Commercial Litigation and Arbitration

Sanctions — No Appellate Jurisdiction to Reverse Erroneous Award Where Notice of Appeal Filed Only after Opinion Granting Sanctions (Nonfinal) But Not after Fees Quantified and Awarded (Final) — FRAP 4(a)(2), 4(a)(4)(B)(i) Do Not Save Appeal

Feldman v. Olin Corp., 2012 U.S. App. LEXIS 18106 (7th Cior. Aug. 27, 2012):

We are sympathetic to Feldman's contention that the district court abused its discretion by imposing sanctions. Global Brass admits that it never gave Feldman advance notice as required under Rule 11(c)(1). Notice plays a central part in the Rule 11 process, as the 1993 Committee Note emphasizes. Subdivisions (b) and (c), ¶ 13. That alone should have led to the dismissal of the motion. And it is our impression that Global Brass's argument on the merits for sanctions was flimsy. Sanctions would have been appropriate only if Feldman had no legal basis or evidentiary support for keeping Global Brass in the case as a defendant, or was doing so for an improper purpose. But Feldman's lawyers had good reason to think that Global Brass was a proper defendant. There was evidence in the record including pay stub records, job postings, and a letter from defendant's counsel identifying Global Brass as Feldman's employer, all suggesting that Global Brass might have been the entity employing Feldman. The confusion about the precise relationship among the three corporate defendants persists in this court, exacerbated by the defendants' failure to follow another procedural rule — this time, Federal Rule of Appellate Procedure 26.1, which requires parties to submit a Corporate Disclosure Statement. The defendants failed to comply with that rule, and their carelessness has needlessly complicated both our review for conflicts and our substantive evaluation of this part of the case.

As it happens, however, we have no jurisdiction to address this issue, because Feldman's attorney failed to file a timely notice of appeal from the district court's final decision on sanctions. Feldman filed a notice of appeal from the November 29, 2010, grant of the motion for sanctions, but that order was nonfinal, because it explicitly reserved the calculation of fees. When the fees were ultimately imposed by the court's order of February 22, 2011, Feldman failed to file a notice of appeal. This defect was brought to Feldman's attention during the course of briefing in this case. His attorneys tried to salvage the appeal, raising several arguments and filing a late notice on August 3, 2011. We dismissed that appeal as untimely. See Feldman v. Olin Corp., et al., 673 F.3d 515 (7th Cir. 2012).

Despite their earlier lack of success, Feldman's attorneys are now asking us to treat the first notice of appeal filed by Feldman from the November order as effective on the date in February the fees were imposed. This is possible, they contend, under Federal Rule of Appellate Procedure 4(a)(2). But they are mistaken. FRAP 4(a)(2) permits courts to treat a notice of appeal filed after a court announces a decision or order, but does not formally enter final judgment, as filed on the date of the entry of the judgment or order. But this rule applies "only when a district court announces a decision that would be appealable if immediately followed by the entry of judgment." FirsTier Mortgage Co. v. Investors Mortgage Ins. Co., 498 U.S. 269, 276 (1991). The Supreme Court has specifically said that Rule 4(a)(2) does not "permit[] a notice of appeal from a clearly interlocutory decision — such as a discovery ruling or a sanction order under Rule 11 of the Federal Rules of Civil Procedure — to serve as a notice of appeal from the final judgment" because "[a] belief that such a decision is a final judgment would not be reasonable." Id.; see also Carter v. Ashland, Inc., 450 F.3d 795, 797 (8th Cir. 2006) ("We conclude Rule 4(a)(2) does not save the instant notice of appeal filed prematurely from the dismissal order, because the order 'left unresolved' the amount of the attorney's fees and costs."). Nor does Rule 4(a)(4)(B)(i) help. That rule applies to motions for attorney's fees only "if the district court extends the time to appeal under Rule 58," Fed R. App. P. 4(a)(4)(A)(iii), and the court did not do so here.

We note that one other jurisdictional defect dooms this appeal. As we explained in our earlier rejection of the attorneys' late attempt to appeal the fees, the district court ordered Feldman's attorneys to pay the fees in its February order, not Feldman, thereby "relieving the plaintiff of the obligation imposed by the previous order." 673 F.3d at 516. Thus, even if we were somehow to find the early notice of appeal to be effective at a later date, any issue Feldman might have had with those fees is now moot. Feldman's attorneys were the only parties who could appeal a fee award imposed against them, but they did not file an appeal from the November order and their attempt to file an appeal from the February order was far too late. We therefore find that we have no jurisdiction to review the award of attorney's fees to Global Brass.

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