Court Opinion

ID: 9427758
Source: CourtListenerOpinion
Date Created: 2023-08-02 23:21:48.365386+00
Date Added: 2024-06-11T17:23:09.503999
License: Public Domain

Mr. Justice Rehnquist,
dissenting.
In disposing of this case on the merits, the Court gives short shrift to the question of appealability, a threshold issue by no means free from doubt even under the most generous view of our decided cases. I have concluded from these cases, viewed in light of the longstanding policy of the federal judicial system against piecemeal appeals, that the judgment now before us lacks the finality required by 28 U. S. C. § 1291, and I would therefore remand this case to the Court of Appeals with instructions to dismiss Boeing’s appeal. Exhibit “A” of the shortsightedness of the Court’s sloughing off the issue of appealability as it does is the fact that the parties are obliged to refer to the present case not merely as "Van Gemert,” but as “Van Gemert III.” This case, which began in March 1966, has been appealed to the Court of Appeals for the Second Circuit three times, and now, after 14 years of litigation, this Court affirms the third decision of the Court of Appeals.
There is no doubt as to the appealability of the first of the three decisions of the District Court, since it dismissed *483respondents’ complaint with prejudice. The second appeal was also by respondents from a determination by the District Court that respondents were not entitled to any prejudgment interest; this decision was also reversed by the Court of Appeals. Following this second remand, the District Court entered a “Judgment and Order” stating that Boeing was liable to respondent class in the amount of $3,289,359 plus interest, ordering Boeing to pay this amount into escrow, and indicating that respondents’ attorneys could recover their fees “out of said total amount of this judgment.” At this point, Boeing appealed for the first time, asserting that respondents’ attorneys should collect their fees only out of that portion of the fund actually claimed. As noted by the Court, the Court of Appeals en banc affirmed this aspect of the District Court’s order.
The novelty of the question posed by Boeing is attributable in large part to the historic prevalence of the “American rule,” which generally prevents a court from requiring the losing party to pay the prevailing party’s attorney’s fees. In recent years, however, the proliferation of class actions and the enactment of various statutes modifying the American rule1 have multiplied the opportunities for recovering attorney’s fees and have simultaneously spawned a great deal of litigation over assessment of those fees. These developments lend added significance to the procedural implications of our decisions in this area.
In the typical American-rule case, the federal judicial system, by statute and rule, has generally made a final order a prerequisite to appellate review. A judgment is not considered final, and therefore appealable, until the district court has completed all but the most ministerial acts. Arguably, *484litigation necessitating an award of attorney's fees should be treated no differently. It would be quite reasonable, I believe, to postpone appeal in such cases until the District Court had entered judgment not only on liability and damages, but also on whether and in what amount attorney’s fees will be assessed. Cf. Liberty Mutual Ins. Co. v. Wetzel, 424 U. S. 737 (1976) (dismissing appeal from judgment of liability in Title VII action under Civil Rights Act of 1964 where requests for injunction, damages, and attorney’s fees remained pending in the District Court).
For better or for worse, the little precedent that exists in this area has tended to deviate from such a sensible approach. This deviation has been particularly noticeable when the right to attorney’s fees has been based on the existence of a “common fund” such as that discussed in the opinion of the Court. Beginning with Trustees v. Greenough, 105 U. S. 527 (1882), the Court has evidenced a willingness to treat the division of the common fund as a separate piece of litigation for purposes of appeal. In Greenough, for example, this Court entertained an appeal from an order allowing a successful plaintiff bondholder to recover attorney’s fees even though the original action remained pending in the trial court for purposes of administration. The Court stated that the award of fees, “though incidental to the [original] cause,” was sufficiently “collateral,” “distinct,” and “independent,” to be appealable in its own right. Id., at 531.
From Greenough it was an analytically short, though temporally long, step .to the decision of the Court of Appeals for the Seventh Circuit in Swanson v. American Consumer Industries, Inc., 517 F. 2d 555 (1975). In that shareholders’ derivative suit, the District Court entered judgment in favor of plaintiffs and awarded damages. Seven months later it granted attorney’s fees to prevailing counsel under an “extension” of Greenough. 517 F. 2d, at 560. Two notices of appeal were filed from this latter order, one on behalf of *485plaintiffs challenging the amount of damages and the other on behalf of plaintiffs and their attorneys challenging the amount of attorney’s fees. The Court of Appeals dismissed the appeal on the question of damages as untimely, reasoning that the District Court’s determination of damages was final, and therefore appealable, upon entry of the first order.
Greenough and Swanson represent two sides of the same coin. If an attorney’s attempt to secure fees from the common fund is “collateral” enough to support an independent appeal despite the continued pendency of the main litigation,2 then the judgment establishing the fact and amount of the defendant’s liability in the main litigation should also support a separate appeal despite the continued pendency of a dispute over division of the fund between the beneficiaries and their attorneys.3
*486Implicit in this bifurcated approach to appealability in common-fund cases is a strict bifurcation of the issues that can be litigated in either appeal. Thus, this Court would not have permitted the trustees in Greenough to contest in their appeal the merits of the dispute that generated the common fund. Nor, I venture, would the Court of Appeals for the Seventh Circuit have allowed a timely appeal on the issue *487of damages to challenge the amount of attorney’s fees assessed, an issue that was the subject of a later, separate appeal. In each case, appellant would be powerless to reach backward or forward from the “collateral” proceeding to the “merits” of the lawsuit.
But this is exactly what the Court permits Boeing to do in this case. Assuming, as seems likely, that the Greenough/ Swanson model of bifurcated appealability will prevail, I have no doubt that Boeing could have appealed, at this stage of the proceedings, from the judgment that it was liable to the plaintiff class in the amount of $3,289,359 plus interest. But as the Court concedes, indeed stresses, Boeing has not challenged either the fact of liability or the amount. See ante, at 479-480, n. 5. Such an appeal must have appeared futile in light of Van Gemert I, 520 F. 2d 1373 (1975), which established liability, and Van Gemert II, 553 F. 2d 812 (1977), which established the precise amount of damages payable to each member of the class. Instead, Boeing relies on the “finality” of the District Court’s judgment on the merits, the Swanson side of the coin, to prosecute an appeal on the division of the common fund, the Greenough side of the coin. As noted above, such crisscrossing of contentions is inconsistent with a bifurcated approach to appellate litigation in common-fund cases.
Even if Boeing is to be allowed to appeal under the “collateral order” rubric in this case, the order from which it appealed was not final even under that doctrine. Greenough itself noted that the trustees brought their appeal from “a final determination of the particular matter arising upon the complainant’s petition for allowances. . . .” 105 U. S., at 531 (emphasis added). Similarly, Cohen v. Beneficial Industrial Loan Corp., 337 U. S. 541 (1949), which formalized the “collateral order” doctrine presaged in Greenough, requires that the order appealed from be the “final disposition of a claimed right which is not an ingredient of the cause of action and does not require consideration with it.” 337 U. S., at 546-547 (em*488phasis added). In this case, however, that portion of the litigation involving the attorney’s fees is still in its most nascent phase. We do not know, for example, when these fees are going, to be assessed, how they will be calculated, or what will become of that portion of the fund that is neither claimed nor paid out in fees.
Nowhere does this lack of finality manifest itself more than in the Court’s holding that Boeing has standing to litigate over the division of the spoils even though it may not have any continuing interest whatsoever in the money held in escrow.4 In allowing Boeing to base its appeal on a “colorable claim for the return of ![any] excess,” ante, at 481, n. 7, the Court comes dangerously close to assuming in a single phrase that Boeing has standing. At best this analysis is unnecessary, since final settlement of the conflicting claims to the fund would establish Boeing’s standing once and for all. At worst it represents a dangerous dilution of the standing requirement. In any event, the anticipatory nature of the analysis necessary to reach the merits of Boeing’s appeal buttresses the notion that the Court is using a dubious technique to gloss over a lack of finality.
The procedural implications of our decision today will, I fear, have a more far-reaching effect than the decision on the *489propriety of the application of the common-fund rule for allowing fees. Were I an attorney representing a party in common-fund litigation at a juncture similar to that encountered by Boeing prior to its appeal, I would be quite confused about the propriety of an immediate appeal, either on the merits of the main cause of action or on the details of an impending assessment of fees. Fearful that, by waiting for a “final order” in the strict sense, I might forfeit my right to appeal certain aspects of the litigation, cf. Swanson v. American Consumer Industries, Inc., I probably would err in favor of filing an immediate appeal on whatever aspects of the case were bothersome at that time.5 From the standpoint of the federal appellate courts, such uncertainty can only result in numerous interlocutory, precautionary appeals.
In sum, I believe that the District Court’s order on the division of the “common fund” lacks the finality necessary to support Boeing’s appeal, and would remand this matter to the Court of Appeals with instructions to dismiss the appeal. I therefore dissent.

 See, e. g., 5 U. S. C. § 552 (a) (4) (E) (permitting award of attorney’s fees in actions brought under Freedom of Information Act); 15 U. S. C. § 1691e (d) (suits under Equal Credit Opportunity Act); 42 U. S. C. § 2000e-5 (k) (Title VII suits under Civil Rights Act of 1964); 42 U. S. C. § 1988 (civil-rights suits).

 See also Sprague v. Ticonic National Bank, 307 U. S. 161, 169 (1939) (claim for fees out of common fund “sufficiently different” from parent claim to support separate appeal); Preston v. United States, 284 F. 2d 514 (CA9 1960) (attorney’s appeal from District Court’s refusal to award fees on common-fund theory); Angoff v. Goldfine, 270 F. 2d 185 (CA1 1959) (attorney’s appeal from District Court’s refusal to grant him fees out of settlement fund).

 Outside the common-fund context, the consensus in the lower courts over the permissibility of bifurcated appeals dissolves. Two Courts of Appeals, including the Seventh Circuit, áppear to have carried the Greenough/Swanson approach over into cases where one party recovers attorney’s fees directly from an opposing party. In Hidell v. International Diversified Investments, 520 F. 2d 529 (CA7 1975), for example/appellee had brought suit under the securities laws. The District Court entered a judgment granting appellee an injunction, damages, and “reasonable” attorney’s fees. The Court of Appeals, citing Swanson, allowed the defendant to appeal the merits of the dispute prior to the actual determination of those fees.
In Lowe v. Pate Stevedoring Co., 595 F. 2d 256, 257 (CA5 1979), the plaintiff had prevailed on the merits of an unfair-representation suit against his union. The District Court granted plaintiff’s attorney fees as the result of the union’s “bad faith,” but denied plaintiff’s attorney a lien against the union to secure his fee. The Court of Appeals, relying on *486Swanson, Preston v. United States, supra, and Cohen v. Beneficial Industrial Loan Corp., 337 U. S. 541 (1949), allowed the attorney to prosecute his appeal even though his client’s prayer for reinstatement remained pending in the District Court. To the extent that the Fifth Circuit treats such an appeal as severable from the main cause of action, it might also treat an appeal from the main litigation as severable from the attorney’s-fees proceeding.
Two other Courts of Appeals have rejected the bifurcated model of appealability in non-common-fund cases. In Richerson v. Jones, 551 F. 2d 918, 922 (1977), the Third Circuit confronted an appeal by the United States from a judgment of liability in a discrimination suit. The District Court’s order had awarded plaintiff promotion, backpay, and interest, but had not yet ruled on plaintiff's request for attorney’s fees. In holding that the United States had not appealed from a final order, the Court of Appeals relied upon Liberty Mutual Ins. Co. v. Wetzel, 424 U. S. 737 (1976), and distinguished Swanson as a case where plaintiff was not seeking to collect fees from his adversary.
Employing similar analysis, the Second Circuit twice has held that, where the obligation to pay an opposing party’s attorney’s fees arises out of an agreement that is also the subject of the original litigation, the attorney’s-fees issue is not sufficiently collateral to allow appeal from a judgment on the merits prior to a determination of the attorney’s fees. See Aetna Casualty & Surety Co. v. Giesow, 412 F. 2d 468 (1969) (suit for breach of subordination agreement); Union Tank Car Co. v. Isbrandtsen, 416 F. 2d 96 (1969) (suit to enforce settlement agreement). Judge Friendly has attempted to reconcile Giesow with the common-fund cases. See Cinerama, Inc. v. Sweet Music, S. A., 482 F. 2d 66, 70, n. 2 (CA2 1973). See also Union Tank Car Co. v. Isbrandtsen, supra, at 97.
This overview is offered only to illustrate the complexity of this issue. Perhaps all these cases-can be reconciled in some principled manner; if not, it is only a matter of time before this Court will have to try its hand at an issue that obviously has been perplexing other federal courts. In the meantime, I believe that we should tread quite carefully in this area.

 Boeing’s only interest in the funds now held in escrow is its assertion that the unclaimed portion of the judgment eventually will revert to it. But respondents have argued with some force that the unclaimed funds will eventually escheat to the State of New York. See N. Y. Aband. Prop. Law § 1200 (McKinney 1944). In fact, the Attorney General of New York already has presented such a claim to the District Court. See Brief 'for Respondents filed by Stuart D. Wechsler 23. If the Attorney General and respondents are correct, then Boeing has no more standing to press its appeal than would a losing defendant have standing to contest the division of an award between plaintiff and his attorney pursuant to a contingent-fee arrangement.
Although respondents have not challenged Boeing’s standing, we are obligated to consider the issue sua sponte, if necessary. See, e. g., Juidice v. Vail, 430 U. S. 327, 331 (1977).

 The potential for confusion is even greater outside the context of common-fund litigation. See n. 3, supra.