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

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## Record

- **Collection:** Supreme Court brief
- **Document type:** Appendix
- **Published:** January 1, 1999
- **Citation:** 525 U.S. 1071

## Text

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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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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

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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

---

Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40386003_1224%3A2. Public record. Not legal advice.