- Court: United States Supreme Court
- Area(s) of Law: Bankruptcy Law
- Date Filed: June 15, 2015
- Case #: 14–103
- Judge(s)/Court Below: Thomas, J., delivered the opinion of the Court, in which Kennedy, J., Robert, C.J., Alito, J., and Scalia, J. joined. Sotomayor, J. filed an opinion concurring with the judgment. Breyer, J., filed a dissent in which Ginsburg, J. and Kagan, J. joined.
- Full Text Opinion
Respondent was no longer financially stable. Respondent hired Petitioner attorneys in accordance with §327(a) of the Bankruptcy Code. Petitioner sought compensation under §330(a)(1) for the work they did for Respondent. The bankruptcy court awarded Petitioner $120 million for the work they did, $4.1 million for exceptional performance, and over $4 million for litigation fees. The Fifth Circuit reversed citing the American Rule.
According to the American Rule, each party must pay their own fees absent a specific statutory exception. The language of §330(a)(1) does not provide an explicit exception to the American Rule. As stated in the statute, “reasonably compensated” is not an exception to the American Rule. Law firms have argued that compensation for “services” does not consider the complex work required for the fee based defense work required in bankruptcy proceedings. The United States filed an amicus brief arguing that fee based defense work is not considered a service. The United States relied on Jean in making their argument. However, the rational from Jean does not apply here because in Jean there was an exception and the issue concerned the specific finding required to grant an award. The general trend in American Law is not to awarded fees. AFFIRMED.