Service Employees International Union Local 32BJ v. Preeminent Protective Service ( 2021 )

United States Court of Appeals
FOR THE DISTRICT OF COLUMBIA CIRCUIT
Argued October 13, 2020 Decided May 18, 2021
No. 19-7157
SERVICE EMPLOYEES INTERNATIONAL UNION LOCAL 32BJ,
APPELLEE
v.
PREEMINENT PROTECTIVE SERVICES INC.,
APPELLANT
Appeal from the United States District Court
for the District of Columbia
(No. 1:17-cv-01679)
Eden Brown Gaines argued the cause and filed the briefs
for appellant.
Michael T. Anderson argued the cause for appellee. With
him on the brief was Arlus J. Stephens.
Before: KATSAS and RAO, Circuit Judges, and EDWARDS,
Senior Circuit Judge.
Opinion for the Court filed by Circuit Judge KATSAS.
KATSAS, Circuit Judge: This appeal arises from an
employment dispute between Preeminent Protective Services,
Inc. and the Service Employees International Union Local
2
32BJ (SEIU). The district court compelled the parties to
arbitrate, held Preeminent in contempt for failing to comply,
and awarded attorneys’ fees to the SEIU. Preeminent seeks to
challenge all three orders, but we lack jurisdiction to review the
arbitration and contempt orders, which were final decisions not
timely appealed. We affirm the fee award on the merits.
I
Preeminent provides security services in and around the
District of Columbia. When Preeminent took over a contract
at one site in the District, it refused to hire two guards who had
previously worked there. According to the SEIU, the refusal
violated a collective-bargaining agreement. The SEIU filed a
petition to compel arbitration of that claim. In May 2018, the
district court granted summary judgment to the SEIU and
ordered the parties to arbitrate.
Preeminent stalled the arbitration for over a year. Two
arbitrators recused themselves—one after Preeminent refused
to commit to paying its share of the arbitration fees and another
after Preeminent accused him of bias for seeking assurance of
payment. As delays mounted, the SEIU moved for contempt.
In November 2018, the district court ordered Preeminent to pay
half the cost of the arbitration but determined that a contempt
order would be premature. In January 2019, the court found
that Preeminent had acted in bad faith and awarded attorneys’
fees to the SEIU. In June 2019, the court found Preeminent in
civil contempt and imposed a $20,000 fine if Preeminent failed
to arbitrate within 30 days. The court also awarded further
costs and attorneys’ fees. After the contempt order, a third
arbitrator finally completed the arbitration.
3
In November 2019, the court entered an order fixing the
total amount of costs and attorneys’ fees at about $51,000.
Several days later, Preeminent filed a notice of appeal.
II
Preeminent seeks review of three orders: the May 2018
order compelling arbitration, the June 2019 contempt order,
and the November 2019 order fixing the amount of attorneys’
fees. Preeminent appealed neither the arbitration order nor the
contempt order within 30 days of their entry. Yet Congress has
provided that “no appeal shall bring any judgment, order or
decree in an action, suit or proceeding of a civil nature before
a court of appeals for review unless notice of appeal is filed,
within thirty days after the entry of such judgment, order or
decree.” 28 U.S.C. § 2107(a). This 30-day deadline is
jurisdictional. See Hamer v. Neighborhood Hous. Servs. of
Chicago, 138 S. Ct. 13, 20–21 (2017); Bowles v. Russell, 551
U.S. 205, 209–10 (2007). And it is fatal to the attempted appeal
of the arbitration and contempt orders.
A
First, we consider our jurisdiction to review the order
compelling arbitration. Section 16 of the Federal Arbitration
Act (FAA) specifies what kind of arbitration-related decisions
are appealable. It bars appeals from any “interlocutory order
… directing arbitration to proceed,” 9 U.S.C. § 16(b)(2), but
permits appeals from any “final decision with respect to an
arbitration,” id. § 16(a)(3). The SEIU contends that the May
2018 order was such a “final decision,” which Preeminent did
not timely appeal. Preeminent objects that the order was
interlocutory and thus merged into the final award of attorneys’
fees. See Ciralsky v. CIA, 355 F.3d 661, 668 (D.C. Cir. 2004).
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A decision is “final” under the FAA if it “ends the
litigation on the merits and leaves nothing more for the court to
do but execute the judgment.” Green Tree Fin. Corp.-Ala. v.
Randolph, 531 U.S. 79, 86 (2000) (cleaned up). If the district
court “has ordered the parties to proceed to arbitration, and
dismissed all the claims before it,” its decision is thus final. Id.
at 89.
Here, the order compelling arbitration was final because it
ended the litigation on the merits. The only claim before the
district court was one to compel arbitration, and the court
conclusively resolved it on summary judgment. See Cincinnati
Ins. Co. v. All Plumbing, Inc., 812 F.3d 153, 157 (D.C. Cir.
2016) (decisions granting summary judgment on all claims are
final). To be sure, the court did re-engage in the case during
the later contempt proceedings. But they arose only because
Preeminent flouted the final order compelling arbitration,
which did not open a new window for appealing it. See United
States v. Gewin, 759 F.3d 72, 81 (D.C. Cir. 2014) (“a contempt
proceeding does not open to reconsideration the legal or factual
basis of the order alleged to have been disobeyed and thus
become a retrial of the original controversy”) (quoting Maggio
v. Zeitz, 333 U.S. 56, 69 (1948)). Because Preeminent did not
timely appeal the order compelling arbitration, it cannot
challenge that order here.
B
Next, we consider our jurisdiction to review the civil
contempt order. Again, the question turns on whether
Preeminent could have appealed the order when it was entered.
We have held that “a civil contempt order against a party
in a pending proceeding is not appealable as a final order under
28 U.S.C. § 1291.” Byrd v. Reno, 180 F.3d 298, 302 (D.C. Cir.
5
1999). But “in all situations other than that of civil contempt
against a party to a pending proceeding,” contempt sanctions
“are deemed appealable as final decisions.” 15B C. Wright &
A. Miller, Federal Practice & Procedure § 3917 (2d ed. 1992).
Thus, contempt orders entered after final judgment are
themselves final and appealable. See, e.g., Gewin, 759 F.3d at
77; Armstrong v. Exec. Off. of the President, 1 F.3d 1274, 1289
(D.C. Cir. 1993). The contempt order here falls within this
category.
Preeminent argues that the contempt order was
interlocutory because its sanction was conditional and the fee
issues remained pending. But we have previously held that a
contempt order imposing conditional sanctions is final.
Armstrong, 1 F.3d at 1289; see Salazar ex rel. Salazar v.
District of Columbia, 602 F.3d 431, 436 (D.C. Cir. 2010). As
for the pending fee dispute, the Supreme Court has imposed a
“bright-line rule … that a decision on the merits is a ‘final
decision’ for purposes of § 1291 whether or not there remains
for adjudication a request for attorney’s fees attributable to the
case.” Budinich v. Becton Dickinson & Co., 486 U.S. 196,
202–03 (1988). Under the same reasoning, a post-judgment
contempt sanction does not lose its status as a final judgment
because related fee litigation remains pending.
Preeminent contends that Budinich, which involved an
award under a fee-shifting statute, does not govern sanctions
imposed for litigation misconduct. But the same rule applies
regardless of the source of the fee award. See Budinich, 486
U.S. at 201 (“the § 1291 effect of an unresolved issue of
attorney’s fees for the litigation at hand should not turn upon
the characterization of those fees by the statute or decisional
law that authorizes them”); Ray Haluch Gravel Co. v. Cent.
Pension Fund of Int’l Union of Operating Eng’rs, 571 U.S.
177, 185 (2014) (“Budinich made it clear that the uniform rule
6
there announced did not depend on whether the statutory or
decisional law authorizing a particular fee claim treated the
fees as part of the merits.”). The pendency of fee issues did not
prevent the contempt order from becoming final and appealable
when it was entered. And because Preeminent did not timely
appeal that order, it cannot challenge the order here.
III
Preeminent did timely appeal the November 2019 fee
award, which we must review on the merits. The district court
based the fee award on the familiar “lodestar” figure—the
number of hours worked by each SEIU lawyer multiplied by a
reasonable hourly rate for each lawyer. See, e.g., Pennsylvania
v. Del. Valley Citizens’ Council for Clean Air, 478 U.S. 546,
562–66 (1986). In determining the number of hours worked,
the district court considered only time spent responding to
Preeminent’s “sanctioned conduct” of delaying the arbitration.
SEIU v. Preeminent Protective Servs., Inc., 415 F. Supp. 3d 29,
34–35 (D.D.C. 2019). And when calculating reasonable hourly
rates, the court considered “prevailing market rates” for the
legal services provided, rather than the actual rates charged by
the lawyers involved. Id. at 35–37.
Preeminent raises three challenges to the fee award: First,
it was impermissibly punitive to use prevailing market rates as
opposed to actual rates. Second, the district court
miscalculated the prevailing market rates. Third, the court
should have lowered the award to account for Preeminent’s
inability to pay. We reject each contention.
A
The district court’s decision to use prevailing market rates
to calculate the fee award rested on our decision in Save Our
7
Cumberland Mountains, Inc. v. Hodel, 857 F.2d 1516 (D.C.
Cir. 1988) (en banc). That case presented the question how to
calculate an appropriate award under the fee-shifting provision
of the Surface Mining Control and Reclamation Act. See id. at
1517. The attorneys in question charged below-market rates to
support what they viewed as “good causes.” Id. at 1518. We
held that the award should reflect “prevailing market rates” for
the services provided, “rather than the actual rates” charged by
the attorneys. Id. at 1521. We have repeatedly applied
Cumberland Mountains to uphold the use of market rates in
determining appropriate awards under statutory fee-shifting
provisions. See, e.g., Bd. of Trs. of the Hotel & Rest. Emps.
Local 25 v. JPR, Inc., 136 F.3d 794, 801–08 (D.C. Cir. 1998)
(ERISA); Covington v. District of Columbia, 57 F.3d 1101,
1106–12 (D.C. Cir. 1995) (42 U.S.C. § 1988).
Preeminent seeks to distinguish awards under fee-shifting
statutes from ones resting on a district court’s inherent power
to sanction for litigation-related misconduct. Preeminent cites
Goodyear Tire & Rubber Co. v. Haeger, 137 S. Ct. 1178
(2017), which held that fee awards imposed for misconduct
“must be compensatory rather than punitive in nature.” Id. at
1186. Preeminent reasons that if awards reflect rates above
those actually charged, they go beyond merely providing
compensation. Preeminent reads Goodyear to deem such
awards to be punitive, thus requiring the procedural protections
afforded for adjudications of criminal contempt. See id. (if
“criminal-type protections are missing, a court’s shifting of
fees is limited to reimbursing the victim”).
Goodyear does not reach that far. The case presented no
question whether use of a prevailing market rate above the
discounted actual rate is better characterized as compensatory
or punitive. Instead, the Court considered whether a district
court could use its inherent sanctioning power to shift fees for
8
litigation tasks not caused by party misconduct at all. See 137
S. Ct. at 1187. The Court answered no but nonetheless stressed
that, even in the context of sanctions, “[a] district court has
broad discretion to calculate fee awards.” Id. at 1184.
Goodyear thus provides no basis for concluding that the use of
market rates to calculate fee awards—a common if not
ubiquitous practice in civil litigation—requires full-blown
criminal process.
Our holding is narrow. We do not foreclose the possible
use of discounted actual rates to calculate fee awards in the
context of sanctions for litigation misconduct. Perhaps actual
rates make more sense in the absence of fee-shifting statutes
designed “to attract competent counsel.” Cumberland
Mountains, 857 F.2d at 1521 (cleaned up). Or perhaps actual
rates make more sense because inherent powers “should be
exercised with especial ‘restraint and discretion.’” Goodyear,
137 S. Ct. at 1186 n.5 (quoting Roadway Express, Inc. v. Piper,
447 U.S. 752, 764 (1980)). We do not decide these questions.
Instead, we hold only that they do not implicate the line
between civil and criminal contempt, which is enough to reject
the argument as framed by Preeminent.
B
Preeminent next argues that the district court erred in
calculating the prevailing market rate, which is the rate charged
by attorneys of similar skill and experience in the relevant legal
community. See Covington, 57 F.3d at 1109. Fee matrices
“provide a useful starting point” in determining the market rate.
Id. One of them—the so-called “Laffey matrix”—consists of
rates compiled by the U.S. Attorney’s Office for the District of
Columbia for use in Washington, D.C. See id. Other relevant
evidence might include attorney affidavits, as well as “recent
fees awarded by the courts … to attorneys with comparable
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qualifications handling similar cases.” Id. We review the
determination of an appropriate hourly rate only for abuse of
discretion. See id. at 1110.
The district court here used the rates set forth in the Laffey
matrix, which substantially exceeded the rates charged by the
SEIU’s outside counsel. But as the court explained, counsel
discounted their rates because the SEIU, a non-profit
organization, could not afford market rates. Moreover, the
court found “ample evidence that the Union’s outside counsel
are skilled attorneys who could command” market rates “but
chose to discount their services” for the union. SEIU, 415 F.
Supp. 3d at 36. This evidence included affidavits setting forth
the attorneys’ academic credentials, judicial clerkships,
significant representations, other professional experience, and
orders approving fee awards for them at the Laffey rates in
similar cases. Preeminent’s only contrary evidence was a
single declaration by a former official in a different union. He
attested that the usual market rate for union attorneys was
between $200 and $350 an hour, but without specifying
whether that was a discounted rate and without providing any
corroborating evidence. On this record, the district court did
not abuse its discretion in concluding that the SEIU’s attorneys
could command the market rates in the Laffey matrix.1
1
The district court saw no distinctive concern with awarding
market rates to the SEIU’s in-house counsel. We have held that
ethical rules may restrict the use of market rates for in-house counsel
to unions and other organizations that engage in activities beyond
simply providing legal services. Am. Fed’n of Gov’t Emps. v. FLRA,
944 F.2d 922, 934–37 (D.C. Cir. 1991). We cannot fault the court
for overlooking that point, though, for Preeminent raised it neither
below nor here.
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C
Finally, Preeminent argues that the district court erred in
failing to reduce the fee award based on its asserted inability to
pay. The circuits are divided on whether courts, in imposing
compensatory litigation sanctions, must consider the
sanctioned party’s asserted inability to pay. Compare Martin
v. Automobili Lamborghini Exclusive, Inc., 307 F.3d 1332,
1337 (11th Cir. 2002) (yes), with Shales v. Gen. Chauffeurs,
Local Union No. 330, 557 F.3d 746, 749–50 (7th Cir. 2009)
(no). We need not address this question, for we agree with the
district court that Preeminent did not show an inability to pay
the sanction imposed here.
In support of its request for a reduced sanction, Preeminent
submitted evidence of operating and other losses and the
termination of its largest contract. But as the district court
noted, the losses give no sense of Preeminent’s balance sheet
or net worth, and the expired contract says nothing about other
contracts that might take its place. See Lakeland Bus Lines,
Inc. v. NLRB, 347 F.3d 955, 962 (D.C. Cir. 2003) (“business
losses are not equivalent to claims of inability to pay”).
Moreover, the SEIU presented its own evidence that
Preeminent had active contracts with the federal government
and the District of Columbia worth over $2.5 million, that it
was also under contract to provide security for Ravens and
Orioles games in Baltimore, and that Preeminent’s website
claimed over 200 clients served. Based on this evidence, the
district court permissibly concluded that Preeminent failed to
show an inability to pay the $51,000 award of fees and costs.
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IV
We dismiss Preeminent’s appeal of the arbitration and
contempt orders, and we affirm the fee award on the merits.
So ordered.