Baker & Hostetler LLP v. United States Department of Commerce

KAREN LECRAFT HENDERSON, Circuit Judge,

dissenting in part.

While I fully concur in Parts I-IV of the majority opinion, I disagree with the majority’s conclusion that the United States Supreme Court’s footnote observation in Kay v. Ehrler, 499 U.S. 432 , 436 n. 7, 111 S.Ct. 1435 , 113 L.Ed.2d 486 (1991), can— or should — be stretched to permit a law firm litigant acting through its member lawyers to collect attorney’s fees under FOIA’s fee-shifting provisions.

In Kay , the Supreme Court extended the general principle that a pro se litigant is not entitled to attorney’s fees under a similar fee-shifting provision to include a lawyer-litigant appearing pro se. See 499 U.S. at 437-38 , 111 S.Ct. 1435 . The Court determined that the overriding purpose of the fee-shifting provision of 42 U.S.C. § 1988 is to ensure the retention of “independent counsel” and a bona fide attorney-client relationship capable of promoting “effective prosecution of meritorious claims.” Id. at 437 , 111 S.Ct. 1435 . That purpose applies equally to a lawyer proceeding pro se as to a layman. Id. As the Court noted, “[e]ven a skilled lawyer who represents himself is at a disadvantage in contested litigation” because “[h]e is deprived of the judgment of an independent third party in framing the theory of the case, evaluating alternative methods of presenting the evidence, cross-examining hostile witnesses, formulating legal argu *327 ments, and in making sure that reason, rather than emotion, dictates the proper tactical response to unforeseen developments.” Id. Further, “[ejthieal considerations may make it inappropriate for [a lawyer proceeding pro se ] to appear as a witness.” Id.

Although Kay decided only the attorney’s fee issue for a pro se lawyer-litigant, in a footnote the Court rejected the plaintiffs attempt to analogize his situation to the “organizations [Congress intended] to receive an attorney’s fee even when they represented themselves” by noting that “an organization is not comparable to a pro se litigant because the organization is always represented by counsel, whether in-house or pro bono, and thus, there is always an attorney-client relationship.” Id. at 436 n. 7, 111 S.Ct. 1435 . The Court said nothing to indicate what type of “organization” it meant except to describe its legal representative as either in-house or unpaid. Id. This type of legal representation does not immediately bring to mind a law firm “organization,” at least not the Court’s specification of a pro bono lawyer. 1 And even the “in-house counsel” referenced in footnote 7 means either corporate counsel or public sector lawyers employed in state attorney’s offices more naturally than it does members of a law firm. See, e.g., Wisconsin v. Hotline Indus., Inc., 236 F.3d 363 (7th Cir.2000) (State’s attorney awarded attorney’s fees for representing State under removal statute ( 28 U.S.C. § 1447 (c))).

Nevertheless, using this “slim reed” dictum and disregarding the reasoning underlying the Kay holding, the majority construes the generic “organization” of Kay’s footnote 7 to include a law firm. Maj. Op. at 325. 2 Indeed, the majority goes further than the Supreme Court’s description of an “organization” by concluding that “[a]n attorney-client relationship exists ... when ‘a member of an entity who is also an attorney represents the entity.’ ” Maj. Op. at 325 (quoting Bond v. Blum, 317 F.3d 385, 400 (4th Cir.2003)) (emphasis added). Because “[t]he law firm ‘still remains a business and professional entity distinct from its members, ... the member representing the firm as an entity represents the firm’s distinct interests in the agency relationship inherent in the attorney-client relationship.’ ” Id. at 325-26 (quoting Blum, 317 F.3d at 400 ) (emphasis added).

The majority’s reasoning thus reduces to the following: (1) a law firm constitutes an entity with a legal identity distinct from its members; (2) an entity with a separate *328 identity comes within the minimal description of “organizations ... representing] themselves” in Kay’s footnote dictum, see Kay, 499 U.S. at 436 n. 7, 111 S.Ct. 1435 ; and, therefore, (3) a law firm constitutes an organization eligible for attorney’s fees even when it is represented by its members. Yet Kay’s observation regarding “organizations” is not based simply on the distinction between an entity and an individual. Instead, Kay’s emphasis on independent judgment and ethical considerations in holding lawyer-litigants barred from attorney’s fees is wholly ignored by the majority. 3

Not only does the majority stretch Kay’s dictum past its breaking point but, in my view, it strays from our own precedent. In Burka v. U.S. Dep’t of Health & Human Servs., 142 F.3d 1286 (D.C.Cir. 1998), we interpreted Kay , stressing the necessity of independent legal judgment, to deny attorney’s fees not only to the lawyer-litigant but also to his law firm colleagues for their legal services rendered in a FOIA action. See 142 F.3d at 1291-92 . Acknowledging an earlier case awarding fees to a lawyer-litigant for the work of co-counsel, see Lawrence v. Bowsher, 931 F.2d 1579 (D.C.Cir.1991), we distinguished it based on the fact that co-counsel there were not “affiliated with the litigant’s law practice.” Burka, 142 F.3d at 1291 . With no affiliation, as in Lawrence , we found the “independent counsel” that Kay emphasized. Id.; see also Lawrence, 931 F.2d at 1579 . Relying on Kay , we then noted that the agency relationship which “ ‘the word attorney assumes’ ... does not exist ... where the counsel are simply colleagues at the litigant’s law firm working under the litigant’s direction .’’Burka, 142 F.3d at 1291 (quoting Kay, 499 U.S. at 435 , 111 S.Ct. 1435 ). Thus, because the lawyer-litigant controlled legal strategy and the presentation of evidence and co-counsel were not “independent counsel hired by him to assist him,” no genuine attorney-client relationship existed and attorney’s fees were unavailable. Id. (emphasis added).

In practice, there is no difference between Burka’s co-counsel working for, and under the direction of, their law firm colleague and Baker & Hostetler’s members’ representation of all of their affiliated partners, that is, the law firm itself. Bur-ka’s denial of fees for the work of co-counsel working “in the same firm” as the individual lawyer-litigant applies equally to lawyers who constitute “the same firm.” See id. at 1292. Just as Burka directed his affiliated co-counsel, Baker & Hostetler controlled and directed its quest for attorney’s fees through its member lawyers, presumably acting as “the final filter,” Kooritzky v. Herman, 178 F.3d 1315, 1324 (D.C.Cir.1999), for litigation decisions.

Absent the “detached perspective” that comes from independent counsel, a law firm as an entity — as much as a lawyer-litigant — may have an interest in bringing suit if a fee-shifting statute is in effect “solely as a way to generate fees rather than to vindicate personal claims.” Fal-cone v. IRS, 714 F.2d 646, 648 (6th Cir. 1983) (“We do not believe that Congress intended to so subsidize attorneys without *329 clients.”). 4 Moreover, in light of Kay’s focus upon independent legal judgment, a “rule that authorizes awards of counsel fees to pro se litigants ... who are members of the bar — would create a disincentive to employ counsel whenever such a plaintiff considered himself competent to litigate on his own behalf.” Kay, 499 U.S. at 438 , 111 S.Ct. 1435 ; of. Blum, 317 F.3d at 400 . Finally, it is possible, if not likely, that the firm members representing Baker & Hostetler in the FOIA action may be witnesses in seeking attorney’s fees, thereby implicating the ethical concerns voiced in Kay. See 499 U.S. at 437 , 111 S.Ct. 1435 .

The Supreme Court recently reaffirmed, in a different context, the decision of a sister circuit “to err on the side of caution” when facing “imprecision in [the Court’s] prior cases” by “neither forcing] ... nor bur[ying] the issue” but instead by “following] [the Court’s precise holding] until expressly overruled by the Supreme Court,” even if the holding has since been undermined by intervening precedent. Eberhart v. United States, 546 U.S. 12 , 126 S.Ct. 403, 404, 407 , 163 L.Ed.2d 14 (2005) (noting tension between Court’s earlier holding that filing deadlines are “jurisdictional” and intervening precedent finding other time prescriptions non-jurisdictional). Such caution is even more apt here. See Rusk Prudential HMO, Inc. v. Moran, 536 U.S. 355, 377 , 122 S.Ct. 2151 , 153 L.Ed.2d 375 (2002) (declining “to turn dictum into holding”); U.S. Bancorp Mortgage Co. v. Bonner Mall P’ship, 513 U.S. 18, 24 , 115 S.Ct. 386 , 130 L.Ed.2d 233 (1994) (“invoking our customary refusal to be bound by dicta”). Rather than relying on Kay’s footnote dictum to “force” a holding that a law firm litigant is eligible for attorney’s fees under FOIA based on its members’ work, I would follow Circuit precedent — as well as the holding in Kay — and find Baker & Hostetler ineligible for attorney’s fees under FOIA. Accordingly, I respectfully dissent from Part V of the majority opinion.

. An organization represented by “pro bono counsel,” at least in my experience, refers to a public interest or other non-profit organization, not a law firm.

. The majority relies on the post-Airy decisions of two other courts of appeals. See Bond v. Blum, 317 F.3d 385, 398 (4th Cir. 2003); Gold, Weems, Bruser, Sues & Rundell v. Metal Sales Mfg. Corp., 236 F.3d 214, 218-19 (5th Cir.2000). Although both circuits concluded that a law firm constitutes an organization within the meaning of Kay 's footnote 7, each proceeded more tentatively than the majority suggests. See Maj. Op. at 325-26. In Blum the Fourth Circuit recognized that "representation of a law firm by one of its members presents an increased risk of emotional involvement and loss of independence” but awarded attorney's fees because the record gave "no indication” of compromised independence. 317 F.3d at 400 . The Fifth Circuit's invocation of Kay in Metal Sales Mfg. was even more conditional. The case involved a Louisiana statute under which the Louisiana state courts had in the past permitted attorney’s fees awards to lawyers proceeding pro se. See 236 F.3d at 218; Hos-kins v. Ziegler, 506 So.2d 146 (La.Ct.App. 1987). The Fifth Circuit noted Kay's applicability only "if the Louisiana Open Account Statute were construed to require both a lawyer and a client.” Id. at 219 .

. Moreover, the majority fails to consider the implications of basing its reasoning on the separate identities of law firms as entities and its member lawyers as individuals. Under the majority’s reading of Kay need an individual lawyer simply incorporate himself in order to be eligible for attorney's fees? And what of the sole practitioner with a "firm” identity formally separate from himself as an individual? In addition, the majority fails to address an inconsistency in its reliance on Kay : At the same time it splits the law firm entity from its members, it does so relying on the Supreme Court’s description of organizations “repre-sentfing] themselves.” Kay, 499 U.S. at 436 n. 7, 111 S.Ct. 1435 (emphasis added).

. While the Court in Kay did not use Fal-cone 's interest analysis, the Court described Falcone as requiring the same "detached and objective perspective" that it found lacking in Kay.Compare Kay, 499 U.S. at 434 n. 4, 111 S.Ct. 1435 (quoting Falcone, 714 F.2d at 647 ) with id. at 437 , 111 S.Ct. 1435 .