Hall v. Cole 8212 630

• Decision Date: 21 May 1973
• Docket Number: No. 72,72
• Parties: Paul HALL, etc., et al., Petitioners, v. John COLE. —630
• Court: U.S. Supreme Court

412 U.S. 1

93 S.Ct. 1943

36 L.Ed.2d 702

Paul HALL, etc., et al., Petitioners,

v John COLE.

No. 72—630.

Argued March 21, 1973.

Decided May 21, 1973.

Syllabus

Respondent, expelled from his union for deliberate and malicious vilification of union management following his resolutions unsuccessfully condemning that management's alleged undemocratic actions and shortsighted policies, regained his union membership in a suit under § 102 of the Labor-Management Reporting and Disclosure Act (LMRDA) and was awarded $5,500 in legal fees. The Court of Appeals affirmed. Held:

1. Respondent's suit under § 102 of the LMRDA vindicated not only his own rights of free speech guaranteed by the statute but furthered the interests of the union and its members as well. As a result, the award to respondent of attorneys' fees under these circumstances comported with the trial court's inherent equitable power of making such an award whenever 'overriding considerations indicate the need for such a recovery.' Mills v. Electric Auto-Lite Co., 396 U.S. 375, 391—392, 90 S.Ct. 616, 625, 24 L.Ed.2d 593. Pp. 4—9.

2. The allowance of counsel fees to the successful plaintiff in a suit brought under § 102 is not precluded by that statutory provision and, indeed, is supported by the legislative history of the LMRDA. Pp. 9—14.

3. Under all the facts of the case, the District Court did not abuse its discretion in awarding counsel fees to respondent. Pp. 14—15.

462 F.2d 777, affirmed.

Howard Schulman, New York City, for petitioners.

Burton H. Hall, New York City, for respondent.

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 Reporting and Disclosure Act of 1959, 73 Stat. 523, 29 U.S.C. § 412.¹ 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 District, respondent introduced a set of resolutions alleging various instances of undemocratic actions and shortsighted policies on the part of union officers. The resolutions were defeated and, on November 26, 1962, respondent was expelled from the union on the ground that his presentation of the resolutions violated a union rule proscribing 'deliberate or malicious vilification with regard to the execution or the duties of any office or job.' After exhausting his intra-union remedies, respondent 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).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 District Court, finding a violation of respondent's rights under § 101(a)(2), ordered him permanently reinstated to membership in the union and, although denying respondent's damages claims,³ granted him counsel fees in the sum of $5,500 against the union. The Court of Appeals affirmed in all respects, 462 F.2d 777 (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, 93 S.Ct. 687, 34 L.Ed.2d 662. We affirm.

I

Although the traditional American⁴ rule ordinarily disfavors the allowance of attorneys' fees in the absence of statutory⁵ or contractual authorization,⁶ 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, 59 S.Ct. 777, 780, 83 L.Ed. 1184 (1939), and federal courts do not hesitate to exercise this inherent equitable power whenever 'overriding considerations indicate the need for such a recovery.' Mills v. Electric Auto-Lite Co., 396 U.S. 375, 391—392, 90 S.Ct. 616, 625, 24 L.Ed.2d 593 (1970); see Fleischmann Distilling Corp. v. Maier Brewing Co., 386 U.S. 714, 718, 87 S.Ct. 1404, 1407, 18 L.Ed.2d 475 (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 J. Moore, Federal Practice 54.77(2), p. 1709 (2d ed. 1972); see, e.g., Newman v. piggie Park Enterprises, Inc., 390 U.S. 400, 402 n. 4, 88 S.Ct. 964, 966, 19 L.Ed.2d 1263 (1968); Vaughan v. Atkinson, 369 U.S. 527, 82 S.Ct. 997, 8 L.Ed.2d 88 (1962); Bell v. School Bd. of Powhatan County, 321 F.2d 494 (CA4 1963); Rolax 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 plaintiff's successful 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 v. Electric Auto-Lite, supra, 396 U.S., at 393—394, 90 S.Ct., at 626.⁷ 'Fee shifting' 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.' Id., at 392, 90 S.Ct., at 625; see also Fleischmann Distilling Corp. v. Maier Brewing Co., supmra, 386 U.S., at 719, 87 S.Ct., at 1407; Trustees v. Greenough, 105 U.S. 527, 532, 26 L.Ed. 1157 (1882). Thus, in Mills v. 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 accomplished through the use of a misleading proxy statement in violation of § 14(a) of the Securities Exchange Act of 1934, 48 Stat. 895, 15 U.S.C. § 78n(a). In reaching this result, we reasoned that, since the dissemination of misleading proxy solicitations jeopardized important interests of both the corporation and "the stockholders as a group,"⁸ the successful enforcement of the statutory policy necessarily 'rendered a substantial service to the corporation and its shareholders.' Mills v. Electric Auto-Lite Co., supra, 396 U.S., at 396, 90 S.Ct., at 627. Under these circumstances, reimbursement 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.' Id., at 397, 90 S.Ct., at 628.

The instant case is clearly governed by this aspect of Mills. The Labor-Management Reporting and Disclosure 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 process. . . .'⁹ Thus, Title I¹⁰ 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,'¹¹ and, as the Court of Appeals noted, the rights enumerated in Title I¹² were deemed 'vital to the independence of the membership and the effective and fair operation of the union as the representative of its membership.' 462 F.2d, at 780. See also Fulton Lodge No. 2 of International Assn. of Machinists and Aerospace Workers, A.F.L.—C.I.O. v. Nix, 415 F.2d 212 (CA5 1969); Salzhandler 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 necessarily rendered a substantial service to his union as an institution and to all of 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 lawsuits contribute to the preservation of union democracy, they frequently prove beneficial 'not only in the immediate impact of the results achieved but in their implications for the future conduct of the union's affairs.' Yablonski v. United Mine Workers of America, 150 U.S.App.D.C. 253, 260, 466 F.2d 424, 431 (1972). Thus, as in Mills, reimbursement of respondent's attorneys' fees out of the union treasury¹³ simply shifts 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.' Mills v. Electric Auto-Lite Co., supra, 369 U.S., at 397, 90 S.Ct., at 628. 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 United Mine Workers, 311 F.Supp. 946 (D.c 1970); Sands v. Abelli, 290 F.Supp. 677 (SDNY 1968)....