[PUBLISH]
IN THE UNITED STATES COURT OF APPEALS
FOR THE ELEVENTH CIRCUIT FILED
U.S. COURT OF APPEALS
_____________ ELEVENTH CIRCUIT
December 5, 2003
No. 01-16973 THOMAS K. KAHN
CLERK
_____________
D.C. Docket No. 00-00542 CV-PCH
ROBERT S. WOLFF,
EDWARD TURNER,
EDWARD E. WALLER,
GREY WOLF HOLDINGS,
JOHN G. COUGHLIN,
Plaintiffs-Appellees,
versus
CASH 4 TITLES,
d.b.a. Charles Richard Homa, et al.,
Defendants,
PHILLIP S. STENGER,
G. JAMES CLEAVER, CAYMAN
ISLANDS LIQUIDATIONS CREDITOR’S COMMITTEE,
Appellants.
____________
Appeal from the United States District Court
for the Southern District of Florida
____________
(December 5, 2003)
Before TJOFLAT and BARKETT, Circuit Judges, and WEINER*, District Judge.
TJOFLAT, Circuit Judge:
I.
This appeal involves the fairness of the attorneys’ fees the district court
awarded the plaintiffs’ attorneys in a class action brought under the Racketeer
Influenced and Corrupt Organizations Act (“RICO”), 18 U.S.C. § 1964,1 by the
victims of a Ponzi scheme.2 The Ponzi scheme involved the sale of securities of
*
Honorable Charles R. Weiner, United States District Judge for the Eastern District of
Pennsylvania, sitting by designation.
1
Section 1964(c) of title 18 provides, “Any person injured in his business or property by
reason of a violation of section 1962 of this chapter may sue therefor in any appropriate United
States district court and shall recover threefold the damages he sustains and the cost of the suit,
including a reasonable attorney’s fee.” Sections 1962 (a), (b), and (c), in turn, make criminally
liable those who engage in, or aid and abet another to engage in, a pattern of racketeering activity
or the collection of an unlawful debt if they also do the following: invest income derived from
the pattern of racketeering activity or the collection of an unlawful debt in the operation of an
enterprise engaged in interstate commerce (section 1962(a)); acquire or maintain, through the
pattern of racketeering activity or the collection of an unlawful debt, any interest in or control
over such an enterprise (section 1962(b)); or conduct, or participate in the conduct of, the affairs
of such an enterprise, as a person employed by or associated with the enterprise, through a
pattern of racketeering activity or the collection of an unlawful debt (section 1962(c)). Section
1962(d) makes it a crime to conspire to violate sections 1962(a), (b), or (c).
2
The expression “Ponzi scheme” has become common parlance for fraudulent
investment plans in which funds taken from later investors are paid to early investors to create
the false appearance that investment activities are generating high returns. The expression takes
its name from Charles Ponzi, a famous Boston swindler. Beginning with just $150 in capital in
late 1919, Ponzi initiated an investment scheme in which he promised 150% returns on 90-day
promissory notes. Ponzi claimed that revenue from the notes would be used to finance profitable
investments in the international trade of postal coupons. In fact, Ponzi never invested the funds
at all and simply used revenues from new investors to pay off notes purchased by earlier
investors, including himself. In only eight months, Ponzi had collected close to $10 million from
the scheme. See Cunningham v. Brown, 265 U.S. 1, 7-9, 44 S. Ct. 424, 425-26, 68 L. Ed. 873
(1924) (detailing Ponzi’s fraud scheme).
2
corporations formed for the purpose of making high-interest loans to members of
the public, who would pledge their automobile titles as collateral. The named
plaintiffs and the members of their class are the purchasers of these securities; the
defendants are the issuer corporations and those entities and individuals who
devised or facilitated the scheme.
The plaintiffs’ complaint, which was filed in the Southern District of Florida
on February 8, 2000, alleged that the defendants fraudulently misrepresented that
the proceeds of the securities the plaintiffs purchased would be used to fund the
loans that were to be collateralized with the automobile titles, because the
defendants’ intent was, instead, to divert most of the proceeds to their own uses.
Such fraud and the defendants’ misappropriation of investment proceeds, the
plaintiffs alleged, violated the federal mail fraud,3 wire fraud,4 and money
laundering statutes,5 constituted “racketeering activity” under RICO, 6 and rendered
the defendants liable in treble damages.
During their investigation of the matter, the plaintiffs’ attorneys concluded
3
18 U.S.C. § 1341.
4
18 U.S.C. § 1343.
5
18 U.S.C. §§ 1956-57.
6
18 U.S.C. § 1961.
3
that some of the funds obtained from the plaintiffs had passed through various
bank accounts in the United States and the Bank of Bermuda (Cayman) Limited
(“Bank”). Counsel concluded that the Bank had aided and abetted the defendants
in their perpetration of the alleged fraudulent scheme and, thus, was answerable
with the defendants in RICO damages. Counsel therefore amended the plaintiffs’
complaint to add the Bank as a party defendant.
Several months later, on June 16, 2001, plaintiffs’ counsel and the Bank
arrived at a settlement and entered into an agreement which called for the Bank to
pay the members of the plaintiff class $67.5 million in exchange for releases of
liability and the dismissal of the plaintiffs’ claims.7 Under the agreement, the
Bank would deposit this amount with Phillip S. Stenger, who, acting as the
administrator of the settlement (“Settlement Administrator”), would pay the class
plaintiffs’ claims. After the parties submitted the Settlement Agreement to the
district court for approval, the court held a fairness hearing. No one objected to
the settlement, and the court therefore approved it. Four days later, on October 16,
2001, the court entered an order dismissing the plaintiffs’ claims against the Bank
7
The Bank, its parent corporation, Bank of Bermuda, Ltd., and Bermuda Trust (Cayman)
Ltd. were parties to the settlement. In this opinion, our reference to the “Bank” includes the
parent corporation and the trust. Also executing the settlement agreement was Phillip S. Stenger,
who agreed to dismiss a lawsuit, which we describe in the text infra, that he had brought against
the Bank in the United States District Court for the Northern District of Illinois, Stenger v. Bank
of Bermuda, No. 00-CV-5740 (filed Sept. 19, 2000).
4
with prejudice in a final judgment entered pursuant to Rule 54(b) of the Federal
Rules of Civil Procedure.
The Settlement Agreement provided that the fees for the plaintiffs’ attorneys
would be paid out of the $67.5 million settlement fund. The court entered the final
judgment (dismissing the claims against the Bank) without fixing counsel’s fees;
apparently with the consent of the parties, the court deferred ruling on counsel’s
fee application.8 The court ruled on counsel’s fee application at the conclusion of
a four-day hearing in which it heard from the plaintiffs’ attorneys; members of the
plaintiff class; counsel for the Securities and Exchange Commission (“SEC”),
which, as indicated below, was prosecuting a suit against the defendants other than
the Bank in the Northern District of Illinois;9 and the appellants. After
considering what they had to say, the court, on November 9, 2001, awarded
plaintiffs’ counsel fees in the sum of $11.475 million, which amounted to
seventeen percent of the settlement fund.
8
Plaintiffs’ counsel initially asked for fees equal to 25% of the $67.5 million settlement.
They subsequently amended their application to request a fee of 23.5%. The record does not
indicate why the court did not dispose of the amended application before entering the Rule 54(b)
final judgment; we assume that time constraints made it inconvenient for the court to rule on the
application at the fairness hearing.
9
Securities and Exchange Commission v. Homa, No. 99-CV-6895 (N.D. Ill. filed Oct.
21, 1999). As indicated in the text infra, prior to the settlement of the instant case, Phillip S.
Stenger (the settlement administrator) was appointed receiver of the assets of the defendants
named in Homa (who, with the exception of the Bank, are defendants in the instant case).
5
Phillip S. Stenger, as “Receiver,” two “Joint Official Liquidators” (“JOLs”)
of Cayman Islands companies,10 and the Cayman Islands Liquidations Creditors’
Committee (“Creditors’ Committee”)11 now appeal the district court’s attorneys’
fee decision.12 In a joint brief, they ask us to vacate the district court’s fee award
as excessive and to remand the case for further proceedings. The plaintiffs’
attorneys, as appellees, ask us to dismiss this appeal on the ground that none of the
appellants has standing to prosecute it.
We conclude that the appellants lack standing to appeal and therefore
dismiss the appeal without reaching the question of whether the district court
abused its discretion in awarding the attorneys’ fees at issue. Before setting forth
the reasons for our conclusion, we think it appropriate to explain the various hats
Phillip S. Stenger wears in this case, as “Receiver,” as “Settlement Administrator,”
and as “JOL.”
On October 21, 1999, the SEC brought a lawsuit in the United States
District Court for the Northern District of Illinois against the defendants (with the
10
Stenger is one of the two JOLs; thus, in addition to appealing as “Receiver,” he appeals
as a JOL.
11
The Creditors’ Committee consists of four members of the plaintiff class who,
according to their brief, serve as a “conduit” between the members of the plaintiff class and the
JOLs.
12
The SEC appears as amicus curiae, in support of Stenger’s position.
6
exception of the Bank) named in the instant action; its complaint described the
same Ponzi scheme described in the complaint in the instant case and sought relief
under Section 17(a) of Securities Act of 1933,13 Sections 10(b), 15(a)(1) and
15(c)(1) of the Securities Exchange Act of 1934,14 and Rule 10b-5 of the SEC’s
regulations.15 Securities and Exchange Commission v. Homa, No. 99-CV-6895.
On November 2 and December 10, 1999, the district court, with the consent of the
defendants’ attorneys, entered orders granting the SEC’s application for the
appointment of a “receiver of the Receivership Property” of each of the defendants
“for the benefit of investors to marshal, conserve, protect, hold funds, operate and,
with the approval of the Court, dispose of any assets constituting the Receivership
Property.” The Receivership Property included all of the defendants’ assets. The
two orders appointed Phillip S. Stenger as the receiver and gave him the authority
to “bring such legal actions based on law or equity in any state, federal or foreign
court as he deems necessary or appropriate in discharging his duties as receiver on
behalf of the estate [of the defendants] or on behalf of investors whose interests he
13
15 U.S.C. § 77q(a).
14
15 U.S.C. §§ 78j(b), 78o(a)(1), 78o(c)(1).
15
17 C.F.R. § 240.10b-5.
7
is protecting.” 16 The orders also authorized him to employ his law firm, Stenger &
Stenger, P.C., of Grand Rapids, Michigan, to represent him.17 In March 2000, the
Grand Court of the Cayman Islands appointed Stenger and G. James Cleaver of the
Ernst & Young accounting firm as the JOLs of the Cayman Islands companies
involved in the Ponzi scheme. On September 19, 2000, Stenger, acting as
Receiver of Cash 4 Titles (a defendant in the instant case), sued the Bank in the
United States District Court for the Northern District of Illinois, Stenger v. Bank
of Bermuda, No. 00-CV-5740. Pending the Bank’s motion to dismiss the action,
the proceedings, including discovery, were stayed. Stenger settled the case,
releasing the Bank from the receivership’s claims, as part of the settlement
agreement the Bank made with the class plaintiffs on June 16, 2001. With this
history in mind, we address the plaintiffs’ attorneys’ motion to dismiss this appeal.
16
As we indicate in part II.B of the text, infra, although he was Receiver of the assets of
the defendants (with the exception of the Bank) in the instant case, Stenger made no attempt to
appear in the case on behalf of any of these defendants – either as Receiver or as counsel for the
defendants.
17
Stenger thereafter employed Stenger & Stenger, P.C., to represent him as Receiver.
The firm is one of four law firms on appellants’ joint brief in this appeal. The brief’s cover sheet
indicates that Stenger & Stenger, P.C., represents “Cash 4 Titles,” one of the defendants in the
case. Neither Stenger & Stenger, P.C., nor any other law firm or attorney appeared or filed a
pleading on behalf of Cash 4 Titles in the district court. As far as we can tell, this is Cash 4
Title’s first appearance in the instant action. The joint brief’s Certificate of Interested Persons
states as follows: “Phillip S. Stenger, Esq. (Appellant/Receiver/Joint Liquidator/Cayman’s
Creditors’ Committee)”; “Stenger & Stenger, P.C. (Counsel for Appellant/Receiver).” Two other
law firms, Holland & Knight, LLP, and Silver & Van Essen, P.C., are also listed in the
Certificate of Interested Persons as “Counsel for Appellant/Receiver.”
8
II.
A.
“Article III of the Constitution confines the reach of federal jurisdiction to
‘Cases’ and ‘Controversies.’” Alabama-Tombigbee Rivers Coalition v. Norton,
338 F.3d 1244, 1252 (11th Cir. 2003) (quoting U.S. Const. art. III, § 2).
The irreducible constitutional minimum of standing contains three
requirements. First and foremost, there must be alleged (and
ultimately proved) an injury in fact – a harm suffered by the plaintiff
that is concrete and actual or imminent, not conjectural or
hypothetical. Second, there must be causation – a fairly traceable
connection between the plaintiff’s injury and the complained-of
conduct of the defendant. And third, there must be redressability – a
likelihood that the requested relief will redress the alleged injury.
This triad of injury in fact, causation, and redressability constitutes
the core of Article III’s case-or-controversy requirement, and the
party invoking federal jurisdiction bears the burden of establishing its
existence.
Steel Co. v. Citizens for a Better Environment, 523 U.S. 83, 102-04, 118 S. Ct.
1003, 1016-17, 140 L. Ed. 2d 210 (1998) (citations and marks omitted). In
addition to these three constitutional requirements, the Supreme Court has held
that prudential requirements pose additional limitations on standing. For example,
“even when the plaintiff has alleged injury sufficient to meet the ‘case or
controversy’ requirement . . . the plaintiff generally must assert his own legal
rights and interests, and cannot rest his claim to relief on the legal rights or
interests of third parties.” Warth v. Seldin, 422 U.S. 490, 499, 95 S. Ct. 2197,
9
2205, 45 L. Ed. 2d 343 (1975).
Litigants must establish their standing not only to bring claims, but also to
appeal judgments. Arizonans for Official English v. Arizona, 520 U.S. 43, 64, 117
S. Ct. 1055, 1067, 137 L. Ed. 2d 170 (1997) (“The standing Article III requires
must be met by persons seeking appellate review, just as it must be met by persons
appearing in courts of first instance.” (citations and marks omitted)). Though
similar and overlapping, the doctrines of appellate standing and trial standing are
not identical. See Knight v. Alabama, 14 F.3d 1534, 1555 (11th Cir. 1994). “The
primary limitation on [a litigant’s] appellate standing is the adverseness
requirement which is one of the rules of standing particular to the appellate
setting. Only a litigant ‘who is aggrieved by the judgment or order may appeal.’”
Id. at 1556 (quoting Dairyland Ins. Co. v. Makover, 654 F.2d 1120, 1123 (5th Cir.
Unit B. Sept. 4, 1981)). Thus, it is entirely possible that named defendants in a
trial proceeding, who would doubtless have appellate standing for the purposes of
challenging some final rulings by the trial court, could lack standing to appeal
other trial court rulings that do not affect their interests.
“Generally, one not a party lacks standing to appeal an order in that action.”
10
Taylor v. Ouachita Parish School Bd., 648 F.2d 959, 971 (5th Cir. Unit A 1981).18
But see In re Subpoena to Testify Before Grand Jury Directed to Custodian of
Records, 864 F.2d 1559, 1561 (11th Cir. 1989) (acknowledging that nonparties
can sometimes intervene to appeal a judgment that would abridge another’s
protected speech when those intervenors are potential recipients of the speech).
B.
Although several class members objected to plaintiffs’ counsel’s 23.5% fee
petition at the trial level, not a single class member appealed the final 17% fee
award ultimately issued. Instead, the appellants consist of Stenger, the JOLs, and
the Creditors’ Committee. None of them were parties before the district court;
none moved the court for leave to intervene in the case for any purpose. When
plaintiffs’ counsel learned that Stenger planned to contest their fee application and
attempted to discover the materials he might introduce at the hearing on their
application, Stenger objected on the ground that he was not a party in the litigation
and hence was not subject to discovery under Rule 34 of the Federal Rules of Civil
Procedure. Because he was not a party, Stenger argued that to obtain the
materials, counsel had to serve him with a subpoena under Rule 45, which
18
In Bonner v. City of Prichard, 661 F.2d 1206, 1209 (11th Cir.1981) (en banc), this
court adopted as binding precedent all decisions of the former Fifth Circuit handed down prior to
October 1, 1981.
11
provides procedures for obtaining testimony or the production of potential
evidence from nonparties. The JOLs, moreover, in a document filed with the
district court, specifically identified themselves as “non parties in this action.”
In sum, if appellants became parties in this case, they became such solely
because they voiced objections to the fees plaintiffs’ attorneys were seeking or
because one of them was the receiver for defendants other than the Bank. We
conclude that neither of these circumstances made the appellants parties in this
case. “[T]he district court has great latitude in formulating attorney’s fee awards.”
Gilmere v. City of Atlanta, 931 F.2d 811, 814 (11th Cir. 1991). In its discretion,
the court could have permitted innumerable sources to inform its judgment,
regardless of whether those sources were proper parties with a legal right to
object. Thus, the objections alone do not indicate party status. Furthermore, there
is no reason to suppose that Stenger automatically became a party to the class
action lawsuit merely by virtue of his role as the defendants’ court-appointed
Receiver in a separate action.19 See, e.g., 65 Am. Jur. 2d Receivers § 394 (2003)
19
In oral argument, appellants’s counsel suggested that we treat Stenger as a party
defendant, “as receiver for the defendant entities in the class action.” We are not persuaded.
Nothing in appellants’ brief warranted the suggestion that a defendant’s receiver is necessarily a
proxy for the defendant in a case. Various sources hold, to the contrary, that receivers have legal
identities distinct from the entities whose assets they are charged with marshaling. See, e.g., 65
Am. Jur. 2d Receivers § 365 (2003) (“Generally, a receivership does not prevent the
commencement or prosecution to judgement of actions against the person of whose property the
receiver is appointed and such an action cannot be enjoined.”); Seaboard Air Line Ry. Co. v.
12
(“The receiver does not, by virtue of his or her appointment, become a party to a
pending action against the corporation or person for whose property the receiver is
appointed, but is a stranger to the action until added or substituted by an order of
the court wherein the action is pending.”). Stenger has consistently represented
himself as a receiver, not as a representative of the respective defendant entities.
He has not been substituted for any defendant as a party, and there is no intimation
that he appears for the defendants now in this appeal.20 Because this case provides
Dorsey, 149 So. 759, 760 (Fla. 1932) (“The rule is well settled that the appointment of a receiver
for the defendant does not abate an action against it nor will it bar the prosecution to judgment of
such action. If the interests represented by the receiver render it necessary he may at his request
be substituted by order of the court as a party defendant and allowed to defend, but until this is
done he is a stranger to the cause. It is not the duty of the plaintiff to bring him in.”). Indeed, in
Riehle v. Margolies, 279 U.S. 218, 49 S. Ct. 310, 73 L. Ed. 669 (1929), the Supreme Court
acknowledged that a state court could litigate a lawsuit brought against a defendant that became
subject to federal receivership proceedings. The Court distinguished between two aspects of
orders involving the distribution of a defendant’s assets among its creditors. One aspect, it
explained, “deals directly with the property” to be distributed by fixing “the time and manner of
distribution.” Id. at 224, 49 S. Ct. at 312. This direct-property aspect, the Court suggested,
implicates the defendant’s receiver. The second aspect “does not deal directly with any of the
property,” but deals instead with defendant’s “amount of indebtedness” to creditors, i.e., the
defendant’s liability. Id., 49 S. Ct. 312-13. This liability aspect implicates the defendant itself.
“There is no inherent reason,” the Court explained, “why the adjudication of the liability of the
debtor in personam may not be had in some court other than that which has control of the res.”
Id. at 224, 49 S. Ct. at 313 (emphasis added). It follows, then, that, in the instant case, the
liability of the defendants in personam for RICO damages was a matter to be adjudicated without
the Receiver’s presence. The Receiver’s interest would be implicated only after the plaintiffs’
obtained a money judgment and sought to execute their judgment against the defendants’ assets.
20
The cover of appellants’ brief indicates that Stenger’s law firm is appearing for Cash 4
Titles (one of the defendants in the case for which counsel never appeared in the district court,
see supra note 17), but Stenger himself has never appeared as a party or as counsel of record for a
party.
13
no reason to depart from the usual rule against appeals by nonparties, see Taylor,
648 F.2d at 971, we find that the appellants lack standing to appeal the district
court’s fee award.
In any event, the appellants lack injury sufficient to satisfy the requirements
of Article III. This shortcoming would deprive appellants of standing even if,
contrary to all appearances, they were non-settling parties to the trial proceeding.
In other contexts, we have recognized that “a non-settling defendant . . . is not
prejudiced by the settlement and therefore has no standing to complain about the
settlement.” In re Beef Industry Antitrust Litigation, 607 F.2d 167, 172 (5th Cir.
1979). On the facts of this case, none of the appellants is responsible for paying
the plaintiffs’ attorneys’ fees; none would suffer any imaginable concrete injury if
those fees were increased, nor would they enjoy any concrete benefit if those fees
were eliminated altogether. Instead, these hypothetical injuries or benefits would
accrue to the class members themselves. The class members proved themselves
capable of objecting to the fees at trial, and they elected not to appeal the fee
award before this court. The appellants have no legal basis for waging a battle
that the allegedly injured class members elected not to pursue.
Appellants’ inventive attempts to squeeze an injury out of the fee award
underscores the fault of their position. Appellants’ first argument, presented in
14
their joint brief, is founded on the principle that the class members cannot recover
twice for the same injuries; thus, every dollar the Bank pays to compensate the
defrauded investors is a dollar for which the other defendants cannot be liable.
Extrapolating from this principle, appellants argue that Stenger, as Receiver for
the other defendants, is injured insofar as the receivership entities are subject to
greater residual liability for every settlement dollar disbursed to the plaintiffs’
lawyers instead of the class members themselves. This argument’s Achilles’ heel
is its fatally questionable assumption that the class members’ recovery – for
purposes of prohibiting double recovery from defendants other than the Bank – is
measured as $67.5 million less the attorneys’ fees, rather than as the whole amount
the Bank pays out to settle the claims against it. Appellants fail to provide any
support in the record or law for this assumption. The fact of the matter is that the
class members receive two assets from the Bank’s settlement: cash compensation
for their injuries and valuable legal services. The Bank ultimately financed both
of these assets in exchange for releases from suit. There is absolutely no reason to
suppose that the Bank has paid less or that the receivership entities remain liable
for more simply because a percentage of the Bank’s payout is allocated to
attorneys’ fees.
Although appellants do not identify Stenger qua Settlement Administrator
15
as a co-appellant, they argue that in that capacity he is injured by the fees because
greater fees mean that fewer funds come into his custody for distribution among
the class members. This red herring fails to swim around the fact that the
Settlement Administrator is simply that: an administrator who performs nothing
more than a mechanical function in distributing funds for the court. Under the
Settlement Agreement, Stenger must deposit the funds in an interest-bearing bank
account, “separate from the other Receivership assets.” He has no duty or even
discretion to deposit the funds in a higher-yielding investments; in fact, he has no
choice but to place the funds at a bank in Illinois or Michigan. He must disburse
pro rata payments to the class members based on their claims against the Bank,
and he has no discretion to vary the percentage of recovery awarded among class
members.21 Even within this narrow range of responsibility, the Settlement
Administrator’s activities are subject to the court’s supervision.22 All interest
21
In relevant part, the Settlement Agreement provides,
A class member’s “Settlement Share” of the Net Settlement Fund equals the lesser
of (a) 50% of the member’s Recognized Loss [defined, roughly, as the amount
loaned to the fraud scheme less any sums recovered from it]; or (b) the product of
the Settlement Fund remaining after payment of the Receiver’s
expenses . . . multiplied by a fraction, the numerator of which is a class member’s
Recognized Loss, and the denominator which is the sum of all Recognized Losses
of all class members.
22
The Settlement Agreement specifies that any disputes concerning the Receiver’s
administration of the fund or payment of its shares to the class members are “subject to review by
the Receivership Court (Judge Guzman)” in the Northern District of Illinois. How settling
parties in a case pending before a judge of the Southern District of Florida could charge a judge
16
accrued on the settlement fund pending distribution accrues to the plaintiffs, not
Stenger. With respect to his own compensation, Stenger is entitled to nothing
more for his services than reimbursement “for fees, costs and expenses incurred in
connection with the administration” of the settlement fund. This reimbursement,
like all other aspects of the settlement administration, is subject to court approval.
There is no reason to suppose, and appellants do not argue, that the
Administrator’s reimbursement will vary in proportion to the size of the fund after
the plaintiffs’ attorneys’ fee has been deducted. Finally, as Settlement
Administrator, Stenger will hold only the “Net Settlement Fund,” which is defined
in the Settlement Agreement as the Bank’s total payout less the fees awarded to
the plaintiffs’ attorneys. Thus, the Agreement does not entrust Stenger with a
specified sum from which fees will be withdrawn; rather, Stenger’s role as
Settlement Administrator begins only where attorneys’ fees have already been
determined and disbursed. On the facts of this case, then, it is clear that the
Settlement Administrator is not injured, irrespective of the fee amount paid to the
plaintiffs’ attorneys.
in another district with monitoring the execution of their settlement – which the Southern District
judge not only approved, but in so doing specified in its final order (pursuant to which judgment
issued) that it “retained exclusive jurisdiction to resolve any issues regarding the interpretation,
validity, effect or enforceability of the Settlement or this Order” – somehow escapes us. We are
delighted that this conundrum is not before us in this appeal.
17
Appellants also suggest that their standing can be traced to a provision in
the Settlement Agreement specifying that the “Class Plaintiffs and the Settling
Defendants agree not to object to the Receiver’s standing to raise any concerns
before the Class Action Court”23 regarding various matters, including the
plaintiffs’ attorneys’ fee. However well intended, however carefully negotiated,
this provision cannot affect our jurisdiction. Parties cannot, by agreement or
otherwise, confer jurisdiction on a court. See Ins. Corp. of Ireland, Ltd. v.
Compagnie des Bauxites de Guinee, 456 U.S. 694, 702, 102 S. Ct. 2099, 2104, 72
L. Ed. 2d 492 (1982) (“[N]o action of the parties can confer subject-matter
jurisdiction upon a federal court.”). Clearly, the provision does not imbue the
Receiver with a contractual right to oppose the fee award. It simply contains the
class plaintiffs’ promise not to raise standing concerns in the event of opposition
to the fee award. Whether breach of this promise creates standing in the Receiver
to bring a collateral contract action against the plaintiffs’ attorneys is not an issue
before us.
Finally, appellants contend that the plaintiffs’ attorneys waived their
standing challenge by failing to assert it at the trial level. This contention
23
“Settling Defendants” appears in the plural because the Bank for purposes of this
discussion refers to three affiliated entities. See supra note 7.
18
proceeds in two steps. First, appellants attempt to characterize the plaintiffs’
attorneys’ standing objection as one grounded solely in the prudential bar to
asserting third-party rights. Second, appellants urge us to hold that prudential
standing objections, unlike Article III standing objections, are waivable. This
legalistic gambit grossly misconstrues the doctrine of standing. The requirement
of injury to the complaining party stems from Article III, not from prudential
principles.
The Art. III judicial power exists only to redress or otherwise to
protect against injury to the complaining party, even though the
court’s judgment may benefit others collaterally. A federal court’s
jurisdiction therefore can be invoked only when the plaintiff himself
has suffered “some threatened or actual injury resulting from the
putatively illegal action . . . .”
Warth, 422 U.S. at 499, 95 S. Ct. at 2205 (quoting Linda R.S. v. Richard D., 410
U.S. 614, 617, 93 S. Ct. 1146, 1148, 35 L. Ed. 2d 536 (1973)). Thus, even in
exceptional cases where plaintiffs are permitted to raise the rights of others, those
plaintiffs must still demonstrate their own injuries to satisfy the constitutional
requirements of standing. See id. at 501, 95 S. Ct. at 2206 (“Congress may grant
an express right of action to persons who otherwise would be barred by prudential
standing rules. Of course, Art. III’s requirement remains: the plaintiff still must
allege a distinct and palpable injury to himself . . . .”). As explained above,
19
appellants’ standing is questionable not because they assert third-party rights to
rectify their injuries, but because they lack injuries altogether. Since this failing
amounts to a jurisdictional infirmity, challenges based on it cannot be waived.
[W]e are required to address the issue [of standing] even if the courts
below have not passed on it, and even if the parties fail to raise the
issue before us. The federal courts are under an independent
obligation to examine their own jurisdiction, and standing is perhaps
the most important of the jurisdictional doctrines.
FW/PBS, Inc. v. City of Dallas, 493 U.S. 215, 230-31, 110 S. Ct. 596, 607, 107 L.
Ed. 2d 603 (1990) (citations, marks, and brackets omitted). We need not address
the question of whether purely prudential standing arguments are waivable.
IV.
For the foregoing reasons, this appeal is
DISMISSED.
20
Wolff v. Cash 4 Titles
Court: Court of Appeals for the Eleventh Circuit
Date filed: 2003-12-05
Citations: 351 F.3d 1348
Copy Citations