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COMMODITY FUTURES TRDG. COM'N v. ROSENTHAL & CO.

April 28, 1982

COMMODITY FUTURES TRADING COMMISSION, PLAINTIFF,
v.
ROSENTHAL & COMPANY, ET AL., DEFENDANTS.



The opinion of the court was delivered by: Shadur, District Judge.

MEMORANDUM OPINION AND ORDER

Commodity Futures Trading Commission ("CFTC") sued defendants charging their sale of so-called "London commodity options" violated the anti-fraud provisions of the Commodities Exchange Act (such sales have since been rendered wholly illegal by the Futures Trading Act of 1978, 7 U.S.C. § 6c). This Court's January 26, 1982 order dismissed the action without prejudice. Now Leonard Pomerantz, Larry Spatz, Don Braverman, John Dexter and Perry Cracraft have petitioned this Court for attorneys' fees under the newly enacted Equal Access to Justice Act, 28 U.S.C. § 2412 (the "Act"). They have also reasserted a similar claim of much lesser magnitude based on this Court's Local Civil Rule 4 ("Rule 4").

Before this Court would turn to the various substantive issues posed by defendants' application under the Act, the Court asked the parties to brief the threshold question whether the Act applies retroactively to permit recovery of fees generated before its October 1, 1981 effective date.*fn1 For the reasons stated in this memorandum opinion and order the Court determines the issue is certainly not so clear-cut as to permit rejection of the petition solely on that score. It therefore defers its decision pending full submissions on the merits of the application.

Act subsection (d)(1)(A) reads:

Its effective date is provided for in the note following 5 U.S.C. § 504:

  This Title and the amendments made by this
  Title . . . shall take effect on October 1, 1981,
  and shall apply to . . . any civil action . . .
  pending on, or commenced on or after, such date.
  Only two opinions cited by the parties have addressed the
retroactivity question directly. Each held the Act permits
recovery of all attorney's fees generated by an action, so long
as it was pending October 1, 1981. Photo Data, Inc. v. Sawyer,
533 F. Supp. 348 (D.D.C. 1982); Berman v. Schweiker, 531 F. Supp. 1149
 No. 80 C 2737 (N.D.Ill. 1982). Neither however considered
the sovereign immunity argument advanced by the government
here.

Certainly the Photo Data and Berman reading of the Act is a reasonable — perhaps even the normal — one. It proceeds from the dual premise that:

    (1) All actions pending October 1, 1981 are
  covered by the Act.
    (2) Awards under the Act are for "fees and
  other expenses . . . incurred . . . in any civil
  action (other than cases sounding in tort)
  brought by or against the United States. . . ."

There is no language specifically limiting awards to fees incurred before the October 1, 1981 date.

But that reading is not the only permissible one. It could be reached if the effective date provision contained only its last clause, the one stating the Act "shall apply to . . . any civil action . . . pending on" October 1, 1981. It thus might be said to treat the earlier clause ("This Title and the amendments made by this Title . . . shall take effect on October 1, 1981. . . .") as surplusage. Under familiar rules of construction statutes are to be read, if possible, to give meaning to all their provisions. 2A D. Sands, Sutherland Statutory Interpretation § 46.06 (rev. 2d ed. 1973). And one rational reading of the "take effect" clause would be to apply it to the "fees . . . incurred" language of the Act, so that the allowance would extend only to "fees . . . incurred" after the Act "shall take effect on October 1, 1981."

Sovereign immunity, though there have been many statutory inroads on its once-universal scope, remains a viable doctrine. See this Court's opinion in Edmondson v. Simon, 87 F.R.D. 487, 490 (N.D.Ill. 1980). One concomitant of the doctrine is that statutes waiving sovereign immunity are narrowly construed, requiring a clear showing of congressional intent, ...


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