KEITH ALLEN, ET AL., APPELLEES v. DISTRICT OF COLUMBIA, A MUNICIPAL CORPORATION, APPELLANT
No. 18-7177
United States Court of Appeals FOR THE DISTRICT OF COLUMBIA CIRCUIT
Argued December 12, 2019 Decided August 11, 2020
Consolidated with 18-7178
Appeals from the United States District Court for the District of Columbia (No. 1:00-cv-00591)
Richard S. Love, Senior Assistant Attorney General, Office of the Attorney General for the District of Columbia, argued the cause for appellant. With him on the briefs were Karl A. Racine, Attorney General, Loren L. AliKhan, Solicitor General, and Caroline S. Van Zile, Deputy Solicitor General.
Michael J. Murali argued the cause for appellees. On the brief was Ronald L. Drake.
Before: SRINIVASAN, Chief Judge, and GRIFFITH and KATSAS, Circuit Judges.
Opinion for the Court filed by Circuit Judge KATSAS.
I
A
The
The District of Columbia has long struggled to comply with the
Congress responded by passing a series of appropriations riders limiting the amount that the District could pay in
For 2003 to 2008, Congress passed annual riders prohibiting the District from paying more than $4,000 per proceeding out of current appropriations for
For 2009, Congress passed a final appropriations rider. Like the 2002 Act, it applied to current and future appropriations. It provides that no funds approрriated for the District “may be made available to pay the fees of an attorney who represents a party in or defends an IDEA proceeding which was initiated prior to the date of the enactment of this Act in an amount in excess of $4,000 for that proceeding.” Omnibus Appropriations Act, 2009, Pub. L. No. 111-8, § 814(a)(1), 123 Stat. 524, 697 (2009 Act).
B
In these eleven consolidated cases, the plaintiffs are hundreds of parеnts who prevailed against the District in
In 2015, the plaintiffs moved to compel the District to pay the balance of their attorneys’ fees with interest. The district court held that the 2009 Act applies to all
The magistrate judge separately calculated how much the District owed and how much it could lawfully pay. He determined that the District owed a total of about $3.7 million in fee awards, which had accumulated over $1.3 million in interest. Applying the payment cap, the magistrate judge recommended that the District be required to pay about $514,000 in fee awards and costs. He did not recommend that the District be required to pay any interest.
Both sides filed objections to the magistrate judge‘s report and recommendation. The plaintiffs objected to its failure to include interest; the District did not mention that issue. While the dispute was pending before the district court, the District paid the plaintiffs some $427,000, which it characterized as including all undisputed fees plus interest on those fees. The district court prodded the parties to clarify their exact positions on and calculation of interest. The plaintiffs then asserted that the District should be rеquired to pay interest on the full amount of fee awards, not just on amounts up to the payment cap. The District responded that it could not be compelled to pay interest on debts that it was legally forbidden to pay off.
The district court agreed with the plaintiffs. It held that the District‘s position was both forfeited and meritless. Allen v. District of Columbia, 263 F. Supp. 3d 14, 32-33 (D.D.C. 2017) (Allen II). After modifying the magistrate judge‘s calculations, the court ordered the District tо pay some $220,000 in further outstanding fee awards, as limited by the payment cap, and about $1.4 million in interest accumulated on the entire amount of all unpaid awards. See id. at 46.
II
The District raises only one contention on appeal: that it cannot be compelled to pay interest on fee awards that Congress has prohibited it from paying.
A
The district court held that the District forfeited this argument by not raising it under the court‘s Local Rule 72.3(b). That rule requires a party to file written objections to a magistrate judge‘s report and recommendation within 14 days.
The District did not forfeit the interest issue. Because the magistrate judge did not recommend requiring it to pay any interest, much less interest on the full fee awards, the District had no reason to object on that basis. Nor was the question otherwise fairly teed up. To the contrary, before referring the matter to the magistrate judge, the district court ruled that the District “must pay plaintiffs $4,000—less any amount already paid—plus interest, for each action.” J.A. 216. This formulation at least suggested that interest would be due only on amounts up to the $4,000 cap. The court also instructed the magistrate judge “to calculate the amount of interest due from the date of judgment until October 1, 2015, sо that any further statutory change authorizing additional payments in the outstanding judgments will be readily actionable.” Allen I, 128 F. Supp. 3d at 85. This further suggested that the District would pay interest on the full awards only if Congress lifted the fee cap. In turn, the magistrate judge separately determined the “amount of fees and costs due now pursuant to the $4,000 fee cap”
The District did not need to object to something that the magistrate judge had not recommended. Neither the court‘s instructions to the magistrate judge nor the magistrate judge‘s report and recommеndation fairly warned that the District might be required to pay interest on the full fee awards. And as soon as the district court raised that possibility, the District promptly objected, thus preserving the issue.
B
On the merits, the District contends that the 2009 fee cap prohibits it from paying interest on the full judgment amounts. We review this question of law de novo. See Conservation Force v. Salazar, 699 F.3d 538, 542 (D.C. Cir. 2012).
The plaintiffs’ argument is straightforward: By its terms, the 2009 Act prohibits the use of any appropriated funds to pay more than $4,000 per IDEA proceeding for “the fees of an attorney.” Pub. L. No. 111-8, § 814(a)(1), 123 Stat. at 697. But without exception, another statute provides that “[i]nterest shall be allowed on any money judgment in a civil case recovered in a district court.”
The Supreme Court has explained that, “where a common-law principle is well established, courts may take it as a given that Congress has legislated with an expectation that the principle will apply except when a statutory purpose to the contrary is evident.” Astoria Fed. Sav. & Loan Ass‘n v. Solimino, 501 U.S. 104, 108 (1991) (cleaned up). “In order to abrogate a common-law principle, the statute must ‘speak directly’ to the question addressed by the common law.” United States v. Texas, 507 U.S. 529, 534 (1993) (quoting Mobil Oil Corp. v. Higginbotham, 436 U.S. 618, 625 (1978)). The Court repeatedly has applied this principle to narrow the scope of seemingly unbounded statutes. For example, although the
This case implicates another well-established common-law principle: If the law makes a debt unpayable, then interest on the debt is also unpayable. This rule flows from the meaning of interest, which is “given on mоney demands as damages for delay in payment.” Redfield v. Ystalyfera Iron Co., 110 U.S. 174, 176 (1884); see also Library of Congress v. Shaw, 478 U.S. 310, 322 (1986) (interest is “designed to compensate for the belated receipt of money“); Shoemaker v. United States, 147 U.S. 282, 321 (1893) (“Interest accrues in the nature of damages, by reason of the failure of the debtor to pay the principal when due.“). When Congress has prohibited a monetary payment, its delayed receipt is not wrongful; instead, it is obligatory. And a party cannot fairly be mаde to pay “damages” for doing what the law requires.
This principle is as old as the Republic. As far back as 1789, the Supreme Court held that an American debtor owed no interest to a British creditor for the time between September 1775 and March 1783, when the Continental Congress had made it illegal to “make any remittances” to British subjects. Hoare v. Allen, 2 U.S. (2 Dall.) 102, 103 (1789). The Court explained that “[w]here a person is prevented by law, from paying the principal, he shall not be compelled to pay interest during the prohibition.” Id. This followed from the nature of interest: “Interest is paid for the use or forbearance of money. But in the case before us, there could be no forbearance; because the plaintiff could not enforce the payment of the principal; nor could the defendants pay [the plаintiff], consistent with law ....” Id. The Court later applied the same rule in Brown v. Hiatts, 82 U.S. (15 Wall.) 177 (1872), which arose from legislation prohibiting certain payments during the Civil War. The Court gave the same explanation: “Interest is the compensation allowed by law, or fixed by the parties, for the use or forbearance of money, or as damages for its detention, and it would be manifestly unjust to exact such compensation, or damages, when the payment of the principal dеbt was interdicted.” Id. at 185. The Court stated that “[a]s a general rule it may be safely laid down that wherever the law prohibits the payment of the principal, interest during the existence of the prohibition is not demandable.” Id. at 186 (cleaned up).
We have no basis to conclude that
The district court and the plaintiffs offer various responses to the Brown line of cases, but none is persuasive. The district court asserted that here, unlike in those cases, payment of the principal “was never suspended.” Allen II, 263 F. Supp. 3d at 33. That is incorrect; Congress has prohibited payment of fee awards over $4,000 in individual
For these reasons, we hold that the District cannot be compelled to pay interest on the portion of fee awards that it has been legally prohibitеd from paying off.
III
On cross-appeal, the plaintiffs argue that the 2009 fee cap does not apply at all to most of the fee awards at issue. They further raise separation of powers and takings challenges to the cap. And they contend that the cap breaches the District‘s duty of good faith and fair dealing. We review these legal arguments de novo. See Conservation Force, 699 F.3d at 542.
A
We begin with the plaintiffs’ statutory arguments. First, the plaintiffs invoke the presumption against statutory retroactivity, see Landgraf v. USI Film Prods., 511 U.S. 244 (1994), to contend that the 2009 Act should not be applied to their fee awards. But the statute does speak clearly to its own temporal scope; by its terms, it applies to fees in
Next, the plaintiffs argue that the 2009 Aсt, which is an appropriations statute, should not be construed to modify substantive law. Insofar as the plaintiffs suggest that the funding restrictions in the 2009 Act do not govern future appropriations,
The plaintiffs briefly suggest that the payment cap applies only to federally appropriated funds and thus does not prohibit use of the District‘s other revenue sources to pay off the fee awards. But the plаintiffs fail to identify any such sources or otherwise to develop this theory beyond bald assertion. We do not consider arguments raised in such skeletal form. Schneider v. Kissinger, 412 F.3d 190, 200 n.1 (D.C. Cir. 2005). In any event, in construing the 2002 Act, we took it for granted that a prohibition on the District‘s ability to spend federally appropriated funds amounts to a blanket spending prohibition. See Whatley, 447 F.3d at 819-20 (“the District is never to pay fees for work done or fees requested in the relevant years“).
B
We next consider the plaintiffs’ constitutional challenges to the fee cap. First, the plaintiffs contend that the cap violates the separation of powers by commanding the courts to reopen final judgments, which is unconstitutional under Plaut v. Spendthrift Farm, Inc., 514 U.S. 211 (1995). But the 2009 Act does no such thing. Instead, it limits the future use of funds to “pay” for attorneys’ fees in
The plaintiffs further contend that the 2009 Act violates the separation of powers by purporting to bind future Congresses. The 2009 Act does continue to govern current and future appropriations, but nothing in it prevents (оr could prevent) a future Congress from lifting its payment restrictions. As we explained in Whatley, barring “payment in subsequent fiscal years” is different from purporting to bar subsequent statutory amendments. 447 F.3d at 821-22 (cleaned up).
Finally, the plaintiffs argue that the fee cap violates the
Far from upsetting the status quo, the 2009 Act
C
The plaintiffs argue that the District breached a duty of good faith and fair dealing when it lobbied for the fee cap while negotiating consent judgments in two of the cases under review. The plaintiffs failed to raise this argument before the district court, so we do not consider it. See Keepseagle v. Perdue, 856 F.3d 1039, 1053 (D.C. Cir. 2017).
IV
For these reasons, we reverse the district court‘s judgment requiring payment of interest on above-cap fees, affirm the district court‘s judgment in all other respects, and remand for further proceedings consistent with this opinion.
So ordered.