Allapattah Services, Inc. v. Exxon Corp.

• Decision Date: 18 May 2005
• Docket Number: No. 91-0986CIVGOLD.,91-0986CIVGOLD.
• Citation: 372 F.Supp.2d 1344
• Parties: ALLAPATTAH SERVICES, INC., et. al., Plaintiffs, v. EXXON CORPORATION, Defendant.
• Court: U.S. District Court — Southern District of Florida

372 F.Supp.2d 1344

ALLAPATTAH SERVICES, INC., et. al., Plaintiffs, v. EXXON CORPORATION, Defendant.

No. 91-0986CIVGOLD.

United States District Court, S.D. Florida.

May 18, 2005.

COPYRIGHT MATERIAL OMITTED

Eugene E. Stearns [Lead counsel], Mark P. Dikeman, Stearns Weaver Miller, Weissler Alhadeff & Sitterson, P.A., Miami, FL, Gerald M. Bowen, Esq., Oakhill, VA, Cass Walker Christenson, Daniel G. Jarcho, McKenna Long & Aldridge LLP, Washington, DC, Jewel H. Grutman, Stamford, Conn., Sidney M. Pertnoy, Jay H. Solowsky, Leah Lariviere, Pertnoy, Solowsky & Allen, P.A., Miami, FL, Marshall Joel Osofsky, Moyle, Flanigan, Katz, Raymond & Sheehan, P.A., West Palm Beach, FL, Marc M. Coupey, Millwood, N.Y., for Plaintiffs.

Larry Stewart, Esq. [Lead counsel], Stewart Tilghman Fox & Bianchi, P.A., Miami, FL, Robert G. Abrams, Robert J. Brookhiser, Jr, Darren B. Bernhard, J. Anthony Chaves, Stuart H. Harris, Terry L. Sullivan, Howrey, Simon, Arnold & White, LLP, Washington, D.C., Robert K. Burlington, Paul Schwicp, Burlington, Weil, Schwiep, Kaplan & Blonsky, PA, Miami, FL, Thomas Julin, Jamie Zysk, Marty Steinberg, Alejandra H. Pennie, Huton & Williams, Miami, FL, Robert Wallis, Esq., Exxon Corporation, Houston, TX, for Defendants.

ORDER ON PLAINTIFFS' EMERGENCY MOTION TO STRIKE EXXON'S ANSWERS AND AFFIRMATIVE DEFENSES TO CLASS MEMBER CLAIMS, FOR ENTRY OF DEFAULT JUDGMENT, AND FOR FURTHER SANCTIONS AGAINST EXXON CORPORATION AND ITS ATTORNEYS

GOLD, District Judge.

Plaintiffs Allapattah Services Inc., et al., pursuant to Fed.R.Civ.P. 12(f), 28 U.S.C. § 1927, and this Court's inherent power to control the integrity of the judicial process and the conduct of the parties before it, move this Court to enter orders: (1) striking Exxon's frivolous answers and affirmative defenses filed in the claims administration process which seek to obstruct the timely processing of claims by re-litigating the very issues already resolved by the jury's verdict and this Court's post-trial orders which have been affirmed on appeal by the Eleventh Circuit; (2) entering final default judgment against Exxon on each claimant's claim in the amount determined by the Special Master in accordance with the Order on Procedure; (3) revoking the Court's discretionary ruling to allow Exxon to assert set-offs in the claims process; (4) requiring Exxon's counsel to forfeit and disgorge any fees paid in connection with the filing of Exxon's frivolous pleadings; (5) with respect to claims as to which Exxon has yet to file answers, requiring Exxon to limit the denials and affirmative defenses set forth in its answers to the limited number of objections expressly authorized in the Order on Procedure; and, (6) awarding undersigned counsel the reasonable costs and attorney's fees incurred in connection with this motion and related proceedings [D.E. # 1874].

On April 18, 2005, Exxon filed its Response to Plaintiffs' Emergency Motion to Strike Exxon's Answers and Affirmative Defenses, for Default Judgment and for Sanctions [D.E. # 1899]. On April 25, 2005, Plaintiffs filed their reply [D.E. # 1912]. Oral argument was held on Friday, April 29, 2005. For reasons set forth in this order, I grant Plaintiffs' motion in part by striking particular affirmative defenses and Exxon's release set-off. I also award attorney's fees, costs, and other sanctions.

I. BACKGROUND OF FACTS AND PRIOR PROCEEDINGS.

A. Pre-Trial Rulings On Damages, Releases and Prejudgment Interest.

Prior to trial, Exxon filed numerous motions challenging Plaintiffs' stated intention to establish Exxon's duty, breach and damages on a class-wide basis [D.E. # s, e.g., 7, 239, 270, 296, 298, 388, 409, 412, 415, 673, 744, 746, 976, and 977]. Exxon complained particularly about Plaintiffs' intention to prove damages on an annualized, cents-per-gallon basis that would apply to each member of the Class. I entered a number of orders rejecting Exxon's arguments and ultimately adopting Plaintiffs' proposed special jury verdict providing for determination of damages in this manner. See Allapattah Servs. Inc. v. Exxon Corp., 61 F.Supp.2d 1300 (S.D.Fla.1999); Allapattah Servs., Inc. v. Exxon Corp., 61 F.Supp.2d 1308 (S.D.Fla.1999); Allapattah Servs. Inc. v. Exxon Corp., 61 F.Supp.2d 1326 (S.D.Fla.1999); and Allapattah Servs., Inc. v. Exxon Corporation, 188 F.R.D. 667 (S.D.Fla.1999).

In the last referenced order, I specifically stated that I intended to rule on Exxon's defense related issues pre-trial. 188 F.R.D. at 670 n. 1. I did so with regard to Exxon's affirmative defense that releases affecting in excess of 5,000 dealer-members preclude Plaintiffs' action for breach of contract, and its claim that prejudgment interest could not be handled on a class-wide basis.

In connection with Exxon's release defense, I concluded that Exxon's form releases did not bar the Class Dealers' claims based on two grounds. First, I held that if the jury determined, through special interrogatories, that Exxon breached its good faith obligations to its dealers under its sales agreements, and that such breach was fraudulently concealed from the class, then the Releases may not, in good faith, be uniformly enforced against an involuntary waiver of those rights. Id. at 681-684. Second, as an alternative ground, I concluded that the plain meaning of the terms "trade accounts" and "reimbursements," which appear in the vast majority of the releases, unambiguously, and, as a matter of law, except Plaintiffs' claims from the releases. Id. at 681 n. 24.¹ I also concluded, as a matter of law, that releases executed after certification of the Plaintiff-Class cannot bar those Plaintiffs from participating in the litigation of this action. Id. at 685.² The sole exception was for releases executed in Delaware. Even as to those releases, I concluded that they were not enforceable against the dealers that included the "exception" language, see id. at 681 n. 24, but would be enforceable, if at all, against those Delaware dealers whose releases contain no such qualifying language (i.e. the Category-four releases). Id. at 684 n. 26. Accordingly, the issue of releases was finally and unequivocally resolved by my order. Notwithstanding, Exxon again raises the same issue in its affirmative defenses filed during the claims administration process.

In connection with prejudgment interest, I surveyed the applicable state laws and concluded, pre-trial, that the Plaintiffs were entitled to prejudgment interest in the event of a jury verdict. See id. at 688 ("[T]he entitlement and accrual periods of prejudgment interest shall be in accordance with the aforementioned conclusions"). Where prejudgment interest is awarded as a matter of right, I further concluded that the Plaintiffs' breach of contract damages were liquidated. Id. at 685 n. 29.

B. Post-Trial Rulings On All Substantive Issues Pertaining to Damages, Prejudgment Interest, Releases and on the Claims Administration Process Including Set-offs.

On February 20, 2001, the jury rendered a Special Verdict in favor of the Class Dealers [D.E. # 1395]. Besides finding for Plaintiffs on issues of liability and causation, the jury, in accordance with Fed.R.Civ.P. 49(a), determined class damages in the form of a common guideline or factor (cents-per-gallon on a year-to-year basis during the Class Period). After the verdict, the Dealers filed a motion for entry of an aggregate, lump some verdict for the Class as a whole [D.E. # 1409]. Exxon opposed the motion, arguing that by virtue of the "on average" nature of Exxon's pricing obligation, Plaintiffs had failed to prove that any dealer had been damaged, that damages would have to be established on a dealer-by-dealer basis in the claims administration process, and that damages were not liquidated, thereby precluding an award of prejudgment interest [D.E. # 1416, pages 15-18]. Exxon also argued that the jury's finding that Exxon's contractual duty was owed to all dealers rather than to individual dealers constituted a conflict in the verdict that entitled it to judgment as a matter of law [D.E. # 1440].

I denied Exxon's arguments In a series of interlocking orders and judgments intended to provide for interim, but final, review of Exxon's liability to every member of the class for an award of compensatory damages in an amount determined by the jury's verdict, plus prejudgment interest. The orders consist of the Order on Procedure for Determination and Entry of Final Judgment (the "Order on Procedure") [D.E. # 1464] (also cited as Allapattah Services, Inc. v. Exxon Corp., 157 F.Supp.2d 1291 (S.D.Fla.2001)), the Judgment on Special Verdict (the "Interim Judgment") [D.E. # 1465], the Order Denying Exxon's Rule 50 and 59 Motions (the "Rule 50 Order") [D.E. # 1463], and the Rule 54(b) Final Judgment on Jury Verdict for Named Plaintiffs (the "Rule 54(b) Final Judgment") [D.E. # 1507].

1. Each Class Member's Entitlement to Compensatory Damages In an Amount Determined by the Jury's Special Verdict.

In my Rule 50 Order and Order on Procedure, I expressly rejected Exxon's argument that based on the "on average" nature of the Exxon's obligation to reduce whole sale prices, some class members were damaged to a greater or lesser extent than others. I held that the jury's verdict established that Exxon had failed to provide any offset to any dealer throughout the damage period, that Plaintiffs had properly established class-wide breach, and that the cents per gallon damage award would determine the amount of every class member's damage in the administrative claim process.

I also rejected Exxon's argument as to the supposed conflict in the jury verdict concerning the nature of Exxon's pricing obligations:

Although Exxon did its best to confuse the jury as to its obligations to its dealers with the tests used to prove or disprove its performance, ... [i]n the Court' view, Exxon's argument regarding conflict in the verdict form is a "smoke-screen" to hide from its...