Baker Botts, L.L.P. v. ASARCO, L.L.C.

Whether Bankruptcy Code §330(a) allows judges discretion in awarding attorneys compensation in litigation dealing with a fee application.

Petitioner was Respondent’s counsel during Respondent’s Chapter 11 bankruptcy. Petitioner aided Respondent in wining one of the largest judgments in Chapter 11 history, between $7 and $10 billion. When Petitioner applied to the Court for its fees, Respondent challenged the fees on a large scale.

The bankruptcy court awarded Petitioner $113 million in fees present to §330(a) of the Bankruptcy Code and rejected all of Respondent’s objections to Petitioner’s fees. This fee was arrived at by the “rare and exception performance and results” that Petitioner got for Respondent. The district court affirmed the fees stating that the bankruptcy court did not abuse its discretion in awarding such an amount for Petitioner’s exception service. The Court of Appeals for the Fifth Circuit affirmed the fees awarded to Petitioner but reversed the addition award of fees for the litigation of the fee application.

To resolve a split among the circuits with regards to defending fee applications, Petitioner appeals to the Supreme Court. Petitioner argues that the Supreme Court should follow the majority of circuits which have held “that bankruptcy judges may award compensation for the defense of a fee application, at least when the defense is meritorious and successful,” and overrule the holding of the Fifth Circuit which held that “bankruptcy judges may award compensation for the defense of a fee application, at least when the defense is meritorious and successful.”