Padgett v. City of Monte Sereno

Background

Joseph Padgett sued eight defendants in 2004, alleging civil-rights violations. After a jury trial, he received $1 in nominal damages and $200,000 in punitive damages, which the court reduced to $10,000. He prevailed on one claim: retaliation under the First Amendment.

Padgett’s original attorneys withdrew in 2006, and Padgett represented himself for two years. In September 2008, Bustamante & Gagliasso and Kallis & Associates became his attorneys. They represented him for about five years, until the court relieved them as counsel.

In 2010, Judge Ware awarded Padgett $500,000 in attorney’s fees under 42 U.S.C. § 1988. The Ninth Circuit later vacated that award and sent the matter back because the order did not explain the fee calculation. In March 2015, the court awarded $471,056.64 in attorney’s fees and $100,000 in litigation costs directly to Bustamante and Kallis. Padgett appealed, and the Ninth Circuit vacated the award because the court had not analyzed whether a valid contract allowed fees to be paid directly to the firms.

On October 7, 2019, the court reinstated the 2015 fee and cost award after finding that the parties’ fee agreement directed payment to Bustamante. Padgett moved for reconsideration, but the court denied that motion. Padgett then appealed the October 2019 order. Bustamante filed the present motion under Federal Rule of Appellate Procedure 7, asking Padgett to post a bond for appellate attorney’s fees and costs.

Legal standard

Rule 7 allows a district court to require an appellant to post a bond or provide other security in an amount needed to ensure payment of costs on appeal. Those costs may include appellate attorney’s fees when the relevant fee-shifting statute authorizes an award of those fees.

Attorney’s-fee bond

The court concluded that 42 U.S.C. § 1988(b) was the statutory authority connected to the prior fee awards. That statute allows a prevailing party in a civil-rights action to recover reasonable attorney’s fees. But the court distinguished the underlying civil-rights case from the issue presented in Padgett’s appeal.

The appeal concerned whether a contractual provision allowed Padgett’s prevailing-party fees to be paid directly to Bustamante. It did not concern whether § 1988(b) entitled Padgett or Bustamante to recover fees for enforcing civil rights. Because the appeal involved a contractual dispute rather than the vindication of civil rights, the court held that § 1988(b) did not authorize Bustamante to recover appellate attorney’s fees. The court therefore concluded that a Rule 7 bond for those fees was inappropriate.

Padgett argued that Bustamante could not recover fees because the firm was representing itself. The court said that issue was more complicated because Bustamante claimed a contractual right to fees awarded to Padgett, and Bustamante indicated it would obtain an attorney for the appeal. The court declined to decide whether the cited Supreme Court precedent would independently bar recovery.

The court also rejected Bustamante’s alternative arguments under Rules 38 and 39 of the Federal Rules of Appellate Procedure and 28 U.S.C. § 1927. It explained that Rule 39 costs do not include attorney’s fees, that only the appeals court may determine whether an appeal is frivolous and impose Rule 38 sanctions, and that § 1927 does not provide a basis for a Rule 7 bond for attorney’s fees. Bustamante also raised a new argument in its reply brief that the fee agreement entitled it to appeal costs. The court did not reach that argument because new legal arguments generally may not be raised for the first time in a reply.

Rule 39 costs and disposition

Bustamante separately sought costs under Rule 39 for the first time in its reply. Its opening brief requested a lump sum of $150,000 without identifying how much represented costs rather than attorney’s fees. The court denied Bustamante’s request for costs.

The court’s final disposition was: “Bustamante’s motion to compel Padgett to post a FRAP 7 bond for appellate attorney’s fees and costs is DENIED.” The court also declined to discuss the merits of Padgett’s appeal or decide whether the appeal was frivolous.