Moriarty Ex Rel. Local Union No. 727, I.B.T. Pension Trust v. Svec

In the

United States Court of Appeals

For the Seventh Circuit

____________

Nos. 03-1699 and 03-1743

THOMAS J. MORIARTY, Trustee on Behalf of the Local Union

No. 727, I.B.T. Pension Trust, and the Teamsters Local

Union No. 727 Health and Welfare Trust,

Plaintiff-Appellee,

Cross-Appellant,

v.

JAMES F. SVEC, individually and doing business as

SVEC & SONS FUNERAL HOME and doing business as WEST

SUBURBAN LIVERY,

Defendant-Appellant,

Cross-Appellee.

____________

Appeals From the United States District Court

for the Northern District of Illinois, Eastern Division

Case No. 96-C-7392—George W. Lindberg, Judge.

____________

ARGUED SEPTEMBER 28, 2005—DECIDED NOVEMBER 21, 2005

____________

Before FLAUM, Chief Judge, and MANION and EVANS,

Circuit Judges

FLAUM, Chief Judge. In this successive appeal, James F.

Svec (“Svec”), the owner of Svec & Sons Funeral Home

2 Nos. 03-1699 and 03-1743

(“Home”) and West Suburban Livery (“WSL”), two sole-

proprietorships, appeals the district court’s determination

that Svec was an employee during the relevant time period

and was therefore required under a collective bargaining

agreement to make contributions on his behalf to a pension

fund and a health and welfare fund (“Funds”), both of which

have plaintiff Thomas J. Moriarty on their respective

boards of trustees. Both Svec and Moriarty appeal the

amount of attorneys’ fees and costs awarded to Moriarty;

Svec appeals the district court’s determination that he must

pay interest, double interest, and audit costs to Moriarty;

Svec appeals the district court’s decision not to sanction

Moriarty under 28 U.S.C. § 1927; and Svec appeals the

district court’s determination that it had jurisdiction over

plaintiff’s claims against WSL. For the reasons stated

herein, we affirm in part and vacate and remand in part.

I. Background

This Court has addressed the dispute between Svec and

Moriarty on two prior occasions. See Moriarty v. Svec, 164

F.3d 323 (7th Cir. 1998) (“Moriarty I”); see also Moriarty v.

Svec, 233 F.3d 955 (7th Cir. 2001) (“Moriarty II”). After

nearly ten years of protracted litigation, this case appears

to have reached its conclusion. While there are issues

remaining that affect the parties, the primary subject of

this appeal is the attorneys’ fees awarded by the district

court. The facts of the original dispute are detailed in this

Court’s prior decisions; the facts contained herein are

limited to those necessary to discuss the issues pending

before this Court.

Until his death on June 29, 1987, James Svec’s father,

Elmer Svec, was the sole owner of Svec & Sons Funeral

Home and the half-owner of West Suburban Livery. As part

of the Funeral Directors Services Association of Greater

Chicago (“FDSA”), Home was bound by a collective bargain-

Nos. 03-1699 and 03-1743 3

ing agreement (“CBA”) to make contributions on behalf of

its employees, including funeral directors, to a pension fund

and a health and welfare fund.

In Moriarty II, this panel remanded two issues to the

district court. The first issue the district court was in-

structed to consider was what percentage of ownership Svec

had in Home and WSL for the time period at issue, January

1, 1987 to June 29, 1987. Both parties admit that using the

formula mandated by the Seventh Circuit, see Moriarty II,

233 F.3d at 963 (citing Goodman Investment Co., 292

N.L.R.B. 340, 347-48 (1989)), Svec owned 3.82% of the

integrated enterprise, Home and WSL, during the relevant

time period.

The second issue this Court remanded for determination

was “what percentage of ownership is necessary before Svec

is considered a principal owner under the CBA[?]” Id.

The amount in dispute for the period from January 1,

1987 through June 29, 1987, consists of $1,451 allegedly

owed by Home to the Health and Welfare Fund and $1,038

allegedly owed by Home to the Pension Fund. After nearly

ten years of exhaustive litigation, the potential attorneys’

fees and costs in this case dwarf these claims.

On July 23, 2002, on remand from Moriarty II, the district

court granted Moriarty’s motion for summary judgment on

the remaining ownership issues. The district court found

that Svec owned 3.82% of the integrated enterprise from

January 1, 1987 to June 29, 1987.

Although Svec had repeatedly advocated for a 10%

ownership rule, under which any person owning less than

10% of a business would be considered an employee, Svec

introduced a new position regarding the requirements for

“substantial” or “significant” ownership. Svec proposed a

new rule under which he, as the son of the owner, would

have been considered a “substantial” or “significant” owner

on the basis of his father’s ownership. The district court

4 Nos. 03-1699 and 03-1743

rejected this new formulation and found that, “Defendant

has presented no evidence showing that [the 10% rule] was

in any way inconsistent with the collective bargaining unit

or that it is unreasonable. . . . Accordingly, no reasonable

jury could find against the plaintiff on the issue of whether

3.82% ownership was sufficient for defendant to be a

significant or substantial owner.”

Svec also brought a motion for attorneys’ fees under 28

U.S.C. § 1927. That statute provides that “[a]ny attorney . .

. who so multiplies the proceedings in any case unreason-

ably and vexatiously may be required by the court to satisfy

personally the excess costs, expenses, and attorneys’ fees

reasonably incurred because of such conduct.” 28 U.S.C.

§ 1927.

Svec’s claim for attorneys’ fees was based upon an

allegation that Moriarty knew Svec owned the funeral home

after his father’s death on June 29, 1987, and unreasonably

pursued claims for contributions for that time period

anyway. The district court found that although plaintiff’s

counsel had acted unreasonably by failing to look in the

court file of Elmer Svec’s estate to determine ownership,

such conduct was not “vexatious.” The district court there-

fore denied Svec’s motion for attorneys’ fees under 28 U.S.C.

§ 1927.

On October 8, 2002, the district court issued two of the

seven orders that make up its findings on remand. Moriarty

requested a recovery of $277,644.06 from Svec. Of this,

$191,779.28 were attorneys’ fees. The district court found

that these attorneys’ fees covered too long a time period.

Citing this Court’s ruling in Moriarty II, the district court

found that because the defendant had made a substantial

offer to settle on December 30, 1997, for $43,000, Svec was

not liable for attorneys’ fees Moriarty incurred after that

date. Memorandum and Order of October 8, 2002, at 3

(quoting Moriarty II, 233 F.3d at 967 (“an offer is substan-

Nos. 03-1699 and 03-1743 5

tial if, as in this case, the offered amount appears to be

roughly equal to or more than the total damages recovered

by the prevailing party”). In addition, the district court

found that an offer made by Svec to settle for $43,424.26 on

November 17, 1997, was also a substantial offer.1 Memoran-

dum and Order of October 8, 2002, at 5. As a result, the

district court found that it must consider the November

offer a “substantial offer of settlement” in determining

attorneys’ fees. Id. The district court concluded that any

attorneys’ fees accrued after November 14, 1997, “would be

zero percent of the load star [sic] amount for that period,

and that is what the court will award.” Id. at 6.

Based upon this determination, the district court an-

nounced its intention to award Moriarty “reasonable . . .

costs of the action” under 29 U.S.C. § 1132(g)(2)(D) for costs

and attorneys’ fees prior to November 14, 1997. Memoran-

dum and Order of October, 8, 2002, at 6. The court also

found that costs for “post-audit issues” were properly

included in the plaintiff’s costs. Interest and double interest

were added to the judgment. See 29 U.S.C. § 1132(g)(2)(B),

(C). The district court asked Moriarty to submit an

amended final draft judgment in accordance with these

findings.

On November 19, 2002, the district court issued an

additional order. This order appears to grant Moriarty

attorneys’ fees at the rate of $225.00 per hour rather than

$165.00 per hour. The order states that the issue of attor-

neys’ fees was previously decided and further argument was

1

This “offer” was actually an attempted acceptance. Svec was

attempting to accept an offer previously made by Moriarty, which

Moriarty was no longer holding open. Svec indicated a willingness

to accept Moriarty’s previous offer by phone on November 14,

1997, and by letter on November 17, 1997. The two dates are used

interchangeably by the district court.

6 Nos. 03-1699 and 03-1743

“barred by the law of the case.” Order of November 19,

2002.

On December 4, 2002, the district court issued a judgment

in favor of the plaintiff in the amount of $99,880.87. This

judgment consisted of:

(A) $20,191.50 in delinquent contributions—

(i) $1,351.00 - owed by the Funeral Home to the

Health and Welfare Fund for the period January 1,

1987 through June 30, 1987;

(ii) $1,038.00 - owed by the Funeral Home to the

Pension Fund for the period January 1, 1987

through June 30, 1987;

(iii) $11,444.00 - owed by WSL to the Health and

Welfare Fund for the period October 1, 1993

through December 31, 1995;

(iv) $6,358.50 - owed by WSL to the Pension Fund

for the period [ ] October 1, 1993 through December

31, 1995.

(B) $25,814.05 in interest through October 22, 2002 on

the delinquent contributions at the rate set forth in the

Funds’ trust agreements;

(C) $25,814.05 in double interest, as allowed pursuant

to 29 U.S.C. § 1132(g)(2)(C)(ii);

(D) $10,557.02 in audit costs;

(E) $281.00 in costs for prosecuting this suit; and

(F) $17,223.25 in attorneys [sic] fees.

Nos. 03-1699 and 03-1743 7

Order of December 4, 2002, at 2.2

Moriarty submitted a motion to reconsider the amount of

attorneys’ fees and costs under Federal Rule of Civil

Procedure 59(e). Upon reconsideration, the district court

again found that both the November 14, 1997, and the

December 30, 1997, offers were substantial. Despite this

finding, the district court chose to amend its prior order.

The new district court order found:

[T]here were two substantial offers of settlement made

in late 1997. The court believes that it was somewhat

inconsistent, though, in holding that the Seventh

Circuit’s determination that the 12/30/1997 offer was

substantial foreclosed plaintiff’s argument that there

was no substantial offer of settlement, but then using

the 11/14/1997 date to cut off attorneys fees and costs.

The court is, therefore, amending its prior orders to

allow attorneys fees and costs plaintiff incurred prior to

12/30/1997.

Order of February 12, 2003.

The district court entered its last order in this case on

February 19, 2003. It adjusted the award of attorneys’ fees

in the December 4, 2002 order to reflect the change in cut-

off from November 14, 1997, to December 30, 1997. As such,

the attorneys’ fees owed by Svec to Moriarty were increased

$23,821.88 (from $17,223.25 to $41,045.13). This alteration

made the final judgment against Svec $123,702.75.

Amended Judgment Order of February 19, 2003.

Svec now appeals the judgment of the district court and

Moriarty cross-appeals.

2

The awards by the district court that are at issue in this appeal

are contained in (A)(i), (A)(ii), (B), (C), (D), (E), and (F). The values

of the delinquent contributions in (A)(iii) and (A)(iv) are not

disputed by either Moriarty or Svec.

8 Nos. 03-1699 and 03-1743

II. Discussion

A. Liability for Contributions to the Funds

This Court reviews a district court’s decision to grant

summary judgment de novo. See Dugan v. Smerwick

Sewerage Co., 142 F.3d 398 (7th Cir. 1998). Summary

judgment is appropriate where no genuine issue of material

fact exists and the moving party is entitled to judgment as

a matter of law. Id. In reviewing summary judgment

motions, this Court construes the record in the light most

favorable to the non-moving party. Id.

Contributions to the Funds were required for all employ-

ees of Home/WSL. Principal owners, however, were exempt

from the contribution requirements. In its Moriarty II

opinion, this Court instructed the district court to deter-

mine “what percentage of ownership is necessary before

Svec is considered a principal owner under the CBA. Svec

claims that ten percent ownership is sufficient, but Mori-

arty has an opportunity on remand to show that this figure

is incorrect.” Moriarty v. Svec II, 233 F.3d 955, 963 (7th Cir.

2000).

The remand order specifically gave Moriarty, but not

Svec, leave to show that the ten percent figure was incor-

rect. The district court adopted ten percent as the standard

for “substantial/significant” ownership, as Svec had re-

quested at every stage of these proceedings. Svec may not

now reverse course and adopt a position contrary to his

posture throughout the course of litigation. The district

court properly declined to consider this new argument by

Svec given the clear directive of Moriarty II.3 Because Svec

was an employee, not a principal owner, during the period

3

The district court also evaluated the merits of Svec’s claim that

3.82% ownership could qualify as “significant/substantial” under

the CBA. We need not revisit this evaluation.

Nos. 03-1699 and 03-1743 9

in dispute, we affirm the district court’s holding awarding

$1,351.00 in delinquent contributions to the Health and

Welfare Fund for the period January 1, 1987 to June 29,

1987, and $1,038.00 in delinquent contributions owed to the

Pension Fund for the period January 1, 1987 to June 29,

1987.

B. Attorneys’ Fees

The district court awarded $41,045.13 in attorneys’ fees

to Moriarty based upon ERISA’s mandatory fee provision.

29 U.S.C. § 1132(g)(2)(D) (“In any action under this

subchapter . . . in which a judgment in favor of the plan is

awarded, the court shall award the plan—reasonable

attorney’s fees and costs of the action, to be paid by the

defendant[.]”) (emphasis added). District courts have wide

discretion to determine what constitutes reasonable attor-

neys’ fees. We review these awards for abuse of discretion.

Moriarty v. Svec II, 233 F.3d 955, 963 (7th Cir. 2001) (citing

Hensley v. Eckerhart, 461 U.S. 424, 437 (1983)). “However,

when fees are adjusted because of a principle of law our

review is de novo.” Id. (citing Jaffee v. Redmond, 142 F.3d

409, 412-13 (7th Cir. 1998)).

The seven orders of the district court do not provide a

clear picture of why the total amount of attorneys’ fees

awarded is appropriate. Because several questions remain

regarding the proper hourly rate and the time period

covered by the attorneys’ fees, we have no choice but to

vacate the award and remand this issue to the district

court.

In Moriarty II, this Court outlined the factors to be

considered in determining a reasonable amount of attor-

neys’ fees. 233 F.3d at 965-68. Although many issues that

contribute to attorneys’ fees are left to its sound discretion,

the district court must demonstrate that it has considered

the proportionality of attorneys’ fees to the total damage

10 Nos. 03-1699 and 03-1743

award, as well as the existence of substantial settlement

offers. Id. at 968. In addition, the district court must

provide an explanation of the hourly rate used, which is

sufficient for this court to determine whether the district

court has acted within its discretion. Id. at 965.

1. Proportionality

The district court did not address the proportionality of

attorneys’ fees. Given the extended litigation in this case,

attorneys’ fees may be disproportionate to the damages

awarded. This Court previously offered an analysis of the

importance of proportionality in an award of attorneys’ fees.

See Moriarty II, 233 F.3d at 967-68. Furthermore, this

Court specifically instructed the district court to analyze

proportionality in this case. As this Court stated in Mori-

arty II:

[P]roportionality concerns are a factor in determining

what a reasonable attorney’s fee is. . . . [T]he district

court’s fee order should evidence increased reflection

before awarding attorney’s fees that are large multiples

of the damages recovered or multiples of the damages

claimed. . . . [W]e remand for such evaluation. On

remand . . . the district court should consider . . .

proportionality factors in exercising its discretion in

fashioning a reasonable attorney’s fee.

Id. at 968.

This Court takes no position as to whether the attorneys’

fees were proportional to the amount of the award. We must

require, however, that the district court analyze this issue.

Because there has been no discussion of proportionality, we

must again remand this issue to the district court.

Nos. 03-1699 and 03-1743 11

2. Hourly Rate

The district court’s rulings regarding the proper hourly

rate for Moriarty’s counsel are internally inconsistent. On

remand, the district court’s only discussion of the proper

rate for attorneys’ fees consists of the following two sen-

tences: “Defendant contends that plaintiff inappropriately

requests attorney’s fees at the rate of $225.00 per hour

rather than $165.00 per hour. This argument is barred by

the law of the case.” Order of November 19, 2002.

Although the meaning of this statement is somewhat

vague, it appears “this” refers to the subject of the previous

sentence, i.e., the defendant’s contention. Therefore, a plain

reading of the district court’s order is that the law of the

case bars Svec from arguing that Moriarty cannot request

a $225.00 hourly rate, thereby sanctioning a rate of $225.00

per hour for Moriarty’s counsel.

Although the district court appeared to indicate that the

law of the case mandated an hourly rate of $225 and the

court could not consider a rate of $165, the opposite is true.

During oral argument, this Court attempted to resolve the

ambiguity in the district court’s order. Neither party,

however, could explain what “law of the case” the district

court’s Order of November 19, 2002, referred to.

Previous rulings as to the proper hourly rate are no more

illuminating. Neither party cited what appears to be the

first statement in the record concerning this subject: a

March 24, 1998 finding by the district court that rates of

$225 per hour for partners and $200 per hour for associates

are reasonable. This issue was next discussed on October

29, 1999, when the district court found $165 per hour to be

the market rate for the legal services provided to Moriarty.

This Court approved of that finding in Moriarty II, stating

that “Given the evidence before it, the district court did not

abuse its discretion in deciding that $165 is the hourly rate

for Jacob, Burns work.” 233 F.3d at 965.

12 Nos. 03-1699 and 03-1743

The issue of the hourly rate for attorneys’ fees thus

appeared to be settled. If the district court had cited

Moriarty II or its own previous rulings to find an hourly

rate of $165, the law of the case would have barred any

attempt by Moriarty to inflate the hourly rate.

Svec alleges that despite its earlier order, the district

court awarded attorneys’ fees at rates of $225 and $200 per

hour. As this Court stated in Moriarty II, “The lawyer’s

regular rate is strongly presumed to be the market rate for

his or her services.” Id. at 965 (citing Central States Pension

Fund v. Central Cartage Co., 76 F.3d 114, 116-17 (7th Cir.

1996); Gusman v. Unisys Corp., 986 F.2d 1146, 1150 (7th

Cir. 1993)). The market rate previously found by the district

court and approved of by this Court in Moriarty II is $165

per hour. Id. Thus, the law of the case has established $165

per hour as the appropriate rate for the services of Mori-

arty’s counsel. If the district court no longer believes this

rate to be appropriate, it must provide a comprehensive

explanation. We remand this issue to the district court for

findings consistent with this opinion.

3. Substantial Offers to Settle

The district court’s findings as to whether Svec made a

substantial offer to settle are perplexing. On remand, the

district court correctly characterized Moriarty II as holding

the December 30, 1997 offer by Svec to be substantial. See

Moriarty v. Svec II, 233 F.3d 955, 967 (7th Cir. 2001) (“[A]n

offer is substantial if, as in this case, the offered amount

appears to be roughly equal to or more than the total

damages recovered by the prevailing party.”). Svec’s

substantial offer to settle on December 30, 1997, does not

preclude the possibility that other substantial offers were

made, nor does it preclude that attorneys’ fees may be

collected after that point. The law of this case, however,

Nos. 03-1699 and 03-1743 13

bars any claim that the December 30, 1997 offer was not

substantial.4

In Moriarty II, this Court stated that “[s]ubstantial

settlement offers should be considered by the district court

as a factor in determining an award of reasonable attorney’s

fees.” Id. The district court appears to have interpreted this

language to mandate the termination of fees following a

substantial settlement offer. Nevertheless, the district court

did not abuse its discretion by cutting off the recovery of

attorneys’ fees after Svec made a substantial settlement

offer. This Court cannot, however, affirm the district court’s

determination that the relevant substantial offer in this

case was made on December 30, 1997.

In its Memorandum and Order of October 8, 2002, the

district court found that Svec’s December 30, 1997 offer was

substantial and that an earlier offer on November 14, 1997,

for a slightly larger sum of money, was also substantial.

Based upon this determination, the district court found that

“a reasonable attorney’s fee for the period after November

14, 1997, would be zero percent of the load star [sic] amount

for the period, and that is what the court will award.”

Memorandum and Order, October 8, 2002, at 6. This

determination was logical and well founded. If an offer of

$43,000 is a substantial offer, a previous offer for a larger

amount must also be substantial. We affirm the district

court’s finding that both offers were substantial.5

4

Moriarty’s argument that Svec’s December 30, 1997 offer was

not substantial fails to note that the current total damages

include years of additional costs and interest. As this Court found

in Moriarty II, at the time the offer was made, it was substantial.

5

Determinations by the district court as to whether an offer is

substantial are reviewed for abuse of discretion. See Moriarty v.

Svec II, 233 F.3d 955, 968 (7th Cir. 2001).

14 Nos. 03-1699 and 03-1743

The district court, however, made further findings that

complicated this issue. While continuing to hold that “there

were two substantial offers of settlement made in late

1997,” the district court stated:

The court believes that it was somewhat inconsistent,

though, in holding that the Seventh Circuit’s determi-

nation that the 12/30/1997 offer was substantial fore-

closed plaintiff’s argument that there was no substan-

tial offer of settlement, but then using the 11/14/1997

date to cut off attorneys [sic] fees and costs. The court

is, therefore, amending its prior orders to allow attor-

neys [sic] fees and costs plaintiff incurred prior to

12/30/1997.

We fail to see the inconsistency found by the district court.

If the December 30 offer was substantial and an offer for a

greater sum was previously made, that offer is also substan-

tial. It is inconsistent to find, as the district court did, that

although a substantial offer was made on November 14,

attorneys’ fees should be recovered until a second substan-

tial offer was made.

If the district court chooses to use a substantial offer as a

cut-off point for the award of attorneys’ fees, such a decision

is within its discretion given the facts of this case. However,

the district court must offer an explanation as to why it

chooses to use one substantial offer as a cut-off, but not

another. As such, we remand to the district court with

instructions to make one of three possible findings on this

issue. The district court may find: (1) the November 14,

1997 offer was substantial and is therefore the appropriate

cut-off point for attorneys’ fees; (2) that despite the fact that

both offers were substantial, the December 30, 1997 offer

was a more appropriate cut-off (this conclusion would

require further explanation); or (3) now that the district

court is freed from the misapprehension that no fees may be

collected after a substantial offer is made, it may find that

Nos. 03-1699 and 03-1743 15

although a substantial offer is an important factor in

determining attorneys’ fees, other factors lead it to conclude

that Svec is liable for some portion of attorneys’ fees

incurred after a substantial offer was made.

Once the district court has made findings regarding

proportionality, the proper hourly rate, and the issue of

substantial offers, the district court should enter a new

award of attorneys’ fees against Svec, to replace the current

award of $41,045.13.

C. Interest, Double Interest, and Audit Costs

The district court allowed interest, double interest, and

audit costs to continue to accrue after the attorneys’ fees

awarded to Moriarty were cut off. We affirm the district

court’s decision on this issue.

The exact statutory language at issue states:

(g) Attorney’s fees and costs; awards in actions involv-

ing delinquent contributions . . .

(2) In any action under this subchapter by a fidu-

ciary for or on behalf of a plan to enforce section

1145 of this title in which a judgment in favor of the

plan is awarded, the court shall award the plan—

(A) the unpaid contributions,

(B) interest on the unpaid contributions,

(C) an amount equal to the greater of—

(i) interest on the unpaid contributions, or

(ii) liquidated damages provided for under

the plan in an amount not in excess of 20

percent (or such higher percentage as may

be permitted under Federal or State law) of

the amount determined by the court under

subparagraph (A),

16 Nos. 03-1699 and 03-1743

(D) reasonable attorney’s fees and costs of the

action, to be paid by the defendant, and

(E) such other legal or equitable relief as the

court deems appropriate.

29 U.S.C.A. § 1132(g)(2).

1. Interest and Double Interest

Svec is required to pay interest and double interest on the

delinquent contributions. See 29 U.S.C.A. §§ 1132(g)(2)(B),

(C). Svec’s arguments against payment rely upon a strained

statutory interpretation based on Public Citizen v. United

States Department of Justice, 491 U.S. 440, 454 (1989). In

Public Citizen, the Supreme Court found that words of

general meaning sometimes do not represent the legisla-

ture’s true intent. Id. Svec, however, presents no evidence

that the legislature did not mean what it said when it

mandated interest and double interest on unpaid contribu-

tions.

Svec also claims that he should not be forced to pay the

interest costs because Moriarty prolonged this litigation.

The district court did not abuse its discretion in finding that

Moriarty did not prolong this litigation.

While attorneys’ fees and costs must be “reasonable,”

there is no such qualifier placed upon the award of interest

and double interest. See 29 U.S.C.A. §§ 1132(g)(2). The

“reasonable” requirement in the context of fees and costs

creates a latitude for the district court that does not exist in

the awarding of interest. The statutory language has clear

implications in this case. In an action “involving delinquent

contributions . . . the court shall award the plan . . . interest

on the unpaid contributions, [and] an amount equal to the

greater of interest on the unpaid contributions, or liqui-

dated damages[.]” 29 U.S.C.A. §§ 1132(g)(2)(B), (C).

Nos. 03-1699 and 03-1743 17

We affirm the judgment of the district court requiring

Svec to pay Moriarty interest and double interest totaling

$51,628.10 on the unpaid contributions.

2. Audit Costs

Svec also claims that the audit costs were excessive. Of

the $10,557.02 in audit costs, Svec claims $3,868.75 should

not be paid because “it was plaintiff’s attorney’s negligence

in prolonging the litigation that resulted in additional audit

costs.” Svec presents no evidence that the district court

abused its discretion by awarding these costs. Additionally,

there was no factual finding by the district court to support

Svec’s claim that Moriarty should be denied fees or costs

because of alleged “negligence.” The district court correctly

found that audit costs were part of the relief due to plaintiff

under 29 U.S.C.A. § 1132(g)(2)(E). “Because an award of

audit costs to the prevailing party is consistent with the

policy of encouraging full and fair contributions, we hold

that audit costs are recoverable under subsection (E).”

Operating Engineers Pension Trust v. A-C Co., 859 F.2d

1336, 1343 (9th Cir. 1988). We affirm the district court’s

finding that Svec must pay Moriarty $10,557.02 in audit

costs.

3. Costs

The total costs at issue in this case are $281. Svec makes

no argument that this assessment was improper. Nonethe-

less, Svec alleges in an argument heading that “The District

Court Erred in Awarding Plaintiff . . . Costs[.]” The Court

finds no basis to challenge the assessment of costs and

affirms the holding of the district court.

18 Nos. 03-1699 and 03-1743

D. Sanctions Against Moriarty Under 28 U.S.C. § 1927

After his father’s death on June 29, 1987, Svec was

clearly the owner of Home and no longer an employee. Svec

argues that any claims by Moriarty that concern his

employment status after his father’s death on June 29,

1987, were the result of unreasonable and vexatious

litigation. The district court may impose sanctions to punish

unreasonable and vexatious litigation:

Any attorney or other person admitted to conduct cases

in any court of the United States or any Territory

thereof who so multiplies the proceedings in any case

unreasonably and vexatiously may be required by the

court to satisfy personally the excess costs, expenses,

and attorneys’ fees reasonably incurred because of such

conduct.

28 U.S.C. § 1927 (emphasis added).

We review district court decisions to grant or deny

sanctions under 28 U.S.C. § 1927 for an abuse of discretion.

In re TCI Ltd., 769 F.2d 441, 448 (7th Cir. 1985). Svec

claims he “incurred $95,406.50 in attorneys fees and

$7,917.93 in costs from 1996 through September 20, 1999 in

defending against plaintiff’s unmeritorious claim.” The

district court found that Moriarty’s counsel acted negli-

gently and unreasonably by failing to obtain the probate file

for Elmer Svec’s estate; however, the district court did not

find this behavior “vexatious.” The district court went on to

find that 28 U.S.C. § 1927 requires both unreasonable and

vexatious behavior.

We affirm the district court’s decision to deny Svec

sanctions based upon the behavior of Moriarty’s counsel.

Svec cites many cases in which attorneys who acted unrea-

sonably and vexatiously were sanctioned. He fails, however,

to establish that the conduct in this case was vexatious.

Sanctions may only be awarded under 28 U.S.C. § 1927

against an individual who has demonstrated “subjective or

Nos. 03-1699 and 03-1743 19

objective bad faith.” Pac. Dunlop Holdings, Inc. v. Barosh,

22 F.3d 113,120 (7th Cir. 1994) (citing Kotsilieris v.

Chalmers, 966 F.2d 1181, 1184 (7th Cir. 1992)). Svec’s

allegation that Moriarty’s attorney knew of the “principal

owner rule” and still pursued claims against Svec for post-

July 1, 1987 contributions fails to meet the high burden

required to overturn the district court’s findings. Although

Svec alleges that Moriarty’s counsel knew he was the owner

following his father’s death, the district court found no

action by Moriarty’s counsel so egregious as to warrant

sanctions under 28 U.S.C. § 1927. We affirm the district

court’s decision to withhold sanctions, while sharing the

district court’s concern regarding the actions of Moriarty’s

counsel.

Although Svec reargues every allegation against Moriarty

and Moriarty’s counsel, he fails to illustrate how the district

court’s decision not to grant sanctions is an abuse of

discretion. In short, the district court’s holding that the

actions by Moriarty’s counsel do not support sanctions

under 28 U.S.C. § 1927 was not an abuse of discretion.

In a footnote, Svec expands his claim for attorneys’ fees

under 28 U.S.C. § 1927 to include the plaintiff as well as

the plaintiff’s lawyers. A footnote does not preserve an issue

for review. See To-Am Equipment Co., Inc. v. Mitsubishi

Caterpillar Forklift Am., Inc., 152 F.3d 658, 663 (7th Cir.

1998). Therefore, this Court has not examined any claims

against Moriarty under 28 U.S.C. § 1927.

E. Jurisdiction of the District Court to Hear Mori-

arty’s Claims

Svec asks this Court to reconsider its decision in Moriarty

I that the terms of the collective bargaining agreement

covered WSL employees. Although the NLRB found that

Teamsters Local 727 did not represent WSL’s employees,

this Court found the question of representation irrelevant.

20 Nos. 03-1699 and 03-1743

“Once the court found that WSL and the Funeral Home

were a single employer, and that WSL employees performed

livery services, it could impose liability ‘in accordance with

the terms and conditions of [the] . . . agreement.’ ” Moriarty

v. Svec I, 164 F.3d 323, 334 (7th Cir. 1998) (quoting 29

U.S.C. § 1145).

This Court will not revisit an issue it resolved seven years

ago. Law of the case doctrine advises against a court

reopening previously decided issues. Messinger v. Anderson,

225 U.S. 436, 444 (1912). This Court will only reexamine an

earlier decision if it is “convinced that [decision] is clearly

erroneous and would work a manifest injustice.” Arizona v.

California, 460 U.S. 605, 618 n.8 (1983). The jurisdictional

decision in Moriarty I was correct, and we reaffirm that

holding today.

III. Conclusion

For the reasons stated herein, we AFFIRM the district

court’s holding that Svec was an employee subject to the

collective bargaining agreement from January 1, 1987 to

June 29, 1987; we VACATE the district court’s award of

attorneys’ fees and REMAND to the district court for a

determination of the proper amount of attorneys’ fees; we

AFFIRM the district court’s award of interest, double

interest, and audit costs; we AFFIRM the district court’s

denial of sanctions against Moriarty’s counsel; and we

AFFIRM the district court’s assertion of jurisdiction to hear

Moriarty’s claims.

Nos. 03-1699 and 03-1743 21

A true Copy:

Teste:

________________________________

Clerk of the United States Court of

Appeals for the Seventh Circuit

USCA-02-C-0072—11-21-05