[00:00:02] Speaker 02:
Case number 18-7177 at L. Keith Allen at L.

[00:00:40] Speaker 01:
Good morning.

[00:00:42] Speaker 00:
Good morning and may it please the court Richard Love for the District of Columbia.

[00:00:47] Speaker 00:
The district can't be ordered to pay interest on judgment amounts prohibited by statute from paying.

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Doing so would contravene Congress's purpose in capping idea attorney's fees.

[00:00:59] Speaker 01:
Let's start with the text though.

[00:01:01] Speaker 01:
What's your best textual argument that the 2009 Act precludes payment of interest?

[00:01:07] Speaker 01:
It doesn't say anything about interest.

[00:01:10] Speaker 01:
fees an attorney?

[00:01:12] Speaker 00:
Well, I think interest only runs on fees.

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There would be no interest without fees.

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It would contravene the purpose of the instituting the cap.

[00:01:28] Speaker 01:
We're back to purpose now.

[00:01:31] Speaker 01:
We'll get to your argument about purpose.

[00:01:33] Speaker 01:
I want your argument starting with text.

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Well, I think just as the district court here

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rejected the argument that the absence of any reference to judgments meant that the cap was inapplicable when you had a judgment.

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The court said, nor is there any reason to find that the judgment for attorney's fees are not subject to the cap because the appropriations acts do not specifically state they apply to judgments.

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And curiously, he also said, or interest.

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And I think the mere fact, I think that's correct.

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The mere fact that the text doesn't refer to judgments, to interest, doesn't mean that it wasn't applicable to stopping interest.

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So textually, I think they go hand in hand, just as

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fees or a fee award, arguably, you know, interest attaches to a fee award, the prohibition on fees likewise would prohibit the interest.

[00:02:49] Speaker 02:
That seems clearly right if the statute is a prohibition on fees, which is what you just said.

[00:03:00] Speaker 02:
but it seems to be only a prohibition on payment, right?

[00:03:05] Speaker 02:
It's an appropriation provision, so the underlying entitlement to fees is undisturbed.

[00:03:15] Speaker 00:
Well, that's correct, but it does not limit the court's authority to enter the award, but it does limit the district's ability to pay above $4,000, and I think that

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So for the amounts that the district is prohibited from paying, I think it's a reasonable inference that the prohibition runs also to the interest that would have attached to that amount of the judgment that the district is prohibited from paying.

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Beyond the text, if I could, on some other points that we would submit supports the district's argument that the fee cap prohibits the assessment of interest on amounts above the cap.

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The purpose for the VCAP was to, and it was maintained for ten years, was to stem the growth in legal expenses and the usurping of resources from education to attorney's fees, subjecting the district to interest on

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fee awards that it could not pay clearly runs across purposes to stemming the growth in legal expenses.

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It's also contrary to long-standing precedent that prohibits interest whenever payment of the principal debt is interdicted, and it would, we submit, absurdly subject the district to never-ending interest payments.

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I mean, ordinarily, a party can avoid

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a post-judgment interest or the application of the post-judgment interest statute by making immediate payment, but here the fee cap, the law, foreclosed that possibility.

[00:05:36] Speaker 04:
Suppose we agree with you that it was erroneous to require the district now to pay interest on the entire sum of the judgments.

[00:05:48] Speaker 02:
Right.

[00:05:49] Speaker 04:
You don't disagree.

[00:05:50] Speaker 04:
The district doesn't disagree, though, that it was appropriate to authorize the payment of some level of interest below the principal cap, right?

[00:06:01] Speaker 00:
Oh, yeah.

[00:06:02] Speaker 00:
We paid interest on the amounts up to $4,000.

[00:06:06] Speaker 04:
And how is that calculation made on

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So is that the calculation of the amount of interest that's owed on the levels up to the $4,000 cap?

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It was based on 28 U.S.C.

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1961, so it ran from the date of judgment at the rate set forth in the statute that was applicable at the time.

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I think it's the day before the judgment, whatever the treasury rate is, or I forget the exact date.

[00:06:36] Speaker 00:
And is that done?

[00:06:37] Speaker 04:
So it ran from the date of judgment.

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Until payment.

[00:06:40] Speaker 04:
I'm sorry?

[00:06:40] Speaker 04:
Until payment.

[00:06:41] Speaker 04:
Until payment.

[00:06:42] Speaker 04:
So when you're calculating the amount of interest that's owed, given the existence of a cap, do you pretend as if at the date of the judgment, the judgment said $4,000, and then you calculate interest on that all the way through?

[00:06:53] Speaker 00:
Yes.

[00:06:54] Speaker 00:
That's the way it's done?

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I believe that's the way it was done in terms of what has already been paid.

[00:07:00] Speaker 04:
And the district is fine with that?

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So you, after the cap gets raised to $4,000,

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interest is owed, not interest on the full judgment, but interest on the judgment up to a level of $4,000.

[00:07:12] Speaker 00:
Correct.

[00:07:12] Speaker 04:
And you go back to the judgment, you basically act as if it said the judgment is $4,000, and then you calculate interest owed up to the data payment.

[00:07:20] Speaker 00:
That's my understanding of what was done, yes.

[00:07:23] Speaker 04:
Okay.

[00:07:23] Speaker 04:
And you don't dispute that part of it?

[00:07:25] Speaker 00:
No, we don't dispute it, and as I said, that amount has already been paid.

[00:07:38] Speaker 02:
Can I ask you about constitutional issues?

[00:07:43] Speaker 02:
Sure.

[00:07:43] Speaker 02:
With the statute, at least as applied to pre-existing judgments, which is not the entire scope of the statute, perhaps, but it's a major scope, right?

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So you have pre-existing judgments, and then Congress says as to them,

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They can never be paid.

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Can I correct the court?

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Because I don't think there are pre-existing judgments here.

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Every one of these judgments were from day one subject to a fee cap.

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The first judgment, most of, I think there are ten judgments here.

[00:08:22] Speaker 00:
I think eight are from 2001 or seven are from 2001.

[00:08:26] Speaker 00:
The first fee cap was instituted in 1999, so they were all entered at a time where we would submit the plaintiff's entitlement to amounts above the cap, were contingent, were always contingent upon future congressional appropriations and authority to cover amounts in excess of the fee cap.

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Fee cap changed from 1999.

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It was a lower amount.

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Ultimately, it became $4,000.

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But all of these judgments from day one were subject to the contingency that payment over 4,000 or over X amount was prohibited.

[00:09:07] Speaker 02:
I'm sorry, but then that commits us to the proposition that the courts couldn't enter judgment?

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at the time?

[00:09:19] Speaker 00:
No, I think you know in Callaway this court said that the fee cap only prohibited the district's authority to pay.

[00:09:30] Speaker 02:
Right, it's about payment rather than entry of judgment.

[00:09:34] Speaker 02:
Correct.

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So we come back to the question I posed to you which is we have a set of pre-existing judgments and then Congress says

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very broadly and very categorically, we're not going to pay for these.

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And we have authority for the proposition that judgments are property for takings purposes.

[00:10:01] Speaker 02:
So why isn't that a problem?

[00:10:04] Speaker 00:
Well, I think as a district court found here and these that because these were always contingent

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from day one on the limitations set forth in the fee cap.

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There was never a vested property interest.

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These interests, the entitlement to the amounts above the fee awards was always contingent upon future congressional authorization.

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And that's why there was no takings.

[00:10:38] Speaker 02:
That makes sense if the claim were formulated as a retroactivity-based due process argument about unsettling expectations, but for takings purposes, what seems most relevant is that the pre-existing judgments give rise to property rights.

[00:11:01] Speaker 00:
Well, I guess I get back to my point, which was they were always, I mean, it wasn't like they were settled judgments and then subsequently the Congress placed this impediment on payment.

[00:11:16] Speaker 00:
It always was there.

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I see that my time's up.

[00:11:22] Speaker 00:
Unless the court has any questions, I did want to reserve two minutes.

[00:11:25] Speaker 01:
I'll give you some time back.

[00:11:27] Speaker 00:
Thank you.

[00:11:35] Speaker 03:
Good morning.

[00:11:36] Speaker 03:
Good morning, your honor.

[00:11:36] Speaker 03:
May it please the court, my name is Michael Morale.

[00:11:39] Speaker 03:
And at the outset, I'd like to reserve two minutes for rebuttal.

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To begin, I'm sorry, for a reply, for a reply.

[00:11:50] Speaker 03:
At the outset, this case is about 224 disabled children who were failed by the District of Columbia, as well as their 224 sets of parents, as well as 397 successful administrative hearing officer decisions, each of which represents a failure by the district to do its duty and comply with the law.

[00:12:12] Speaker 03:
These judgments are now old.

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The named plaintiff in this case, Mr. Allen, is over two decades older, as is his attorney.

[00:12:20] Speaker 03:
The district court did not abuse, if I may, I'm going to address the interest issue first.

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The district court did not abuse its discretion and its award of interest payable immediately on cap judgment amounts.

[00:12:31] Speaker 03:
Section 28 U.S.E.

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Section 1961A is clear on this.

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It states that interest shall run from the date of judgment.

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There's nothing in the idea statute or in the 2009 Act FECAP that places any

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any burdens on the running of interest from the date of judgment?

[00:12:52] Speaker 02:
Go ahead.

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What about an argument that it's just inherent in the concept of interest, which would be Judge Griffith's textual hook?

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Interest is compensation for a wrongful failure to pay money back on time, and you don't have that and can't have that when there's a legal prohibition.

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on making the payment.

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Right, Your Honor.

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I would say that interest is not merely due on wrongful delays in payments, but delays in payments generally.

[00:13:28] Speaker 02:
So in this case, rightly or wrongly, Congress decided that Fair enough, but just to make it a little more precise, payments where payment of the principal is legally prohibited.

[00:13:48] Speaker 03:
The payment itself is legally barred from congressional appropriations only.

[00:13:53] Speaker 02:
DC is legally prohibited from stopping the accrual of interest by making payment on the underlying principle, which is the fee amount over $4,000.

[00:14:07] Speaker 03:
I would disagree, Your Honor.

[00:14:09] Speaker 03:
DC is legally prohibited from using congressional appropriations, this one set of, one pool of money to pay... Under any appropriation for the district?

[00:14:21] Speaker 03:
Under any federal appropriation for the district.

[00:14:23] Speaker 02:
So how do they pay?

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For example, in our original motion to enforce

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which is the joint appendix at page 82, we noted that there was a Budget Autonomy Act, which was moving through the district and into Congress, and had that passed, that would have provided another source of funds from which the district could pull that was not subject to the fee cap, as the fee cap was only a cap on federal provisions.

[00:14:47] Speaker 01:
Dividing the intent of Congress is always a perilous sort of exercise.

[00:14:51] Speaker 01:
But in here, it's pretty clear what Congress is trying to do, right?

[00:14:56] Speaker 01:
They were concerned about

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attorneys making more than $4,000 on an IDA claim.

[00:15:02] Speaker 01:
It was swallowing up the whole program.

[00:15:08] Speaker 01:
Your solution to this is to have them pay this interest fee, which would in fact swallow the program.

[00:15:18] Speaker 01:
How is that consistent with the clear congressional intent here to put a cap on this?

[00:15:23] Speaker 01:
It was a program that they thought had gotten out of control.

[00:15:26] Speaker 03:
Well, I would say that the congressional intent is not necessarily clear.

[00:15:31] Speaker 03:
As the signing statement when the bill was read into law stated that the Section 814 of the 2009 Appropriations Act lifted the fee cap on idea attorneys fees.

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So I don't know that I would agree that the... After a certain time, but not for the ones that

[00:15:53] Speaker 01:
interesting uh... it were in front of us here congress was clear that there was a cat that didn't want more than

[00:15:59] Speaker 01:
the statutory cap being paid out to attorneys.

[00:16:01] Speaker 03:
Right, Your Honor, but to the degree that there's incongruities between Congress, between what Congress has authorized to pay and what interest is due on that amount and whether or not it's capped interest payments is the provision of Congress, Your Honor.

[00:16:18] Speaker 03:
It's not for us really or it's not.

[00:16:21] Speaker 04:
How would it work in practice if it's in fact true that

[00:16:24] Speaker 04:
Interest is constantly running on the entire principal amount even if the district is barred from paying the principal amount about the cap from congressional appropriations Right, your honor what happens so that every day you come in and say here's the amount that I'm due at the end of the day Well, given it's annually compounding.

[00:16:42] Speaker 03:
I think it would probably be every year Just an annual exercise that it would be an annual exercise until Congress lifts the fee cap So the cap on fees

[00:16:52] Speaker 02:
is converted into a very generous annuity for you all.

[00:16:58] Speaker 03:
If that's one possible interpretation, the other is that Congress has decided, so we're arguing that Congress has in fact lifted the fee cap, but assuming for the sake of argument that they have not, then it's up to Congress to lift the fee cap.

[00:17:14] Speaker 03:
In the meantime, interest would still be due on that entire judgment amount.

[00:17:19] Speaker 03:
Collectible now collectible later.

[00:17:21] Speaker 03:
The problem we run into there is people are finite.

[00:17:24] Speaker 03:
Well, the district is not so There is a time limitation in terms of mortality your honors, so

[00:17:32] Speaker 03:
We, the Allen plaintiffs, by and through council, have petitioned the city council, petitioned the CFO, have petitioned Congress to revisit this issue, and it seems that Congress, through its inaction, is uninterested in revisiting the fee cap statute.

[00:17:53] Speaker 03:
In addition, the district's Office of Attorney General, upon Mr. Drake's

[00:17:58] Speaker 03:
petition to DC City Council unilaterally came in and objected to the City Council even going to Congress and petitioning for removing the fee cap, which would immediately resolve this issue, as then the principal and interest amounts would be immediately due, interest would stop running.

[00:18:17] Speaker 03:
So if the interest is continually running, it's only through the district's own action and inaction.

[00:18:25] Speaker 03:
We have also alleged that the district drafted the fee cap statute.

[00:18:29] Speaker 01:
I'm sorry, the district's own inaction through what?

[00:18:31] Speaker 01:
Not going to Congress?

[00:18:32] Speaker 03:
Through not going to Congress in its submissions towards the district's budgetary appropriation.

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The D.C.

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City Council has a part.

[00:18:44] Speaker 01:
We're not accustomed to being a backstop when the political process doesn't work.

[00:18:50] Speaker 01:
You know, we're accustomed to interpreting statutes and

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constitution, but we're not here to fix political problems.

[00:18:55] Speaker 03:
Understood, Your Honor, but to that degree then the running of interest while the fee cap is in place would seem to be a political problem.

[00:19:05] Speaker 03:
It would not be within this court's purview.

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And as the court in Plout and in Callaway said, these sorts of incongruities are for Congress to resolve, it's not for the courts.

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To that degree, this interest argument was also weighed by the district.

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The district did not raise it numerous chances over the course of two years of litigation in the court below.

[00:19:38] Speaker 03:
As Judge Lambert clearly said, the district failed to raise this objection, both in its original objections to our motion to enforce, as well as an oral argument, and later in its objection to the report and recommendation, at which point Judge Lambert incorporated the magistrate judge's findings where he calculated interest due on the entirety of the judgment amounts.

[00:20:04] Speaker 01:
I notice you're in your rebuttal time.

[00:20:07] Speaker 01:
Yes, Your Honor.

[00:20:08] Speaker 01:
Thank you.

[00:20:17] Speaker 00:
Very briefly, Your Honor, this case is not about mortality.

[00:20:22] Speaker 00:
It's not about special ed services.

[00:20:24] Speaker 00:
It's an action to collect on an attorney's fee award.

[00:20:27] Speaker 00:
Nor is there any issue with regard that was raised or fully flushed out in terms of there being other sources of funds that Congress may not have appropriated.

[00:20:37] Speaker 02:
What's your answer on that argument?

[00:20:42] Speaker 00:
Well, to the extent we addressed it in our brief very briefly in that it was forfeit.

[00:20:49] Speaker 00:
It never was raised that there are other funds that are not subject to the fee cap.

[00:20:57] Speaker 00:
It was never an issue that was raised below.

[00:20:59] Speaker 00:
It was mentioned quite briefly in the briefs

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And our response was, one, it was forfeit because it wasn't raised below, and two, it was never flushed out even, you know, just merely mentioning it isn't sufficient to raise as an issue in this court.

[00:21:17] Speaker 02:
Can the district raise and spend money on its own under the Home Rule Act or whatever without congressional appropriations?

[00:21:26] Speaker 00:
I don't believe so.

[00:21:27] Speaker 00:
I mean, I haven't fully

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research that issue so it's a little off the top of my head and I hesitate to do that but I don't believe so.

[00:21:38] Speaker 02:
And maybe forfeiture is the answer.

[00:21:39] Speaker 02:
I mean if we were dealing with a state and Congress said no federal funds maybe used to pay these then their case would be pretty compelling which is just well pay it out of your own money.

[00:21:53] Speaker 00:
Right.

[00:21:55] Speaker 00:
In terms of

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I mean, you can't look at that statute in a vacuum.

[00:22:05] Speaker 00:
And we've set forth, I think, several reasons.

[00:22:07] Speaker 00:
I won't repeat myself as to why its passage doesn't support an award of interest in this circumstance.

[00:22:18] Speaker 00:
Finally, on the waiver, I think it said forth in our brief, but I do just want to very briefly repeat that the district never had notice that from the reporter recommendation or from the

[00:22:34] Speaker 00:
underlining referral in the August 2015 order of the district court.

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That immediate payment of interest on judgment amounts that exceeded the cap was an issue under consideration.

[00:22:47] Speaker 00:
We were told, we were ordered to pay $4,000 less anything already paid plus interest.

[00:22:55] Speaker 00:
It was our understanding that interest ran only on the amounts up to the cap.

[00:23:00] Speaker 00:
And although the court ordered the magistrate judge to calculate the remaining judgment plus interest through September 30th, 2015, he did so with the express condition that that should be calculated so the amount would be available if Congress authorized future appropriations.

[00:23:24] Speaker 00:
So for all those reasons, the reasons we set forth in the brief, we think the court err in finding that we waived our objection to interest, plus we also set forth that the issue was passed upon.

[00:23:38] Speaker 00:
and that we are in an extraordinary situation since it would be manifestly unjust to require us to pay interest, potentially never ending interest, on amounts of principle we are prohibited from paying.

[00:23:53] Speaker 00:
We can never stop the running from interest until there's some congressional change.

[00:23:58] Speaker 00:
Thank you.

[00:24:05] Speaker 03:
Thank you, Your Honor.

[00:24:06] Speaker 03:
Just to address four last points.

[00:24:08] Speaker 03:
First, in response to Judge Katz's question, let's say there's another pool of money.

[00:24:13] Speaker 03:
We did raise this issue in a motion before this court to supplement the record, identifying two potential sources of funds that the district could use that are not subject to congressional appropriations.

[00:24:24] Speaker 03:
However, that motion was denied.

[00:24:25] Speaker 03:
I don't want to go further into it, but in addition,

[00:24:30] Speaker 03:
The good faith argument, whether or not the district acting in good faith and fair dealing was raised before the magistrate judge in an argument for Judge Lambert it just wasn't fully argued in our briefs.

[00:24:44] Speaker 03:
We expounded upon that argument in our briefs.

[00:24:48] Speaker 03:
Additionally, in terms of our argument regarding whether or not the district court passed on the waiver, we used an incorrect word.

[00:24:58] Speaker 03:
In our brief, we should have said that we should refer to the interest objection rather than the interest argument.

[00:25:03] Speaker 03:
I think that would have been clear.

[00:25:06] Speaker 03:
The district court did not pass on the interest argument.

[00:25:09] Speaker 03:
However, it did address the objection, the underlying merits of the objection.

[00:25:13] Speaker 03:
And finally,

[00:25:15] Speaker 03:
Your Honor, both Callaway and Watley, two prior cases in the D.C.

[00:25:20] Speaker 03:
Circuit that concern this similar fee cap statute, do not concern final judgments.

[00:25:26] Speaker 03:
This case, Ms.

[00:25:27] Speaker 03:
Schallen's case, is unique in that we have final judgments for attorney's fees.

[00:25:32] Speaker 03:
And in Callaway, there was a challenge to the fee cap statute itself, while in Watley, the appeal was denial of a request for above-cap fees.

[00:25:41] Speaker 03:
At no point in either one of them was there a final judgment.

[00:25:44] Speaker 03:
Therefore, this case is unique.

[00:25:46] Speaker 03:
The fee cap statute does not address final judgments or interest.

[00:25:50] Speaker 03:
The district court did not abuse this discretionary awarding interest over the fee cap.

[00:25:53] Speaker 03:
And the district court did incorrectly decide that to continue to deny payment of the entire principal judgment amounts would not be an unconstitutional taking and violation and separation of powers.

[00:26:06] Speaker 03:
Thank you, Your Honors.

[00:26:08] Speaker 01:
Thank you very much.

[00:26:09] Speaker 01:
The case is submitted.