Opinion ID: 6855
Heading Depth: 2
Heading Rank: 2

Heading: Attorney's Fees Under Other Statutes or Equitable Powers

Text: 25 Boland Marine also argues that since the Director acted unreasonably, the Director should be held liable for Rihner's attorney's fees under the  'bad faith' exception to the American Rule and/or under the general powers and authorities of ALJ's pursuant to the Administrative Procedure Act, the Federal Rules of Civil Procedure, and equity. 26
27 Boland Marine asserts that the Director should be forced to pay Rihner's attorney's fees pursuant to Federal Rules of Civil Procedure 11 or 16(f), both of which, according to Boland Marine, allow for an award of attorneys fees as sanctions. 28 The Federal Rules of Civil Procedure apply to proceedings for enforcement or review of compensation orders under [LHWCA Secs. 18 and 21], except to the extent matters of procedure are provided for in the Act. Fed.R.Civ.P. 81(a)(6); see also Brickner, 11 F.3d at 891 (discussing the Rule). Section 18 of LHWCA governs the enforcement of benefit awards--the collection of the defaulted payments from an employer, or, if the employer is insolvent or otherwise unable to make payments, Section 18 authorizes payment from the Special Fund. 33 U.S.C. Sec. 918. The enforcement procedures set out in this section require certain filings with the deputy commissioner and in the federal district court. Similarly, Section 21 of LHWCA sets forth the procedures for the review of compensation orders by the BRB and the federal courts. 33 U.S.C. Sec. 921. Yet Rule 81(a)(6) does not make the Federal Rules of Civil Procedure applicable to all LHWCA proceedings since by its very language, it extends the reach of the Rules to enforcement and review proceedings only. Brickner, 11 F.3d at 891. 29 The Federal Rules of Civil Procedure, however, do apply in proceedings under LHWCA in any situation not provided for or controlled ... by any statute, executive order, or regulation. 29 C.F.R. Sec. 18.1(a). Nevertheless, while federal regulation incorporates the Federal Rules into some aspects of LHWCA proceedings, the imposition of attorney's fees and sanctions for instituting or continuing a proceeding without reasonable ground is an area provided for or controlled by the Act. Accordingly, we find that Rules 11 and 16 find no application in those situations. 30 As noted above, Section 26 of LHWCA provides for the situation when a party institutes or continues a proceeding without reasonable ground. Brickner, 11 F.3d at 891. We agree with the reasoning of the Ninth Circuit that the inclusion of this section in LHWCA, which allows a sanction for unreasonable claims against either party, impliedly precludes a sanction for bad faith claims, and therefore Rule 11 should not be incorporated. Id. Moreover, the notion that attorney misconduct in LHWCA proceedings should be governed by Section 26 instead of the sanctioning procedures of the Federal Rules of Civil Procedure is further supported by the federal regulations. Specifically, the federal regulations direct an ALJ to certify instances of attorney misbehavior to the Federal District Court having jurisdiction in the place in which he or she is sitting to request appropriate remedies. 29 C.F.R. Sec. 18.29. 31 We agree with the Brickner court that the sanctioning mechanism provided in Section 26 makes it plain that Congress has considered the possibility that either party will do the acts contemplated by Rule 11 and has determined the stage at which corrective disciplinary action can be taken. Brickner, 11 F.3d at 891. Thus, we find that because Section 26 controls the circumstances of a party continuing a proceeding without reasonable ground, the sanctioning procedures of the Federal Rules of Civil Procedure are not applicable to that conduct.
32 Under the well-established American Rule used in the federal courts, absent statute or enforceable contract, litigants pay their own attorney's fees. Alyeska Pipeline Serv. Co. v. Wilderness Soc'y, 421 U.S. 240, 257, 95 S.Ct. 1612, 1621, 44 L.Ed.2d 141 (1975); accord Holliday v. Todd Shipyards Corp., 654 F.2d 415, 419 (5th Cir.1981), overruled on other grounds, Phillips v. Marine Concrete Structures, Inc., 895 F.2d 1033 (5th Cir.1990); Director v. Robertson, 625 F.2d 873, 876 (9th Cir.1980). There are, however, a few nonstatutory exceptions to the American Rule. Courts may depart from the general rule that each party pays his own attorney's fees in cases involving a common fund, situations where a party has willfully violated a court order, and cases of fraudulent, groundless, oppressive, or vexatious conduct. Holliday, 654 F.2d at 419 n. 4; see also Alyeska Pipeline, 421 U.S. at 257-59, 95 S.Ct. at 1621-22. A court's ability to award attorney's fees, even under these judicially-created exceptions to the American Rule, is not unfettered. In a statute such as LHWCA, Congress, while fully recognizing and accepting the general rule, [has made] specific and explicit provisions for the allowance of attorney's fees, and the statute must guide courts in the award of such fees. Alyeska Pipeline, 421 U.S. at 260 & n. 33, 95 S.Ct. at 1623 & n. 33. In these situations, the Supreme Court has noted that it is apparent that the circumstances under which attorneys' fees are to be awarded and the range of discretion of the courts in making those awards are matters for Congress to determine. Id. at 262, 95 S.Ct. at 1624; see also Holliday, 654 F.2d at 419-20 (discussing the applicability of the American Rule's statutory exceptions to LHWCA). Thus, Alyeska Pipeline seems to indicate that when a Congressional statute sets out the framework for the award of attorney's fees, courts should look to that statutory framework alone to determine whether sanctions should be awarded. 33 Notwithstanding this language, the Supreme Court recently indicated that even if a statute governs the imposition of attorney's fees a court may resort to its inherent power to impose attorney's fees, as a sanction for bad faith conduct. This is plainly the case where the conduct at issue is not covered by one of the other sanctioning provisions. Chambers v. NASCO, Inc., 501 U.S. 32, 50, 111 S.Ct. 2123, 2135, 115 L.Ed.2d 27 (1991). In Chambers, the Court stated that while the inherent powers of the lower federal courts can be limited by statute and rule[,] ... we do not lightly assume that Congress has intended to depart from established principles such as the scope of a court's inherent power. Id. at 47, 111 S.Ct. at 2134 (internal quotations and citations omitted). Consequently, the Court concluded that, even in the face of a statute or a rule, a court's ability to levy attorney's fees as sanctions was not limited to situations covered by that rule or statute. The Court noted that in a situation where a party acts in bad faith, and when neither the statute nor the rules [is] up to the task [of sanctioning the conduct], the court may safely rely on its inherent power to assess attorney's fees. Id. at 50, 111 S.Ct. at 2136; see also United States v. Horn, 29 F.3d 754, 760 (1st Cir.1994) ([E]ven though a particular abuse is covered by a specific statute or rule, a court still may invoke its supervisory power to address the abuse if the remedial provision is inadequate to the task.); Amsted Indus. v. Buckeye Steel Castings Co., 23 F.3d 374, 378 (Fed.Cir.1994) ([S]tatutes governing sanctions do not displace the federal courts' inherent power to impose sanctions for bad faith and vexatious conduct.). 34 We recognize that there may be some tension between Chambers and Alyeska Pipeline regarding the ability of a court to exercise its equitable powers to assess attorney's fees for bad faith conduct in the face of a statute describing the circumstances in which fees may be assessed. See Chambers, 501 U.S. at 61, 111 S.Ct. at 2141 (Kennedy, J. dissenting) (noting the case permits the exercise of inherent sanctioning powers without prior recourse to controlling rules and statutes, thereby abrogating to federal courts the power to regulate fees and costs). Nevertheless, in the instant case, we need not concern ourselves with that tension. Simply, this is not a case in which the conduct of the Director rises to the level of abuse warranting the use of the court's inherent power to sanction. A court should invoke its inherent power to award attorney's fees only when it finds that fraud has been practiced upon it, or that the very temple of justice has been defiled. Chambers, 501 U.S. at 46, 111 S.Ct. at 2133; accord Amsted Indus., 23 F.3d at 379. 35 In the instant case, the ALJ commented that the Director's stance prior to the hearing was unreasonable because, despite contesting the 8(f) request of Boland Marine, the Director did not offer any evidence in opposition to the motion or pursue his position in opposition to the request for 8(f) relief at the formal hearing. Thus, the ALJ determined that the Director should be liable for Rihner's attorney's fees for institut[ing] proceedings in this case without reasonable grounds. While this is the appropriate standard for a federal court (and, as discussed above, only a court) to assess attorney's fees under Section 26 of LHWCA, it is not the equivalent to the finding that a fraud was perpetrated on the court or that very temple of justice has been defiled which is required for a court assess attorney's fees through its inherent powers. Accordingly, we do not find that the director's actions warrant the exercise of the court's equitable powers to award attorney's fees.
36 Finally, Boland Marine makes a cursory argument that the Special Fund should be held liable for attorney's fees under the provisions of the Equal Access to Justice Act (EAJA), 5 U.S.C. Sec. 504. We find their argument meritless. 37 The EAJA allows parties in certain adversary administrative proceedings to recover attorney's fees and costs from the government. Hodge v. United States Dep't of Justice, 929 F.2d 153, 154 (5th Cir.1991), cert. denied, --- U.S. ----, 112 S.Ct. 866, 116 L.Ed.2d 772 (1992). In order to receive such an award, certain procedures must be followed. Specifically, [a] party seeking an award of fees and other expenses shall, within thirty days of a final disposition in the adversary adjudication, submit to the agency an application which shows that the party is a prevailing party and is eligible to receive an award under [the] section.... 5 U.S.C. Sec. 504(a)(2). Here, there is no evidence in the record that Rihner, the party seeking fees, followed these procedures. Accordingly, we will not address whether attorney's fees should be awarded under the provisions of the EAJA in this case. 38