argued: November 20, 1986.
ELLEN R. GLASER, ADMINISTRATRIX OF THE ESTATE OF ALAN GLASER, DECEASED AND ELLEN R. GLASER IN HER OWN RIGHT
CINCINNATI MILACRON, INC., JOHN DOES, CARSTAB CORP., AKZO, N.V., AKZONA INC., INTERSTAB CHEMICALS, INC,., ALLIED CORP., AMERADA HESS CORP., HESS OIL VIRGIN ISLANDS CORP., AMERICAN PETROFINA, INC., COSDEN OIL & CHEMICAL CO., ARMCO, INC., ASHLAND OIL INC., J.T. BAKER CHEMICAL CO., BIG BEN CHEMICALS & SOLVENTS, INC., CELANESE CORP., CELANESE CHEMICAL CORP., CHEMATAR, INC., CITIES SERVICE CO., CONOCO, INC., CROWLEY TAR PRODUCTS CO., INC., CROWN CENTRAL PETROLEUM CORP., DONNER-HANNA COKE CORP., DOW CHEMICALS CO., EXXON CORP., FORD MOTOR CORP., INLAND STEEL CO., INTERLAKE INC., KERR-MCGEE CORP., SOUTHWESTERN REFINING CO., KERR-MCGEE CHEMICAL CORP., KERR-MCGEE REFINING CORP., LEHIGH VALLEY INDUSTRIES INC., MARATHON OIL CO., FOREMOST MCKESSON INC., THE MEAD CORP., MOBIL OIL, MONSANTO CO., MUTCHLER CHEMICAL CO., INC., NORTHWEST INDUSTRIES, INC., LONE STAR STEEL CO., ORE & PERRO CORP., PEERLESS PETROCHEMICALS INC., PENNZOIL CO., PHILLIPS PETROLEUM CO., PHILLIPS PUERTO RICO CORE, INC., PHILLIPS CHEMICAL CO., REPUBLIC STEEL CORP., F.H. ROSS & CO., SHELL OIL CO., SHELL CHEMICAL CO., THE SIGNAL COMPANIES, INC., AMINOIL USA, INC., SKELLY OIL CO., STANALCHEM INC., STANDARD OIL CO. OF INDIANA, AMOCO CHEMICALS CORE, VISTRON CORP., STANDARD OIL CO. OF CAL, CHEVRON CHEMICAL CO., CHEVRON USA INC., SUBURBAN CHEMICAL CO., TAR RESIDUALS INC., TECHNICAL PETROLEUM CO., TENNECO INC., TENNECO OIL CO., TENNECO CHEMICALS INC., TEXACO INC., THOMPSON-HAYWARD CHEMICAL CO., HARRISON & GROSSFIELD (AMERICA) INC., NORTH AMERICAN PHILIPS CORP, PEPI INC., GEORGE UHE CO., INC., UNION CARBIDE CORP., UNION OIL CO. OF CALIFORNIA, THOMAS W. HENDERSON, ROBERT L. JENNINGS, JR., BASKIN AND STEINGUT, P.C., FORMERLY BASKIN AND SEARS, P.C., APPELLANT
Appeal from the United States District Court for the Western District of Pennsylvania - Pittsburgh, D.C. Civil No. 82-0064.
BEFORE: SEITZ, GIBBONS and BECKER, Circuit Judges.
Appellants Thomas Henderson, Robert Jennings and Baskin and Steingut, P.C. appeal the order of the district court assessing $165,069.85 in attorneys' fees against them pursuant to the preAugust 1983 version of Rule 11 of the Federal Rules of Civil Procedure. Subject matter jurisdiction in the underlying action was based on diversity of citizenship. Because appellants are no longer counsel for the plaintiff,*fn1 we have appellate jurisdiction under Eavenson, Auchmuty & Greenwald v. Holtzman, 775 F.2d 535 (3d Cir. 1985).
During the summers of 1970 through 1972, Alan Glaser worked as an employee at a chemical plant operated by Cincinnati Milacron, Inc. in New Jersey. Glaser died on January 15, 1980 as a result of a chronic form of leukemia. On January 14, 1982, Ellen Glaser, Alan Glaser's widow, filed a wrongful death and survivor action, alleging that Alan was exposed to benzene when he worked for Cincinnati Milacron, and that this exposure caused his leukemia.
The complaint, filed by attorneys Henderson and Jennings one day before the statute of limitations expired, named as defendants ninety six corporations allegedly engaged in the manufacture of benzene and benzene-containing products (the "seller defendants") during 1970 through 1972 and five corporations identified as user defendants, Cincinnati Milacron, Inc. and its potential successors at the New Jersey plant. The complaint asserted claims of negligence, strict liability, and loss of consortium against the seller and user defendants. In addition, the complaint stated a separate cause of action against the seller defendants under a market share, enterprise or alternative theory of liability, alleging that certain exposures to benzene were unidentifiable, that the seller defendants represented substantially all of the benzene industry during the relevant time period, and that the seller defendants were liable in proportion to their market-share of the benzene industry.
After the complaint was filed, one of the user defendants sought to depose plaintiff's counsel in order to challenge the bias of the complaint under Rule 11. The district court agreed that the counsel could be deposed for the purpose of determining whether counsel had good grounds for the complaint. In this deposition, Jennings was questioned extensively about his prefiling investigation. Further information about Jennings' investigation of the case was set forth in Jennings' affidavit to the court. The appellees, seller defendants who were awarded attorneys' fees, do not challenge Jennings' account of his prefiling investigative efforts.
We now turn to a narration of the pertinent facts. In February 1981 Ellen Glaser approached Baskin and Sears, P.C. about bringing an action for her husband's death.*fn2 The law firm, however, apparently took no action in the case until Jennings joined the firm in August 1981 and was assigned the case under Henderson's supervision.
In his affidavit, Jennings claimed that he first reviewed Alan Glaser's medical record to confirm the diagnosis of chronic myelogenous leukemia. He further stated that he spoke with family members to confirm Ellen Glaser's statement that here husband had complained that he had been exposed to benzene when he worked for Cincinnati Milacron. He also reviewed the available toxicological record to establish that there was a causal connection between benzene exposure and the type of leukemia from which Alan Glaser suffered. finally, Jennings explained that because Glaser was exposed to benzene in new Jersey, but subsequently moved to Pennsylvania, considerable legal research was focused on choice of law and statute of limitations questions under the law of the two states.
Jennings further explained in his affidavit that he telephoned Cincinnati Milacron on December 16, 1981. when an attorney from the corporation returned his call two days later, Jennings requested access to the records of chemicals used at the New Jersey plant during 1970 through 1972, or assistance in determining who had the records. He received no response to this request before filing the action.
During his deposition, Jennings stated that he was unable to identify the manufacturers of any benzene or benzene-containing chemicals that was supplied to the Cincinnati Milacron plant during the relevant time period. Jennings and Henderson therefore decided to rely upon an enterprise, market share or alternative liability theory of recovery from the seller defendants. Jennings reviewed Moody's Standard & Poor's, the Oil, Paint & Drug Chemical Buyers Directory and the Stanford Research Institute Directory of Chemical Producers to determine which companies had produced benzene or benzene-containing products on a national basis during the period of alleged exposure and the companies' successors. These companies were then named as defendants in the action.
On February 11, 1982, one of the seller defendants filed a motion to suspend the pleadings pending discovery limited to identifying the suppliers of benzene. The plaintiff joined in this motion on February 23. Three days later, the district court stayed the filing of answers, counterclaims, cross claims and third-party complaints and limited ...
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