Two Appeals Arising Out of San Juan Dupont Plaza Hotel Fire Litigation, In re

• Decision Date: 02 March 1993
• Docket Number: 92-2313,Nos. 92-2312,s. 92-2312
• Citation: 994 F.2d 956
• Parties: , 25 Fed.R.Serv.3d 1185 In re TWO APPEALS ARISING OUT OF the SAN JUAN DUPONT PLAZA HOTEL FIRE LITIGATION. . Heard
• Court: U.S. Court of Appeals — First Circuit

Page 956

994 F.2d 956

61 USLW 2785, 25 Fed.R.Serv.3d 1185

In re TWO APPEALS ARISING OUT OF the SAN JUAN DUPONT PLAZA HOTEL FIRE LITIGATION.

Nos. 92-2312, 92-2313.

United States Court of Appeals First Circuit.

Heard March 2, 1993.

Decided June 4, 1993.

Paul K. Connolly, Jr., with whom Damian R. LaPlaca, LeBoeuf, Lamb, Leiby & MacRae, Ralph W. Dau, Peter B. Ackerman, Jeffrey W. Kilduff, O'Melveny & Myers, Raul E. Gonzalez-Diaz, A.J. Bennazar-Zequeira, Gonzalez & Bennazar, Andrew K. Epting, Jr., G. Trenholm Walker, Wise & Cole, Homer L. Marlow, William G. Liston, Marlow, Shofi, Connell, Velerius, Abrams, Lowe & Adler, Deborah A. Pitts, Hancock, Rothert & Bunshoft, Bethany K. Culp, Patrick McCoy, Oppenheimer Wolff & Donnelly, Lon Harris, Harris & Green, Stuart W. Axe, Lester, Schwab, Katz & Dwyer, Adrian Mercado, Mercado & Soto, Virgilio Mendez Cuesta, Ernesto Rodriguez-Suris, and Latimer, Biaggi, Rachid, Rodriguez-Suris & Godreau, were on consolidated briefs, for appellants.

Gary L. Bostwick, with whom R. Lance Belsome, was on brief, for appellees Hotel Systems Intern., et al.

Alvaro Calderon, with whom Will Kemp and Monita F. Sterling, PSC Liaison, were on brief, for appellee Plaintiffs' Steering Committee.

Before SELYA and CYR, Circuit Judges, and FUSTE, ^* District Judge.

SELYA, Circuit Judge.

These consolidated appeals require us to grapple for the first time with a looming problem in modern federal court practice: how, if at all, should expenses indigenous to a court's handling of mass disaster litigation be reallocated once the winners and losers have been judicially determined? Here, the appellants, late-joined defendants and defendants in cross-claim, prevailed in the underlying litigation. Nonetheless, the district court, coincident with the entry of judgment, effectively foreclosed them from either seeking costs under Fed.R.Civ.P. 54(d) or otherwise lobbying for reallocation of several hundreds of thousands of dollars in court-ordered expense assessments. Finding that the court's abrupt slamming of these doors was improvident, we vacate the relevant portion of the judgment and remand for further proceedings.

I. BACKGROUND

In 1987, the Judicial Panel on Multidistrict Litigation appointed the Honorable Raymond L. Acosta, a United States District Judge for the District of Puerto Rico, to handle some 270 cases arising out of the deadly fire that had earlier engulfed the San Juan Dupont Plaza Hotel. See In re Fire Disaster at Dupont Plaza Hotel, 660 F.Supp. 982 (J.P.M.L.1987) (per curiam). Judge Acosta's stewardship proved "a model of judicial craftsmanship and practical ingenuity." In re Nineteen Appeals Arising Out of the San Juan Dupont Plaza Hotel Fire Litig., 982 F.2d 603, 606 (1st Cir.1992). Among the many successful innovations that brought the litigation to a celeritous conclusion were (1) the creation of a Joint Document Depository (JDD), which housed and copied for distribution all discovery materials, see Pretrial Order No. 127 (Dec. 2, 1988), at 66; (2) the appointment of liaison counsels (plaintiffs' and defendants'), each of whom was responsible for dispersing filings among his or her constituents, see id. at 61-63; and (3) the formation of a Joint Discovery Committee (JDC) dedicated to devising means of expediting the litigation, see In re Recticel Foam Corp., 859 F.2d 1000, 1001 (1st Cir.1988) (describing operation of JDC). To fund these innovations, the district court entered a series of case-management orders which imposed mandatory assessments upon all litigants. ¹ In this way, the court periodically requisitioned fresh monies as funds on hand were depleted. The orders were silent as to (i) whether or not the court planned to readjust defendants' contributions in light of future developments, and (ii) the court's authority, if any, to effectuate such reallocations. ²

Roughly two years after the first shots in the litigation had been fired, a group of defendants involved in the hotel's ownership and operation settled with the plaintiffs (the fire victims and their families) and cross-claimed for indemnification against various insurers whose liability policies had expired before the fire started (the pre-fire insurers). On August 9, 1989, the plaintiffs followed the cross-claimants' lead, adding the pre-fire insurers as direct defendants under P.R. Laws Ann. tit. 26, §§ 2001, 2003 (1976). Because discovery had formally closed on December 15, 1988, see Pretrial Order No. 127, at 96-97, the pre-fire insurers' investigation of the newly emergent claims against them necessarily centered around a review of documents stored in the JDD. ³

The pre-fire insurers quickly filed dispositive motions. The district court, faced with more pressing problems, was slow in addressing the motions. Finally, the court granted them on September 11, 1992, see In re San Juan Dupont Plaza Hotel Fire Litig., 802 F.Supp. 624 (D.P.R.1992), aff'd, 989 F.2d 36 (1st Cir.1993), entered judgment in favor of the pre-fire insurers on all claims, and decreed that the parties would bear their own costs.

On appeal, seventeen pre-fire insurers complain that the district court abused its discretion by summarily precluding both an award of costs and a complete or partial refund of the cost-sharing assessments. ⁴ The fire victims, represented by the Plaintiffs' Steering Committee (PSC), and two cross-claimants, Hotel Systems International (HSI) and Dupont Plaza Associates (Associates), filed opposition briefs and participated in oral argument.

II. NATURE OF THE STAKES

In the expectation that describing the disputed expenditures in greater detail will help to put matters in the proper perspective, we travel that route.

A. Court-Ordered Assessments.

The vast majority of appellants' outlays comprise mandatory payments imposed by six orders of the district court. See Pretrial Order No. 48 (Feb. 11, 1988); Pretrial Order No. 67 (Apr. 18, 1988); Pretrial Order No. 127, supra; Pretrial Order No. 135 (Jan. 17, 1989); Pretrial Order No. 212 (July 31, 1989); Order No. 259 (Aug. 21, 1990). Although the first four orders eventuated before appellants entered the fray, those orders required appellants to pay the sums assessed therein shortly after filing entries of appearance. See Pretrial Order No. 127, at 71; Pretrial Order No. 135, at 9. Appellants paid the assessments under protest. ⁵ The compulsory payments total $705,500. Eighty-three percent of this aggregate amount--$586,500--represents assessments levied under the four earliest cost-sharing orders.

Appellants' tribute helped to fund the various instrumentalities that Judge Acosta had set in place to expedite the litigation. Thus, out of each insurer's total contribution ($41,500), $18,000 went toward defraying the JDD's operating expenses, see Pretrial Order No. 127, at 72; $3,500 went toward defraying the JDC's expenses, see id.; and $10,000 went toward paying costs associated with the office of Defendants' Liaison Person (DLP). ⁶ See id.; Pretrial Order No. 212, at 1; Order No. 259, at 1. The district court originally intended that the remaining $10,000 would subsidize the construction of a new courtroom and related facilities. See Pretrial Order No. 135, at 9. The idea was abandoned and the funds in question were eventually utilized for operational costs of the JDD and DLP. See In re San Juan Dupont Plaza Hotel Fire Litig., 142 F.R.D. 41, 46 n. 20 (D.P.R.1992). Therefore, the figures recited above, insofar as they pertain to the JDD and DLP, are minimum estimates.

B. Ordinary Costs.

Presumably, the payments made pursuant to the cost-sharing orders, though substantial, do not comprise the whole of appellants' investment in this sprawling litigation. Their successful defense doubtless required other, more commonplace expenditures, such as photocopy costs of the type and kind routinely associated with litigation. See, e.g., 28 U.S.C. § 1920 (1988) (listing fees and expenses taxable as costs).

III. WAIVER

Having described the expenses appellants seek to recoup, we pause to address a threshold matter. The plaintiffs submit that the pre-fire insurers waived any claim for expense recovery by failing to file bills of costs after judgment entered. See id. (requiring bill of costs to be filed). We demur: the doctrine of waiver presents no barrier to appellants' attempt to recover court costs or request a reallocation of the mandatory cost-sharing assessments.

To be sure, the failure seasonably to file a bill of costs with the district court may, in certain circumstances, constitute a waiver of a party's right to recoup costs under Rule 54(d). See Mason v. Belieu, 543 F.2d 215, 222 (D.C.Cir.) (vacating a cost award where plaintiffs had failed to file a bill of costs), cert. denied, 429 U.S. 852, 97 S.Ct. 144, 50 L.Ed.2d 127 (1976). There is no waiver here, however, because the district court, by ordering, coincident with the entry of judgment, that each party bear its own costs, preempted appellants' opportunity to file a bill of costs--and did so despite D.P.R.Loc.R. 331.1, which allows prevailing parties ten days after notice of judgment to file bills of costs. In the face of this flat ruling, the subsequent filing of an itemized bill of costs would have served no useful purpose. ⁷ The law does not require litigants to run fools' errands. Thus, a party who forgoes an obviously futile task will not ordinarily be held thereby to have waived substantial rights. See Franki Found. Co. v. Alger-Rau & Assocs. Inc., 513 F.2d 581, 587 (3d Cir.1975) (refusing to allow waiver to be grounded in a party's dereliction of a futile task); see also Northern Heel Corp. v. Compo Indus., Inc., 851 F.2d 456, 461 (1st Cir.1988) (stating, in a different context, that "[t]he law should not be construed idly to require parties to perform futile acts or to engage in empty rituals").

A somewhat closer question is whether appellants, by failing to ask the district court, after judgment entered,...