Seventh Circuit Discusses FRCP Entanglement, Does Not Believe Attorney’s Fees Sanctions Orders Are To Be Treated Differently Than Normal Federal Fee Orders.
The Seventh Circuit U.S. Court of Appeals, in Feldman v. Olin, No. 11-2722 (7th Cir. Feb. 23, 2012), tackled a messy federal rules of civil procedure issue relating to whether attorneys timely appealed a Rule 11 sanctions order entered against them. The answer was “no,” producing a colorfully written opinion by Circuit Judge Posner in the process.
Plaintiffs’ attorneys were sanctioned under FRCP 11 for filing a frivolous employment suit. The procedural context was that the district court initially ordered the case dismissed and ordered plaintiff to pay fees under Rule 11, orders timely appealed by plaintiff. The problem was that, two months later, the district court ordered sanctions of $1,475 against plaintiff’s attorneys, in essence vacating the prior order of fee assessment against plaintiff. The fee order was made in the form of a memorandum and order, not a separate judgment. (For many orders, a “separate document” in the form of a judgment needs to be entered to trigger the running of the normal 30-days appeal period, or else the period is a longer 150 days from entry of the memoranda/orders.) Attorneys did appeal, albeit after the 30-day normal period expired but within the longer 150-day time frame. The issue for determination was whether the attorneys’ appeal was timely.
It was not, according to the Seventh Circuit.
Attorneys first argued that a “separate document” was required for the order, such that the longer 150-day period applied--which would have made their appeal timely. However, FRCP 58(a)(3), since 2002, eliminated the “separate document” requirement for an order disposing of attorney’s fees under Rule 54. But, countered attorneys, there are exceptions to this general rule in FRCP 54(d)(2)(E), which lists further exceptions for violating “these rules”--with attorneys arguing that Rule 11 was one of “these rules” such that the “separate document” requirement had to be satisfied.
The Seventh Circuit decided that the Rule 54 “exceptions” language merely calls off the specific procedures for requesting attorney’s fees, being inapplicable to fees imposed under FRCP 11 The panel found no reason to believe attorney’s fee orders, no matter what the entitlement basis, were subject to a “separate document” requirement which would fly in the face of the Rule 58(a)(3) overarching language.
However, attorneys had not given up yet. Attorneys argued that the fee order was “substantive” given that it was directed at them rather than the client. Circuit Judge Posner did not believe this changed its characterization in the least. Besides, it was far from certain that a sanctions order is a judgment such that a separate document is required at all. He did admit, though, that “the rules could be better drafted.” End result: Attorneys’ appeal dismissed.