that the time to file a notice of appeal does not begin to run until the court has decided both the underlying claim and the attorney’s fee claim.

Supreme Court Decision

That issue was resolved by the Supreme Court this year in Ray Haluch Gravel Co. v. Central Pension Fund of Internatonal Union of Operating Engineers and Participating Employers, 134 S. Ct. 773 (2014), an ERISA case. Certain labor union funds sued under § 515 of ERISA to compel additional employer contributions to employee benefit plans, and they also sought to recover attorney’s fees and costs. The claim for fees and costs had both a statutory and a contractual basis, because it was brought both under § 502(g)(2)(D) of ERISA and under the terms of a collective bargaining agreement.

The relevant facts were these:

Under a collective bargaining agreement, Haluch Gravel, a landscape supply company, was required to pay contributions to union-affiliated benefit funds. After an audit was conducted, some of the Funds sued, alleging that Haluch Gravel failed to make the required contributions in violation of ERISA and the Labor Management Relations Act of 1947. The Funds also sued to recover attorney’s fees, audit fees, and costs of $143,600.

The district court entered judgment for the Funds on June 17, 2011, ruling that they were entitled to unpaid contributions of $26,897, which was less than had been claimed. International Union of Operating Engineers, Local 98 Health and Welfare, Pension and Annuity Funds v. Ray Haluch Gravel Co., 792 F. Supp. 2d 129 (D. Mass.).

The district court did not rule on the claim for fees and expenses until July 25, 2011, more than a month later, when it entered a second judgment awarding $34,688, again less than the Funds had claimed. 792 F. Supp. 2d. at 143.

The Funds filed a notice of appeal to the First Circuit Court of Appeals on August 15, 2011, more than 30 days after entry of the judgment on the merits but less than 30 days after the judgment awarding fees and expenses. The First Circuit held that the appeal was timely and that the first judgment entered on June 17 was not final and appealable, because a contractual claim for fees and expenses remained pending. 695 F.3d 1, 6 (1st Cir. 2012).

The Supreme Court granted certiorari to resolve conflicting decisions by the circuit courts of appeals, some of which had held that Budinich applies to all claims for attorney’s fees, both statutory and contractual, and others of which had held that contractual claims for attorney’s fees fall outside the Budinich ruling.

Contractual and Statutory Fee Claims Treated the Same

The Court held that the Funds’ appeal was untimely, and that the time to file the notice of appeal began to run when the judgment on the merits of the claim for additional contributions was entered – regardless of whether the claim for attorney’s fees was based on a statute or on a contract.

“Were the jurisdictional effect of an unresolved issue of attorney’s fees to depend 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,” the Court said. “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.”

The Court declined to base the finality of a judgment on “complex variations in statutory and contractual fee-shifting provisions,” noting that “[s]ome fee-shifting provisions treat the fees as part of the merits; some do not. Some are bilateral, authorizing fees either to plaintiffs or defendants; some are unilateral. Some depend on prevailing party status; some do not.”

Instead, the Court said, “[t]he rule adopted in Budinich ignores these distinctions in favor of an approach that looks solely to the character of the issue that remains open after the court has otherwise ruled on the merits of the case.” Consequently, whether the claim for attorney’s fees is based on a statute, a contract, or both, the fact that a claim for fees and costs remains pending does not prevent a judgment on the merits from becoming final for purposes of appeal.

In the context of representing ERISA plan sponsors and claims fiduciaries, the lesson is clear. If the district court enters judgment on the merits for the plan participant or beneficiary, that is a final decision for the purpose of appeal. A notice of appeal must be filed within 30 days of the date of that judgment – even if a claim to recover attorney’s fees and costs remains pending. If the decision on the ancillary claim for fees is entered more than 30 days later, a subsequent notice of appeal from the earlier judgment on the merits of the claim will be untimely.

Click here to view the full May 2014 Edition of the ERISA and Life Insurance News.

Authors
H. Sanders Carter
T (404) 962-1015
F (404) 962-1220
Kenton J. Coppage
T (404) 962-1065
F (404) 962-1256
Dorothy H. Cornwell
T (404) 962-1096
F (404) 962-1246
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