Kalodner, Philip v. Abraham, Spencer

United States Court of Appeals

FOR THE DISTRICT OF COLUMBIA CIRCUIT

Argued October 17, 2002 Decided November 19, 2002

No. 01-5339

Philip P. Kalodner,

Appellant

v.

Spencer Abraham, Secretary of Energy, et al.,

Appellees

Appeal from the United States District Court

for the District of Columbia

(No. 97cv02013)

Philip P. Kalodner, appellant appearing pro se, argued the

cause and filed the briefs.

Edward Himmelfarb, Attorney, U.S. Department of Jus-

tice, argued the cause for appellees. With him on the brief

was William Kanter, Deputy Director.

Before: Edwards, Randolph and Tatel, Circuit Judges.

Opinion for the Court filed by Circuit Judge Tatel.

Tatel, Circuit Judge: In this case involving Emergency

Petroleum Allocation Act refunds to consumers of crude oil,

appellant, an attorney, seeks an award of fees under the

common fund doctrine for helping third parties recover mon-

ey from a government-created escrow account held in the

United States Treasury. Because the government has not

waived its sovereign immunity, we affirm the district court's

denial of his request.

I.

Enacted in 1973, the Emergency Petroleum Allocation Act

("EPAA"), 15 U.S.C. ss 751-760h (repealed 1981), gave the

federal government authority to establish and administer a

program of mandatory price controls for crude oil and related

petroleum products. The statute, incorporating the enforce-

ment mechanism set out in section 209 of the Economic

Stabilization Act, 12 U.S.C. s 1904 (expired 1974), authorized

the Department of Energy (DOE) to institute administrative

enforcement proceedings against alleged violators of the

EPAA and to obtain restitution from them. 15 U.S.C.

s 754(a)(1). The Petroleum Overcharge Distribution and

Restitution Act, 15 U.S.C. ss 4501-4507, part of which re-

mains in effect today, directs the Secretary "to identify

persons who have been harmed by a violation of the EPAA

regulations and to use recovered funds to make restitution [to

such persons] 'to the maximum extent possible.' " Consol.

Edison Co. v. O'Leary, 131 F.3d 1475, 1478 (Fed. Cir. 1997)

(quoting 15 U.S.C. s 4502). DOE determines both eligibility

for restitution and the amount each person should receive

according to standards set forth in 10 C.F.R. pt. 205, subpt.

V--the so-called Subpart V procedures.

The procedural and substantive history of this case is

complex, but little of it relates to the narrow issue before us.

Suffice it to say that in 1992, Cities Service Oil and Gas

Corporation, the predecessor to Occidental Petroleum Corpo-

ration, agreed to settle DOE section 209 charges alleging

certain violations of the EPAA. Under that settlement,

Occidental agreed to make payments to a restitution fund for

distribution to end users of Occidental's crude oil, to certain

states, and to the United States. The restitution fund "is

held in an escrow account in the [United States] Treasury."

Appellee's Br. at 26.

To settle additional allegations that it violated the EPAA,

Occidental entered into a separate agreement with another

group of end users, clients of appellant Philip Kalodner. This

included an award of $400,000 in attorney's fees to Kalodner.

Kalodner subsequently filed a claim with DOE seeking an

award of attorney's fees from the fund established through

DOE's settlement with Occidental. Although neither Kalod-

ner nor his clients were parties to that settlement and

although he had already received a substantial fee award,

Kalodner alleges that his work on behalf of his clients benefit-

ted the entire class of end users, entitling him to still more

fees. Expressly disclaiming that he qualifies as a Subpart V

claimant, Appellant's Reply at 21, Kalodner argues that he is

entitled to an award pursuant to the common fund fee doc-

trine. See Boeing Co. v. Van Gemert, 444 U.S. 472, 478

(1980) (recognizing that under common fund fee doctrine "a

litigant or a lawyer who recovers a common fund for the

benefit of persons other than himself or his client is entitled

to a reasonable attorney's fee from the fund as a whole").

Both DOE and the district court rejected Kalodner's claim.

Kalodner appeals.

II.

Neither the complex jurisdictional issues in this case, in-

cluding whether appellate jurisdiction is with this Court or

the Federal Circuit, see Tex. Am. Oil Corp. v. United States

Dep't of Energy, 44 F.3d 1557, 1563-64 (Fed. Cir. 1995), nor

the merits of Kalodner's common fund claim require our

attention, for Kalodner's suit is barred by sovereign immuni-

ty. See Steel Co. v. Citizens for a Better Env't, 523 U.S. 83,

94-95 (1998) (courts must establish jurisdiction before ad-

dressing merits); Galvan v. Fed. Prison Indus., 199 F.3d 461,

463 (D.C. Cir. 1999) (courts may address sovereign immunity

prior to other "non-merits decisions"). "The basic rule of

federal sovereign immunity," the Supreme Court has ex-

plained, "is that the United States cannot be sued at all

without the consent of Congress." Block v. North Dakota,

461 U.S. 273, 287 (1983). The federal government is "immune

from suit save as it consents to be sued," United States v.

Sherwood, 312 U.S. 584, 586 (1941), and "waiver of the

Federal Government's sovereign immunity must be unequivo-

cally expressed in statutory text," Lane v. Pena, 518 U.S. 187,

192 (1996).

Although arguing that this action "is against the United

States only in its capacity as escrowee of funds belonging to

end users found entitled to restitution," Appellant's Reply Br.

at 16-17, Kalodner's common fund fee claim nevertheless

implicates federal sovereign immunity for a simple reason:

He seeks funds in the United States Treasury. According to

the government, its sovereign immunity defense is especially

strong because the United States may recover any funds that

remain in the escrow account after distribution to end users.

See Statement of Modified Restitutionary Policy in Crude Oil

Cases, 51 Fed. Reg. 27,899 (Aug. 4, 1986); Order Implement-

ing Statement of Restitutionary Policy Concerning Crude Oil

Overcharges, 51 Fed. Reg. 29,689-02 (Aug. 20, 1986) (direct-

ing excess funds in escrow account after disbursements have

been made to be deposited in general fund of the United

States Treasury). Kalodner insists that nothing will remain

in the escrow account because all funds will be distributed on

a pro rata basis to Occidental's end users. Appellant's Reply

Br. at 14-15 (citing Consol. Edison Co. v. Richardson, 233

F.3d 1376, 1379 (Fed. Cir. 2000) (Subpart V claimants have

standing to challenge awards to other Subpart V claimants

because the awards are distributed on a pro rata basis and

"any increase in the size of the total consumed volume ...

directly reduces the share of each claimant")). We need not

resolve that debate, however, for the sine qua non of federal

sovereign immunity is the federal government's possession of

the money in question. The government need not have an

actual interest in the funds in order to invoke the defense.

See United States v. N.Y. Rayon Importing Co., 329 U.S. 654

(1947) (federal sovereign immunity precludes award of pre-

judgment interest based on funds held by the United States

but belonging to private parties); VGS Corp. v. United States

Dep't of Energy, 808 F.2d 842, 846 (Temp. Emer. Ct. App.

1986) (for purposes of sovereign immunity, that the govern-

ment has never claimed a right to the money "does not

remove the obstacle presented by the N.Y. Rayon case").

Kalodner relies on National Treasury Employees Union v.

Nixon, 521 F.2d 317 (D.C. 1975), where we rejected a sover-

eign immunity defense against a claim for attorney's fees.

Appellant's Reply Br. at 17. In that case, however, the funds

at issue had already been distributed to private parties, so the

money was no longer in the government's possession. Nat'l

Treasury Employees, 521 F.2d at 320 ("[W]e believe that

sovereign immunity does not bar the award of attorney's fees

and litigation expenses against private parties merely because

some incidental expense might be imposed upon the Govern-

ment by such an award."). As Kalodner concedes, the funds

at issue here remain in the Treasury. They are thus fully

protected by sovereign immunity.

Kalodner has also failed to identify a statutory waiver of

immunity that would allow him to bring his common fund fee

claim. Congress has waived sovereign immunity for Subpart

V claimants--parties actually injured by violations of the

EPAA--by authorizing them to seek refunds from escrow

accounts held by the United States Treasury and to challenge

awards to other claimants. See Goodyear Tire & Rubber Co.

v. Dep't of Energy, 118 F.3d 1531 (Fed. Cir. 1997) (party

allegedly injured by EPAA violation challenged DOE's denial

of its claims for price refunds); Consol. Edison Co. v. Rich-

ardson, 233 F.3d 1376 (holding that Subpart V claimants have

standing to challenge awards to other claimants). But as

Kalodner concedes, he is not a Subpart V claimant nor was he

injured by a violation of the EPAA. Appellant's Reply Br. at

21.

Because Kalodner's claim is barred by sovereign immunity,

we affirm the district court's denial of his fee request.

So ordered.