Term: 2014
Docket: 14-103
Baker Botts, L.l.p., v. Asarco, L.l.c.
- Pro
14-103 BAKER BOTTS, L.L.P., ET AL. V. ASARCO, L.L.C. DECISION BELOW: 751 F.3d 291 CERT. GRANTED 10/2/2014 QUESTION PRESENTED: Section 330(a) of the Bankruptcy Code grants discretion to bankruptcy judges to award "reasonable compensation for actual, necessary services rendered by" an attorney or other professional employed by the estate. 11 U.S.C. §330(a)(1). Before any compensation may be awarded, the Code requires professionals to complete a detailed fee application, to which any party in interest may object. It is undisputed that the preparation of such a fee application is compensable. But the circuits have now divided over whether defending it is likewise compensable. The Ninth Circuit, like the vast majority of lower courts, has held that bankruptcy judges may award compensation for the defense of a fee application, at least when the defense is meritorious and successful. It so held in part because categorically denying compensation would undermine the statutory requirement that bankruptcy professionals' compensation not be diluted compared to that of non-bankruptcy practitioners. But the Fifth Circuit, in the judgment below, held that such compensation is never authorized by §330(a). The question presented is whether §330(a) grants bankruptcy judges discretion to award compensation for the defense of a fee application. LOWER COURT CASE NUMBER: 12-40997, 12-40998, 13-40409
The U.S. Supreme Court case Baker Botts, L.L.P., v. ASARCO, L.L.C., 2014 involved a dispute over attorney's fees in bankruptcy proceedings. The law firm Baker Botts had been hired to assist copper mining company ASARCO with its Chapter 11 bankruptcy filing and subsequent litigation against its parent company for fraudulent asset transfers. After successfully recovering billions of dollars for the estate, Baker Botts sought compensation not only for their work on the case but also for time spent defending their fee application when it was challenged by ASARCO. However, the Supreme Court ruled that under Section 330(a) of the Bankruptcy Code, attorneys could not be awarded fees incurred while defending their fee applications because such defense is not considered a service to the debtor’s estate.
In the dissenting opinion for Baker Botts, L.L.P., v. ASARCO, L.L.C., Justice Sotomayor argued that bankruptcy courts should have discretion to award fees for fee-defense work. She contended that the majority's interpretation of Section 330(a) of the Bankruptcy Code was too narrow and failed to consider Congress's intent in enacting it. The section allows "reasonable compensation for actual, necessary services rendered," which she believed could include defending a fee application against litigation. Furthermore, she pointed out that denying such compensation would discourage competent law firms from taking on complex bankruptcy cases due to potential cost burdens associated with litigating their own fees.
