Cent. Pension Fund of Int'l Union of Operating Eng'rs v. Ray Haluch Gravel Co.

• Decision Date: 12 September 2012
• Docket Number: No. 11–1944.,11–1944.
• Parties: CENTRAL PENSION FUND OF the INTERNATIONAL UNION OF OPERATING ENGINEERS AND PARTICIPATING EMPLOYERS et al., Plaintiffs, Appellants, v. RAY HALUCH GRAVEL CO., Defendant, Appellee.
• Court: U.S. Court of Appeals — First Circuit

695 F.3d 1

CENTRAL PENSION FUND OF the INTERNATIONAL UNION OF OPERATING ENGINEERS AND PARTICIPATING EMPLOYERS et al., Plaintiffs, Appellants,

v.RAY HALUCH GRAVEL CO., Defendant, Appellee.

No. 11–1944.

United States Court of Appeals,First Circuit.

Heard July 31, 2012.

Decided Sept. 12, 2012.

Kenneth L. Wagner, with whom Blitman & King LLP was on brief, for appellants.

José A. Aguiar, with whom Doherty, Wallace, Pillsbury and Murphy, P.C. was on brief, for appellee.

Before THOMPSON, SELYA and DYK,^* Circuit Judges.

SELYA, Circuit Judge.

This appeal requires us to resolve two issues of first impression in this circuit. The first, which has divided our sister circuits, relates to judgment finality. The second relates to what happens when an employer fails to keep appropriate records concerning work covered by the benefit-remittance provisions of a collective bargaining agreement. After careful consideration, we hold that the appeal is timely as to all issues and that both the judgment on the benefit-remittance claim and the judgment awarding attorneys' fees are open to appellate review. We further hold that these judgments must be vacated. Consequently, we remand to the district court for further proceedings consistent with this opinion.

I. BACKGROUND

We briefly rehearse the background and the travel of the case, reserving more exegetic detail for our treatment of particular issues.

The defendant, Ray Haluch Gravel Co., is a landscape supply company in Ludlow, Massachusetts.¹ Over time, its primary operations have morphed from site work and excavation to the sale of landscaping products—but it continues to perform both types of work.

Beginning in 1988, the defendant entered into a series of collective bargaining agreements with the International Union of Operating Engineers, Local 98 (the Union), which maintains a hiring hall where employers may either seek Union referrals or directly hire workers. The collective bargaining agreement at issue here (the CBA) took effect on May 1, 2005 and expired on April 30, 2011. Under it, the defendant remitted contributions to an array of Union-affiliated benefit funds (the Funds) primarily on behalf of a single employee: Todd Downey. All of the Funds are employee benefit plans regulated under the Employee Retirement Income Security Act (ERISA), 29 U.S.C. §§ 1001–1461.

In 2007, the Funds commissioned audits of the defendant's books. Armed with the completed audits, they demanded additional remittances for previously unreported work allegedly covered by the CBA. The defendant demurred, and the Funds sued the defendant in the federal district court.² Pertinently, their complaint sought recovery of both unpaid remittances and attorneys' fees.

Following a three-day bench trial, the lower court took the matter under advisement and requested briefs (covering, inter alia, the claim for attorneys' fees). In line with this briefing order, the plaintiffs—having been granted extra time for this purpose—filed a motion for attorneys' fees.

On June 17, 2011, the district court issued an order resolving the claim for unpaid remittances. It awarded the plaintiffs $26,897.41 referable to covered work performed by a specific employee (Martin Jagodowski), but denied recovery for any other work. Int'l Union of Oper'g Eng'rs, Local 98 Health & Welfare, Pension & Annuity Funds v. Ray Haluch Gravel Co. (Haluch I), 792 F.Supp.2d 129, 138 (D.Mass.2011). The court directed the entry of judgment for the plaintiffs,³ explaining that it would rule on the claim for attorneys' fees in a separate decision. Id.

On July 25, 2011, the court resolved the claim for attorneys' fees, awarding the plaintiffs $34,688.15. Int'l Union of Oper'g Eng'rs, Local 98 Health & Welfare, Pension & Annuity Funds v. Ray Haluch Gravel Co. (Haluch II), 792 F.Supp.2d 139, 143 (D.Mass.2011). At the end of its order, the court noted for the first time that “[t]his case may now be closed.” Id. On August 15, 2011, the plaintiffs appealed the decisions in both Haluch I and Haluch II.

II. ANALYSIS

We subdivide our analysis into three segments. First, we discuss the timeliness of the appeal vis-à-vis the lower court's decision in Haluch I. Second, we consider the plaintiffs' plaint that the district court misconstrued the CBA and, in the bargain, did not appropriately resolve the claim for unpaid remittances. Finally, we turn to the claim for attorneys' fees.

A. Timeliness of the Appeal.

The timeliness of an appeal in the federal courts is governed by the provisions of Rule 4 of the Federal Rules of Appellate Procedure. With narrow exceptions not relevant here (such as when the federal government is a party), an appeal in a civil case must be filed within either thirty days of the entry of a final judgment or thirty days after the district court's denial of one of several post-judgment motions. Fed. R.App. P. 4(a)(1)(A), (a)(4). These time limits are mandatory and jurisdictional. See Budinich v. Becton Dickinson & Co., 486 U.S. 196, 203, 108 S.Ct. 1717, 100 L.Ed.2d 178 (1988).

In the case at hand, the plaintiffs filed their notice of appeal within thirty days following the district court's entry of judgment with respect to the claim for attorneys' fees. This was, however, more than thirty days after the district court had entered its previous and separate judgment as to the claims for unpaid remittances. The question reduces, then, to whether the notice of appeal was timely as to the first judgment. This, in turn, requires us to determine whether the first judgment was a final judgment. See28 U.S.C. § 1291 (conferring on the courts of appeals jurisdiction over “final decisions of the district courts”).

The point of embarkation for this inquiry is Budinich, in which the plaintiff, after prevailing on an employment claim, sought to recover counsel fees under a state fee-shifting statute. 486 U.S. at 197, 108 S.Ct. 1717. The plaintiff, who was dissatisfied with the outcome of the case on the merits, did not file a notice of appeal until after the district court resolved the claim for attorneys' fees. That notice was filed more than thirty days after the entry of judgment on the merits. See id. at 197–98, 108 S.Ct. 1717.

The Budinich Court ruled that the appeal was untimely as to the merits of the employment claim. See id. at 199–203, 108 S.Ct. 1717. It started with the conventional wisdom that a final decision under section 1291 is “one which ends the litigation on the merits and leaves nothing for the court to do but execute the judgment.” Id. at 199, 108 S.Ct. 1717 (internal quotation marks omitted). It then noted that, in general, “a claim for attorney's fees is not part of the merits of the action to which the fees pertain.” Id. at 200, 108 S.Ct. 1717. In the usual case, “[s]uch an award does not remedy the injury giving rise to the action, and indeed is often available to the party defending against the action.” Id. The judgment on the merits was, therefore, final when rendered—the fees issue was wholly collateral—and the appeal should have been taken within thirty days thereafter. Id. at 203, 108 S.Ct. 1717.

The defendant insists that Budinich is controlling here: in its view, the Budinich Court crafted a bright-line rule. But this characterization begs the question of where and how the line should be drawn. We must explore that conundrum.

The decisions of the courts of appeals on this point are in disarray. Some have held that Budinich applies to all claims for attorneys' fees. See, e.g., O & G Indus., Inc. v. Nat'l R.R. Pass. Corp., 537 F.3d 153, 167–68 & n. 11 (2d Cir.2008); United States ex rel. Familian Nw., Inc. v. RG & B Contractors, Inc., 21 F.3d 952, 954–55 (9th Cir.1994); Cont'l Bank, N.A. v. Everett, 964 F.2d 701, 702 (7th Cir.1992); First Nationwide Bank v. Summer House Joint Venture, 902 F.2d 1197, 1199–1200 (5th Cir.1990). Other courts have held, on various rationales, that contractual claims for attorneys' fees may fall beyond the Budinich line. See Carolina Power & Light Co. v. Dynegy Mktg. & Trade, 415 F.3d 354, 356 (4th Cir.2005) (concluding that a claim for attorneys' fees “not limited to expenses incurred during the underlying litigation is an element of damages” and that, therefore, “a judgment that leaves open such a claim is not final and appealable”); Brandon, Jones, Sandall, Zeide, Kohn, Chalal & Musso, P.A. v. MedPartners, Inc., 312 F.3d 1349, 1355 (11th Cir.2002) (per curiam) (holding that “a request for attorneys' fees pursuant to a contractual clause is considered a substantive issue; and an order that leaves a substantive fees issue pending cannot be ‘final’ ”); Justine Realty Co. v. Am. Nat'l Can Co., 945 F.2d 1044, 1047–49 (8th Cir.1991) (explaining that attorneys' fees are part of the merits when sought under contract for, in part, pre-litigation costs incurred as a result of breach). At least one court has put a foot in each camp. See Gleason v. Norwest Mortg., Inc., 243 F.3d 130, 137–38 (3d Cir.2001) (concluding that certain contract-based attorneys' fees are outside the scope of Budinich but finding “no difference ... for § 1291 finality purposes, between payment of attorneys' fees to a prevailing party under statute and payment ... under the contract”). We have not yet had occasion to pass upon this issue.

We do not believe that Budinich should be read mechanically to apply to all claims for attorneys' fees, whatever their genesis. Such a mechanical reading overlooks the Supreme Court's acknowledgment that “[i]f one were to regard the demand for attorney's fees as itself part of the merits, the .... merits would then not have been concluded, and § 1291 finality would not exist.” Budinich, 486 U.S. at 200, 108 S.Ct. 1717 (emphasis in original). This acknowledgment unmistakably signals that, although the Budinich Court determined that attorneys' fees generally should be considered a collateral matter, they may sometimes be considered as part of the merits. Cf. Osterneck v. Ernst &...