Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-caDC-13-07121/USCOURTS-caDC-13-07121-0/pdf.json

Nature of Suit Code: 890
Nature of Suit: Other Statutory Actions
Cause of Action: 

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United States Court of Appeals 

FOR THE DISTRICT OF COLUMBIA CIRCUIT

Argued May 6, 2014 Decided June 3, 2014 

No. 01-7041 

MCKESSON CORPORATION, ET AL., 

APPELLEES

v. 

ISLAMIC REPUBLIC OF IRAN, 

APPELLANT

FINANCIAL ORGANIZATION FOR THE EXPANSION OF 

OWNERSHIP OF PRODUCTIVE UNITS, ET AL., 

APPELLEES

Consolidated with 13-7070, 13-7121 

Appeals from the United States District Court 

for the District of Columbia 

(No. 1:82-cv-00220) 

Patrick P. O’Donnell argued the cause for the appellant. 

Christopher J. Wright, Anne K. Langer and Charles T. 

Kimmett were on brief. Thomas G. Corcoran, Jr., Henry M. 

Lloyd, Laina Lopez and Mary-Ellen Noone entered 

appearances.

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Mark N. Bravin argued the cause for the appellees. Gene 

C. Schaerr, Eric M. Goldstein and Mark R. Joelson were on 

brief. Peter Buscemi entered an appearance. 

Stuart F. Delery, Assistant Attorney General, United 

States Department of Justice, Ronald C. Machen Jr., United 

States Attorney, and Douglas N. Letter and H. Thomas Byron, 

III, Attorneys, were on brief for amicus curiae United States of 

America in support of neither party. 

Before: HENDERSON, ROGERS and TATEL, Circuit Judges. 

Opinion for the Court filed by Circuit Judge HENDERSON. 

KAREN LECRAFT HENDERSON, Circuit Judge: After the 

1979 revolution in Iran, the Iranian government expropriated 

the interest held by McKesson Corporation (McKesson), an 

American business, in an Iranian dairy company. McKesson 

first filed suit in the District of Columbia district court in 1982. 

After more than three decades of litigation, including six trips 

to this Court, McKesson finally secured a judgment of $29.3 

million. We now review the $13.4 million in attorney’s fees 

the district court awarded McKesson. Because the district 

court improperly calculated attorney’s fees under Iranian law, 

we vacate the fee award and remand with instructions to award 

McKesson $29,516 in attorney’s fees. 

I. 

The baroque procedural history that got us here is 

contained in many volumes of West’s Federal Reporter. For a 

detailed summary, see McKesson Corp. v. Islamic Republic of 

Iran (McKesson VI), 672 F.3d 1066, 1070–72 (D.C. Cir. 2012). 

For our limited purpose, the relevant background is as follows. 

In McKesson VI, we held that the 1955 Treaty of Amity, 

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Economic Relations, and Consular Rights, U.S.-Iran, Aug. 15, 

1955, 8 U.S.T. 899 (Treaty of Amity)—construed under 

Iranian law—provides McKesson with a private right of action 

against the government of Iran. 672 F.3d at 1078. We 

affirmed the district court’s finding that Iran is liable to 

McKesson under the Treaty of Amity for the expropriation of 

McKesson’s equity interest in the dairy company and the 

withholding of McKesson’s dividends. Id. at 1080–83. We 

concluded that the district court erred, however, in adding 

compound interest to McKesson’s damages award and 

therefore remanded with instructions to recalculate the award 

using simple interest. Id. at 1083–84. On March 27, 2013, 

the district court did so, entering final judgment for McKesson 

in the amount of $29,318,284.47. McKesson Corp. v. Islamic 

Republic of Iran, 935 F. Supp. 2d 34, 38 (D.D.C. 2013). That 

amount is not at issue here. 

Over the course of the litigation, McKesson filed five 

petitions for attorney’s fees accrued during five distinct time 

periods. On November 30, 2000, the district court ruled on 

the first petition. See McKesson Corp. v. Islamic Republic of 

Iran, No. 82-00220 (D.D.C. Nov. 30, 2000), reprinted at Joint 

Appendix (JA) 211–34. It reasoned that “in determining 

whether a prevailing party is entitled to fees and expenses, a 

court looks . . . to the substantive law on which the successful 

claim is based.” JA 217. At the time, however, we had not 

yet decided what (if any) substantive law provided McKesson 

with a cause of action. The district court held that it had 

authority to award reasonable fees under international law or, 

in the alternative, under Iranian law, see JA 219–27, and 

granted McKesson $2.95 million in fees and expenses for legal 

work performed through July 2000, see JA 234. 

On March 27, 2013, the district court ruled on 

McKesson’s next three fee petitions, covering legal work done 

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from August 2000 to June 2012. It noted that we had 

determined in 2012 that Iranian law recognizes McKesson’s 

cause of action and therefore “the issue of whether attorneys’ 

fees may be awarded to McKesson is . . . governed by Iranian 

law.” McKesson Corp., 935 F. Supp. 2d at 39 (citing 

McKesson VI, 672 F.3d at 1072). It then concluded that it had 

discretion to award reasonable attorney’s fees under Iranian 

law, brushing aside Iran’s contrary argument in a footnote. Id.

at 39–40 & n.4. Despite having acknowledged that Iranian 

law governed, however, the district court proceeded to assess 

the reasonableness of McKesson’s requested award by 

referring solely to American case law applying federal 

fee-shifting statutes. Id. at 40–45. It held that a fee award of 

just over $10 million was reasonable under this precedent. Id.

at 45. The award included a “current-rate” enhancement that 

compensated McKesson for the delay in payment by 

calculating fees using 2012 billing rates instead of the rates that 

prevailed when the work was performed. Id. at 43. The 

district court subsequently granted McKesson’s fifth fee 

request—$434,385 for fees incurred for work done between 

July 2012 and April 2013—for the same reasons given for the 

second through fourth requests. Id. at 47–48. 

Iran timely appealed each of the district court orders 

awarding fees.1

 The appeal from the district court’s 2000 

decision, which we had held in abeyance until now, was 

consolidated with the two more recent cases for appeal. See 

Order, Nos. 01-7041, 13-7070, 13-7121 (D.C. Cir. Aug. 16, 

2013). 

 1 The three awards total $13,407,424.43 in fees: 

$2,945,803.73 from the November 2000 award; $10,027,235.70 

from the March 2013 award; and $434,385 from the August 2013 

award.

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II. 

 Although we generally review an attorney’s fees award for 

abuse of discretion, “a district court abuses its discretion if it 

did not apply the correct legal standard or if it misapprehended 

the underlying substantive law.” Conservation Force v. 

Salazar, 699 F.3d 538, 542 (D.C. Cir. 2012) (quotation marks 

and ellipsis omitted). We therefore review de novo whether 

the district court applied the correct legal standard, id., 

including de novo review of the district court’s interpretation 

of foreign law, City of Harper Woods Emps. Ret. Sys. v. Olver, 

589 F.3d 1292, 1298 (D.C. Cir. 2009); see FED. R. CIV. P. 44.1. 

We held in McKesson VI that this suit is governed by 

Iranian law, 672 F.3d at 1075, and the parties agree that Iranian 

law controls the question of attorney’s fees. The parties 

further agree that, under Articles 515 and 519 of the Iranian 

Civil Procedure Act of 2000 (Act), McKesson is entitled to 

receive some measure of attorney’s fees. Article 515 

authorizes the prevailing party to “demand compensation for 

damages resulting from the court proceeding.” Article 519 

defines damages to include “legal fees[] and other costs which 

are directly or indirectly related to the court proceeding and 

have been necessary to prove or defend the case.” 

The parties disagree on the calculation of fees. The 

dispute therefore turns on the applicability vel non of Article 

518 of the Act, which provides: “In the instances where the 

amount of expenses and damages are [sic] not fixed in the law 

or official tariff, the amount of such expenses and damages 

shall be decided by the court.” Iran contends that an “official 

tariff” applies here—Article 3 of Iran’s 2006 regulation on 

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attorney’s fees.2 By Iran’s calculation, that tariff yields a fee 

award of $29,516. McKesson does not dispute that 

calculation nor does it dispute that the tariff would apply if this 

action had been brought by Iranian counsel in an Iranian court. 

It was brought in an American court, however. McKesson 

contends this makes all the difference because Iran “presented 

absolutely no evidence below that the tariff applies in this type 

of case, i.e., a case tried in courts outside of Iran by non-Iranian 

counsel.” Br. of McKesson 27. Because this case is 

therefore not one in which damages are “fixed in the law or 

official tariff,” McKesson contends, the amount of attorney’s 

fees is to be decided “by the court”—i.e., in the court’s 

discretion. 

We read Article 518’s plain language to provide that 

“decided by the court” applies only “[i]n the instances where 

the amount of [attorney’s fees is] not fixed in the law or official 

tariff.” That is, Article 518 provides a general rule that courts 

must use an official tariff or other amount fixed by law in 

awarding attorney’s fees. The court has discretion only when 

the tariff (or other fixed amount) does not apply. As the party 

seeking attorney’s fees under foreign law, McKesson bears the 

 2

 McKesson contends that Iran forfeited this argument with 

respect to the first and second fee petitions by not raising it below. 

When those two petitions were filed and briefed in 2000 and 2007, 

however, it was far from certain what substantive law (if any) 

supplied McKesson’s cause of action. Indeed, we issued four 

decisions between 2001 and 2012 on the subject. See McKesson 

HBOC, Inc. v. Islamic Republic of Iran, 271 F.3d 1101 (D.C. Cir. 

2001), vacated in relevant part, 320 F.3d 280 (D.C. Cir. 2003); 

McKesson Corp. v. Islamic Republic of Iran, 539 F.3d 485 (D.C. Cir. 

2008); McKesson VI, 672 F.3d at 1078–80. That unusual degree of 

uncertainty makes this is an “exceptional” case in which Iran’s 

forfeiture may be excused. See Roosevelt v. E.I. Du Pont de 

Nemours & Co., 958 F.2d 416, 419 n.5 (D.C. Cir. 1992). 

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burden of establishing the substance of foreign law. See In re 

Avantel, S.A., 343 F.3d 311, 321–22 (5th Cir. 2003) (party 

seeking to apply Mexican privilege law “had the burden of 

proving its substance to a reasonable certainty such that the 

district court could apply it to the documents at issue”); 

Bel-Ray Co. v. Chemrite (Pty) Ltd., 181 F.3d 435, 440–41 (3d 

Cir. 1999) (similar); Restatement (Second) of Conflict of Laws 

§ 136 cmt. f (1971) (“[T]he party who claims that the foreign 

law is different from the local law of the forum has the burden 

of establishing the content of the foreign law.”); see also Baker 

v. Booz Allen Hamilton, Inc., 358 F. App’x 476, 481 (4th Cir. 

2009) (similar); cf. Br. of McKesson 25 (acknowledging it 

bears “initial burden”). It is therefore up to McKesson to 

show that the general rule (that an official tariff controls) does 

not apply here. We reject McKesson’s attempt to shift the 

burden by requiring Iran to show that the general rule does

apply and the exception does not. Although McKesson 

criticizes Iran’s expert on Iranian law for not supplying 

authority for the proposition that the tariff applies in actions 

pursued outside Iranian courts, neither does McKesson’s 

expert offer any authority supporting the notion that it does not

apply in such cases. 

Moreover, McKesson’s argument seeks to have it both 

ways. It invokes Iranian law to argue that the court has 

discretion to award attorney’s fees but, when it comes to 

addressing how the court should exercise that discretion, 

McKesson cites not a single Iranian precedent. Instead, 

McKesson relies (as did the district court) solely on U.S. 

precedent awarding attorney’s fees under federal fee-shifting 

statutes. But that precedent tells us nothing about how an 

Iranian court exercises its alleged discretion. Put differently, 

McKesson is content to use Iranian law insofar as it allows for 

fees and thus is more generous than the default American Rule. 

See Hardt v. Reliance Std. Life Ins. Co., 560 U.S. 242, 252–53 

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(2010) (under “American Rule” each litigant pays its own 

attorney’s fees unless statute or contract provides otherwise). 

But McKesson runs from Iranian law where it is less generous 

than U.S. law—i.e., where the applicable tariff yields a smaller 

award than might have been granted if McKesson had brought 

its action under a U.S. fee-shifting statute. We think the 

internal inconsistency of McKesson’s argument is telling. 

We conclude that the official tariff applies. Iran contends 

that, applied to McKesson’s $29.3 million judgment, the tariff 

yields a fee award of $29,516. McKesson does not dispute the 

calculation. Accordingly, we vacate the district court’s fee 

award and instruct the district court on remand to grant 

McKesson $29,516 in attorney’s fees. 

 So ordered.

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