Friday, January 31, 2014

Ray Haluch Gravel Co. Clarifies When Judgments Are Final

By John M. Fitzgerald
Partner, Tabet DiVito & Rothstein LLC

On January 15, 2014, in a unanimous opinion, the United States Supreme Court significantly clarified when a judgment is final for purposes of 28 U.S.C. §1291. In Ray Haluch Gravel Co. v. Central Pension Fund of Int’l Union of Operating Engineers & Participating Employers, 571 U.S. ___, the Supreme Court opted for a bright-line rule that should provide clarity and predictability to appellate practitioners.

It is well established that a judgment can be “final” and appealable for purposes of 28 U.S.C. §1291 even if a claim for attorney's fees remains pending. The precise issue in Ray Haluch Gravel Co. was, in the words of Justice Kennedy, “whether a different result obtains if the unresolved claim for attorney’s fees is based on a contract rather than, or in addition to, a statute.” Ray Haluch Gravel Co.,  No.12-992, slip op. at 1. The answer was no. “Whether the claim for attorney’s fees is based on a statute, a contract, or both,” Justice Kennedy explained, “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.” Id.

In the case sub judice, pension funds sued Ray Haluch Gravel Co., a landscape supply company, for failing to make required contributions to the funds. Among other relief, the Funds sought attorney’s fees, auditor’s fees, and costs under ERISA and a collective bargaining agreement (CBA). Id. at 2.

On June 17, 2011, the district court issued an order finding that the Funds “were entitled to certain unpaid contributions, though less than had been requested.” Id. at 3. On the same day, the district court awarded a total of $26,897.41 to the Funds. In a separate order issued approximately a month later, on July 25, 2011, the district court awarded the Funds a total of $34,688.15 in attorney’s fees and costs. Id. at 3-4. The Funds appealed from both orders on August 15, 2011.

Ray Haluch Gravel Co. argued in the appellate court that the Funds had failed to timely appeal from the district court’s order of June 17, and thus lost their opportunity to challenge the district court’s resolution of their substantive claims. Id. at 4. The United States Court of Appeals for the First Circuit disagreed on the basis that the Funds’ claim for attorney’s fees was based (at least in part) on the CBA. The First Circuit reasoned that the CBA required “the payment of attorneys’ fees as an element of damages in the event of a breach,” and therefore found that the June 17 order was not final. Id. The Supreme Court granted certiorari “to resolve a conflict in the Courts of Appeals over whether and when an unresolved issue of attorney’s fees based on a contract prevents a judgment on the merits from being final.” Id. at 4-5. The Supreme Court reversed the First Circuit and, incidentally, agreed with the Seventh Circuit’s approach to this issue. See Continental Bank, N.A. v. Everett, 964 F.2d 701, 702-03 (7th Cir. 1992) (“An open issue about legal fees, contractual or otherwise, does not affect our jurisdiction to resolve the appeal” on the underlying claims.).

As early as Budinich v. Becton Dickinson & Co., 486 U.S. 196 (1988), the Supreme Court had decided that a judgment was “final” for purposes of 28 U.S.C. §1291 notwithstanding a pending claim for attorney’s fees pursuant to a statute. In Ray Haluch Gravel Co., the Funds argued that pending claims for attorney’s fees pursuant to a contract were different because contractual attorney’s fees provisions, unlike statutory attorney’s fees provisions, are “liquidated-damages provisions intended to remedy the injury giving rise to the action.” Ray Haluch Gravel Co., No.12-992, slip op. at 7. That argument failed. First, the Court noted that contractual attorney’s fees provisions often entitle prevailing defendants to fees. Second, the holding of Budinich did not recognize the distinction on which the Funds relied. Justice Kennedy went as far as to suggest that the Funds were attempting “to relitigate an issue already decided in Budinich.” Id. at 8.

The Court also noted that the rule suggested by the Funds posed at least two serious practical problems. First, “[o]perational 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.” Id. Second, and potentially more important, the Funds’ proposed rule “does not promote predictability,” because while “it may be clear whether and to what extent a fee claim is contractual rather than statutory in nature, that is not always so.” Id. Indeed, in the case at hand, the Funds’ request for fees was based on both ERISA and the CBA. Accordingly, while the Funds raised the specter of piecemeal litigation, that concern was “counterbalanced by the interest in determining with promptness and clarity whether the ruling on the merits will be appealed.” Id. at 9. Finally, the Court found it immaterial that the Funds’ request for fees included some fees that were incurred before the litigation began. Id. at 12.

Certainly with respect to the timing of filing a notice of appeal, predictability and certainty are worthy goals. On that measure, Ray Haluch Gravel Co. merits the appreciation of the appellate bar.

Recommended Citation: John M. Fitzgerald, Ray Haluch Gravel Co. Clarifies When Judgments Are FinalThe Brief, (January 31, 2014),

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