[00:00:00] Speaker 00:
We'll now hear argument in the fourth and final case of the day, appeal number 20-2223, Keith Manufacturing versus Butterfield.

[00:00:11] Speaker 00:
Mr. Kolich, please begin.

[00:00:15] Speaker 03:
Thank you, Your Honor.

[00:00:17] Speaker 03:
Subject to questions, I'd like to discuss briefly both some procedural and substantive issues where Butterfield believes that the district court abused its discretion.

[00:00:30] Speaker 03:
And I will start briefly by discussing the procedural issues that we see in this case.

[00:00:36] Speaker 03:
To begin with, the district court applied a Rule 60B analysis to a supplemental brief.

[00:00:48] Speaker 03:
On the other hand, Rule 60B states explicitly that release under that rule can only be granted, quote, on motion, and yet there was no motion filed in this case under Rule 60.

[00:01:01] Speaker 03:
Counsel, this is Judge Hughes.

[00:01:04] Speaker 03:
I don't really understand why the district court used Rule 60B analysis, but we vacated his prior order, which was the order in this case, and remanded it for further proceeding.

[00:01:16] Speaker 03:
So wasn't it well within his discretion to ask for supplemental briefs and reconsider his prior order, since there was no more final order in the case on attorneys' fees?

[00:01:32] Speaker 03:
Thank you, Your Honor.

[00:01:32] Speaker 03:
Well, Butterfield does not agree with that, although it's true that the Federal Circuit vacated the underlying... He may not agree with it, but what's the legal basis that would prevent him from reconsidering the case after we vacated his order?

[00:01:48] Speaker 03:
There was nothing that could be law of the case or binding on the parties because his judgment was vacated.

[00:01:56] Speaker 03:
Your Honor, it seems to me that by vacating the underlying opinion, the Federal Circuit was merely vacating the issue under appeal.

[00:02:11] Speaker 03:
To reconsider a separate issue that was never appealed seems to be inconsistent.

[00:02:17] Speaker 03:
Why did that issue have to be appealed?

[00:02:20] Speaker 03:
They had won.

[00:02:21] Speaker 03:
There was nothing for them to appeal.

[00:02:24] Speaker 03:
They could have potentially made it as an alternative argument for affirmance, but if they tried to appeal the prevailing party issue, it would have been dismissed as an improper cross appeal.

[00:02:39] Speaker 03:
I'm sorry, Your Honor, I don't understand that statement.

[00:02:40] Speaker 03:
I don't understand your procedural objections here at all.

[00:02:44] Speaker 03:
You know, the district court may have not used Rule 60 properly, but it's pretty clear to me from our decision, prior decision in this case,

[00:02:53] Speaker 03:
We rejected his reliance on Microsoft and sent it back and said, try again.

[00:02:58] Speaker 03:
And that try again doesn't mean that he's precluded from reconsidering the prevailing party status.

[00:03:09] Speaker 03:
Understood, your honor.

[00:03:10] Speaker 03:
In that case, I will skip the remaining discussion of the procedural issues and move straight to the substantive issues, which, which we think are also dispositive.

[00:03:22] Speaker 03:
Thank you for that comment and for saving me that breath.

[00:03:26] Speaker 03:
So turning to the substantive issues on the prevailing party analysis, specifically Oregon law and specifically Oregon rule of civil procedure 54A states, quote, unless the circumstances indicate otherwise, the dismissed party is the prevailing party.

[00:03:44] Speaker 03:
That is the substantive determination for prevailing party analysis when a case is dismissed voluntarily.

[00:03:53] Speaker 03:
And that same rule, Section A1, states that it applies, quote, to dismissals by plaintiffs and, quote, by stipulation, as happened in this case.

[00:04:07] Speaker 03:
There were no circumstances in this case indicating otherwise, and therefore Butterfield was the prevailing party under Rule 54A3 and under Oregon law.

[00:04:20] Speaker 03:
The district court based its entire opinion to the contrary on the distinction between a dismissal quote by the plaintiff and a dismissal quote by stipulation.

[00:04:32] Speaker 03:
And Butterfield believes that is clear error when the statute explicitly states that it applies equally to dismissals by the plaintiffs and by stipulation.

[00:04:44] Speaker 03:
That's the primary substantive argument that we think calls for a reversal of the district court's decision.

[00:04:53] Speaker 03:
The only other issue that was raised by the district court is the fact that there was no judgment document filed in this case.

[00:05:02] Speaker 03:
That is a procedural requirement of Oregon law.

[00:05:07] Speaker 03:
And in Butterfield's opinion, that procedural requirement cannot be applied in this situation because it would imply that a party could not get the same relief from federal court that it could get from the Oregon State Court.

[00:05:25] Speaker 03:
Because have this case been... I'm not sure I follow that argument, counsel.

[00:05:29] Speaker 03:
Why is it a procedural argument and why

[00:05:31] Speaker 03:
If you wanted this judgment to qualify under state law, didn't you ask the district court to enter a judgment confirming the stipulation?

[00:05:41] Speaker 03:
You could have done that.

[00:05:42] Speaker 03:
You didn't do it.

[00:05:46] Speaker 03:
That's, that's correct, your honor.

[00:05:47] Speaker 03:
We didn't do it because we didn't think that it was a requirement as, as you know, under rule 41.

[00:05:56] Speaker 03:
A case can be dismissed in federal court by stipulation without a judgment document and so that there is no procedural requirement of getting a judgment document.

[00:06:07] Speaker 03:
I'm not sure why you keep calling this a procedural requirement.

[00:06:11] Speaker 03:
Whether there's a judgment or not is also relevant under federal law for attorneys fees and that's why these stipulations for dismissal without involvement of the court

[00:06:22] Speaker 03:
don't qualify either parties for prevailing party status for attorney fees in federal court.

[00:06:27] Speaker 03:
If you want prevailing party in federal court, you also have to ask for a judgment.

[00:06:31] Speaker 03:
So why do you keep calling this a procedural requirement?

[00:06:34] Speaker 03:
It seems to me that it's a substantive requirement of the prevailing party status.

[00:06:43] Speaker 03:
Your Honor, Oregon law calls this a procedural requirement, and I will

[00:06:50] Speaker 03:
cite a case for that proposition, if you'll bear with me for just a second.

[00:06:57] Speaker 03:
Garcia v. DMV, which is cited at page 24 of Butterfield's principal brief in the end of the first paragraph on that page, calls the submission of a form of judgment or a judgment of dismissal document at state court, quote, a procedural step.

[00:07:20] Speaker 03:
And in fact, if that were viewed as a requirement in federal court, then these state law claims would not even be dismissed formally as it stands now, because Oregon state law says that in state court, these claims are not even adjudicated until this final judgment document is submitted.

[00:07:47] Speaker 03:
Clearly, that's not the case in federal court because the case is closed, and we're not talking about the merits anymore.

[00:07:55] Speaker 03:
So Oregon law calls it a procedural step.

[00:07:57] Speaker 03:
That's why I used that phrase.

[00:08:01] Speaker 01:
Is it a procedural step to perform a substantive requirement?

[00:08:10] Speaker 03:
I'm not sure I understood that question, Your Honor, but the filing

[00:08:15] Speaker 02:
procedural step to perform a substantive requirement?

[00:08:22] Speaker 03:
I don't believe it's a substantive requirement.

[00:08:25] Speaker 03:
I don't think there's anything inconsistent with the fact that Oregon law could require a procedural step

[00:08:37] Speaker 03:
to get to a substantive result, if that answers your question.

[00:08:40] Speaker 03:
I think there are plenty of statutes that have both procedural and substantive aspects, and this is one of them.

[00:08:46] Speaker 03:
But I don't think the procedural aspects can apply in federal court without violating the Erie Doctrine.

[00:08:54] Speaker 03:
If this case had been entirely in state court, the filing of this judgment document would be automatic.

[00:09:01] Speaker 03:
It would not be done by the court.

[00:09:03] Speaker 03:
It would simply be a form that one of the parties files

[00:09:07] Speaker 03:
to close the case.

[00:09:10] Speaker 03:
That, as I said, is called the procedural step under Oregon law.

[00:09:14] Speaker 03:
That requirement doesn't exist in federal court.

[00:09:18] Speaker 03:
So there was simply no reason for the parties and certainly for Butterfield to file such a document or cause such a document to be filed after becoming the dismissed party.

[00:09:29] Speaker 03:
He became the prevailing party under Oregon law.

[00:09:34] Speaker 03:
That's what the substance of the law says.

[00:09:37] Speaker 03:
The dismissed party is the prevailing party.

[00:09:39] Speaker 03:
That's the statutory language.

[00:09:43] Speaker 03:
Butterfield clearly is the dismissed party.

[00:09:55] Speaker 03:
So if I understand the tone of your questions correctly, Your Honors, it sounds as though you're really wondering whether

[00:10:03] Speaker 03:
the lack of a judgment document would satisfy the

[00:10:08] Speaker 03:
circumstances indicate otherwise language.

[00:10:12] Speaker 03:
And Butterfield submits that that that should not be the case because the submission of a judgment document in state court is simply a procedural requirement.

[00:10:23] Speaker 03:
It doesn't include any court input.

[00:10:28] Speaker 03:
It's a form that the parties file with the court to signify their agreement that the case has been dismissed.

[00:10:35] Speaker 03:
That's all it is.

[00:10:36] Speaker 03:
It's not a court order.

[00:10:39] Speaker 03:
And for that reason, it is a procedural requirement.

[00:10:42] Speaker 03:
And as the dismissed party, Butterfield should be the prevailing party.

[00:10:50] Speaker 03:
Unless you have further questions at the moment, I'll reserve the remainder of my time for rebuttal.

[00:10:53] Speaker 03:
Thank you.

[00:10:54] Speaker 00:
Okay.

[00:10:55] Speaker 00:
Thank you, Mr. Kolich.

[00:10:57] Speaker 00:
We'll now hear from Mr. Kazer.

[00:11:00] Speaker 04:
Thank you, Your Honor.

[00:11:04] Speaker 04:
We've now gone through

[00:11:06] Speaker 04:
Two motions for attorneys fees were technically on our third appeal now.

[00:11:12] Speaker 04:
And the appellant still hasn't answered the main question on appeal, which is this.

[00:11:19] Speaker 04:
A party can stipulate to end a case without a court order or any judicial action under Rule 41A1AII, bearing in mind that a stipulation involves some kind of agreement.

[00:11:34] Speaker 04:
And the question is, can the party then claim to be prevailing and have a judgment against the other party when no judicial action is involved?

[00:11:43] Speaker 04:
And just to address the questions that just came up, it is a substantive requirement that judgment be entered in order for a party to prevail on a contract claim, on a state contract claim.

[00:12:03] Speaker 04:
It's true that there's a procedural rule in Oregon, Oregon's Rule 54.

[00:12:10] Speaker 04:
Mr. Kowalski left off part of the rule, which is the rule states that judgment has to be entered.

[00:12:18] Speaker 04:
But there's a separate statute in Oregon that also sets forth the substantive requirement that a favorable judgment has to be entered in order for a party to be prevailing.

[00:12:31] Speaker 04:
It's that simple.

[00:12:33] Speaker 04:
The appellant doesn't have any authority for taking the position it's been taken.

[00:12:39] Speaker 04:
And the authority points in the opposite direction.

[00:12:42] Speaker 04:
The plain answer to the question is you just can't do what the appellant is trying to do.

[00:12:47] Speaker 04:
On a practical note, you know, many companies have financing agreements with their banks that require periodic financing statements that are prepared by accounting firms.

[00:13:02] Speaker 04:
It's not unusual for an attorney in private practice to receive an audit request letter from an accounting firm that asks for a report of lawsuits or liabilities, that sort of thing.

[00:13:15] Speaker 04:
And according to the appellant, if I had to respond to an audit request letter on behalf of my client, I'd have to report that there's a judgment against my client.

[00:13:23] Speaker 04:
Or you can look at it another way.

[00:13:24] Speaker 04:
It's not unusual for banks to ask potential borrowers whether the borrower

[00:13:30] Speaker 04:
whether the borrower has any outstanding judgments against it.

[00:13:34] Speaker 04:
And so according to the appellant, my client would have to answer that question.

[00:13:38] Speaker 04:
Uh, yes.

[00:13:40] Speaker 04:
Um, if this panel agrees with the appellant, it's, it's going to lead to, uh, some new topics and continuing education classes for both accountants, um, and lawyers, um, concerning the 60, the rule 60 B issue.

[00:13:59] Speaker 04:
I also was somewhat confused by why the District Court raised Rule 60B.

[00:14:09] Speaker 04:
I don't think it was necessary, but it did.

[00:14:12] Speaker 04:
And certainly it was within the Court's discretion to reconsider and correct any mistakes that it made earlier.

[00:14:21] Speaker 04:
So we ask that you affirm the District Court's decision.

[00:14:26] Speaker 04:
Thank you.

[00:14:27] Speaker 02:
Did Judge Cleverger, did any of the parties suggest to the judge that he might want to reconsider using Rule 60B?

[00:14:39] Speaker 04:
You may have cut out a little bit, Your Honor, but I think your question was, did anyone suggest to the judge that he may want to consider using Rule 60B?

[00:14:48] Speaker 04:
And the answer is no.

[00:14:51] Speaker 04:
Neither party did.

[00:14:52] Speaker 04:
We just did what the district court

[00:14:57] Speaker 04:
told us to do uh... which is uh... and and and the district court did the right thing i mean uh... there was uh... it's earlier ordered them vacated and remanded and so the district court asked the parties what what do you think about the case you know what's left and uh... you know we said uh... that uh... your honor you got a do-over and uh... you know that's what it is and of course the other party said well we win it's time to calculate our attorney's fees and uh...

[00:15:27] Speaker 04:
the district court said, or gave permission to both parties to file supplemental briefs and raise any issue they wanted to raise.

[00:15:36] Speaker 04:
That's what we did.

[00:15:37] Speaker 04:
And so then, of course, when the district court issued its second opinion, then it raised the Rule 60B issue on its own.

[00:15:52] Speaker 04:
OK.

[00:15:53] Speaker 04:
If there are no further questions, thank you very much.

[00:15:56] Speaker 00:
Okay, thank you.

[00:15:57] Speaker 00:
We'll hear from Mr. Kolich now who has some rebuttals on.

[00:16:02] Speaker 03:
Thank you, Your Honor.

[00:16:04] Speaker 03:
First, I'll agree with Mr. Kasur.

[00:16:06] Speaker 03:
Neither party raised Rule 60.

[00:16:08] Speaker 03:
That was the court relying on that rule on its own.

[00:16:12] Speaker 03:
But I won't rebut further on the procedural issues.

[00:16:14] Speaker 03:
I understand your point about that.

[00:16:17] Speaker 03:
On the substance, it seems to me that Mr. Kasur brought up the question of whether there was a judgment in this case.

[00:16:26] Speaker 03:
Butterfield's view is that the Federal Circuit's prior opinion in the case stated, if not affirmatively, at least impliedly, that there was a rule 54, a federal rule 54 judgment, because that was in fact the only issue that was appealed previously in this

[00:16:48] Speaker 03:
in this matter.

[00:16:49] Speaker 03:
And Butterfield appealed the court's reliance on Microsoft to determine that there was not a Rule 54 judgment.

[00:16:58] Speaker 03:
The Federal Circuit vacated that and enumerated all the reasons why there should have been a Rule 54 judgment by virtue of the stipulated dismissal.

[00:17:08] Speaker 03:
So if there was a Rule 54 judgment, then Butterfield's position is that that obviates the requirement

[00:17:16] Speaker 03:
of this so-called state court judgment document because the federal circuit essentially held there was a judgment.

[00:17:25] Speaker 03:
Oregon law states that if there's a judgment, then the dismissed party is the prevailing party, even if they're dismissed by stipulation.

[00:17:36] Speaker 03:
So what we have in this case is a dismissal by stipulation, a finding by this court that there was a judgment by virtue of that

[00:17:46] Speaker 03:
stipulated dismissal, and Oregon law stating that a dismissed party that gets a judgment is a prevailing party.

[00:17:55] Speaker 03:
Putting that together, we contend that there was clear error by the district court.

[00:18:06] Speaker 00:
Thank you, Mr. Kolich.

[00:18:10] Speaker 00:
The case is submitted, and that concludes argument for today.

[00:18:14] Speaker 00:
Thank you.

[00:18:15] Speaker 00:
Your report is adjourned from day to day.