Baker Botts L.L.P. v. ASARCO LLC

(Slip Opinion) OCTOBER TERM, 2014 1
Syllabus
NOTE: Where it is feasible, a syllabus (headnote) will be released, as is
being done in connection with this case, at the time the opinion is issued.
The syllabus constitutes no part of the opinion of the Court but has been
prepared by the Reporter of Decisions for the convenience of the reader.
See United States v. Detroit Timber & Lumber Co., 200 U.S. 321, 337.
SUPREME COURT OF THE UNITED STATES
Syllabus
BAKER BOTTS L.L.P. ET AL. v. ASARCO LLC
CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR
THE FIFTH CIRCUIT
No. 14–103. Argued February 25, 2015—Decided June 15, 2015
Respondent ASARCO LLC hired petitioner law firms pursuant to
§327(a) of the Bankruptcy Code to assist it in carrying out its duties
as a Chapter 11 debtor in possession. See 11 U.S. C. §327(a). When
ASARCO emerged from bankruptcy, the law firms filed fee applica-
tions requesting fees under §330(a)(1), which permits bankruptcy
courts to “award . . . reasonable compensation for actual, necessary
services rendered by” §327(a) professionals. ASARCO challenged the
applications, but the Bankruptcy Court rejected ASARCO’s objections
and awarded the law firms fees for time spent defending the applica-
tions. ASARCO appealed to the District Court, which held that the
law firms could be awarded fees for defending their fee applications.
The Fifth Circuit reversed, holding that §330(a)(1) did not authorize
fee awards for defending fee applications.
Held: Section §330(a)(1) does not permit bankruptcy courts to award
fees to §327(a) professionals for defending fee applications. Pp. 3–13.
(a) The American Rule provides the “ ‘basic point of reference’ ” for
awards of attorney’s fees: “ ‘Each litigant pays his own attorney’s fees,
win or lose, unless a statute or contract provides otherwise.’ ” Hardt
v. Reliance Standard Life Ins. Co., 560 U.S. 242, 252–253. Because
the rule is deeply rooted in the common law, see, e.g., Arcambel v.
Wiseman, 3 Dall. 306, this Court will not deviate from it “ ‘absent ex-
plicit statutory authority,’ ” Buckhannon Board & Care Home, Inc. v.
West Virginia Dept. of Health and Human Resources, 532 U.S. 598,
602. Departures from the American Rule have been recognized only
in “specific and explicit provisions,” Alyeska Pipeline Service Co. v.
Wilderness Society, 421 U.S. 240, 260, usually containing language
that authorizes the award of “a reasonable attorney’s fee,” “fees,” or
“litigation costs,” and referring to a “prevailing party” in the context
2 BAKER BOTTS L.L.P. v. ASARCO LLC
Syllabus
of an adversarial “action,” see generally Hardt, supra, at 253, and nn.
3–7. Pp. 3–4.
(b) Congress did not depart from the American Rule in §330(a)(1)
for fee-defense litigation. Section 327(a) professionals are hired to
serve an estate’s administrator for the benefit of the estate, and
§330(a)(1) authorizes “reasonable compensation for actual, necessary
services rendered.” The word “services” ordinarily refers to “labor
performed for another,” Webster’s New International Dictionary
2288. Thus, the phrase “ ‘reasonable compensation for services ren-
dered’ necessarily implies loyal and disinterested service in the inter-
est of” a client, Woods v. City Nat. Bank & Trust Co. of Chicago, 312
U.S. 262, 268. Time spent litigating a fee application against the
bankruptcy estate’s administrator cannot be fairly described as “labor
performed for”—let alone “disinterested service to”—that administra-
tor. Had Congress wished to shift the burdens of fee-defense litiga-
tion under §330(a)(1), it could have done so, as it has done in other
Bankruptcy Code provisions, e.g., §110(i)(1)(C). Pp. 4–7.
(c) Neither the law firms nor the United States, as amicus curiae,
offers a persuasive theory for why §330(a)(1) should override the
American Rule in this context. Pp. 7–13.
(1) The law firms’ view—that fee-defense litigation is part of the
“services rendered” to the estate administrator—not only suffers from
an unnatural interpretation of the term “services rendered,” but
would require a particularly unusual deviation from the American
Rule, as it would permit attorneys to be awarded fees for unsuccess-
fully defending fee applications when most fee-shifting provisions
permit awards only to “a ‘prevailing party,’ ” Hardt, supra, at 253.
Pp. 7–8.
(2) The Government’s argument is also unpersuasive. Its theo-
ry—that fees for fee-defense litigation must be understood as a com-
ponent of the “reasonable compensation for [the underlying] services
rendered” so that compensation for the “actual . . . services rendered”
will not be diluted by unpaid time spent litigating fees—cannot be
reconciled with the relevant text. Section 330(a)(1) does not author-
ize courts to award “reasonable compensation,” but “reasonable com-
pensation for actual, necessary services rendered,” and the Govern-
ment properly concedes that litigation in defense of a fee application
is not a “service.” And §330(a)(6), which presupposes compensation
“for the preparation of a fee application,” does not suggest that time
spent defending a fee application must also be compensable. Com-
missioner v. Jean, 496 U.S. 154, distinguished.
The Government’s theory ultimately rests on the flawed policy ar-
gument that a “judicial exception” is needed to compensate fee-
defense litigation and safeguard Congress’ aim of ensuring that tal-
Cite as: 576 U. S. ____ (2015) 3
Syllabus
ented attorneys take on bankruptcy work. But since no attorneys are
entitled to such fees absent express statutory authorization, requir-
ing bankruptcy attorneys to bear the costs of their fee-defense litiga-
tion under §330(a)(1) creates no disincentive to bankruptcy practice.
And even if this Court believed that uncompensated fee-defense liti-
gation would fall particularly hard on the bankruptcy bar, it has no
“roving authority . . . to allow counsel fees . . . whenever [it] might
deem them warranted,” Alyeska Pipeline, supra, at 260. Pp. 8–13.
751 F.3d 291, affirmed.
THOMAS, J., delivered the opinion of the Court, in which ROBERTS,
C. J., and SCALIA, KENNEDY, and ALITO, JJ., joined, and in which SO-
TOMAYOR, J., joined as to all but Part III–B–2. SOTOMAYOR, J., filed an
opinion concurring in part and concurring in the judgment. BREYER, J.,
filed a dissenting opinion, in which GINSBURG and KAGAN, JJ., joined.
Cite as: 576 U. S. ____ (2015) 1
Opinion of the Court
NOTICE: This opinion is subject to formal revision before publication in the
preliminary print of the United States Reports. Readers are requested to
notify the Reporter of Decisions, Supreme Court of the United States, Wash-
ington, D. C. 20543, of any typographical or other formal errors, in order
that corrections may be made before the preliminary print goes to press.
SUPREME COURT OF THE UNITED STATES
_________________
No. 14–103
_________________
BAKER BOTTS L.L.P. ET AL., PETITIONERS v.
ASARCO LLC
ON WRIT OF CERTIORARI TO THE UNITED STATES COURT OF
APPEALS FOR THE FIFTH CIRCUIT
[June 15, 2015]
JUSTICE THOMAS delivered the opinion of the Court.
Section 327(a) of the Bankruptcy Code allows bank-
ruptcy trustees to hire attorneys, accountants, and other
professionals to assist them in carrying out their statutory
duties. 11 U.S. C. §327(a). Another provision, §330(a)(1),
states that a bankruptcy court “may award . . . reasonable
compensation for actual, necessary services rendered by”
those professionals. The question before us is whether
§330(a)(1) permits a bankruptcy court to award attorney’s
fees for work performed in defending a fee application in
court. We hold that it does not and therefore affirm the
judgment of the Court of Appeals.
I
In 2005, respondent ASARCO LLC, a copper mining,
smelting, and refining company, found itself in financial
trouble. Faced with falling copper prices, debt, cash flow
deficiencies, environmental liabilities, and a striking work
force, ASARCO filed for Chapter 11 bankruptcy. As in
many Chapter 11 bankruptcies, no trustee was appointed
and ASARCO—the “ ‘debtor in possession’ ”—administered
the bankruptcy estate as a fiduciary for the estate’s credi-
2 BAKER BOTTS L.L.P. v. ASARCO LLC
Opinion of the Court
tors. §§1101(1), 1107(a).
Relying on §327(a) of the Bankruptcy Code, which per-
mits trustees to employ attorneys and other professionals
to assist them in their duties, ASARCO obtained the
Bankruptcy Court’s permission to hire two law firms,
petitioners Baker Botts L.L.P. and Jordan, Hyden, Wom-
ble, Culbreth & Holzer, P.C., to provide legal representa-
tion during the bankruptcy.1 Among other services, the
firms prosecuted fraudulent-transfer claims against
ASARCO’s parent company and ultimately obtained a
judgment against it worth between $7 and $10 billion.
This judgment contributed to a successful reorganization
in which all of ASARCO’s creditors were paid in full. After
over four years in bankruptcy, ASARCO emerged in 2009
with $1.4 billion in cash, little debt, and resolution of its
environmental liabilities.
The law firms sought compensation under §330(a)(1),
which provides that a bankruptcy court “may award . . .
reasonable compensation for actual, necessary services
rendered by” professionals hired under §327(a). As re-
quired by the bankruptcy rules, the two firms filed fee
applications. Fed. Rule Bkrtcy. Proc. 2016(a). ASARCO,
controlled once again by its parent company, challenged
the compensation requested in the applications. After
extensive discovery and a 6-day trial on fees, the Bank-
ruptcy Court rejected ASARCO’s objections and awarded
the firms approximately $120 million for their work in the
bankruptcy proceeding plus a $4.1 million enhancement
for exceptional performance. The court also awarded the
firms over $5 million for time spent litigating in defense of
their fee applications.
——————
1 Although§327(a) directly applies only to trustees, §1107(a) gives
Chapter 11 debtors in possession the same authority as trustees to
retain §327(a) professionals. For the sake of simplicity, we refer to
§327(a) alone throughout this opinion.
Cite as: 576 U. S. ____ (2015) 3
Opinion of the Court
ASARCO appealed various aspects of the award to the
District Court. As relevant here, the court held that the
firms could recover fees for defending their fee application.
The Court of Appeals for the Fifth Circuit reversed. It
reasoned that the American Rule—the rule that each side
must pay its own attorney’s fees—“applies absent explicit
statutory . . . authority” to the contrary and that “the Code
contains no statutory provision for the recovery of attor-
ney fees for defending a fee application.” In re ASARCO,
L.L.C., 751 F.3d 291, 301 (2014) (internal quotation
marks omitted). It observed that §330(a)(1) provides “that
professional services are compensable only if they are
likely to benefit a debtor’s estate or are necessary to case
administration.” Id., at 299. Because “[t]he primary
beneficiary of a professional fee application, of course, is
the professional,” compensation for litigation defending
that application does not fall within §330(a)(1). Ibid.
We granted certiorari, 573 U. S. ___ (2014), and now
affirm.
II
A
“Our basic point of reference when considering the
award of attorney’s fees is the bedrock principle known as
the American Rule: Each litigant pays his own attorney’s
fees, win or lose, unless a statute or contract provides
otherwise.” Hardt v. Reliance Standard Life Ins. Co., 560
U.S. 242, 252–253 (2010) (internal quotation marks omit-
ted). The American Rule has roots in our common law
reaching back to at least the 18th century, see Arcambel v.
Wiseman, 3 Dall. 306 (1796), and “[s]tatutes which invade
the common law are to be read with a presumption favor-
ing the retention of long-established and familiar [legal]
principles,” Fogerty v. Fantasy, Inc., 510 U.S. 517, 534
(1994) (internal quotation marks and ellipsis omitted). We
consequently will not deviate from the American Rule
4 BAKER BOTTS L.L.P. v. ASARCO LLC
Opinion of the Court
“ ‘absent explicit statutory authority.’ ” Buckhannon Board
& Care Home, Inc. v. West Virginia Dept. of Health and
Human Resources, 532 U.S. 598, 602 (2001) (quoting Key
Tronic Corp. v. United States, 511 U.S. 809, 814 (1994)).
We have recognized departures from the American Rule
only in “specific and explicit provisions for the allowance of
attorneys’ fees under selected statutes.” Alyeska Pipeline
Service Co. v. Wilderness Society, 421 U.S. 240, 260
(1975). Although these “[s]tatutory changes to [the Amer-
ican Rule] take various forms,” Hardt, supra, at 253, they
tend to authorize the award of “a reasonable attorney’s
fee,” “fees,” or “litigation costs,” and usually refer to a
“prevailing party” in the context of an adversarial “action,”
see, e.g., 28 U.S. C. §2412(d)(1)(A); 42 U.S. C. §§1988(b),
2000e–5(k); see generally Hardt, supra, at 253, and nn. 3–
7 (collecting examples).
The attorney’s fees provision of the Equal Access to
Justice Act offers a good example of the clarity we have
required to deviate from the American Rule. See 28
U.S. C. §2412(d)(1)(A). That section provides that “a
court shall award to a prevailing party other than the
United States fees and other expenses . . . incurred by that
party in any civil action (other than cases sounding in tort)
. . . brought by or against the United States” under certain
conditions. Ibid. As our decision in Commissioner v.
Jean, 496 U.S. 154 (1990), reveals, there could be little
dispute that this provision—which mentions “fees,” a
“prevailing party,” and a “civil action”—is a “fee-shifting
statut[e]” that trumps the American Rule, id., at 161.
B
Congress did not expressly depart from the American
Rule to permit compensation for fee-defense litigation by
professionals hired to assist trustees in bankruptcy pro-
ceedings. Section 327(a) authorizes the employment of
such professionals, providing that a “trustee, with the
Cite as: 576 U. S. ____ (2015) 5
Opinion of the Court
court’s approval, may employ one or more attorneys, ac-
countants, appraisers, auctioneers, or other professional
persons, that do not hold or represent an interest adverse
to the estate, and that are disinterested persons, to repre-
sent or assist [him] in carrying out [his] duties.” In other
words, §327(a) professionals are hired to serve the admin-
istrator of the estate for the benefit of the estate.
Section 330(a)(1) in turn authorizes compensation for
these professionals as follows:
“After notice to the parties in interest and the United
States Trustee and a hearing, and subject to sec-
tions 326, 328, and 329, the court may award to a
trustee, a consumer privacy ombudsman appointed
under section 332, an examiner, an ombudsman ap-
pointed under section 333, or a professional person
employed under section 327 or 1103—
“(A) reasonable compensation for actual, necessary
services rendered by the trustee, examiner, ombuds-
man, professional person, or attorney and by any
paraprofessional person employed by any such person;
and
“(B) reimbursement for actual, necessary expenses.”
(Emphasis added.)
This text cannot displace the American Rule with respect
to fee-defense litigation. To be sure, the phrase “reason-
able compensation for actual, necessary services rendered”
permits courts to award fees to attorneys for work done to
assist the administrator of the estate, as the Bankruptcy
Court did here when it ordered ASARCO to pay roughly
$120 million for the firms’ work in the bankruptcy pro-
ceeding. No one disputes that §330(a)(1) authorizes an
award of attorney’s fees for that kind of work. See Alyeska
Pipeline, supra, at 260, and n. 33 (listing §330(a)(1)’s
predecessor as an example of a provision authorizing
attorney’s fees). But the phrase “reasonable compensation
6 BAKER BOTTS L.L.P. v. ASARCO LLC
Opinion of the Court
for actual, necessary services rendered” neither specifi-
cally nor explicitly authorizes courts to shift the costs of
adversarial litigation from one side to the other—in this
case, from the attorneys seeking fees to the administrator
of the estate—as most statutes that displace the American
Rule do.
Instead, §330(a)(1) provides compensation for all §327(a)
professionals—whether accountant, attorney, or auc-
tioneer—for all manner of work done in service of the
estate administrator. More specifically, §330(a)(1) allows
“reasonable compensation” only for “actual, necessary
services rendered.” (Emphasis added.) That qualification
is significant. The word “services” ordinarily refers to
“labor performed for another.” Webster’s New Interna-
tional Dictionary 2288 (def. 4) (2d ed. 1934); see also
Black’s Law Dictionary 1607 (3d ed. 1933) (“duty or labor
to be rendered by one person to another”); Oxford English
Dictionary 517 (def. 19) (1933) (“action of serving, helping
or benefiting; conduct tending to the welfare or advantage
of another”).2 Thus, in a case addressing §330(a)’s prede-
cessor, this Court concluded that the phrase “ ‘reasonable
compensation for services rendered’ necessarily implies
loyal and disinterested service in the interest of ” a client.
Woods v. City Nat. Bank & Trust Co. of Chicago, 312 U.S.
262, 268 (1941); accord, American United Mut. Life Ins.
Co. v. Avon Park, 311 U.S. 138, 147 (1940). Time spent
litigating a fee application against the administrator of a
bankruptcy estate cannot be fairly described as “labor
performed for”—let alone “disinterested service to”—that
administrator.
This legislative decision to limit “compensation” to
——————
2 Congress
added the phrase “reasonable compensation for the ser-
vices rendered” to federal bankruptcy law in 1934. Act of June 7, 1934,
§77B(c)(9), 48 Stat. 917. We look to the ordinary meaning of those
words at that time.
Cite as: 576 U. S. ____ (2015) 7
Opinion of the Court
“services rendered” is particularly telling given that other
provisions of the Bankruptcy Code expressly transfer the
costs of litigation from one adversarial party to the other.
Section 110(i), for instance, provides that “[i]f a bank-
ruptcy petition preparer . . . commits any act that the
court finds to be fraudulent, unfair, or deceptive, on the
motion of the debtor, trustee, United States trustee (or the
bankruptcy administrator, if any),” the bankruptcy court
must “order the bankruptcy petition preparer to pay the
debtor . . . reasonable attorneys’ fees and costs in moving
for damages under this subsection.” §110(i)(1)(C). Had
Congress wished to shift the burdens of fee-defense litiga-
tion under §330(a)(1) in a similar manner, it easily could
have done so. We accordingly refuse “to invade the legis-
lature’s province by redistributing litigation costs” here.
Alyeska Pipeline, 421 U.S., at 271.
III
The law firms, the United States as amicus curiae, and
the dissent resist this straightforward interpretation of
the statute. The law firms and the Government each offer
a theory for why §330(a)(1) expressly overrides the Ameri-
can Rule in the context of litigation in defense of a fee
application, and the dissent embraces the latter. Neither
theory is persuasive.
A
We begin with the law firms’ approach. According to the
firms, fee-defense litigation is part of the “services ren-
dered” to the estate administrator under §330(a)(1). See
Brief for Petitioners 23–30. As explained above, that
reading is untenable. The term “services” in this provision
cannot be read to encompass adversarial fee-defense liti-
gation. See Part II–B, supra. Even the dissent agrees on
this point. See post, at 1 (opinion of BREYER, J.).
Indeed, reading “services” in this manner could end up
8 BAKER BOTTS L.L.P. v. ASARCO LLC
Opinion of the Court
compensating attorneys for the unsuccessful defense of a
fee application. The firms insist that “estates do benefit
from fee defenses”—and thus receive a “service” under
§330(a)(1)—because “the estate has an interest in obtain-
ing a just determination of the amount it should pay its
professionals.” Brief for Petitioners 25–26 (internal quota-
tion marks omitted). But that alleged interest—and hence
the supposed provision of a “service”—exists whether or
not a §327(a) professional prevails in his fee dispute. We
decline to adopt a reading of §330(a)(1) that would allow
courts to pay professionals for arguing for fees they were
found never to have been entitled to in the first place.
Such a result would not only require an unnatural inter-
pretation of the term “services rendered,” but a particu-
larly unusual deviation from the American Rule as well, as
“[m]ost fee-shifting provisions permit a court to award
attorney’s fees only to a ‘prevailing party,’ ” a “ ‘substan-
tially prevailing’ party,” or “a ‘successful’ litigant,” Hardt,
560 U.S., at 253 (footnote omitted). There is no indication
that Congress departed from the American Rule in
§330(a)(1) with respect to fee-defense litigation, let alone
that it did so in such an unusual manner.
B
The Government’s theory, embraced by the dissent,
fares no better. Although the United States agrees that
“the defense of a fee application does not itself qualify as
an independently compensable service,” it nonetheless
contends that “compensation for such work is properly
viewed as part of the compensation for the underlying
services in the bankruptcy proceeding.” Brief for United
States as Amicus Curiae 25. According to the Govern-
ment, if an attorney is not repaid for his time spent suc-
cessfully litigating fees, his compensation for his actual
“services rendered” to the estate administrator in the
underlying proceeding will be diluted. Id., at 18. The
Cite as: 576 U. S. ____ (2015) 9
Opinion of the Court
United States thus urges us to treat fees for fee-defense
work “as a component of ‘reasonable compensation.’ ” Id.,
at 33; accord, post, at 1 (BREYER, J., dissenting). We
refuse to do so for several reasons.
1
First and foremost, the Government’s theory cannot be
reconciled with the relevant text. Section 330(a)(1) does
not authorize courts to award “reasonable compensation”
simpliciter, but “reasonable compensation for actual,
necessary services rendered by” the §327(a) professional.
§330(a)(1)(A) (emphasis added). Here, the contested
award was tied to the firms’ work on the fee-defense litiga-
tion and is correctly understood only as compensation for
that work. The Government and the dissent properly
concede that litigation in defense of a fee application is not
a “service” within the meaning of §330(a)(1); it follows that
the contested award was not “compensation” for a “ser-
vice.” Thus, the only way to reach their reading of the
statute would be to excise the phrase “for actual, neces-
sary services rendered” from the statute.3
Contrary to the Government’s assertion, §330(a)(6) does
not presuppose that courts are free to award compensation
based on work that does not qualify as a service to the
estate administrator. That provision specifies that “[a]ny
compensation awarded for the preparation of a fee appli-
cation shall be based on the level and skill reasonably
required to prepare the application.” The Government
argues that because time spent preparing a fee application
is compensable, time spent defending it must be too. But
the provision cuts the other way. A §327(a) professional’s
preparation of a fee application is best understood as a
——————
3 The dissent’s focus on reasonable compensation is therefore a red
herring. See post, at 5–6. The question is not whether an award for
fee-defense work would be “reasonable,” but whether such work is
compensable in the first place.
10 BAKER BOTTS L.L.P. v. ASARCO LLC
Opinion of the Court
“servic[e] rendered” to the estate administrator under
§330(a)(1), whereas a professional’s defense of that appli-
cation is not. By way of analogy, it would be natural to
describe a car mechanic’s preparation of an itemized bill
as part of his “services” to the customer because it allows a
customer to understand—and, if necessary, dispute—his
expenses. But it would be less natural to describe a sub-
sequent court battle over the bill as part of the “services
rendered” to the customer.
The Government used to understand that time spent
preparing a fee application was different from time spent
defending one for the purposes of §330(a)(1). Just a few
years ago, the U. S. Trustee explained that “[r]easonable
charges for preparing . . . fee applications . . . are compen-
sable . . . because the preparation of a fee application is
not required for lawyers practicing in areas other than
bankruptcy as a condition to getting paid.” 78 Fed. Reg.
36250 (2013) (emphasis deleted). By contrast, “time spent
. . . defending . . . fee applications” is ordinarily “not com-
pensable,” the Trustee observed, as such time can be
“properly characterized as work that is for the benefit of
the professional and not the estate.” Ibid.
To support its broader interpretation of §330(a)(6), the
Government, echoed by the dissent, relies on our remark
in Jean that “[w]e find no textual or logical argument for
treating so differently a party’s preparation of a fee appli-
cation and its ensuing efforts to support that same appli-
cation.” 496 U.S., at 162; see post, at 7. But that use of
Jean begs the question. Jean addressed a statutory provi-
sion that everyone agreed authorized court-awarded fees
for fee-defense litigation. 496 U.S., at 162. The “only
dispute” in that context was over what “finding [was]
necessary to support such an award.” Ibid. In resolving
that issue, the Court declined to treat fee-application and
fee-litigation work differently given that the relevant
statutory text—“a court shall award to a prevailing party
Cite as: 576 U. S. ____ (2015) 11
Opinion of the Court
. . . fees and other expenses . . . incurred by that party in
any civil action”—could not support such a distinction.
Id., at 158. Here, by contrast, the operative language—
“reasonable compensation for actual, necessary services
rendered”—reaches only the fee-application work. The
fact that the provision at issue in Jean “did not mention
fee-defense work,” post, at 5, is thus irrelevant.
In any event, the Government’s textual foothold for its
argument is too insubstantial to support a deviation from
the American Rule. The open-ended phrase “reasonable
compensation,” standing alone, is not the sort of “specific
and explicit provisio[n]” that Congress must provide in
order to alter this default rule. Alyeska Pipeline, 421
U.S., at 260.
2
Ultimately, the Government’s theory rests on a flawed
and irrelevant policy argument. The United States con-
tends that awarding fees for fee-defense litigation is a
“judicial exception” necessary to the proper functioning of
the Bankruptcy Code. Brief for United States as Amicus
Curiae 15, n. 7 (internal quotation marks omitted). Ab-
sent this exception, it warns, fee-defense litigation will
dilute attorney’s fees and result in bankruptcy lawyers
receiving less compensation than nonbankruptcy lawyers,
thereby undermining the congressional aim of ensuring
that talented attorneys will take on bankruptcy work.
Accord, post, at 3.
As an initial matter, we find this policy argument un-
convincing. In our legal system, no attorneys, regardless
of whether they practice in bankruptcy, are entitled to
receive fees for fee-defense litigation absent express statu-
tory authorization. Requiring bankruptcy attorneys to
pay for the defense of their fees thus will not result in
any disparity between bankruptcy and nonbankruptcy
12 BAKER BOTTS L.L.P. v. ASARCO LLC
Opinion of the Court
lawyers.4
The United States nonetheless contends that uncom-
pensated fee litigation in bankruptcy will be particularly
costly because multiple parties in interest may object to
fee applications, whereas nonbankruptcy fee litigation
typically involves just a lawyer and his client. But this
argument rests on unsupported predictions of how the
statutory scheme will operate in practice, and the Gov-
ernment’s conduct in this case reveals the perils associ-
ated with relying on such prognostications to interpret
statutes: The United States took the opposite view below,
asserting that “requiring a professional to bear the normal
litigation costs of litigating a contested request for pay-
ment . . . dilutes a bankruptcy fee award no more than any
litigation over professional fees.” Reply Brief for Appel-
lant United States Trustee in No. 11–290 (SD Tex.), p. 15.
The speed with which the Government has changed its
tune offers a good argument against substituting policy-
oriented predictions for statutory text.
More importantly, we would lack the authority to re-
write the statute even if we believed that uncompensated
fee litigation would fall particularly hard on the bank-
ruptcy bar. “Our unwillingness to soften the import of Con-
gress’ chosen words even if we believe the words lead to a
harsh outcome is longstanding,” and that is no less true in
bankruptcy than it is elsewhere. Lamie v. United States
Trustee, 540 U.S. 526, 538 (2004). Whether or not the
Government’s theory is desirable as a matter of policy,
——————
4 To the extent the United States harbors any concern about the pos-
sibility of frivolous objections to fee applications, we note that “Federal
Rule of Bankruptcy Procedure 9011—bankruptcy’s analogue to Civil
Rule 11—authorizes the court to impose sanctions for bad-faith litiga-
tion conduct, which may include ‘an order directing payment . . . of
some or all of the reasonable attorneys’ fees and other expenses in-
curred as a direct result of the violation.’ ” Law v. Siegel, 571 U. S. ___,
___ (2014) (slip op., at 12).
Cite as: 576 U. S. ____ (2015) 13
Opinion of the Court
Congress has not granted us “roving authority . . . to allow
counsel fees . . . whenever [we] might deem them warranted.”
Alyeska Pipeline, supra, at 260. Our job is to follow
the text even if doing so will supposedly “undercut a basic
objective of the statute,” post, at 3. Section 330(a)(1) itself
does not authorize the award of fees for defending a fee
application, and that is the end of the matter.
* * *
As we long ago observed, “The general practice of the
United States is in opposition” to forcing one side to pay
the other’s attorney’s fees, and “even if that practice [is]
not strictly correct in principle, it is entitled to the respect
of the court, till it is changed, or modified, by statute.”
Arcambel, 3 Dall., at 306 (emphasis deleted). We follow
that approach today. Because §330(a)(1) does not explic-
itly override the American Rule with respect to fee-defense
litigation, it does not permit bankruptcy courts to award
compensation for such litigation. We therefore affirm the
judgment of the Court of Appeals.
It is so ordered.
Cite as: 576 U. S. ____ (2015) 1
Opinion of SOTOMAYOR, J.
SUPREME COURT OF THE UNITED STATES
_________________
No. 14–103
_________________
BAKER BOTTS L.L.P. ET AL., PETITIONERS v.
ASARCO LLC
ON WRIT OF CERTIORARI TO THE UNITED STATES COURT OF
APPEALS FOR THE FIFTH CIRCUIT
[June 15, 2015]
JUSTICE SOTOMAYOR, concurring in part and concurring
in the judgment.
As the Court’s opinion explains, there is no textual,
contextual, or other support for reading 11 U.S. C.
§330(a)(1) in the way advocated by petitioners and the
United States. Given the clarity of the statutory lan-
guage, it would be improper to allow policy considerations
to undermine the American Rule in this case. On that
understanding, I join all but Part III–B–2 of the Court’s
opinion.
Cite as: 576 U. S. ____ (2015) 1
BREYER, J., dissenting
SUPREME COURT OF THE UNITED STATES
_________________
No. 14–103
_________________
BAKER BOTTS L.L.P. ET AL., PETITIONERS v.
ASARCO LLC
ON WRIT OF CERTIORARI TO THE UNITED STATES COURT OF
APPEALS FOR THE FIFTH CIRCUIT
[June 15, 2015]
JUSTICE BREYER, with whom JUSTICE GINSBURG and
JUSTICE KAGAN join, dissenting.
The Bankruptcy Code authorizes a court to award “rea-
sonable compensation for actual, necessary services ren-
dered by” various “professional person[s],” including “at-
torneys,” whom a bankruptcy “trustee [has] employ[ed] . . .
to represent or assist the trustee in carrying out the trus-
tee’s duties.” 11 U.S. C. §§327(a), 330(a) (emphasis added).
I agree with the Court that a professional’s defense of a
fee application is not a “service” within the meaning of
the Code. See ante, at 6. But I agree with the Govern-
ment that compensation for fee-defense work “is properly
viewed as part of the compensation for the underlying
services in [a] bankruptcy proceeding.” Brief for United
States as Amicus Curiae 25. In my view, when a bank-
ruptcy court determines “reasonable compensation,” it
may take into account the expenses that a professional
has incurred in defending his or her application for fees.
I
The Bankruptcy Code affords courts broad discretion to
decide what constitutes “reasonable compensation.” The
Code provides that a “court shall consider the nature, the
extent, and the value of . . . services [rendered], taking
into account all relevant factors.” §330(a)(3) (emphasis
2 BAKER BOTTS L.L.P. v. ASARCO LLC
BREYER, J., dissenting
added). Cf. Hensley v. Eckerhart, 461 U.S. 424, 437
(1983) (“reemphasiz[ing a trial court’s] discretion in de-
termining the amount of a fee award,” which “is appropri-
ate in view of the [trial] court’s superior understanding of
the litigation”). I would hold that it is within a bankruptcy
court’s discretion to consider as “relevant factors” the cost
and effort that a professional has reasonably expended
in order to recover his or her fees.
Where a statute provides for reasonable fees, a court
may take into account factors other than hours and hourly
rates. Perdue v. Kenny A., 559 U.S. 542, 551–557 (2010).
For instance, “an enhancement” to attorney’s fees “may be
appropriate if the attorney’s performance includes an
extraordinary outlay of expenses and the litigation is
exceptionally protracted.” Id., at 555. And “there may be
extraordinary circumstances in which an attorney’s per-
formance involves exceptional delay in the payment of
fees” that justify additional compensation. Id., at 556.
These examples demonstrate that increased compensation
is sometimes warranted to reflect exceptional effort or
resources expended in order to attain one’s fees.
In that vein, work performed in defending a fee applica-
tion may, in some cases, be a relevant factor in calculating
“reasonable compensation.” Consider a bankruptcy attor-
ney who earns $50,000—a fee that reflects her hours,
rates, and expertise—but is forced to spend $20,000 de-
fending her fee application against meritless objections. It
is within a bankruptcy court’s discretion to decide that,
taking into account the extensive fee litigation, $50,000 is
an insufficient award. The attorney has effectively been
paid $30,000, and the bankruptcy court might under-
standably conclude that such a fee is not “reasonable.”
Indeed, this Court has previously acknowledged that
work performed in defending a fee application is relevant
to a determination of attorney’s fees. In Commissioner v.
Jean, 496 U.S. 154, 160–166 (1990), the Court held that
Cite as: 576 U. S. ____ (2015) 3
BREYER, J., dissenting
fee-defense work is compensable under the Equal Access
to Justice Act, 28 U.S. C. §2412(d)(1)(A). The Court
quoted with approval the Second Circuit’s statement that
“[d]enying attorneys’ fees for time spent in obtaining them
would dilute the value of a fees award by forcing attorneys
into extensive, uncompensated litigation in order to gain
any fees.” 496 U.S., at 162 (quoting Gagne v. Maher, 594
F.2d 336, 344 (1979); internal quotation marks omitted).
A contrary interpretation of “reasonable compensation”
would undercut a basic objective of the statute. Congress
intended to ensure that high-quality attorneys and other
professionals would be available to assist trustees in
representing and administering bankruptcy estates. To
that end, Congress directed bankruptcy courts to consider
“whether the compensation is reasonable based on the
customary compensation charged by comparably skilled
practitioners in cases other than cases under” the Bank-
ruptcy Code. §330(a)(3)(F). Congress recognized that
comparable compensation was necessary to ensure that
professionals would “remain in the bankruptcy field.”
H. R. Rep. No. 95–595, p. 330 (1977). Cf. Perdue, supra, at
552 (“[A] ‘reasonable’ fee is a fee that is sufficient to induce
a capable attorney to undertake the representation of a
meritorious civil rights case”).
In some cases, the extensive process through which a
bankruptcy professional defends his or her fees may be so
burdensome that additional fees are necessary in order to
maintain comparability of compensation. In order to be
paid, a professional assisting a trustee must file with the
court a detailed application seeking compensation. Fed.
Rule Bkrtcy. Proc. 2016(a). The application will not be
granted until after the court has conducted a hearing on
the matter. §330(a)(1). And “[t]he court may, on its own
motion or on the motion of the United States Trustee,
the United States Trustee for the District or Region, the
trustee for the estate, or any other party in interest, award
4 BAKER BOTTS L.L.P. v. ASARCO LLC
BREYER, J., dissenting
compensation that is less than the amount of compensa-
tion that is requested.” §330(a)(2).
By contrast, an attorney representing a private party, or
a professional working outside of the bankruptcy context,
generally faces fee objections made only by his or her
client—and those objections typically are made outside of
court, at least initially. This process is comparatively
simple, involves fewer parties in interest, and does not
necessarily impose litigation costs. Consequently, in order
to maintain comparable compensation, a court may find it
necessary to account for the relatively burdensome fee-
defense process required by the Bankruptcy Code. Ac-
counting for this process ensures that a professional is
paid “reasonable compensation.”
II
The majority rests its conclusion upon an interpretation
of the statutory language that I find neither legally neces-
sary nor convincing. The majority says that Congress, in
writing the reasonable-compensation statute, did not
“displace the American Rule with respect to fee-defense
litigation.” Ante, at 5. The American Rule normally re-
quires “[e]ach litigant” to “pa[y] his own attorney’s fees,
win or lose.” Hardt v. Reliance Standard Life Ins. Co., 560
U.S. 242, 253 (2010).
But the American Rule is a default rule that applies
only where “a statute or contract” does not “provid[e]
otherwise.” Ibid. And here, the statute “provides other-
wise.” Ibid. Section 330(a)(1)(A) permits a “court [to]
award . . . reasonable compensation for actual, necessary
services rendered by the trustee, examiner, ombudsman,
professional person, or attorney and by any paraprofes-
sional person employed by any such person.” This Court
has recognized that through §330(a), Congress “ma[d]e
specific and explicit [its] provisio[n] for the allowance of
attorneys’ fees,” and thus displaced the American Rule.
Cite as: 576 U. S. ____ (2015) 5
BREYER, J., dissenting
Alyeska Pipeline Service Co. v. Wilderness Society, 421
U.S. 240, 260, and n. 33 (1975) (listing §330(a)’s predeces-
sor among examples of provisions authorizing attorney’s
fees).
The majority suggests that the American Rule is not
displaced with respect to fee-defense work in bankruptcy
because §330(a) does not specifically authorize fees for
that particular type of work. See ante, at 4–5 (“Congress
did not expressly depart from the American Rule to permit
compensation for fee-defense litigation by professionals
hired to assist trustees in bankruptcy proceedings”). To
the extent that the majority intends to impose a require-
ment that a statute must explicitly mention fee defense in
order to provide compensation for that work, this require-
ment is difficult to reconcile with the Court’s decision in
Jean. There, the Court held that the Equal Access to
Justice Act authorizes compensation for fee-defense work.
See 496 U.S., at 160–166. The fee provision of the Equal
Access to Justice Act, as enacted at the time, permitted an
“award to a prevailing party . . . of fees and other expenses
. . . incurred by that party in any civil action . . . brought
by or against the United States.” Id., at 158 (quoting 28
U.S. C. §2412(d)(1)(A) (1988 ed.)). The provision did not
mention fee-defense work—but the Court nonetheless held
that such work was compensable. See Jean, supra, at
160–166. I would do the same here.
The majority focuses on particular words that appear in
the Equal Access to Justice Act: “fees,” “prevailing party,”
and “civil action.” See ante, at 4. But neither the term
“fees” nor the phrase “prevailing party” relates specifically
to fee-defense work. And even assuming that the phrase
“civil action” is more easily read to cover fee litigation than
the phrase “actual, necessary services,” that difference
here is beside the point. I find the necessary authority in
the words “reasonable compensation,” not the words “ac-
tual, necessary services.” In order to ensure that each
6 BAKER BOTTS L.L.P. v. ASARCO LLC
BREYER, J., dissenting
professional is paid reasonably for compensable services, a
court must have the discretion to authorize pay reflecting
fee-defense work.
The majority asserts that by interpreting the phrase
“reasonable compensation,” I have effectively “excise[d]
the phrase ‘for actual, necessary services rendered’ from
the statute.” Ante, at 9. But the majority misunder-
stands my views. The statute permits compensation for
fee-defense work as a part of compensation for the under-
lying services. Thus, where fee-defense work is not neces-
sary to ensure reasonable compensation for some under-
lying service, then under my reading of the statute, a
court should not consider that work when calculating
compensation.
Indeed, to the extent that the majority bases its decision
on the specific words of §330(a), its argument seems weak.
The majority disregards direct statutory evidence that
Congress intended to give courts the authority to account
for reasonable fee-litigation costs. Section 330(a)(6) states
that “any compensation awarded for the preparation of a
fee application shall be based on the level and skill rea-
sonably required to prepare the application.” This provi-
sion does not authorize compensation, but rather assumes
(through the words “any compensation awarded”) pre-
existing authorization under §330(a). And the majority
cannot convincingly explain why, under its reading of the
statute, fee-application is a compensable “actual, neces-
sary servic[e] rendered” to the estate.
The majority asserts that a fee application, unlike fee
defense, can be construed as a “service” to the bankruptcy
estate. See ante, at 9–10. The majority draws an analogy
between a fee application and an itemized bill prepared by
a car mechanic. See ibid. It argues that, like an itemized
bill, a fee application is a “service” to the customer. But
customers do not generally pay their mechanics for time
spent preparing the bill. A mechanic’s bill is not a sepa-
Cite as: 576 U. S. ____ (2015) 7
BREYER, J., dissenting
rate “service,” but rather is a medium through which the
mechanic conveys what he or she wants to be paid. Simi-
larly, a legal bill is not a “service” rendered to a client. In
fact, ASARCO concedes that attorneys do not charge their
clients for time spent preparing legal bills. See Tr. of Oral
Arg. 33. A bill prepared by an attorney, or another bank-
ruptcy professional, is not a “service” to the bankruptcy
estate.
The majority suggests that a fee application must be a
service “ ‘because the preparation of a fee application is not
required for lawyers practicing in areas other than bank-
ruptcy as a condition to getting paid.’ ” Ante, at 10 (quot-
ing 78 Fed. Reg. 36250 (2013)). But if the existence of a
legal requirement specific to bankruptcy were sufficient to
make an activity a compensable service, then the time
that a professional spends at a hearing defending his or
her fees would also be compensable. After all, the statute
permits a court to award compensation only after “a hear-
ing” with respect to the issue. §330(a)(1). And there is no
such requirement for most attorneys, who simply bill their
clients and are paid their fees. But the majority does not
believe that preparing for or appearing at such a hear-
ing—an integral part of fee-defense work—is compensable.
The majority simply cannot reconcile its narrow interpre-
tation of “reasonable compensation” with §330(a)(6)’s
provision for fee-application preparation fees.
In my view, the majority is wrong to distinguish be-
tween the costs of fee preparation and the costs of fee
litigation. Cf. Jean, 496 U.S., at 162 (“We find no textual
or logical argument for treating . . . differently a party’s
preparation of a fee application and its ensuing efforts to
support that same application”). And the majority should
not distinguish between the compensability of fee litiga-
tion under the Equal Access to Justice Act and fee litiga-
tion under the Bankruptcy Code. Its decision to do so
creates anomalies and undermines the basic purpose of
8 BAKER BOTTS L.L.P. v. ASARCO LLC
BREYER, J., dissenting
the Bankruptcy Code’s fee award provision.
For these reasons, I respectfully dissent.