Appendix — Liddle & Robinson, L. L. P. v. Kidder, Peabody & Co.

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APPENDIX A — OPINION OF THE UNITED STATES

COURT OF APPEALS FOR THE DISTRICT OF

COLUMBIA CIRCUIT DECIDED JUNE 23, 1998

Gnited States Court of Appeals

FOR THE DISTRICT OF COLUMBIA CIRCUIT

Argued May 15, 1998 Decided June 23, 1998

No. 97-7107

Linpa E. LaPRrabe,

LippLe & Rosinson, L.L.P,

APPELLANT

Vv.

KippER Peasopy & Co., INCORPORATED,

APPELLEE

Appeal from the United States District Court

for the District of Columbia

(No. 91cv03330)

Jacob A. Stein argued the cause for appellant, with whom

George A. Fisher was on the briefs.

Andrew J. Schaffran argued the cause for appellee, with

whom Kathy B. Houlihan was on the brief.

Bills of costs must be filed within 14 days after entry of judgment.

The court looks with disfavor upon motions to file bills of costs out

of time.

2a

Appendix A

Before: Wiiiams, Ranpotpx and Rocers, Circuit Judges.

Opinion for the Court filed by Circuit Judge Rocers.

On December 31, 1991, LaPrade filed suit against Kidder

Columbia. She asserted various common law and statuto-

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3a

Appendix A

arbitration and retained jurisdiction, instructing “the parties

[to} notify the Court once arbitration is completed as to what

further proceedings in this Court are appropriate.”

Arbitration did not proceed smoothly. After appealing the

remedies, or in the alternative, that the NASD be ordered to

disqualify the present arbitration panel, and for such other

and further relief as may be just and proper.” Notably,

Liddle & Robinson did not notify the New York state court

that the federal district court had earlier entered an order

staying LaPrade’s action pending arbitration but retaining

jurisdiction. The New York state court issued the

ex parte order staying the arbitration, and the series of nine

arbitration sessions scheduled to begin the next day was

canceled.

Informed of Liddle & Robinson’s ex parte actions before

the New York state court only after the stay was granted,

1 In its order of March 23, 1994, which consolidated the first

and second actions, the district court again directed the parties to

“notify the Court once arbitration is completed as to what further

proceedings in this Court are appropriate.”

4a

Appendix A

Kidder Peabody returned to the district court on November

25, 1996, requesting an emergency order directing LaPrade

| to withdraw her petition in New York state court, holding

Liddle & Robinson in contempt, and imposing sanctions pur-

| suant to 28 U.S.C. § 1927. The district court denied the

request for a temporary restraining order, but subsequently

issued a preliminary injunction and granted Kidder Peabody’s

other requests for relief. The New York state court action,

the district court found, “constitutes an interference with the

arbitration currently pending between the parties ... [and]

an interference with the jurisdiction of this Court.” Thus, the

district court enjoined LaPrade and her counsel from engag-

ing in further proceedings before the New York state court,

lifted the stay imposed by that court, and entered sanctions

against Liddle & Robinson. On this last point, the district

court ordered that:

plaintiff's counsel, the law firm of Liddle & Robinson, .. .

shall compensate Kidder, Peabody & Co., for the vexa-

tious and dilatory tactics of plaintiff's counsel in filing ex

parte papers in the State Court proceeding, without any

notice to the State Court of the actions pending before

this Court, and without any notice to the State Court of

this Court’s arbitration orders, all of which multiplied the

proceedings.

The district court directed Kidder Peabody to file a state-

ment of “the attorneys’ fees, costs, and other expenses rea-

sonably incurred as a result of the improper activities of

plaintiff's counsel.” Thereafter, Kidder Peabody submitted a

figure of $83,279.04, based on a total of 333.5 hours of work

by six partners, seven associates, two legal assistants, and

four other staffers of Kidder Peabody’s counsel. Eighty-six

percent of the hours worked by partners was attributable to

one partner, however, and eighty-nine percent of the hours

worked by associates was attributable to three particular

associates. Liddle & Robinson objected to both the district

court’s decision to grant attorneys’ fees and the amount

sought by Kidder Peabody. In particular, Liddle & Robinson

claimed that the award of fees was inappropriate because its

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Sa

Appendix A

pursuit of an ex parte state court order was a tactic previous-

ly approved by the Second Circuit in McMahon v. Shear-

son/American Express, Inc., 896 F.2d 17 (2d Cir. 1990); that

the attorneys’ fees statement showed that Kidder Peabody’s

counsel performed duplicative and excessive work (although

Liddle & Robinson did not challenge the reasonableness of

the rate charged per hour); that there was no proof that

Kidder Peabody had actually “incurred” the claimed ex-

penses; and that an evidentiary hearing was necessary to

determine which fees and expenses were reasonably incurred.

The district court rejected Liddle & Robinson’s attempts to

reargue the merits of the sanctions award but agreed that

Kidder Peabody’s proposed figure for attorneys’ fees required

some adjustment. The court found that Kidder Peabody’s

counsel had expended an unreasonable number of hours on

the project; thus, the district court reduced the award from

the requested figure of $83,279.04 to a figure ten percent

lower: $74,951.14.

Il.

Liddle & Robinson first contends that the district court

lacked jurisdiction to enter the sanctions order. Although the

district court clearly intended to retain jurisdiction over the

stayed actions, Liddle & Robinson maintains that it could not

do so under the Arbitration Act. The district court only

stayed the actions and never actually ordered the parties to

enter arbitration. Hence, Liddle & Robinson contends, it had

no jurisdiction over the arbitration proceedings in New York

City, and thus no jurisdiction to impose sanctions based on

Liddle & Robinson’s conduct related to those proceedings.

Liddle & Robinson’s contention turns on the distinction

between sections 3 and 4 of the Arbitration Act. Section 3

empowers a district court only to stay an action, leaving to

the claimant the choice of arbitrating the claims or abandon-

ing them.? See 9 U.S.C. § 3; see also The Anaconda v.

2 Section 3 of the Arbitration Act provides:

6a

Appendix A

American Sugar Refining Co., 322 U.S. 42, 45 (1944). Sec-

tion 4 allows the court to issue orders directing arbitration.’

See 9 U.S.C. § 4 (1994). The district court stayed the actions

broughi by LaPrade against Kidder Peabody under section 3,

and did not direct arbitration under section 4; hence, Liddle

& Robinson contends that the district court had “no power to

superintend and direct the pending arbitration in New York

City.”

However, the district court did not have to rely upon the

Arbitration Act for jurisdiction. The district court’s jurisdic-

tion derived from the original diversity suit, which was only

If any suit or proceeding be brought in any of the courts of the

United States upon any issue referable to arbitration under an

agreement in writing for such arbitration, the court in which

such suit is pending, upon being satisfied that the issue in-

volved in such suit or proceeding is referable to arbitration

under such an agreement, shall on application of one of the

parties stay the trial of the action until suc” arbitration has

been had in accordance with the terms of the agreement,

providing the applicant for the stay is not in default in proceed-

ing with such arbitration.

9 U.S.C. § 3.

_ 3 Section 4 of the Arbitration Act provides, in relevant part:

A party aggrieved by the alleged failure, neglect, or refusal of

another to arbitrate under a written agreement for arbitration

may petition any United States district court which, save for

such agreement, would have jurisdiction under title 28, in a civil

action or in admiralty of the subject matter of a suit arising out

of the controversy between the parties, for an order directing

that such arbitration proceed in the manner provided for in

such agreement.... The court shall hear the parties, and

upon being satisfied that the making of the agreerment for

arbitration or the failure to comply therewith is not in issue,

the court shall make an order directing the parties to proceed

to arbitration in accordance with the terms of the agreement.

The hearing and proceedings, under such agreement, shall be

within the district in which the petition for an order directing

such arbitration is filed.

9 U.S.C. § 4.

7a

Appendix A

stayed (not dismissed) pending the results of arbitration.

While Liddle & Robinson is correct that section 3 of the

Arbitration Act was not itself a source of jurisdiction for the

district court to consider Kidder Peabody’s motion for sanc-

tions, see Moses H. Cone Memorial Hosp. v. Mercury Constr.

Corp., 460 U.S. 1, 25 n.32 (1983), it also did not divest the

district court of jurisdiction over the case: “The section

obviously envisages action in a court on a cause of action and

does not oust the court’s jurisdiction of the action, though the

parties have agreed to arbitrate.” The Anaconda, 322 U.S. at

44; accord Morris v. Morgan Stanley & Co., 942 F.2d 648,

653-54 (9th Cir. 1991); Transportes Caribe, SA. v. M/V

Feder Trader, 860 F.2d 637, 638-39 (5th Cir. 1988); see also

Merill Lynch, Pierce, Fenner & Smith, Inc. v. Cunningham,

736 F. Supp. 887, 889 (N.D. Ill. 1990).

Even if Liddle & Robinson means to contend that, although

the district court still had jurisdiction over the original suit,

its jurisdiction was suspended until the arbitration was com-

plete, the contention similarly fails. The Arbitration Act

contemplates that courts should not interfere with arbitra-

tions by making interlocutory rulings, see, ¢.g., Prima Paint

Corp. v. Flood & Conklin Mfg. Co., 388 U.S. 395, 404 (1967);

In re Arbitration Between Michaels & Mariforum Shipping,

S.A. 624 F.2d 411, 414 (2d Cir. 1989), but this general

proposition does not aid Liddle & Robirson. The rationale

behind the principle disfavoring judicial interference with

arbitration supports what the district court did here. The

principle is based on the “congressional purpose that the

arbitration procedure, when selected by the parties to a

contract, be speedy and not subject to delay and obstruction

in the courts.” Prima Paint Corp., 388 U.S. at 404; accord

Moses H. Cone, 460 U.S. at 28. In the instant case, the

district court stayed LaPrade’s actions, instructing her, in

effect, that she could not litigate her claims directly in court,

but could only arbitrate them or abandon them. If a party in

her position could subsequently go to another court in an

attempt to avoid the effect of the order, that party would

have an easy route to delay and obstruct the proceedings.

The Arbitration Act contemplates no such illogical result and

8a

Appendix A

Liddle & Robinson can point to no persuasive authority

suggesting that conclusion.

Rather than interfering with the arbitration proceeding, the

district court was attempting to protect that proceeding and

the effect of its own order. The district court had ordered

LaPrade that she could not pursue her civil remedies without

first submitting to arbitration but, in clear contradiction of

that order, Liddle & Robinson appealed to the state court to

stay the arbitration and remit the parties to judicial remedies,

without even informing that court of the district court’s

instructions. Clearly, the district court had jurisdiction to

address this situation: it retained jurisdiction over the origi-

nal suit, and the Arbitration Act did not divest it of jurisdic-

tion to ensure that the parties adhered to its previous order

under the Arbitration Act. Liddle & Robinson’s contention

that the district court was without jurisdiction to impose

sanctions is meritless.‘

Ill.

The question remains whether the district court abused its

discretion in imposing sanctions for Liddle & Robinson’s

“vexatious and dilatory tactics” under 28 U.S.C. § 1927, which

provides:

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

4 The Arbitration Act does not provide that the district court

loses venue if the arbitration proceeds in another judicial district.

See, e.g., Apex Plumbing Supply, Inc. v. U.S. Supply Co., 1998 WL

188633, at *2-*4 (4th Cir. Apr. 22, 1998); Smiga v. Dean Witter

Reynolds, Inc., 766 F.2d 698, 706 (2d Cir. 1985). We have no

occasion to address whether other state or federal courts could have

provided Kidder Peabody with similar relief. It suffices to note

that once venue was established in regard to institution of the

lawsuit, see Minnesota Mining & Mfg. Co. v. Eco Chem., Inc., 757

F.2d 1256, 1264 (Fed. Cir. 1985), the district court did not lose

venue because the parties arbitrated elsewhere.

PER ING Me eee SIS od i al ball

9a

Appendix A

unreasonably and vexatiously may be required by the

court to satisfy personally the excess costs, expenses, and

attorneys’ fees reasonably incurred because of such con-

duct.

28 U.S.C. § 1927 (1994). Liddle & Robinson contends that

the district court abused its discretion in imposing sanctions,

in setting the level of the attorneys’ fees award, and in

refusing to hold an evidentiary hearing on the attorneys’ fees

issue. This court reviews a district court’s decision to award

attorneys’ fees under 28 U.S.C. § 1927, and the way it

chooses to set the award, only for abuse of discretion. See

Copeland v. Marshall, 641 F.2d 880, 901 (D.C. Cir. 1980) (en

banc). Although this court has not directly established the

standard of review for a district court’s decision whether to

hold an evidentiary hearing on an attorneys’ fees application,

the appropriate standard again appears to be abuse of discre-

tion. See D.D.C.R. 108(f); McLaughlin v. Bradlee, 803 F.2d

1197, 1205-06 (D.C. Cir. 1986); Copeland, 641 F.2d at 905.

We find none.

A.

First, Liddle & Robinson contends that the district court’s

decision to impose sanctions under 28 U.S.C. § 1927 was an

abuse of discretion because the decision to seek an ex parte

order in New York state court was justified by precedent and

thus neither “unreasonable” nor “vexatious” under the stat-

ute. Liddle & Robinson maintains that the Second Circuit

specifically approved this tactic in a substantially similar case,

McMahon v. Shearson/American Express, Inc., 896 F.2d 17

(2d Cir. 1990), and thus that Liddle & Robinson’s actions

could not have been so unreasonable as to merit sanctions.

A review of McMahon shows how different that case is

from this one. Plaintiffs Eugene and Julia McMahon sued

defendant Shearson/American Express (“Shearson”) in dis-

trict court based on allegations of fraud and misrepresenta-

tion in its management of their profit sharing and pension

plans. See id. at 19. Upon opening their accounts, the

McMahons had signed customers’ agreements that included

10a

Appendix A

an arbitration provision, and after they filed their complaint,

Shearson sent them a letter indicating its intent to file a

motion to compel arbitration and requesting that they select

an arbitral forum, as was their right under the arbitration

provision. See id. The McMahons responded that the issue

of the arbitral forum was premature and that they would

select a forum only after a court declared the arbitration

provision enforceable, at which point Shearson, claiming that

the McMahons had waived their right, chose the New York

Stock Exchange (“NYSE”) as the forum. See id. On Shear-

son’s motion, the district court stayed certain portions of the

action under section 3 of the Arbitration Act. See id. at 19-

20. When the appeals from that order were completed, the

issue of arbitral forum resurfaced: the McMahons claimed

that they retained the option to choose a forum, while Shear-

son maintained that its previous selection of the NYSE was

binding. See id. at 20. Declining to resolve the issue, the

district court directed the parties to reach agreement on their

own, but the two sides subsequently began two separate

arbitration proceedings—Shearson at the NYSE and the

“McMahons at the American Arbitration Association. See id.

At that point, seeking to vindicate his clients’ right to choose

the arbitral forum, the McMahons’ counsel filed an ex parte

motion in New York state court for an order to show cause

why the NYSE arbitration should not be stayed. See id.

The defendant sought relief from the district court, and the

McMahons’ counsel agreed to postpone the proceedings be-

fore the state court. See id. Ruling that the defendant's

initial election of the NYSE forum was valid, the district

court imposed sanctions against plaintiffs’ counsel under both

-Federal Rule of Civil Procedure 11 and 28 U.S.C. § 1927.

See id. at 20-21.

Because of its conclusion that the actions of the McMahons’

counsel had not been taken in bad faith, the Second Circuit

reversed the imposition of sanctions under 28 U.S.C. § 1927.

See id. at 23-24. Noting that the district court had expressly

declined to decide the issue of the arbitral forum, the court

sketched the counsel’s unpalatable options:

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Appendix A

Examining [counsel’s] alternatives for preserving his

clients’ right to choose a forum, we conclude that his

choices were limited. One was a return to federal

court—where the judge had already refused to rule.

Another was to seek relief from state court, pursuant to

a New York statute governing arbitration.

Id. at 23. The court concluded that counsel’s “decision to

involve the state court in the dispute was perhaps unortho-

dox, but under the circumstances ... [could not] be charac-

terized either as subterfuge or an attempt to evade the

jurisdiction of the federal court,” id, but rather seemed “a

good faith attempt to preserve what counsel believed to be his

clients’ right to choose an arbitral forum,” id. at 24.

McMahon is distinguishable from the instant case in many

important respects. Perhaps most notably, the McMahons’ —

counsel went to the state court for resolution of an issue the

district court had declined to settle; in the instant case, by

contrast, Liddle & Robinson went to state court for relief that

was plainly inconsistent with the previous district court order.

The McMahons’ counsel filed for an ex parte order in order to

protect the arbitration procedure by establishing the correct

arbitral forum, not to circumvent the arbitration altogether;

as the Second Circuit emphasized, the attempt to secure an

ex parte order was not “an attempt to evade the jurisdiction

of the federal court,” id. at 23. Here the opposite appears

true. See supra Part II. Furthermore, the timing of Liddle

| & Robinson’s excursion to state court was more egregious:

the McMahon’s counsel went to state court at the start of the

arbitration, see McMahon v. Shearson/American Express

Inc., 709 F. Supp. 369, 372 (S.D.N.Y. 1989), rev’d, 896 F.2d 17

(2d Cir. 1990), whereas Liddle & Robinson sought state court

relief after extensive discovery had been completed, on the

: day before hearings were to recommence after a seventeen-

| month delay. Finally, unlike Liddle & Robinson, the McMa-

hons’ counsel at least informed the state court of the district

| court’s role in the proceedings, although the district court

found the representations to the state court deceptive. See

id. at 375 n.22. McMahon does not justify Liddle & Robin-

son’s actions.

12a

Appendix A

Four and one-half years after the initial suit was stayed

and the day before hearings were to restart after seventeen

months of delay, Liddle & Robinson filed an ex parte action in

New York state court to stay the hearings, without informing

that court of the district court’s orders or the district court’s

ongoing jurisdiction. Under the circumstances, the district

court was well within its discretion to impose sanctions under

28 U.S.C. § 1927.

Second, Liddle & Robinson contends that, even if the

district court could have imposed sanctions, it did not support

its order with sufficient findings of fact. This court has not

yet established whether the standard for imposition of sanc-

tions under 28 U.S.C. § 1927 should be “recklessness” or the

more stringent “bad faith.” See United States v. Wallace,

964 F.2d 1214, 1218-19 (D.C. Cir. 1992). Liddle & Robinson

contends that, no matter the proper standard, the district

court did not make findings of fact sufficien’; to support its

decision to sanction. To the contrary, the recwrd makes clear

that, no matter which standard applies, the district court

found that Liddle & Robinson’s actions qualified.

Although the district court concluded that Liddle & Robin-

son’s actions were “vexatious and dilatory” and “improper,”

and clearly believed that Liddle & Robinson was acting in bad

faith, Liddle & Robinson objects to the district court’s failure

actually to make a finding of recklessness or bad faith. In

the key passage in the order imposing sanctions, the court

ordered,

pursuant to 28 U.S.C. § 1927, that plaintiff's counsel, the

law firm of Liddle & Robinson, shall compensate Kidder,

Peabody & Co., for the vexatious and dilatory tactics of

plaintiffs counsel in filing ex parte papers in the State

Court proceeding, without any notice to the State Court

of the actions pending before this Court, and without any

notice to the State Court of this court’s arbitration

orders, all of which multiplied the proceedings.

13a

Appendix A

Later, in the order setting the award, the court specifically

found that Liddle & Robinson’s actions “unreasonably and

vexatiously” multiplied the proceedings. These passages cer-

tainly imply that the district court thought the firm was

acting in bad faith, but Liddle & Robinson is correct that the

district court never stated this explicitly in its orders.

The fact that the district court never explicitly said the

words “bad faith” or “recklessness” does not demonstrate an

abuse of discretion: “these words are not talismans required

for affirmance.” Kisenman v. Peoro (In re Peoro), 798 F.2d

1048, 1051 (9th Cir. 1986). According to the language of 28

U.S.C. § 1927, the district court must find that “the offending

attorney's multiplication of the proceedings was both ‘unrea-

sonable’ and ‘vexatious.’” Travelers Ins. v. St. Jude Hosp. of

Kenner, La., 88 F.3d 1414, 1416-17 (5th Cir. 1994) (quoting

FDIC v. Conner, 20 F.3d 1876, 1884 (5th Cir. 1994)). For

such a finding to be valid, “evidence of recklessness, bad faith,

or improper motive must be present.” Jd. at 1517. Here the

district court made the requisite findings that Liddle &

Robinson’s actions were unreasonable and vexatious, and

there was sufficient evidence of bad faith and recklessness to

support these findings. Moreover, given the ample evidence

that the district court believed Liddle & Robinson acted in

bad faith and recklessly,® it would be an empty formalism to

find an abuse of discretion simply because the district court

failed to invoke the magic words “bad faith” or “reckless-

ness,” and we decline to do so.

C.

Third, Liddle & Robinson contends that, even if sanctions

were appropriate, the district court abused its discretion in

awarding $74,951.14. In particular, Liddle & Robinson con-

tends that the statement filed by Kidder Peabody was so

“outrageously unreasonable” that, under Environmental De-

5 In numerous pointed statements to a representative of Liddle

& Robinson in two hearings, the district court made clear its view

that the facts supported an award of attorneys’ fees whether the

proper standard was recklessness or bad faith.

l4a

Appendix A

fense Fund, Inc. v. Reilly, 1 F.3d 1254 (D.C. Cir. 1993), the

district court ought to have denied Kidder Peabody any

award at all. Jd. at 1258. Instead, considering the proposed

fee award of $83,279.04 based on 333.5 hours of work by

Kidder Peabody's counsel, the district court awarded

$74,951.14, a figure ten percent below Kidder Peabody’s

lodestar figure.

Admittedly, 333.5 hours of work seems a high figure for

actions taken in response to Liddle & Robinson’s ex parte

action in state court, and it seems a bit excessive that six

partners, seven associates, two legal assistants, and four

other staffers worked on the matter. Although Liddle &

Robinson did not challenge the rate charged per hour, the

district court agreed that the basis for the resulting fees was

unreasonable “both in terms of the number of attorneys and

the number of hours.” Faced with these unreasonable fig-

ures, the district court heeded this court’s decision in Cope-

land v. Marshall, 641 F.2d 880 (D.C. Cir. 1980) (en banc), in

which the court held that a district court judge—“recognizing,

as he did, that some duplication or waste of effort had

occurred—did not err in simply reducing the proposed ‘lode-

star’ fee by a reasonable amount without performing an item-

by-item accounting.” Jd. at 908. Although a district court

might in some circumstances consider a fee request, or a

particular item within a fee request, so “outrageously unrea-

sonable” that outright denial of the request or an item within

the request would be appropriate, Environmental Defense

Fund, 1 F.3d at 1258 (quoting Brown v. Stackler, 612 F.2d

1057, 1059 (7th Cir. 1980)) (internal quotation marks omitted),

the district court’s decision to award a lesser figure than the

lodestar request, rather than denying the request outright,

was within the district court’s discretion. See id. at 1260;

Copeland, 641 F.2d at 900-08.

6 Liddle & Robinson’s assertion that the record contains no

proof that Kidder Peabody actually “incurred” these costs (that is,

actually paid its counsel for services rendered) is belied by a

certificate filed by Kidder Peabody’s counsel stating that Kidder

Peabody paid its counsel $83,279.04. See Fep. R. App. P. 10(a); D.C.

15a

Appendix A

D

Nor is Liddle & Robinson’s position that the district court

abused its discretion by not holding an evidentiary hearing on

the attorneys’ fees issue after the court decided to impose

sanctions persuasive. This failure, Liddle & Robinson insists,

violated due process because 28 U.S.C. § 1927 is a punitive

statute and, hence, Liddle & Robinson should have been

allowed to inquire at an evidentiary hearing into what ex-

penses were actually incurred and how reasonable such ex-

penses were.

Although a hearing may certainly be “useful” in some

instances, see Copeland, 641 F.2d at 905, and “it is perhaps

conceivable that due process could require a hearing on

sanctions ... in certain circumstances,” a hearing is not

required in all circumstances. McLaughlin, 803 F.2d at 1205.

Regarding sanctions under Federal Rule of Civil Procedure

11, the court stated in McLaughlin:

The trial court, as a primary participant in the proceed-

ings, had already observed those elements of the litiga-

tion most relevant to the criteria for imposing sanctions

under the rule, most notably McLaughlin’s conduct dur-

ing the trial.... The opportunity the District Court

provided McLaughlin to respond to the defendants’ appli-

cations for fees and costs gave him ample opportunity to

set forth whatever objections he had to the level of

sanctions imposed.

Id. at 1205-06 (citation omitted). Here, as in McLaughlin,

the party against whom sanctions have been imposed has had

ample opportunity to set forth arguments in opposition to

sanctions. Liddle & Robinson has no valid objection based in

due process, and the district court did not abuse its discretion

in deciding that a hearing was unnecessary.

Accordingly, we hold that the district court had jurisdiction

to impose sanctions upon Liddle & Robinson and that in so

doing it did not abuse its discretion, and we affirm.

Cir. R. 30(b). Liddle & Robinson has introduced no contradictory

evidence.

l6a

APPENDIX B — JUDGMENT OF THE UNITED STATES

COURT OF APPEALS FOR THE DISTRICT OF COLUMBIA

CIRCUIT DATED AND FILED JUNE 23, 1998

UNITED STATES COURT OF APPEALS

FOR THE DISTRICT OF COLUMBIA CIRCUIT

No. 97-7107

Linda E. LaPrade, Liddle & Robinson, L.L.P.,

Appellant

v.

Kidder Peabody & Co., Incorporated,

Appellee

Appeal from the United States District Court

for the District of Columbia

(No. 91cv03330)

Before: WILLIAMS, RANDOLPH and Rocers, Circuit Judges.

JUDGMENT

This cause came on to be heard on the record on appeal

from the United States District Court for the District of

Columbia and was argued by counsel. On consideration thereof,

it is

ORDERED and ADJUDGED, by the Court, that the

judgment of the District Court appealed from in this cause is

17a

Appendix B

hereby affirmed, in accordance with the opinion for the Court

filed herein this date.

FOR THE COURT:

Mark J. Langer, Clerk

BY: s/ Robert A. Bonner

Robert A. Bonner

Deputy Clerk

Date: June 23, 1998

18a

APPENDIX C — MEMORANDUM AND ORDER OF THE

UNITED STATES DISTRICT COURT FOR THE

DISTRICT OF COLUMBIA ENTERED MAY 31, 1997

AND FILED JUNE 2, 1997

UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF COLUMBIA

Civil Action No. 91-3330

(HHG)

LINDA E. LaPRADE,

Plaintiff,

v.

KIDDER, PEABODY & CO.,

Defendant.

Civil Action No. 93-0323

(HHG)

LINDA E. LaPRADE,

Plaintiff,

EDWARD CERULLO and PAUL SALZMAN,

Defendants.

19a

Appendix C

MEMORANDUM and ORDER

Before the Court are the statement of defendant Kidder,

Peabody & Co. of its attorneys’ fees, costs, and other expenses,

plaintiff's opposition thereto, defendant’s reply and amended

statement of fees and costs. Upon order by the Court rejecting

plaintiff's request for an evidentiary hearing on the fee award,

plaintiff filed a-more detailed. opposition to which defendants

have replied. Defendant seeks to recover $83,279.04 in fees,

expenses, and costs pursuant to 28 U.S.C. § 1927 and this

Court’s order of December 9, 1996.

|

These cases arise from plaintiff's termination by her

employer Kidder, Peabody. In 1994, the Court stayed the

consolidated cases pending arbitration before the National

Association of Securities Dealers (“NASD”). Arbitration has

proceeded at a snail’s pace to this point. On November 20, 1996,

the day that arbitration sessions were to resume after a 17 month

delay, plaintiff filed an ex parte order to show cause in the

Supreme Court of the State of New York, without any notice

to the State Court of the actions pending before this Court and

without any notice to the State Court of this Court’s arbitration

orders. The State Court stay had the effect of canceling all nine

arbitration sessions scheduled for late November and early

December, 1996.

Seeking to lift the State Court’s stay of the NASD

arbitration, on November 26, 1996, defendant Kidder, Peabody

filed in this Court an application for a temporary restraining

order and an order to show cause, and a memorandum of law in

support. The Court conducted a hearing on November 26, 1996

20a

Appendix C

and declined to grant a temporary restraining order. Kidder,

Peabody filed a motion for an injunction and for summary

judgment on November 29, 1996, and a reply memorandum to

plaintiff's opposition papers on December 5, 1996. After a

hearing on December 6, this Court issued an order lifting the

State Court’s stay of arbitration and awarding Kidder, Peabody

its attorneys’ fees, costs, and other expenses reasonably

incurred, pursuant to 28 U.S.C. § 1927, for plaintiff's, actions

of unreasonably and vexatiously multiplying the proceedings

in this case.

II

The fee award, called the “lodestar,” is calculated by

multiplying the number of hours reasonably expended on the

litigation by a reasonable hourly rate, and adding to that

reasonable expenses. Blum v. Stenson, 465 U.S. 886, 888 (1984).

The party seeking attorneys’ fees has the burden of proving

that its request is reasonable. Rode v. Dellarciprete, 892 F.2d

1177, 1183 (3d Cir. 1990). To establish the reasonableness of

its request, “the fee petitioner ‘must submit evidence supporting

the hours worked and rates claimed.’ ” Jd. (quoting Hensley v.

Eckerhart, 461 U.S. 424, 433 (1983)). The party disputing the

fee petition must make specific objections that are sufficient

to give the fee petitioner notice of the objections to the requested

fee. After objections are filed, the district court has a great

deal of discretion to adjust the fee award in light of the

objections. Jd.

In its amended statement of attorneys’ fees, costs, and other

expenses in connection with the proceedings in this Court during

the period November 20 to December 6, 1996, Kidder, Peabody

claims that it is entitled to $83,279.04: $76,457.90 in fees for

le ES BG OE BBE A A tN She SE ROL DN ly Stee

2la

Appendix C

attorneys, Morgan, Lewis & Bockius LLP; $1,520 in fees for

attorneys, Boraks & Jamnback; and $5,301.14 in expenses

incurred by Morgan, Lewis & Bockius LLP. Defendant Kidder,

Peabody supports this claim with a statement summarizing the

hours expended, the hourly rates charged, and other expenses

incurred in seeking to lift the stay of arbitration.

Plaintiff objects to the requested fees and expenses as being

excessive and unreasonable, and as being not adequately

documented.' Plaintiff does not challenge the reasonableness

of the hourly rate charged by defendant’s attorneys.

Plaintiffs challenge to the adequacy of the decumentation

is without merit. Kidder, Peabody submitted time records that

indicate the amount of time expended, a brief description of

work done during that time, the date of the work, and the name

of the attorney or legal assistant responsible for the services.

Kidder, Peabody has also submitted detailed descriptions of

all expenses incurred, including the date, amount, and nature

of each expense, and copies of receipts for the lead counsel’s

travel from New York to Washington, D.C. for purposes of

oral arguments before this Court.

Plaintiff's challenge to the reasonableness of the hours

expended, on the other hand, has some merit. The fee award at

issue represents compensation for time expended in seeking a

temporary restraining order and, after the Court declined to

issue such an order, a preliminary injunction on the same issue.

The issue for briefing was whether, in these circumstances, a

federal court had the authority to enjoin proceedings in state

court in order to protect the jurisdiction of the federal court.

Agreeing with defendant, this Court concluded that it had such

1. Plaintiff also attempts to reargue the merits of the sanctions

award, but the Court rejects this argument as untimely and without merit.

22a

Appendix C

authority, and accordingly, lifted the stay issued by the state

court.

Kidder, Peabody argues that the hours expended were

reasonable in light of the complexity of the legal issues, the

urgency of the need for relief, and complications stemming from

plaintiff's choice of different fora in which to pursue her claims.

There is no question that defendant urgently needed relief in

order to preserve the arbitration sessions scheduled after a

lengthy delay. The Court so concluded in granting defendant’s

motion for an injunction. Although the issue of jurisdiction is

complicated, the Court finds defendant’s argument as to the

complexity of the case somewhat overstated. Defendant

emphasizes that it filed twelve pleadings in connection with

this matter, but some of these pleadings — such as the notice

of entry of appearance or proposed orders — should not have

occupied much time of Kidder, Peabody’s attorneys.

Kidder, Peabody’s counsel, Morgan, Lewis & Bockius

LLP, claims that the preparation and argument of the

proceedings before this Court required the efforts of six

partners, seven associates, two legal assistants and four other

members of counsel’s staff totaling 333.5 hours. Upon closer

inspection, 86% of the fee hours by partners were billed by the

one lead partner, and 89% of the associate fee hours were billed

by three associates. Nine attorneys claim to have spent over

100 hours in research; four attorneys claim to have spent almost

100 hours drafting and revising the motion papers, and the same

four attorneys claim to have spent over 40 hours “finalizing”

the motion papers — although as defendant points out, the

attorneys did not all finalize the same documents.

Plaintiff specifically challenges the reasonableness of these

fees, and the Court agrees that they are unreasonable both in

23a

Appendix C

terms of the number of attorneys and the number of hours. The

Court does not doubt that Kidder, Peabody’s counsel actually

worked the number of hours claimed. Attorneys in large private

law firms frequently are required to work much longer than

eight-hour days, especially in the context of an expedited

briefing schedule such as was involved here. However, “[i]t

does not follow that the amount of time actually expended is

the amount of time reasonably expended. In the private sector,

‘billing judgment’ is an important component in fee setting.”

Copeland v. Marshall, 641 F.2d 880, 891 (D.C. Cir. 1980) (en

banc) The quality of Kidder, Peabody’s pleadings and

arguments before the Court was top-notch, but it nevertheless

was accomplished via some apparent duplication of effort in

~ both research and writing. There was no need for more than

three associates to work on this matter, nor was it reasonable

for nine attorneys to conduct research.

In Copeland, our Court of Appeals held that a district court

judge “recognizing, as he did, that some duplication or waste

of effort had occurred — did not err in simply reducing the

proposed ‘lodestar’ fee by a reasenable amount without

performing an item-by-item accounting.” Jd. at 903. In light of

the objections raised by plaintiff, the Court will reduce the

lodestar by 10%, to $74,951.14.

Upon consideration of the written submissions of the parties

and affidavits, it is this 31st day of May 1997,

ORDERED that defendant is awarded counsel fees and

costs in the amount of seventy-four thousand, nine hundred

and fifty-one dollars, and fourteen cents ($74,951.14).

s/ Harold H. Greene

HAROLD H. GREENE

United States District Judge

24a

APPENDIX D — ORDER OF THE UNITED STATES

DISTRICT COURT FOR THE DISTRICT OF COLUMBIA

ENTERED AND FILED APRIL 4, 1997

UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF COLUMBIA

Civil Action No. 91-3330

(HHG)

LINDA E. LAPRADE,

Plaintiff,

ve

KIDDER, PEABODY & CO., INC.,

Defendant.

Civil Action No. 93-0323

(HHG)

LINDA E. LAPRADE,

Plaintiff,

V.

EDWARD CERULLO, et al.,

Defendants.

25a

Appendix D

ORDER

Pursuant to this Court’s December 9, 1996 Order, Kidder,

Peabody & Co., Inc., filed their statement of attorneys’ fees,

costs, and other expenses reasonably incurred as a result of the

improper activities of plaintiff's counsel. Kidder, Peabody

thereafter submitted an amended statement on January 15, 1997.

Liddie & Robinson submitted a two-page statement in

opposition, which is based on a certificate by W. Dan Boone,

counsel with the firm of Liddle & Robinson. The Court finds

that the “opposition” contains only general objections and falls

short of challenging the reasonableness of the hourly rate

charged or the adequacy of the documentation of fees requested.

The party disputing the fee petition must make specific

objections that are sufficient to give the petitioner notice of

the objections to the requested fee, which in turn provides the

district court with discretion to adjust the fee award in light of

the objections. See Rode v. Dellarciprete, 892 F.2d 1177 (3rd

Cir. 1990).

Accordingly, it is this 4th day of April, 1997

ORDERED that plaintiff shall submit an appropriate

Opposition within twenty days of the date of this Order or the

Court will treat defendants’ statement as conceded.

s/ Harold H. Greene

HAROLD H. GREENE

United States District Judge

26a

APPENDIX E — ORDER OF THE UNITED STATES

DISTRICT COURT FOR THE DISTRICT OF COLUMBIA

DATED AND FILED DECEMBER 9, 1996

UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF COLUMBIA

Civil Action No. 91-3330

(HHG)

LINDA E. LaPRADE,

Plaintiff,

v.

KIDDER, PEABODY & CO.,

Defendants.

Civil Action No. 93-0323

(HHG)

LINDA R. LaPRADE,

Plaintiff,

V.

EDWARD CERULLO and PAUL SALZMAN,

Defendants.

27a

Appendix E

ORDER

Upon consideration of the written submissions of the parties

and affidavits, and upon hearing argument of counsel on

defendant’s motion for an injunction and for summary

judgment, the Court finds that the action initiated by plaintiff

in the Supreme Court of the State of New York, County of

New York (the “State Court”), before Justice Emily Jane

Goodman, constitutes an interference with the arbitration

currently pending between the parties before the National

Association of Securities Dealers (“NASD arbitration”)

pursuant to the Federal Arbitration Act; and further that such

State Court action constitutes an interference with the

jurisdiction of this Court and this Court’s Orders of June 24,

1992 and March 23, 1994.

It is ORDERED that plaintiff, Linda E. LaPrade, and

plaintiff's counsel are hereby enjoined until further order of

this Court from engaging in proceedings of any kind before the

Supreme Court of the State of New York, whether pursuant to

actions previously filed in this Court or pursuant to new actions,

and whether by the filing of documents or by oral

representations, regarding the pending NASD arbitration

between the parties on plaintiff's claims of breach of contract,

fraud, sex discrimination, abusive discharge, or any other claims

relating to her employment with Kidder Peabody & Co., Inc.;

and it is further

ORDERED, pursuant to 28 U.S.C. § 2283 that, in order to

protect its judgments and because it is necessary in aid of its

jurisdiction, the stay of NASD arbitration entered by Justice

Emily Jane Goodman of the Supreme Court of the State of New

York on November 19, 1996 be and it is hereby LIFTED, and

it shall have no effect; and it is further

28a

Appendix E

ORDERED that plaintiff and plaintiff's counsel proceed

with the hearing sessions scheduled in the pending NASD

arbitration between the parties on December 10, 11, 12 and 19,

1996, such other hearing sessions as may he scheduled, and on

no fewer than five dates that are convenient to the NASD, the

members of the Arbitration Panel, and Kidder, Peabody & Co.,

Inc. during the months of January, February, and March 1997;

and it is further

ORDERED that this Court will be available throughout

the period of the arbitration to entertain applications concerning

alleged interference or attempts to interfere with the orders of

this Court in the above-entitled action and with alleged

interferences or attempts to interfere with the arbitration; and

it is further

ORDERED, pursuant to 28 U.S.C. § 1927, that plaintiff's

counsel, the law firm of Liddle & Robinson, is hereby

sanctioned and it shall compensate Kidder, Peabody & Co., for

the vexatious and dilatory tactics of plaintiff's counsel in filing

ex parte papers in the State Court proceeding, without any notice

to the State Court of the actions pending before this Court, and

without any notice to the State Court of this Court’s arbitration

orders, all of which multiplied the proceedings by requiring

this Court to consider and rule on this motion for a preliminary

injunction and related proceedings; the amount of the sanction

to be paid to be fixed after defendants file with the Court a

statement of the attorneys’ fees, costs, and other expenses

reasonably incurred as a result of the improper activities of

plaintiff's counsel.

December 9, 1996

s/ Harold H. Greene

HAROLD H. GREENE

United States District Judge

29a

APPENDIX F — MEMORANDUM AND ORDER OF THE

UNITED STATES DISTRICT COURT FOR THE DISTRICT

OF COLUMBIA ENTERED AND FILED JUNE 24, 1992

UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF COLUMBIA

Civil Action No. 91-3330

(HHG)

LINDA E. LaPRADE,

Plaintiff,

Vv.

KIDDER, PEABODY, & CO.,

Defendant.

MEMORANDUM AND ORDER

This lawsuit involves common law and statutory claims

by plaintiff against her former employer. This memorandum

addresses several outstanding motions.

Plaintiff has filed a sealed motion, pursuant to Fed.R.Civ.P.

12(f), to strike and seal portions of defendant’s memorandum

in support of defendant’s motion to stay pending arbitration on

the grounds that portions of defendant’s memorandum are

immaterial and scandalous. Plaintiff has shown no good cause

in support of such a motion, and furthermore it is untimely

under Rule 12(f). Accordingly, it will be denied.

30a

Appendix F

Defendant has moved to stay this action pending arbitration

on the grounds that plaintiff signed a Uniform Application for

Securities Industry Registration or Transfer (Form U-4) which

contains a binding arbitration clause. The Federal Arbitration

Act, 9 U.S.C. § 3, requires courts to stay suits based upon “any

issue referable to arbitration under an agreement in writing. . . .”

That statute applies to cases such as this. See Perry v. Thomas,

482 U.S. 483 (1987) ; Gilmer v. Interstate/Johnson Lane Corp.,

111 S. Ct. 1647 (1991).' Plaintiff's arguments that her dispute

goes to the validity of the arbitration provision at issue and

that she is entitled to a factual hearing on that question are

without merit. Furthermore, “the federal policy favoring

arbitration counsels that doubts about the intended scope of an

agreement to arbitrate be resolved in favor of the arbitral

process.” Pearce v. E.F. Hutton Group, Inc., 828 F.2d 826,

829 (D.C. Cir. 1987).

Plaintiff also has moved for leave to amend her opposition

to defendant’s application for a stay. This request was

previously addressed by the Court on March 26, 1992 when it

denied plaintiff's motion for leave to submit a supplemental

memorandum, and accordingly is denied now.

Plaintiff also moves to strike the exhibit (a copy of the U-

4 form) attached to defendant’s motion to stay pending

arbitration and to order that defendant produce the original U-4

form for inspection on the grounds that plaintiff's signature on

that form may be a forgery. Plaintiff has already conceded that

she executed a U-4 form, see First Amended Complaint at 4 84

1. The Gilmer Court particularly noted that § | of the Federal

Arbitration Act, which exempts certain “contracts of employment” from

the scope of the statute, does not apply to arbitration agreements in

securities registration applications. 111 S. Ct. at 1652 n.2.

3la

Appendix F

[sic},? and therefore the motion is without merit and will be

denied.

Accordingly, it is this 24th day of June 1992

ORDERED that plaintiff's motion to file to strike and seal

portions of defendant's memorandum in support of defendant's

motion to stay be and it is hereby denied; and it is further

ORDERED that defendant’s motion to Stay this action

pending arbitration be and it is hereby granted, and the parties

shall notify the Court once arbitration is completed as to what

further proceedings in this Court are appropriate; and it is further

ORDERED that plaintiff's motion for leave to amend the

opposition to defendant's application for a stay be and it is

hereby denied;w and it is further

ORDERED that plaintiff's motion to strike the exhibit

attached to defendant’s motion to stay and to order that

defendant produce a document be and it is hereby denied.

s/ Harold H. Greene

HAROLD H. GREENE

United States District Judge

2. Indeed, plaintiff was required to sign such a form in order to

become a registered representative of defendant with various

self-regulatory organizations designated by the Securities and Exchange

Commission.

32a

APPENDIX G — ORDER OF THE UNITED STATES

COURT OF APPEALS FOR THE DISTRICT OF

COLUMBIA CIRCUIT DENYING SUGGESTION FOR

REHEARING FILED AUGUST 24, 1998

UNITED STATES COURT OF APPEALS

FOR THE DISTRICT OF COLUMBIA CIRCUIT

No. 97-7197 September Term, 1997

91-cv03330

Liddle & Robinson, L.L.P.,

Appellant

v.

Kidder Peabody & Co,

Appellee

BEFORE: Edwards, Chief Judge; Wald, Silberman,

Williams, Ginsburg, Sentelle, Henderson,

Randolph, Rogers, Tatel and Garland, Circuit

Judges

ORDER

Upon consideration of appellant’s Suggestion for

Rehearing /n Banc, and the absence of a request by any member

of the court for a vote; it is

ORDERED that the suggestion be denied.

33a

Appendix G

Per Curiam

FOR THE COURT:

Mark J. Langer, Clerk

BY: s/ Robert A. Bonner

Robert A. Bonner

Deputy Clerk

Circuit Judges Silberman, Ginsburg, Henderson and

Garland did not participate in this matter.

34a

APPENDIX H — ORDER OF THE UNITED STATES

COURT OF APPEALS FOR THE DISTRICT OF

COLUMBIA CIRCUIT DENYING PETITION FOR

REHEARING FILED AUGUST 24, 1998

UNITED STATES COURT OF APPEALS

FOR THE DISTRICT OF COLUMBIA CIRCUIT

No. 97-7107 September Term, 1997

91cv03330

Liddle & Robinson, L.L.P.,

Appellant

v.

Kidder Peabody & Co,

Appellee

BEFORE: Williams, Randolph and Rogers, Circuit

Judges

ORDER

Upon consideration of appellant’s petition for rehearing

filed July 23, 1998, it is

ORDERED that the petition be denied.

Per Curiam

35a

Appendix H

FOR THE COURT:

Mark J. Langer, Clerk

BY: s/ Robert A. Bonner

Robert A. Bonner

Deputy Clerk