Kalodner, Philip v. Abraham, Spencer

                  United States Court of Appeals

               FOR THE DISTRICT OF COLUMBIA CIRCUIT

       Argued October 17, 2002   Decided November 19, 2002 

                           No. 01-5339

                       Philip P. Kalodner, 
                            Appellant

                                v.

          Spencer Abraham, Secretary of Energy, et al., 
                            Appellees

          Appeal from the United States District Court 
                  for the District of Columbia 
                         (No. 97cv02013)

     Philip P. Kalodner, appellant appearing pro se, argued the 
cause and filed the briefs.

     Edward Himmelfarb, Attorney, U.S. Department of Jus-
tice, argued the cause for appellees.  With him on the brief 
was William Kanter, Deputy Director.

     Before:  Edwards, Randolph and Tatel, Circuit Judges.

     Opinion for the Court filed by Circuit Judge Tatel.

     Tatel, Circuit Judge:  In this case involving Emergency 
Petroleum Allocation Act refunds to consumers of crude oil, 
appellant, an attorney, seeks an award of fees under the 
common fund doctrine for helping third parties recover mon-
ey from a government-created escrow account held in the 
United States Treasury.  Because the government has not 
waived its sovereign immunity, we affirm the district court's 
denial of his request.

                                I.

     Enacted in 1973, the Emergency Petroleum Allocation Act 
("EPAA"), 15 U.S.C. ss 751-760h (repealed 1981), gave the 
federal government authority to establish and administer a 
program of mandatory price controls for crude oil and related 
petroleum products.  The statute, incorporating the enforce-
ment mechanism set out in section 209 of the Economic 
Stabilization Act, 12 U.S.C. s 1904 (expired 1974), authorized 
the Department of Energy (DOE) to institute administrative 
enforcement proceedings against alleged violators of the 
EPAA and to obtain restitution from them.  15 U.S.C. 
s 754(a)(1).  The Petroleum Overcharge Distribution and 
Restitution Act, 15 U.S.C. ss 4501-4507, part of which re-
mains in effect today, directs the Secretary "to identify 
persons who have been harmed by a violation of the EPAA 
regulations and to use recovered funds to make restitution [to 
such persons] 'to the maximum extent possible.' "  Consol. 
Edison Co. v. O'Leary, 131 F.3d 1475, 1478 (Fed. Cir. 1997) 
(quoting 15 U.S.C. s 4502).  DOE determines both eligibility 
for restitution and the amount each person should receive 
according to standards set forth in 10 C.F.R. pt. 205, subpt. 
V--the so-called Subpart V procedures.

     The procedural and substantive history of this case is 
complex, but little of it relates to the narrow issue before us.  
Suffice it to say that in 1992, Cities Service Oil and Gas 
Corporation, the predecessor to Occidental Petroleum Corpo-
ration, agreed to settle DOE section 209 charges alleging 

certain violations of the EPAA.  Under that settlement, 
Occidental agreed to make payments to a restitution fund for 
distribution to end users of Occidental's crude oil, to certain 
states, and to the United States.  The restitution fund "is 
held in an escrow account in the [United States] Treasury."  
Appellee's Br. at 26.

     To settle additional allegations that it violated the EPAA, 
Occidental entered into a separate agreement with another 
group of end users, clients of appellant Philip Kalodner.  This 
included an award of $400,000 in attorney's fees to Kalodner.

     Kalodner subsequently filed a claim with DOE seeking an 
award of attorney's fees from the fund established through 
DOE's settlement with Occidental.  Although neither Kalod-
ner nor his clients were parties to that settlement and 
although he had already received a substantial fee award, 
Kalodner alleges that his work on behalf of his clients benefit-
ted the entire class of end users, entitling him to still more 
fees.  Expressly disclaiming that he qualifies as a Subpart V 
claimant, Appellant's Reply at 21, Kalodner argues that he is 
entitled to an award pursuant to the common fund fee doc-
trine.  See Boeing Co. v. Van Gemert, 444 U.S. 472, 478 
(1980) (recognizing that under common fund fee doctrine "a 
litigant or a lawyer who recovers a common fund for the 
benefit of persons other than himself or his client is entitled 
to a reasonable attorney's fee from the fund as a whole").  
Both DOE and the district court rejected Kalodner's claim.  
Kalodner appeals.

                               II.

     Neither the complex jurisdictional issues in this case, in-
cluding whether appellate jurisdiction is with this Court or 
the Federal Circuit, see Tex. Am. Oil Corp. v. United States 
Dep't of Energy, 44 F.3d 1557, 1563-64 (Fed. Cir. 1995), nor 
the merits of Kalodner's common fund claim require our 
attention, for Kalodner's suit is barred by sovereign immuni-
ty.  See Steel Co. v. Citizens for a Better Env't, 523 U.S. 83, 
94-95 (1998) (courts must establish jurisdiction before ad-
dressing merits);  Galvan v. Fed. Prison Indus., 199 F.3d 461, 

463 (D.C. Cir. 1999) (courts may address sovereign immunity 
prior to other "non-merits decisions").  "The basic rule of 
federal sovereign immunity," the Supreme Court has ex-
plained, "is that the United States cannot be sued at all 
without the consent of Congress."  Block v. North Dakota, 
461 U.S. 273, 287 (1983).  The federal government is "immune 
from suit save as it consents to be sued," United States v. 
Sherwood, 312 U.S. 584, 586 (1941), and "waiver of the 
Federal Government's sovereign immunity must be unequivo-
cally expressed in statutory text," Lane v. Pena, 518 U.S. 187, 
192 (1996).

     Although arguing that this action "is against the United 
States only in its capacity as escrowee of funds belonging to 
end users found entitled to restitution," Appellant's Reply Br. 
at 16-17, Kalodner's common fund fee claim nevertheless 
implicates federal sovereign immunity for a simple reason:  
He seeks funds in the United States Treasury.  According to 
the government, its sovereign immunity defense is especially 
strong because the United States may recover any funds that 
remain in the escrow account after distribution to end users.  
See Statement of Modified Restitutionary Policy in Crude Oil 
Cases, 51 Fed. Reg. 27,899 (Aug. 4, 1986);  Order Implement-
ing Statement of Restitutionary Policy Concerning Crude Oil 
Overcharges, 51 Fed. Reg. 29,689-02 (Aug. 20, 1986) (direct-
ing excess funds in escrow account after disbursements have 
been made to be deposited in general fund of the United 
States Treasury).  Kalodner insists that nothing will remain 
in the escrow account because all funds will be distributed on 
a pro rata basis to Occidental's end users.  Appellant's Reply 
Br. at 14-15 (citing Consol. Edison Co. v. Richardson, 233 
F.3d 1376, 1379 (Fed. Cir. 2000) (Subpart V claimants have 
standing to challenge awards to other Subpart V claimants 
because the awards are distributed on a pro rata basis and 
"any increase in the size of the total consumed volume ... 
directly reduces the share of each claimant")).  We need not 
resolve that debate, however, for the sine qua non of federal 
sovereign immunity is the federal government's possession of 
the money in question.  The government need not have an 
actual interest in the funds in order to invoke the defense.  

See United States v. N.Y. Rayon Importing Co., 329 U.S. 654 
(1947) (federal sovereign immunity precludes award of pre-
judgment interest based on funds held by the United States 
but belonging to private parties);  VGS Corp. v. United States 
Dep't of Energy, 808 F.2d 842, 846 (Temp. Emer. Ct. App. 
1986) (for purposes of sovereign immunity, that the govern-
ment has never claimed a right to the money "does not 
remove the obstacle presented by the N.Y. Rayon case").

     Kalodner relies on National Treasury Employees Union v. 
Nixon, 521 F.2d 317 (D.C. 1975), where we rejected a sover-
eign immunity defense against a claim for attorney's fees.  
Appellant's Reply Br. at 17.  In that case, however, the funds 
at issue had already been distributed to private parties, so the 
money was no longer in the government's possession.  Nat'l 
Treasury Employees, 521 F.2d at 320 ("[W]e believe that 
sovereign immunity does not bar the award of attorney's fees 
and litigation expenses against private parties merely because 
some incidental expense might be imposed upon the Govern-
ment by such an award.").  As Kalodner concedes, the funds 
at issue here remain in the Treasury.  They are thus fully 
protected by sovereign immunity.

     Kalodner has also failed to identify a statutory waiver of 
immunity that would allow him to bring his common fund fee 
claim.  Congress has waived sovereign immunity for Subpart 
V claimants--parties actually injured by violations of the 
EPAA--by authorizing them to seek refunds from escrow 
accounts held by the United States Treasury and to challenge 
awards to other claimants.  See Goodyear Tire & Rubber Co. 
v. Dep't of Energy, 118 F.3d 1531 (Fed. Cir. 1997) (party 
allegedly injured by EPAA violation challenged DOE's denial 
of its claims for price refunds);  Consol. Edison Co. v. Rich-
ardson, 233 F.3d 1376 (holding that Subpart V claimants have 
standing to challenge awards to other claimants).  But as 
Kalodner concedes, he is not a Subpart V claimant nor was he 
injured by a violation of the EPAA.  Appellant's Reply Br. at 
21.

     Because Kalodner's claim is barred by sovereign immunity, 
we affirm the district court's denial of his fee request.

                                                        So ordered.