Thoughts on the Lackey v. Stinnie Oral Argument

The Court's argument this morning in Lackey v. Stinnie showed some fractures among the justices. My prediction is that there will be a majority in favor of the petitioners, though that is not a totally confident prediction: several justices were clearly in favor of the petitioners, a couple were in favor of the respondents, and the rest asked some questions of each side that did not clearly reveal their thinking.

But the basic reason for the prediction is that the argument took place on more or less formalist territory–a statute with a term of art, a set of precedents that focus the inquiry for attorneys' fees on final judicial action, the policy decisions to depart from the American Rule being made by Congress not the Court, and the characteristics of the preliminary injunction that distinguish it within the timeline of litigation. The terrain on which the discussion happened was not about how the Court can set optimal incentives for public interest litigation. And in this case the formalist terrain is friendly for the petitioner.

There were two strong points made in favor of the respondents. One is the recently unsplit circuits–the Fourth Circuit had a bright-line rule against fee-shifting after a PI, but now that it just reversed that rule en banc (in the case below), there is no circuit that clearly takes that position. One rejoinder to that is that the various tests used are a mess. But another is that  most of the circuits can get it wrong–which is probably a lesson from yesterday's argument in Royal Canin USA. Still, a strong point for respondents is the lack of support in the courts of appeals.

The other point that seemed to carry some weight for the respondents was a hypothetical from Justice Jackson where someone sues today to be able to participate in a parade tomorrow, gets a PI, and then has gotten all the relief needed, because the parade is over. Is that plaintiff a prevailing party? Some of the reasons why the plaintiff might still care about the case came out at oral argument–an annual parade, a request for damages, a declaratory judgment. But several other points are worth making.

First, in the scenario described, the plaintiff would almost certainly not get a PI because of laches in waiting to sue until the day before the parade. So part of what makes it a great hypo–the perfect fit between the PI and all of the relief that is wanted and possible–requires facts that would make a PI unlikely in the real world.

Second, there are lots of older cases saying that a preliminary injunction is never supposed to give you all the relief you want. That traditional principle isn't repeated very much by courts now. But it's a reminder of just how unmoored the PI is becoming from its "hold in place" function.

Third, the answer to the hypo is, as the attorney for the SG's office suggested, that the person who gets the PI for the parade is simply never a prevailing party. There has been no determination of the merits–no judgment of any kind. Even though the compressed timetable of the hypothetical makes it very advantageous to the plaintiff to have the PI, it is still not the relief sought. The complaint could not have been filed asking only for a PI. It would be good in the hypo for the court to consider moving up the decision on the merits to that day before the parade (either summary judgment or trial), but without that, the plaintiff is not a prevailing party.

I've pulled out those two points as the ones from the respondents that resonated the most with the justices. There is another point that a couple of the justices tended to emphasize: that a preliminary injunction is a judgment in the plaintiff's favor, and if unreversed, why is that judgment not enough for prevailing-party status? But a preliminary injunction is not a judgment at all. It is an order–just like a scheduling order or an order appointing a receiver or an order requiring a defendant to bring the disputed property into the custody of the court. Here's how I put it in The Purpose of the Preliminary Injunction (footnotes omitted):

The second feature of the preliminary injunction is that it is not determinative of any question. It is not a final judgment. It is not a decision on the merits. Its denial, like its grant, "determines nothing." This feature is related to the first one because the intermediate quality of the order means that it cannot be a final determination. Its "very purpose is to set a temporary holding pattern for the parties so that the contested legal question need not be settled right away."

The preliminary injunction, therefore, is not final with respect to fact or law. Although the district court does make findings to aid appellate review, these do not bind the court as the case progresses. The judge may change her mind about credibility and inferences, and can take a different view when considering the identical evidence at a later stage. And any legal conclusions that support or follow from the grant of a preliminary injunction are "merely provisional." The preliminary injunction is "an administrative control of an emergency situation, normally to maintain the status quo, until the court is given an opportunity at the trial to adjudicate upon the substantive merits of the cause."

It is true that a preliminary injunction may be practically decisive. By granting or denying one, the court may tip its hand and prompt the parties to settle. But many other things could be practically decisive and prompt settlement: the filing of an impressive complaint, the assignment of the case to a particular judge, a key witness's terrible deposition, a bombshell email found in discovery, the Supreme Court's grant of certiorari, a law firm added by the other side, a new accuser who steps forward—anything that might shift the case out of the uncertainty window that encourages continued litigation. Grant or denial of a preliminary injunction is a data point for attorneys who predict the outcome. It is a big data point, but legally speaking that is all.

This lacuna at the heart of the preliminary injunction—no final determination of anything—has numerous doctrinal consequences . . . .

The question about what happens to a PI after a judgment actually led to some confusion at the end, where the respondents' counsel asserted that after a judgment dismissing the case as moot that "The preliminary injunction order remains good law," suggesting that it might still be in effect unless vacated. But it is not. It is blackletter law that a preliminary injunction does not last beyond the judgment. It automatically dissolves as soon as the final judgment is entered. See U.S. ex rel. Bergen v. Lawrence, 848 F.2d 1502, 1512 (10th Cir. 1988); see also U.S. Philips Corp. v. KBC Bank N.V., 590 F.3d 1091, 1093-1094 (9th Cir. 2010) (collecting cases). In the words of Judge Frank, a preliminary injunction is "interlocutory, tentative, provisional, ad interim, impermanent, mutable, not fixed or final or conclusive, characterized by its for-the-time-beingness." Hamilton Watch Co. v. Benrus Watch Co., 206 F.2d 738, 742 (2d Cir. 1953).

One final point. There was an interesting question at the end by Justice Thomas for respondents' counsel about whether, on his theory, any other interlocutory orders would be able to justify an award of attorneys' fees. Counsel hesitated and then suggested no because Section 1292(a) singles out preliminary injunctions for special status in terms of interlocutory appealability. But that's not all Section 1292(a) highlights. It also mentions the appointment of receivers. And that's telling because the interlocutory appointment of a receiver has the same basic function as a preliminary injunction–to preserve the court's ultimate remedial options. The receiver does that by preserving the assets, while the PI does that by regulating the conduct of one or both parties. Both can be consequential steps–hence the interlocutory appeal from appointment/refusal or grant/denial–but both are also firmly interim steps (as distinguished from a final injunction or final appointment of a receiver, master, etc.). The appointment of a receiver during the litigation does not make the plaintiff a prevailing party.

I expect the petitioners will prevail. It is just a big lift for the Court to get where the respondents want to go–in tension with the justices' separation of powers instincts, and it would require rowing back in the other direction from some of the major attorneys' fees cases. Maybe the justices will reserve the question of whether any pre-statutory equitable rules about bad faith cases are still available outside the statute, like the common fund cases. Or maybe not: the justices suggested different positions on this. If the prediction is right that the plaintiffs will prevail, there will almost certainly be statements that if Congress wants to depart from the traditional meaning of "prevailing party," it can change the statute, just as it did for FOIA fee-shifting.

In my view, the petitioners' bright-line rule of no fee-shifting for PIs fits the function of the PI and the role of the Court in dealing with Congress's exceptions to the background principle of the American Rule.