in the appeal from the district court to the court of appeals.
Numerous cases in this and other circuits hold that a district court retains jurisdiction to decide an attorneys' fees petition after the underlying case has been appealed. Todd Shipyards Corp. v. Auto Transp., S.A., 763 F.2d 745 (5th Cir. 1985); Venen v. Sweet, 758 F.2d 117 (3d Cir. 1985); Alcorn County, Miss. v. U.S. Interstate Supplies, 731 F.2d 1160 (5th Cir. 1984); West v. Keve, 721 F.2d 91 (3d Cir. 1983). These cases are of two types. The first are those cases where attorneys' fees are an integral part of the damages award. The other type are those cases in which the attorneys' fees are collateral to the merits of the case.
The court turns first to those cases where attorneys' fees are an integral part of damages. See Todd Shipyards Corp., supra; Alcorn County, Miss., supra. Those cases follow the traditional rule that an appeal is not valid where the district court's Order is not final. Venen v. Sweet, 758 F.2d 117, 120-121, n.2 (3d Cir. 1985); Cape May Greene, Inc. v. Warren, 698 F.2d 179 (3d Cir. 1983); Shipbuilding & Dry Dock Co. v. Benefits Review Bd., 535 F.2d 758 (3d Cir. 1976). If the appeal is a nullity, the district court continues to have jurisdiction over the case. In Todd Shipyards, supra, the United States Court of Appeals for the Fifth Circuit held that, in an admiralty case, the district court's Order was not final until the district court had entered an attorneys' fee award. The Todd Shipyards court reasoned that attorneys' fees in an admiralty case were an integral part of the case and were not a collateral matter. Similarly, the Alcorn County court believed that attorneys' fees, like treble damages, were a part of the statutory scheme to encourage private enforcement of the RICO statute. Consequently, that court held that attorneys' fees under RICO were a mandatory part of damages and that the time for appeal ran from the date on which the district court entered a judgment awarding plaintiff attorneys' fees.
On the other hand, a second line of cases considers circumstances where attorneys' fees were permitted as a recovery collateral or incidental to recovery on the main cause of action. White v. New Hampshire Dept. of Employment Security, 455 U.S. 445, 71 L. Ed. 2d 325, 102 S. Ct. 1162 (1982); West v. Keve, 721 F.2d 91 (3d Cir. 1983). In both White, supra, and West supra, attorneys' fees awards made by the district courts under 42 U.S.C. § 1988 while an appeal of the underlying cause of action was pending before the appellate courts were affirmed. In both cases, the district courts retained jurisdiction after the appeals of the cases were filed to award attorneys' fees to the parties which had prevailed in district courts.
Applying these principles in the present case, the court believes that, regardless of whether attorneys' fees in this case are characterized as damages or as a collateral matter, the court retains jurisdiction over plaintiffs' motions. If plaintiffs' claim for attorneys' fees is an integral element of damages, then the court's November 7, 1985 Order was not a final judgment from which Local 107 could appeal, and therefore this court retains jurisdiction to determine plaintiffs' motions. If, however, plaintiffs' claim for attorneys' fees is collateral to the underlying action, the appeal of the underlying case did not transfer jurisdiction over the attorneys' fees issue from this court to the court of appeals and that question is still before the court. Therefore, Local 107's appeal of the case does not bar the determination of plaintiffs' motions.
(b) Timeliness of Plaintiffs' Motions
The court now turns to Local 107's argument that plaintiffs' motions are untimely. Local 107 directs the court's attention to Rule 59(e). According to Local 107, Rule 59(e) bars a motion to alter or amend a judgment unless the motion is filed within ten days of the entry of the judgment. Noting that judgment here was filed on November 7, 1985, and plaintiffs' motions were filed in January, 1986, well after the ten day period, Local 107 argues that plaintiffs' motions are untimely.
Rule 59(e) provides as follows:
A motion to alter or amend the judgment shall be served not later than 10 days after entry of the judgment.
A legion of cases have interpreted Rule 59(e) in the attorneys' fees context. Local 107 and plaintiffs have cited many of these cases. Local 107 asserts that, under these cases, a motion for attorneys' fees is considered a motion to alter or amend judgment and subject to Rule 59(e) time limitations. Plaintiffs predictably argue to the contrary that, under these cases, a motion for attorneys' fees is not a motion to alter and amend judgment and is not subject to Rule 59(e) time limitations.
In the present case, the court believes that under the cases, as discussed below, Rule 59(e) does not preclude plaintiffs' motions for two reasons. First, Rule 59(e) presupposes the entry of a final judgment. If plaintiffs are correct that they are entitled to receive attorneys' fees as an element of damages against Local 107, the November 7, 1985 judgment is not a final judgment eligible for amendment under Rule 59(e). This is because the damages portion was bifurcated, and the jury decided only the liability portion of the case. The judgment Order, which awarded judgment in favor of plaintiffs and against Local 107 in obedience to the jury's answers to the special interrogatories, does not purport to address the damages portion of the case. Therefore, if attorneys' fees are an element of damages, and possibly the only element, that portion of the case is left undecided.
Second, if plaintiffs are correct that they are entitled to attorneys' fees under the common benefit theory or the bad faith theory, attorneys' fees are collateral to the merits. In this case, for the reasons discussed below, Rule 59(e)'s time limitations do not apply.
In order to understand the application of Rule 59(e) time restrictions to motions for attorneys' fees, the court believes that some background explanation of the principles permitting the award of attorneys' fees is necessary. The American Rule is that each party must pay their own attorneys' fees and expenses. To this well-settled general rule, many exceptions have been created by Congress and the courts. For example, federal statutes frequently permit prevailing parties to recover attorneys' fees. See, e.g., 18 U.S.C. § 1964(c); 42 U.S.C. § 1988; Fed.R.Civ.P. 11. Under some statutes, Congress intended that attorneys' fees be awarded as damages, e.g., Todd Shipyards, supra, and, under other statutes, Congress intended that attorneys' fees be awarded as an award, collateral to the merits of the case. E.g., White v. New Hampshire Dept. of Employment Security, supra. Additionally, under some circumstances, attorneys' fees may be awarded, even though there is no statutory basis for awarding them. The award is based on the court's inherent authority. For example, attorneys' fees may be awarded where a party's claim or defense is frivolous, unreasonable, or groundless, or where the party continues to litigate after the claim or defense clearly became frivolous, unreasonable, or groundless. Hughes v. Rowe, 449 U.S. 5, 15, 66 L. Ed. 2d 163, 101 S. Ct. 173 (1980), quoting Christiansburg Garment Co. v. E.E.O.C., 434 U.S. 412, 422, 54 L. Ed. 2d 648, 98 S. Ct. 694 (1978) (the "bad faith" exception or theory). The court may also award attorneys' fees to plaintiff, by prevailing in its lawsuit, by conferring "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 v. Electric Auto-Lite, 396 U.S. 375, 393-94, 24 L. Ed. 2d 593, 90 S. Ct. 616 (1970), quoting Hall v. Cole, 412 U.S. 1, 5, 36 L. Ed. 2d 702, 93 S. Ct. 1943 (1973) (the "common benefit" exception or theory).
With this background,
the court turns to whether the Rule 59(e) time limitations apply to motions for attorneys' fees. The seminal case on this issue is White v. New Hampshire Dept. of Employment Security, supra. In White, plaintiff filed a petition for attorneys' fees four and a half months after the judgment was entered. Plaintiff claimed to be entitled to attorneys' fees on the basis of the common benefit theory. The Supreme Court of the United States held that Rule 59(e) did not bar plaintiff's motion because, the Court reasoned, Rule 59(e) was not intended to effect matters collateral to the merits of the case. A petition for attorneys' fees filed under the common benefit theory, the Court said, was a collateral matter and not subject to Rule 59(e) time limitations. The Court explained that the application of Rule 59(e) to attorneys' fees petitions would promote unnecessary and undesired litigation and would deprive counsel of time to negotiate a fee settlement. See also, Inmates of Allegheny County Jail v. Pierce, 716 F.2d 177 (3d Cir. 1983). The third circuit has also held that White prevents application of the Rule 59(e) period to attorneys' fees sought under the bad faith theory. Kane Gas Light & Heating Co. v. International Brotherhood of Firemen & Oilers, Local 112, 687 F.2d 673, 677 n.5 (3d Cir. 1982). Accordingly, in the instant case, the court finds that Rule 59(e) does not bar plaintiffs' claim for attorneys' fees under the common benefit theory or the bad faith theory.
2. Right to Recover Attorneys' Fees
Having determined that the union's appeal and that Rule 59(e) does not bar this court from deciding plaintiffs' motion, the court proceeds to whether plaintiffs are entitled to recover attorneys' fees under any exception to the American Rule. Each of plaintiffs' theories will be considered.
(a) The Common Benefit Theory
Plaintiffs argue that they are entitled to recover attorneys' fees from the union which were incurred in their lawsuit against the union. Plaintiffs rely on Hall v. Cole, 412 U.S. 1, 36 L. Ed. 2d 702, 93 S. Ct. 1943 (1973) and Harrison v. United Transportation Union, 530 F.2d 558 (4th Cir. 1975), cert. denied, 425 U.S. 958, 48 L. Ed. 2d 203, 96 S. Ct. 1739 (1976).
In Hall, the Supreme Court held that plaintiff may recover attorneys' fees from a union or corporate treasury where the outcome of plaintiff's suit confers a substantial benefit on an ascertainable class and the court's jurisdiction makes the award operate to spread costs proportionately among them. The United States Court of Appeals for the Fourth Circuit in Harrison, relying on Hall, held that plaintiff was entitled to an award of attorneys' fees under the common benefit theory. Plaintiff, in Harrison, proved that his union breached its duty of fair representation because the union had agreed with the employer not to prosecute plaintiff's grievance in return for the employer's agreement to reinstate another employee. The Harrison court, awarding plaintiff attorneys' fees in his case against the union, reasoned that plaintiff had vindicated the rights of all union members to have the union fairly represent each individual member's grievance against an employer. In a case with similar facts to Harrison, the third circuit awarded plaintiff attorneys' fees from the union because plaintiff "rendered a substantial service to the union and the persons it represents by protecting a member's right to be hired directly by an employer or through a specific request of the union . . . . [His lawsuit] serve[d] to dispel the chill cast upon members who might otherwise not take advantage of these special hiring alternatives." Emmanuel v. Omaha Carpenters District Council, 560 F.2d 382 (3d Cir. 1977).
The court believes that, if there was ever a case in which plaintiff should be awarded attorneys' fees under the common benefit theory, this is the case. The plaintiffs' grievance was signed by 109 union members. Although the 109 members did not know whether or not they had a legal remedy, each of them believed and had the right to expect that their union would fairly investigate and consider their grievance. Each of them had the right to have their union act fairly in their behalf. The jury, after a full trial, found, however, that Local 107 did not act fairly. In fact, the jury found that the union acted in an arbitrary and perfunctory manner. In this circumstance, the jury's verdict in this case, as in few others, vindicated the right of the individual members of Local 107 to be fairly represented by their union. The members should be able to expect, as a result of the verdict, that Local 107 officials will treat grievances with greater care and respect than they treated the grievance here. The court believes that the right of all Local 107 members to have their grievances fairly investigated and considered has been vindicated by this lawsuit. Plaintiffs' success against the union for its arbitrary and perfunctory investigation and consideration of plaintiffs' grievance has benefited, and will continue to benefit, each union member. For these reasons, the court believes that plaintiffs are plainly entitled to receive attorneys' fees for their lawsuit against the union, based on the common benefit theory.
Plaintiffs, however, did not prevail against the employers. Thus, their lawsuit against the employers conferred no common benefit on the members of the union. Plaintiffs are not entitled to recover attorneys' fees from the union incurred in their lawsuit against the employers on the common benefit theory.
(b) The Bad Faith Theory
Plaintiffs argue that they are entitled to receive attorneys' fees under the bad faith theory from the union for their lawsuit against the union. The court believes, however, that, having already determined that plaintiffs are entitled to receive attorneys' fees under the common benefit theory from the union for their lawsuit against the union, the court need not consider plaintiffs' bad faith argument. See Hall v. Cole, 412 U.S. at 15.
(c) Attorneys' Fees as Damages
Finally, the court turns to plaintiffs' claim that they are entitled to recover as an element of damages all of their attorneys' fees. This claim has two parts to it. First, plaintiffs argue that they are entitled to an award of attorneys' fees for their lawsuit against Local 107. Second, plaintiffs argue that they are entitled to recover attorneys' fees for the portion of their lawsuit against the employers.
The United States Court of Appeals for the Sixth Circuit has held that a plaintiff, who had prevailed against his union for breach of fair representation and against his employer for wrongful discharge, was entitled to recover from his union all of his attorneys' fees as an element of damages. Scott v. Local Union 377, 548 F.2d 1244 (6th Cir. 1977). The Scott court stated, in pertinent part:
A different situation is presented, however, in his action against the Union, for in that action the principal element of Scott's damages is the amount which it cost him in attorney fees and other expenses to do that which the union was obliged but failed to do on his behalf. He was, therefore, entitled to include in his damages against the Union the amount which he reasonably expended in attorney fees and other costs in prosecuting his claim against the company, costs which he would not have incurred but for the Union's breach of its duty to represent him fairly and in good faith. Czosek v. O'Mara, 397 U.S. 25, 29, 90 S. Ct. 770, 25 L. Ed. 2d 21 (1970); See also, Harrison v. United Transportation Union, 530 F.2d 558, 562 (4th Cir. 1975), cert. denied, 425 U.S. 958, 96 S. Ct. 1739, 48 L. Ed. 2d 203 (1976); De Arroyo v. Sindicato de Trabajadores Packinghouse, 425 F.2d 281, 293 n.17 (1st Cir. 1970).