Opinion — Hall v. Cole

Supreme Court brief1973

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NOTE: Where it is feasible, a syllabus (headnote) will be re-

leased, as is being done in connection with this case, at the time

the opinion is issued. The syllabus gary no part of the opinion

of t the C Court but has been prepared by the Reporter of Decisions for

the convenience of the reader. See United States v. Detroit Lumber

Co., 200 U.8. 321, 337.

SUPREME COURT OF THE UNITED STATES

Syllabus

HALL et av. v. COLE

CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR

THE SECOND CIRCUIT

No. 72-630. Argued March 21, 1973—Decided May 21, 1973

Respondent, expelled from his union for deliberate and malicious

vilification of union management following his resolutions un-

successfully condemning that management's alleged undemocratic

actions and shortsighted policies, regained his umon membership

in a suit under § 102 of the Labor-Management Reporting and

Disclosure Act (LMRDA) and was awarded $5,500 in legal ‘res

The Court of Appeals affirmed. Held:

1. Respondent’s suit under § 102 of the LMRDA vands ated

not only his own rights of free speech guaranteed bey the oo ture

but furthered the interests of the umon and its member. .- wel

As a result, the award to respondent of attormey. tees ineder

these circumstances comported with the trial ewart. un wenn

equitable power of making such an award whenever ove rreding

considerations indicate the se for such recovery is \

Electric Auto-Lite Co., 396 U.S. 375, 391-342) Pp 4.

2. The allowance of counsel tees to the suceeset' plaintiff in

a suit brought under § 102 is not precluded bo that -tarutory

provision and, indeed, is supported by the legislative history of

the LMRDA. Pp. 812.

3. Under all the facts of the case, the Distmet Court did not

abuse its discretion in awarding counsel fees to respondent

Pp. 12-14.

462 F. 2d 777, affirmed.

BRENNAN, J., delivered the opinion of the Court, in which Burcer,

C. J., and DovGias, Stewart, BLackMuN, and PoweELL, JJ., joined.

Wuirte, J., filed a dissenting opinion, in which ReHnavtst, J., joined.

MarsHa.i, J., took no part in the consideration or decision of the

case.

Oe deg eed ee ee ot ae eee a

> 4

——— iat vere

NOTICE : This opinion is subject to formal revision before publication

in the preliminary peist of the United States Reports. Readers are re-

Ak to notify the Reporter of Decisions, Supreme Court of the

‘nited States, Washington, D.C. 20543, of ppg Bah a aphical or other

formal errors, in order that corrections may made before the pre-

liminary print goes to press.

SUPREME COURT OF THE UNITED STATES

No. 72-630

Paul Hall, Ete., et al.

Petitioners,

John Cole.

’}On Writ of Certiorari to the

United States Court of Ap-

peals for the Second Circuit.

[May 21, 1973]

Mr. Justice BRENNAN delivered the opinion of the

Court.

This case requires us to consider the propriety of an

award of counsel fees to a ‘successful plaintiff in a suit

brought under § 102 of the Labor-Management Report-

ing and Disclosure Act of 1959, 29 U. S. C. § 412.". On

August 6, 1962, at a regular meeting of the membership

of petitioner Seafarers International Union of North

America—Atlantic, Gulf, Lakes and Inland Waters Dis-

trict, respondent introduced a set of resolutions alleging

various instances of undemocratic actions and _ short-

sighted policies on the part of union officers. The reso-

lutions were defeated and, on November 26, 1962, re-

spondent was expelled from the union on the ground that

his presentation of the resolutions violated a union rule

proscribing ‘deliberate and malicious vilification with

regard to the execution or the duties of any office or job.”’

After exhausting his intra-union remedies, respondent

Section 102 of the Act, 29 U. S. C. § 412, provides in pertinent

part:

“Any person whose rights secured by the provisions of this sub-

chapter have been infringed by any violation of this subchapter may

bring a civil action in a district court of the United States for such

relief (including injunctions) as may be appropriate.”

ite

2 HALL v. COLE

filed this suit under § 102 of the LMRDA, claiming that

his expulsion under these circumstances violated his right

of free speech as secured by § 101 (a)(2) of the Act, 29

U.S. C. $411 (a)(2)?

On May 27, 1964, the United States District Court for

the Eastern District of New York issued a temporary

injunction restoring respondent’s membership in the

union, and the United States Court of Appeals for the

Second Circuit affirmed. 339 F. 2d 881 (1965). Some

five years later, the case came on for trial and the Dis-

trict Court, finding a violation of respondent’s rights

under § 101 (a)(2), ordered him permanently reinstated

to membership in the union and, although denying re-

spondent’s damage claims,* granted him counsel fees in

the sum of $5,500 against the union. The Court of

2 Section 101 (a)(2) of the Act, 29 U.S. C. § 411 (a) (2), provides:

“Every member of any labor organization shall have the right to

meet and assemble freely with other members; and to express any

views, arguments, or opinions: and to express at meetings of the

labor organization his views, upon candidates in an election of the

labor organization or upon any business properly before the meeting,

subject to the organization’s established and reasonable rules per-

taining to the conduct of meetings: Provided, That nothing herein

shall ‘be construed to impair the right of a labor organization to

adopt and enforce reasonable rules as to the responsibility of every

member toward the organization as an institution and to his refrain-

ing from conduct that would interfere with its performance of its

legal or contractual obligations.”

3In its unreported opinion, the District Court found that re-

spondent “suffered no loss of wages as a result of his expulsion from

the union.” And although respondent “was deprived of his right

to attend meetings and run for union office” during the period of

his expulsion, the District Court concluded that “[t]he record is

barren of any proof on which the court might make a determination

of the value of [these rights].” Finally, the court denied respond-

ent’s claim for punitive damages on the ground that the union’s

“decision to expel respondent: was motivated neither by malice nor

bad faith.

HALL v. COLE 3

Appeals affirmed in all respects, 462 F. 2d 777 (CA2

1972).. We granted certiorari limited to the questions

whether (1) an award of attorneys’ fees is permissible

under § 102 of the LMRDA, and (2) if so, whether such

an award under the facts of this case constituted an abuse

of the District Court’s discretion. 409 U. S. 1074-1075.

We affirm.

Although the traditional American‘ rule ordinarily

disfavors the allowance of attorneys’ fees in the absence

of statutory ° or contractual authorization, ° federal courts,

in the exercise of their equitable powers, may award

attorneys’ fees when the ‘interests of justice so require.

Indeed, the power to award such fees “is.part of the

original authority of the chancellor to do equity in a

particular situation,” Sprague v. Ticonic National Bank,

307 U. S. 161, 166 (1939), and federal courts do not hesi-

The American rule, it might be noted, is more restrictive than

the general rule that prevails in most other nations. See, e. g.,

Ehrenzweig, Reimbursement of Counsel Fees and the Great Society,

54 Calif. L. Rev. 792, 793 (1966). Many commentators have argued

for a “liberalization” of the American rule. See, e. g., Stoebuck,

Counsel Fees Included in Costs: A Logical Development, 38 U. Colo.

L. Rev. 202 (1966); Ehrenzweig, supra; Kuenzel, The Attorney's

Fee: Why Not a Cost of Litigation?, 49 lowa L. Rev. 75 (1963) ;

McCormick, Counsel Fees and Other Expenses of Litigation as an

Element of Damages, 15 Minn. L. Rev. 619 (1931): Comment, The

Allocation of Attorney’s Fees After Mills v. Electric Auto-Lite Co..

38 U. Chi. L. Rev. 316 (1971); Note, Attorney’s Fees: Where Shall

the Ultimate Burden Lie?, 20 Vand. L. Rev.- 1216 (1967).

5See, e. g., Clayton Act, §4, 38 Stat. 731, 15 U. S. C. $15;

Communications Act of 1934, § 206, 48 Stat. 1072, 47 U.S. C. § 206:

Interstate Commerce Act, § 16, 34 Stat. 590, 49 U. S. C. § 16 (2):

Securities Exchange Act of 1934, §§ 9 (e), 18 (a), 48 Stat. 890, 897,

15 U.S. C. §§ 78i (e), 78r (a). _” .

®See, e. g., Fleischmann Distilling Corp. v. Maier Brewing Co.,

386 U.S. 714, 717 (1967); Hauenstein v. Lynham, 100 U.S. 483

(1880); Day v. Woodworth, 13 How. (54 U. 8.) 363 (1852).

4 HALL v. COLE

tate to exercise this inherent equitable power whenever

“overriding considerations indicate the need for such a re-

covery.” Mills v. Electric Auto-Lite Co., 396 U. S. 375,

391-392 (1970) ; see Fleischmann Distilling Corp. v. Maier

Brewing Co., 386 U. S. 714, 718 (1967).

Thus, it is unquestioned that a federal court may award

counsel fees to a successful party when his opponent

has acted “in bad faith, vexatiously, wantonly, or for

oppressive reasons.” 6 Moore’s Federal Practice 1352

(1966 ed.); see, e. g., Newman v. Piggie Park Enter-

prises, Inc., 390 U. S. 400, 402 n. 4 (1968); Vaughan vy.

Atkinson, 369 U. S. 527 (1962); Bell v. School Bd. of

Powhatan County, 321 F. 2d 494 (CA4 1963); Rolaz v.

Atlantic Coast Line R. Co., 186 F. 2d 473 (CA4 1951).

In this class of cases, the underlying rationale of “fee-

shifting” is, of course, punitive, and the essential element

in triggering the award of fees is therefore the existence

of “bad faith” on the part of the unsuccessful litigant.

Another established exception involves cases in which

the plantiff’s sucessful litigation confers ‘a substantial

benefit on the members of an ascertainable class, and

where the court’s jurisdiction over the subject matter of

the suit makes possible an award that will operate to

spread the costs proportionately among them.” Mills vy.

Electric Auto-Lite, supra, at 393-394.’ “Fee-shifting”

? This exception has its origins in the “common-fund” cases, which

have traditionally awarded attorneys’ fees to the successful plaintiff

when his representative action creates or traces a “common-fund,”

the economic benefit of which is shared by all members of the class.

See, e. g., Central Railroad & Banking Co. v. Pettus, 113 U. S. 116

(1885); Trustees v. Greenough, 105 U. S. 527 (1882). In Sprague

v. Ticonic National Bank, supra, the rationale of these cases was

extended to authorize an award of attorneys’ fees to a successful

plaintiff who, although suing on her own behalf rather than as

representative of a class, nevertheless established the right of others

to recover out of specific assets of the same defendant through the

operation of stare decisis. In reaching this result, the Court ex-

plained that the beneficiaries of the plaintiff’s litigation could be

—— ATER SIE PEMA MIE DA RO ERMN A TEES PAIRED NEED ARTE OBER I BY AERC

HALL v. COLE 5

is justified in these cases, not because of any “bad faith”

of the defendant but, rather, because “[t]o allow the

others to obtain full benefit from the plaintiff's efforts

without contributing equally to the litigation expenses

would be to enrich the others unjustly at the plaintiff's

expense.” IJd., at 392; see also Fleischmann Distilling

Corp. v. Maier Brewing Co., supra, at 719; Trustees v.

Greenough, 105 U. S. 527, 5382 (1882). Thus, in Mills

vy. Electric Auto-Lite Co., supra, we approved an award

of attorneys’ fees to successful shareholder plaintiffs in

a suit brought to set aside a corporate merger accom-

plished through the use of a misleading proxy state-

ment in violation of § 14 (a) of the Securities Exchange

Act of 1934, 15 U. S. C. §78n(a). In reaching this

result, we reasoned that, since the dissemination of mis-

leading proxy solicitations jeopardized important inter-

ests of both the corporation and “ ‘the stockholders as a

group,” * the successful enforcement of the statutory

made to contribute to the costs of the suit by an order reimbursing

the plaintiff out of the defendant’s assets from which the beneficiaries

eventually would recover. Finally, in Mills v. Electric Auto-Lite

Co., supra, we held that the rationale of these cases must logically

extend, not only to litigation that confers a monetary benefit on

others, but also to litigation “ ‘which corrects or prevents an abuse

which would be prejudicial to the rights and interests’” of those

others. Jd., at 396, quoting Bosch v. Meeker Cooperative Light &

Power Assn., 257 Minn. 362, 367, 101 N. W. 2d 423, 427 (1960).

Citing our decisions in Mills and Newman v. Piggie Park Enter-

prises, Inc., supra, respondent contends that the award of attorneys’

fees in this case might also be justified on the ground that, by

successfully prosecuting this litigation, respondent acted as a “ ‘pri-

vate attorney general’ vindicating a policy that Congress considered

of highest priority.” Newman v. Piggie Park Enterprises, Inc., supra,

at 402. See also Knight v. Auciello, 453 F. 2d 852 (CA1 1972);

Lee v. Southern Home Sites Corp., 444 F. 2d 143 (CA5 1971). In

light of our conclusion with respect to the “common benefit” ra-

tionale, however, we have no occasion to consider that question.

8 Mills v. Electric Auto-Lite Co., supra, at 392, quoting J. J. Case

Co. v. Borak, 377 U. 8..426, 482 (1964).

ae ao

pe odie,

6 HALL v. COLE

policy necessarily “rendered a substantial service to the

corporation and its shareholders.” Mulls v. Electric Auto-

Lite Co., supra, at 396. Under these circumstances, re-

imbursement of the plaintiffs’ attorneys’ fees out of the

corporate treasury simply shifted the costs of litigation

to “the class that has benefited from them and that would

have had to pay them had it brought the suit.” Jd,

at 397.

The instant case is clearly governed by this aspect

of Mills. The Labor-Management Reporting and Dis-

closure Act of 1959 was based, in part, on a congressional

finding “from recent investigations in the labor and

management fields, that there have been a number of

instances of breach of trust, corruption, disregard of

the rights of individual employees, and other failures

to observe high standards of responsibility and ethical

conduct. .. .” 29 U. S. C. §401(b). In an effort

to eliminate these abuses, Congress recognized that it

was imperative that all union members be guaranteed

at least “minimum standards of democratic proc-

ess... .”° Thus, Title I*® of the LMRDA—the “Bill

of Rights of Members of Labor Organizations’—was

specifically designed to promote the “full and active par-

ticipation by the rank and file in the affairs of the

union,” ** and, as the Court of Appeals noted, the rights

enumerated in Title I'* were deemed “vital to the in-

*105 Cong. Rec. 5806 (1959) (Sen. McClellan).

1029 U. S. C. §§ 411-415.

11 American Federation of Musicians v. Wittstein, | 379 U.S. 171,

182-183 (1964).

12In addition to the Tit. I guarantee of freedom of speech and

assembly involved in this case, 29 U. S. C. § 411 (a) (2), see n. 2,

supra, Tit. I also guarantees equal “political” rights to all union

members, 29 U. S. C. § 411 (a)(1); stability and fairness in the

assessment of dues, initiation fees and other assessments, 29 U. S. C.

§ 411 (a)(3); the right of all union members to sue and to par-

ticipate in litigation, 29 U. S. C. § 411 (a) (4); and procedural fair-

ness in the discipline process, 29 U. S. C. § 411 (a) (5).

Oe i te

HALL v. COLE 7

dependence of the membership and the effective and fair

operation of the union as the representative of its mem-

bership.” 462 F.2d, at 780. See also International Assn.

of Machinists v. Nix, 415 F. 2d 212 (CA5 1969); Salz-

handler v. Caputo, 316 F. 2d 445 (CA2 1963).

Viewed in this context, there can be no doubt that, by

vindicating his own right of free speech guaranteed by

§ 101 (a)(2) of Title I of the LMRDA, respondent nec-

essarily rendered a substantial service to his union as an

institution and to all ot its members. When a union

member is disciplined for the exercise of any of the rights

protected by Title I, the rights of all members of the

union are threatened. And, by vindicating his own right,

the successful litigant dispels the “chill” cast upon the

rights of others. Indeed, to the extent that such law-

suits contribute to the preservation of union democracy,

they frequently prove beneficial “not only in the imme-

diate impact of the results achieved but in their impli-

cations for the future conduct of the union’s affairs.”

Yablonski v. United Mine Workers of America, — U. S.

App. D. C. —, 466 F. 2d 424, 431 (1972). Thus, as in

Mills, reimbursement of respondent’s attorneys’ fees out

of the union treasury ** simply shifts the costs of liti-

gation to “the class that has benefited from them and

that would have had to pay them had it brought the

suit.” Mills v. Electric Auto-Lite Co., supra, at 397.

See also Yablonski v. United Mine Workers of America,

supra; Robins v. Schonfeld, 326 F. Supp. 525 (SDNY

1971); Cefalo v. International Union of District 50

13 Petitioners contend that the payment of counsel fees out of the

union treasury might deplete union funds to such an extent as to

impair the union’s ability to operate as an effective collective bar-

gaining agent and to endanger union stability. Although this con-

sideration is undoubtedly an important one, it is relevant, not to

the power of federal courts to award counsel fees generally, but,

rather, to the exercise of the District Court’s discretion on a case-by-

case basis. See n. 23, infra.

_—_—

EP Gel PEAY

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8 HALL v. COLE

United Mine Workers, 311 F. Supp. 946 (DC 1970);

Sands vy. Abelli, 290 F. Supp. 677 (SDNY 1968). We

must therefore conclude that an award of counsel

fees to a successful plaintiff in an action under § 102

of the LMRDA falls squarely within the traditional

equitable power of federal courts to award such fees

whenever “overriding considerations indicate the need

for such recovery.” Mills v. Electric Auto-Lite Co.,

supra, at 391-392.

This does not end our inquiry, however, for even where

“fee-shifting” would be appropriate as a matter of equity,

Congress has the power to circumscribe such relief. In

Fleischmann Distilling Corp. v. Maier Brewing Co., supra,

for example. we held that § 35 of the Lanham Act, 15

U.S. C. $117, precluded an award of attorneys’ fees as

a separate element of recovery in a suit for deliberate

infringement of a trademark. In reaching that result,

we reasoned that, since § 35 “meticulously detailed the

remedies available to a plaintiff who proves that his valid

trademark has been infringed.” Congress must have in-

tended the express remedial provisions of § 35 “to mark

the boundaries of the power to award monetary relief in

cases arising under the Act.” /d., at 719, 721. Peti-

tioners contend that this reasoning dictates a similar

conclusion with respect to § 102 of the LMRDA. We

do not agree. Unlike § 35 of the Lanham Act, which

specifically “provided not only for injunctive relief, but

also for compensatory recovery measured by the profits

that accrued to the defendant by virtue of his infringe-

ment, the costs of the action, and damages which may be

trebled.” '* § 102 of the LMRDA broadly authorizes the

courts to grant “such relief (including injunctions) as

may be appropriate.” 29 U.S. C. §412. Thus, § 102

* Fleischmann Distilling Corp. v. Maier Brewing Co., supra, at

719.

HALL v. COLE 9

does not “meticulously detail the remedies available to a

plaintiff,” and we cannot fairly infer from the language

of that provision an intent to deny to the courts the

traditional equitable power to grant counsel fees in

“appropriate” situations.

Petitioners argue further, however, that because Con-

gress expressly authorized the recovery of counsel fees

in $$ 201 (c) and 501 (b) of the LMRDA, 29 U.S. C.

§§ 431 (c), 501 (b), the absence of a similar express pro-

vision in § 102 indicates an intent to preclude “fee-

shifting” in suits brought under that section.. Sections

901 (c) and 501 (b), which are not a part of Title I, deal

with narrowly defined problems under the Act, and

specifically authorize such limited remedies as an exami-

nation of the union’s books and records and an account-

ing.’ By contrast, § 102 was premised upon the fact

that Title I litigation necessarily demands that remedies

“be tailored to fit facts and circumstances admitting of

almost infinite variety,” '’® and § 102 was therefore cast

as a broad mandate to the courts to fashion “appropriate”’

relief. Indeed, any attempt on the part of Congress to

spell out all of the remedies available under § 102 would

create the “danger that those [remedies] not listed might

be proscribed with the result that the courts would be

fettered in their efforts to ‘grant relief according to the

necessities of the case.’"’ Gartner v. Soloner, 384 F. 2d

348, 353 (CA3 1961). See Fleuschmann Distilling Corp.

v. Maier Brewing Co., supra. Confronted with a virtually

identical situation in Mills, we explained that the inclu-

5 Section 201 (c) provides for the award of counsel fees in a suit

brought by a union member to obtain access to union books, records

and accounts to verify annual financial statements. 29 U. S. C.

§ 431 (c). Section 501 (b) authorizes ‘‘fee-shifting” in a suit brought

by a member against a union official to recover damages or for an

accounting for the benefit of the union on the ground that the official

is violating his duties. 29 U. S. C. § 501 (b).

6 Gartner v. Soloner. 384 F. 2d 348, 353 (CA3 1961).

ae RR EAE TE GI

10 HALL v. COLE

sion in certain sections of the Securities Exchange Act of

1934 of express provisions for recovery of attorneys’ fees

“should not be read as denying to the courts the power

to award counsel fees in suits under other sections of the

Act when circumstances make such an award appro-

priate... .” Mills v. Electric Auto-Lite Co., supra, at

390-391. That reasoning is equally persuasive today.”

Finally, petitioners call our attention to two isolated

comments in the legislative history of Title I—one by

Senator Goldwater in his testimony before a House Com-

mittee ** and the other contained in a dissenting state-

ment to a House Committee Report '—expressing the

‘Indeed, the Mills reasoning may be particularly appropriate

with respect to the LMRDA. As Professor Cox has noted, “be-

cause much of the bill was written on the floor of the Senate or

House of Representatives and because many sections contain cal-

culated ambiguities or political compromises . . . , the courts would

be well advised to seek out the underlying rational without placing

great emphasis upon close construction of the words,” Cox, Internal

Affairs of Labor Unions Under.the Reform Act of 1959, 58 Mich. L.

Rev. 819, 852 (1960).

18 In his testimony before the House Committee on Education and

Labor, after passage of the Senate version of the LMRDA, Senator

Goldwater stated that “the bill does not grant [the union member],

even where successful in his suit, reasonable counsel fees or other

costs. It thus forces him to assume the entire financial burden of

the litigation. For an ordinary rank-and-file union member who

is generally a wage worker, such a litigation thus becomes an im-

possible financial burden.” 105 Cong. Rec. 10095 (1959).

19 In opposing the reporting of the Elliott Bill, H. R. 8342, 86th

Cong., Ist Sess. (1959), to the House, the nine dissenting Members

of the House Committee on Education and Labor protested that

“Cujnder that bill the individual member must shoulder the burden

of litigation costs himself.” H.R. Rep. No. 741, 86th Cong., Ist

Sess., 95 (1959). At the end of their criticisms of the Elliott Bill,

the dissenters explained that “[f]or the reasons outlined above, we

intend to support . . . the so-called Landrum-Griffin bill (H. R.

8400 and 8401).” Jd., at 98. Thus, although the enforcement pro-

visions of the Elliott Bill and the Landrum-Griffin Bill were virtually

identical, the dissenters apparently. believed that the latter, which

HALL v. COLE 11

fear that, in the absence of a specific provision for the

award of counsel fees, such relief would be unavailable

in suits brought under § 102. Although these statements

plainly indicate “a feeling by some members of the Con-

gress that it would have been desirable and prudent to

spell out unmistakably a right to attorney’s fees,” they

“hardly amount to a definitive and absolute setting of

the Congressional face against the giving of such inci-

dental relief by the courts where compatible with

sound and established equitable principles.” Yablonski

y. United Mine Workers of America, supra, at 429. See

Gartner v. Soloner, supra, at 352. Indeed, both of these

comments exps®ssly favored the allowance of counsel

fees in Title I litigation, and there is no suggestion any-

where in the legislative history that even a single mem-

ber of Congress was opposed to such relief or desired the

words “such relief . . . as may be appropriate” to re-

strict the historic equity powers of the federal courts.

On the contrary, there are numerous expressions by

sponsors and other supporters of the Act indicating that

§ 102 was intended to afford the courts “a wide latitude

to grant relief according to the necessities of the case,” *°

and “to give such relief as [the court] deems equitable

in all the circumstances.” *

Moreover, the award of attorneys’ fees under § 102 is

clearly consonant with Congress’ express desire to adopt

“legislation that will afford necessary protection of the

rights and interests of employees and the public gen-

erally... .” 29 U. S. C. §401(b). As the Court of

Appeals recognized,

“Tnjot to award counsel fees in cases such as this

would be tantamount to repealing the Act itself by

eventually was enacted, allowed the union member to recover counsel

fees.

20 105 Cong. Rec. 15547-15548 (1959) (Rep. Elliott).

217d., at 6717 (Sen. Kuchel). See id., at 14356 (Rep. O’Hara) ;