Brytus v. Spang & Company , 151 F.3d 112 ( 1998 )

Opinions of the United
1998 Decisions States Court of Appeals
for the Third Circuit
8-4-1998
Brytus v. Spang & Company
Precedential or Non-Precedential:
Docket 97-3514
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Recommended Citation
"Brytus v. Spang & Company" (1998). 1998 Decisions. Paper 182.
http://digitalcommons.law.villanova.edu/thirdcircuit_1998/182
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Filed August 4, 1998
UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
No. 97-3514
JEAN E. BRYTUS; JOHN LAZOR; WHEAT GIACOBBE;
JOHN STANKO; STEVE KOTYK; ALEX WARCHOLAK, and
others similarly situated; JOHN KOTYK; SAM BORIELLE,
JR., and others similarly situated; EDWARD J. GOLONKA,
and others similarly situated
v.
SPANG & COMPANY; UNION NATIONAL BANK; PENSION
PLAN, for Former Bargaining Unit Employees of Fort Pitt
Bridge and Electric Weld Divisions at Cannonsburg, PA
Plant; UNITED STEELWORKERS OF AMERICA,
AFL-CIO-CLC, a labor organization
(D.C. Civil No. 88-cv-02548)
EDWARD J. GOLONKA, and others similarly situated
v.
SPANG & COMPANY; PENSION PLAN, for Former
Bargaining Unit Employees of Fort Pitt Bridge and Electric
Weld Division at Cannonsburg, PA Plant; UNITED
STEELWORKERS OF AMERICA,
(D.C. Civ. No. 91-cv-01041)
JEAN E. BRYTUS; JOHN LAZOR; WHEAT GIACOBBE;
JOHN STANKO; STEVE KOTYK; ALEX WARCHOLAK;
JOHN KOTYK and SAM BORIELLE, JR., and others
similarly situated,
Appellants
On Appeal from the United States District Court
for the Western District of Pennsylvania
Argued July 9, 1998
Before: SLOVITER and ROTH, Circuit Judges, and
FULLAM,* District Judge
(Filed: August 4, 1998)
Daniel P. McIntyre (Argued)
Miami Beach, Florida 33119
William T. Payne
Schwartz, Steinsapir, Dohrmann
& Sommers, LLP
Pittsburgh, PA 15219
Attorneys for Appellants
Carl B. Frankel
General Counsel
United Steelworkers of America
Pittsburgh, PA 15222
Jeremiah A. Collins (Argued)
Bredhoff & Kaiser, P.L.L.C.
Washington, D.C. 20036
Attorneys for Appellee,
United Steelworkers of America
OPINION OF THE COURT
SLOVITER, Circuit Judge.
Counsel for Jean E. Brytus and seven other named
_________________________________________________________________
*Hon. John P. Fullam, Senior United States District Judge for the
Eastern District of Pennsylvania, sitting by designation.
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plaintiffs, who filed a successful class action against
plaintiffs' former employer Spang & Co. for violating the
Employee Retirement Income Security Act of 1974, 29
U.S.C. S 1001 et seq. (ERISA) by failing to distribute the
plan surplus to retired workers, filed a motion for attorneys'
fees from the common fund they had created. The district
court initially denied the motion on the ground these
counsel were entitled to and would receive counsel fees to
be paid by Spang under the statutory fee provision for
prevailing parties under ERISA, and therefore were not also
entitled to recovery from the common fund. In its opinion
on reconsideration, the court maintained essentially the
same position but added that it was exercising its equitable
powers in reaching its decision. Counsel appeals from that
order. The threshold issue before us is whether we have
jurisdiction to consider this interesting issue at this time.
I.
In 1995, the district court, relying on our prior decision
in Delgrosso v. Spang & Co., 769 F.2d 928 (3d Cir. 1985)
(relating to a similar pension fund at a different Spang
plant), found that Spang had wrongfully acquired the
surplus assets of an ERISA-protected retirement fund
instead of distributing the surplus proportionately to the
retirees, see app. at 172-91; app at 193-97, and we
affirmed the judgment of the district court. See 79 F.3d
1137 (3d Cir. 1996) (unpublished table decision), cert.
denied, 117 S. Ct. 70 (1996). After the district court's order
on the merits, two of the counsel for the plaintiff class,
Daniel P. McIntyre and William T. Payne (referred to as
"counsel"), sought reasonable attorneys' fees under the fee-
shifting provision of ERISA and also "invoke[d] the common
fund doctrine as warranting a recovery of fees out of the
fund they have recovered on behalf of the class." App. at
219. By 1995, when counsel filed this motion, the "common
fund" consisted of approximately $11.5 million dollars.
Spang did not contest the counsel's right to a reasonable
attorneys' fee as a prevailing party under ERISA, but did
contest the hourly rates to be applied and the costs
claimed. In particular, Spang objected to the request of
Payne and McIntyre for a total of $467,833, app. at 243,
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because that request was based on Payne's rate at $275 per
hour and McIntyre's rate at $300 per hour. Spang argued
that the appropriate fee was approximately $380,082,
based on hourly rates of $260 per hour for McIntyre, and
$220 per hour for Payne. App. at 363. Although the district
court assured counsel that they would receive a reasonable
rate for every hour worked, it did not resolve the dispute
over the hourly rate.
The United Steelworkers Association ("the Union"), as
intervenor, opposed counsel's request for a fee award of
approximately 20-30% of the $11.5 million recovered, or
approximately $2,300,000 to $3,450,000. It argued that all
of counsel's reasonable fees would be paid by the
wrongdoing employer, and contended that it would be
inconsistent with ERISA policy to permit diminution of the
employees' fund. The district court denied counsel's request
for attorneys' fees from the common fund, finding "that
because this action was brought under a fee-shifting
provision of ERISA and was litigated to judgment, the
attorneys' fees to be awarded in this action are to be
governed according to the principles of awarding fees under
the fee-shifting provision." Memorandum Order, July 14,
1997 at 5-6. In its subsequent reconsideration order, the
court also stated that "[c]onsidering the fact that the result
in this case is principally driven by ERISA, the Court, in
the exercise of its equitable powers, finds that under the
totality of the circumstances, an award of reasonable
attorneys' fees based on an unenhanced lodestar formula
plus expenses is the only reasonable method of
compensating Plaintiff-Participants' counsel for their
services." Memorandum Order, August 15, 1997 at 5-6.
Counsel for plaintiffs now appeal the order denying the
request for a fee award from the common fund.
The parties have focused their principal briefs on the
merits of the district court's order denying counsel fees
from the common fund created from their efforts. Counsel
note that the great bulk of the $12 million fund will go to
class members other than those they represented who will
receive from the fund four times more than their then total
pension, that they invited the district court to reduce any
fees they might receive from the common fund by the
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amount of statutory fees awarded, and that only by
awarding them a share of the fund they produced will they
be able to be compensated for the risks they faced and the
success they achieved.1 They cite to cases in other courts
that have allowed both an ERISA statutory fee and an
award from the common fund, arguing that without this
incentive ERISA plaintiffs may not be able to secure
competent counsel who will assist them in gaining access
to the courts to secure their rights under the statute.
The Union counters that the ERISA cases in which
counsel recovered from the common fund are cases that
were settled rather than litigated to judgment, as here. The
Union also argues that it would be contrary to the remedial
provisions and purposes of ERISA to require plan
participants to give up pension assets to enhance the
income of counsel who will receive reasonable fees from the
defendant employer. The Union treats the district court's
order as one that was within its discretion, a discretion it
argues we should not disturb.
These are provocative arguments that have not yet been
addressed by this court. Both parties believe we have
jurisdiction, and gave the matter no attention until we
directed briefing on the issue. They still maintain we have
jurisdiction, treating the district court's order as a collateral
order under Cohen v. Beneficial Indus. Loan Corp., 337 U.S.
541 (1949).
II.
The unbroken precedent of this court is to the effect that
an award of attorneys' fees will not be reviewed if the
amount of the fees have not been quantified because such
an order is not a final order. See, e.g., Polonski v. Trump Taj
Mahal Assocs., 137 F.3d 139, 144 (3d Cir. 1998); Ragan v.
Tri-County Excavating, Inc., 62 F.3d 501, 505 (3d Cir.
1995); Pennsylvania v. Flaherty, 983 F.2d 1267, 1277 (3d
_________________________________________________________________
1. The Supreme Court has held that contingency is not a factor that is
allowed in the calculation of the statutory fee under the lodestar
formula. See Pennsylvania v. Delaware Valley Citizens' Council for Clean
Air, 483 U.S. 711, 716-28 (1987).
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Cir. 1993); Frangos v. Doering Equip. Corp., 860 F.2d 70, 72
(3d Cir. 1988). Were the rule otherwise we might find
ourselves facing two distinct appeals, one on the decision
whether to award fees and thereafter an appeal regarding
the amount awarded. In this case, although the district
court had decided a statutory fee would be awarded and
had given some indication of its inclination, thefinal
amount had not yet been fixed. Thus, an appeal with
respect to the statutory fee would not be ripe.
Counsel argue that the issues relating to the statutory fee
are distinct from those relating to the common fee award,
and in support note that the fees are paid from different
sources -- the statutory fee from Spang and the common
fund fee from those who benefited from their services.
Therefore, they argue, this order is included within the
small class of decisions held appealable in Cohen as final
under S 1291 even though they do not terminate the
underlying litigation. To be eligible for review under Cohen,
the order must (1) conclusively determine the disp uted
question, (2) resolve an important issue completel y
separate from the merits of the action, and (3) be effectively
unreviewable on appeal at the conclusion of the litigation.
See Cohen, 337 U.S. at 545-47 (1949); Michelson v. Citicorp
National Servs. Inc., 138 F.3d 508, 517 (3d Cir. 1998).
Applying the Cohen factors here, it is apparent that the
district court's order, although admittedly its last word on
counsel's entitlement to fees from the common fund, does
not conclusively determine the "disputed question" of
attorneys' fees because the amount of the statutory fees
under ERISA it approved in principle is not yet quantified.
Perhaps most important, we do not regard the district
court's denial of a common fund fee award as separate from
the remaining issue of the amount of statutory attorneys'
fees. Indeed they are intertwined. Counsel seeks to draw a
distinction between the statutory fee, which is awarded to
the prevailing party, and award from the common fund,
which is directly earmarked for the attorneys themselves.
We will not address the validity of this distinction because,
even if valid, it fails to undercut the indisputable fact that
the fee requests are interconnected and neither is
"completely separate" from the remaining attorneys' fee
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issue in the case. In this connection, counsel for plaintiffs
would appear to have acknowledged such a linkage in their
invitation to the district court to deduct from a common
fund fee award the amount of any statutory fee awarded.
We cannot assume that when the court rules finally on
the statutory fees it will not consider its decision denying
counsel fees from the common fund. Similarly, had the
court ruled favorably to counsel on the entitlement to the
common fund fee, it is likely that the district court would
have considered that award in fixing the statutory fee.
Decisions holding that an order awarding counsel afixed
recovery as an equitable right to a common fund is afinal
order, Boeing Co. v. Van Gemert, 444 U.S. 472, 480-82,
nn.5 & 7 (1980); In re Nineteen Appeals Fire Litigation
Arising out of the San Juan Dupont Plaza Hotel, 982 F.2d
603, 608-10 (1st Cir. 1992); Overseas Development Disc
Corp. v. Sangamo Constr. Co., 840 F.2d 1319, 1324 (7th
Cir. 1988), are inapposite. Those cases do not involve both
a common fund award and an award of statutory attorneys'
fees. A fortiori, none of those cases involved the impediment
of a statutory fee that was not yet final because it had not
been quantified.
We view our decision holding the order denying recovery
from the common fund not yet appealable as consistent
with the underlying rationale for denying review of
interlocutory orders -- to avoid piecemeal appeals. See
Praxis Properties, Inc. v. Colonial Savings Bank, 947 F.2d
49, 54 n.5 (3d Cir. 1991) ("[t]his rule reflects federal policy
against piecemeal appeals").2
Accordingly, we conclude that we lack jurisdiction to
review the order under the Cohen doctrine. See Gulfstream
Aerospace Corp. v. Mayacamas Corp. 485 U.S. 271, 276
(1988) ("If the order at issue fails to satisfy any one of these
requirements, it is not appealable under the collateral-order
_________________________________________________________________
2. Counsel contend that the denial of appellate review now will preclude
appellate review in the future because the common fund will be
distributed and no longer available even following a successful appeal.
We take no position on this possibility, but note that counsel may
request that the district court make only a partial distribution of the
common fund after it quantifies the statutory fee award.
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exception to S 1291"). For the reasons set forth, we will
dismiss the appeal.
A True Copy:
Teste:
Clerk of the United States Court of Appeals
for the Third Circuit
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