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In re Benny

filed: March 18, 1996.

IN RE: GEORGE I. BENNY, DEBTOR. KEITH M. LUNDIN, JUDGE. MARK B. MCFEELEY, JUDGE. WILLIAM L. NORTON, JUDGE. GEORGE C. PAINE, II, JUDGE. HUGH ROBINSON. ARTHUR N. VOTOLATO, JR., JUDGE, PLAINTIFFS-APPELLANTS,
v.
L. RALPH MECHAM, DIRECTOR, OF THE AO, DEFENDANT-APPELLEE.



Appeal from the United States District Court for the Northern District of California. D.C. No. CV-94-00501-SBA. Robert H. Schnacke, District Judge, Presiding. Saundra B. Armstrong, District Judge, Presiding. Original Opinion Previously Reported at:,.

Before: Alfred T. Goodwin, and Stephen Reinhardt, Circuit Judges, and Samuel P. King,*fn* District Judge. Opinion by Judge Goodwin.

Author: Goodwin

GOODWIN, Circuit Judge:

A decade after the constitutionality of the current bankruptcy court structure was settled, the denial of attorney fees to the six bankruptcy Judges whose efforts, as amici, had brought about the solution that satisfied both the Constitution and the Judges, has produced this appeal.

The six bankruptcy Judges were plaintiffs in the first case in a series of constitutional challenges to the 1984 Bankruptcy Act. Lundin v. Mecham, 299 U.S. App. D.C. 7, 980 F.2d 1450 (D.C. Cir. 1992). After the Supreme Court held the Bankruptcy Reform Act of 1978 unconstitutional in Northern Pipeline Constr. Co. v. Marathon Pipe Line Co., 458 U.S. 50, 73 L. Ed. 2d 598, 102 S. Ct. 2858 (1982), Congress passed several interim measures to keep the bankruptcy courts operational until it finally enacted the Bankruptcy Amendments and Federal Judgeship Act of 1984.

The last of the interim measures expired two weeks before Congress passed the 1984 Act. To remedy the lapse, Congress added a holdover provision that allowed all bankruptcy Judges to remain in office until the Act became effective.

The Director of the Administrative Office of the U.S. Courts, on the advice of counsel, challenged the 1984 Act on the ground that it violated the Appointments Clause of the Constitution. The Honorable Keith M. Lundin and five fellow bankruptcy Judges then filed for declaratory relief from the Director's challenge in the District Court in the District of Columbia. Meanwhile, in the Northern District of California, Alexandra Benny, a bankrupt debtor, challenged the authority of the bankruptcy Judge to whom her case had been referred. In re Benny, 791 F.2d 712 (9th Cir. 1986).

The six plaintiff Judges in the Lundin case and the director all sought to intervene in Benny, and at the same time, filed a joint motion to stay the proceedings in Lundin pending developments in Benny. Five other cases based on the same challenge to the 1984 Act arose in other jurisdictions.

Judge Robert Schnacke denied the Judges' motion to intervene, but treated them as amici curiae. The Department of Justice participated in Benny, arguing the same position it had advocated in Lundin. The position of the Judges, but not the Judges themselves, ultimately prevailed in Benny. The final decision of Judge Schnake in Benny was, verbatim, the amicus brief filed by the Judges, who were technically nonparties.

After Benny, and all of the other courts that reached the issue, upheld the constitutionality of the Bankruptcy Act, Lundin was dismissed as moot. The Judges then filed for a fee award under the Equal Access to Justice Act in the D.C. district court. The district court denied their application for fees, but the D.C. Circuit reversed and awarded fees for their work in Lundin. That circuit, however, declined to award fees for any of the amicus work in Benny or in the five other cases.

The six bankruptcy Judges then filed in the Northern District of California an application for fees for their work as amici in the Benny case. That district court denied their fee request because they were not "parties" within the meaning of the Equal Access to Justice Act.

This appeal raises the question whether, on this unusual record, the six Judges who carried the litigation to a successful Conclusion were prevailing parties within the meaning of the EAJA. The statute provides for fee awards to prevailing parties in any court having jurisdiction in an action brought by or against the United States unless the position of the United States was substantially justified or other special circumstances make the award unjust. 28 U.S.C. § 2412(a-d) (1995).

The appeal is complicated by In Re Benny, 791 F.2d 712 (9th Cir. 1986), in which we affirmed the Northern District order denying leave to the six bankruptcy Judge plaintiffs in the Lundin case to intervene and be treated as parties in Alexandra Benny's challenge to the constitutionality of the bankruptcy court hearing her case. The government now says that our affirmance of the order of the district court denying intervention is the law of the case, and that we should not reconsider our early decision denying them party status nunc pro tunc in order that they may be awarded party status and EAJA fees for their work.

Our decision in 1986 was based upon the record then before the court, which was that six Judges who were not sitting in any district within this circuit could not be affected by the trial court's decision in the then pending Benny bankruptcy in the district court, and therefore there was no abuse of discretion in denying intervention. In re Benny, 791 F.2d 712 (9th Cir. 1986). That decision, published before the outcome of the Benny bankruptcy case or of the Lundin case in the D.C. Circuit could be known, rested primarily on the holding that the six Judges had failed to demonstrate that the outcome of the Benny bankruptcy was ...


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