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THE SUPREME COURT RULES IN BAKER BOTTS v. ASARCO – BANKRUPTCY PROFESSIONALS ARE DENIED FEE AWARDS FOR DEFENDING FEE APPLICATIONS

Yesterday, June 15, 2015, the U.S. Supreme Court issued its slip opinion regarding the fee dispute issue in BAKER BOTTS L.L.P. v. ASARCO LLC. The high court held that: “Section §330(a)(1) does not permit bankruptcy courts to award fees to §327 professionals for defending fee applications.”

The Court determined no statutory provision provided a basis for recovery of such fees and, thus, the American Rule would trump. The American Rule provides the “basic point of reference” for the awards of attorney’s fees: “Each litigant pays his own attorney’s fees, win or lose, unless a statute or contract provides otherwise.” (the Court citing Hardt v. Reliance Standard Life Ins. Co., 560 U.S. 242, 252-253 (2009)). Simply put, the Supreme Court found that “Congress did not depart from the American Rule in §330(a)(1) for fee-defense litigation.” This highly anticipated decision will be thoroughly analyzed and debated for years to come. 

Even the Justices had differing theories and opinions on the issues:
THOMAS, J., delivered the opinion of the Court, in which ROBERTS, C. J., and SCALIA, KENNEDY, and ALITO, JJ., joined, and in which SOTOMAYOR, J., joined as to all but Part III–B–2. SOTOMAYOR, J., filed an opinion concurring in part and concurring in the judgment. BREYER, J., filed a dissenting opinion, in which GINSBURG and KAGAN, JJ., joined.

More to follow on this case . . .

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