Boston and Maine Corp. v. Moore

• Decision Date: 04 November 1985
• Docket Number: 84-2001 and 85-1081,84-1999,Nos. 84-1911,84-2000,s. 84-1911
• Citation: 776 F.2d 2
• Parties: 120 L.R.R.M. (BNA) 3107, Bankr. L. Rep. P 70,836 In re BOSTON AND MAINE CORPORATION, Debtor, Appellee, v. Ralph J. MOORE, Jr., Petitioner, Appellant.
• Court: U.S. Court of Appeals — First Circuit

Page 2

776 F.2d 2

120 L.R.R.M. (BNA) 3107, Bankr. L. Rep. P 70,836

In re BOSTON AND MAINE CORPORATION, Debtor, Appellee, v. Ralph J. MOORE, Jr., Petitioner, Appellant.

Nos. 84-1911, 84-1999, 84-2000, 84-2001 and 85-1081.

United States Court of Appeals, First Circuit.

Argued June 7, 1985.

Decided Nov. 4, 1985.

Richard T. Conway, Washington, D.C., with whom Ralph J. Moore, Jr., Anthony A. Lapham and Shea & Gardner, Washington, D.C., were on brief for Ralph J. Moore, Jr.

Francis K. Morris, Framingham, Mass. with whom Morris & Collins, Framingham, Mass., was on brief for Boston and Maine Corp.

Before CAMPBELL, Chief Judge, RUBIN ^* and BREYER, Circuit Judges.

LEVIN H. CAMPBELL, Chief Judge.

This appeal arises from several orders of the United States District Court for the District of Massachusetts, awarding attorney fees to petitioner-appellant Ralph J. Moore and his law firm, Shea & Gardner ("Shea"), in an amount that was less than 70 percent of the total compensation sought, for services rendered on behalf of debtor-appellee The Boston & Maine Railroad ("B & M") in the arbitration of a collective bargaining agreement between the railroad and its train crew employees, and in subsequent proceedings to ensure the successful implementation of the arbitration award. We hold that the fees sought by Moore and by Shea were reasonable and that the district court was unduly parsimonious in cutting them.

I. BACKGROUND

In 1970, B & M filed a petition for reorganization under section 77 of the Bankruptcy Act of 1898, 11 U.S.C. Sec. 205 (1976 ed.). While the railroad was still in reorganization, the trustees of B & M retained Moore and his firm in early 1980 to represent the railroad in connection with certain labor arbitration proceedings. There was a consensus that reducing labor costs was extremely important, indeed was key, to B & M's successful reorganization. In the belief that it was "essential for the railroad to obtain the most qualified attorneys available to prepare and present the railroad's case," B & M's officers turned to Moore and Shea because of their extensive experience in railway labor practice. ¹ Shea agreed to be compensated according to its usual hourly rates for hours actually expended, subject of course to approval by the reorganization court. Later in 1980, and until 1982, Shea was also retained to represent B & M in various matters growing out of the arbitration award.

A. Legal Services Provided

We describe in some detail the legal services rendered by Moore and his firm because of the obvious relevance of this information to the reasonableness of the fees.

First, B & M retained Moore to represent it in a binding arbitration between the railroad and the union of its train crew employees (the United Transportation Union, or the "UTU"). At stake was a thorough-going revision of wage rates and working conditions, including a determination of both the current and retroactive wages to be paid to B & M's conductors and trainmen and over 100 proposed changes in the existing work rules. In particular, B & M sought to obtain the right to man its trains with fewer than the then-required three trainmen (the so-called "crew-consist" rules), in order to obtain savings that it considered necessary to turning the railroad's operating deficit into operating profit. After ten days of hearings between May 9 and June 8, 1980, and the filing of a 179-page post-hearing brief, the railroad won what B & M's officers considered a "highly favorable" award.

Among the key provisions in the 83-page arbitration award was the much-desired reduction in the crew-consist rules to two-man train crews. Whereas other railroads had promised hefty "productivity payments" in return for reduced crew-consist rules, B & M was able to substantially limit such payments. Finally, the railroad won highly advantageous terms for the kind of retroactive increases in wages it would be required to pay, resulting in cash savings of approximately $750,000. According to B & M's officers and trustees, including those who worked closely with Moore and his firm on a daily basis, the favorable arbitration award was directly attributable to Shea's thorough preparation, skillful presentation, and strategic recommendations. There was testimony at the time that the award would save B & M about $5 million per year at 1980 wage rates; as of 1984, the actual savings have confirmed this prediction more or less. ²

In September 1980, approximately 60 members of the UTU filed suit, seeking to set the arbitration award aside. Shea was then retained by B & M to defend the arbitration award in what we shall refer to as the "Lenfest litigation." The dissatisfied union members claimed, inter alia, that the agreement to arbitrate had not been executed by the proper UTU officials, as required by section 8 of the Railway Labor Act, 45 U.S.C. Sec. 158, and that the UTU had violated its duty of fair representation. Although Shea was already familiar with the factual background of the case and the terms of the arbitration award, the Lenfest litigation was not simply a repetition of the arbitration proceedings in a different guise; it required Moore and the attorneys who assisted him to educate themselves on various new matters.

After pretrial motions, including B & M's motion for summary judgment (which was denied), the case went to trial unexpectedly on April 12, 1982, ten days after the trial date was set. After a nine-day jury trial, Chief Judge Caffrey directed judgment for the defendant railroad and upheld the arbitration award. See Lenfest v. Boston & Maine Corp., 537 F.Supp. 324 (D.Mass.1982). There appears to be no question as to the vital importance of this result to B & M. Judge Caffrey found that if the Lenfest plaintiffs had succeeded in setting the award aside, "economic chaos would result.... [T]he B & M would have losses of over $3.5 million for every year 1981 through 1985 instead of the projected profits, which now make reorganization arguably feasible. This loss picture would be the kiss of death to the proposed reorganization, which has been ongoing since 1970, and the kiss of death to 700 jobs...." 537 F.Supp. at 337-38.

Finally, ³ Shea was retained, to assist the Boston law firm of Herrick & Smith in petitioning the Massachusetts Department of Public Utilities ("DPU") to rescind its orders requiring the use of three-man train crews in Massachusetts, which prevented the railroad from implementing its new crewconsist rules and thereby realize most of its labor cost savings. When the lead counsel, a partner at Herrick & Smith who was experienced in state administrative litigation, became ill shortly before the hearings, Shea assumed primary responsibility for presenting B & M's case to the DPU.

After B & M filed its petition on October 17, 1980, the DPU decided to conduct a general investigation into the crew-consist issue and directed all railroads operating freight trains within Massachusetts to participate in the proceedings. During eight days of public hearings, B & M made a factually intricate presentation, particularly on the issue of safety of reduced train crews, and faced vigorous opposition from different parties. The DPU ultimately revoked its earlier orders and authorized the use of two-man crews in Massachusetts. Failure to persuade the DPU to change its orders would have deprived B & M of about three-quarters of the savings anticipated from the crew-consist provisions. The railroad's success before the DPU is particularly impressive in light of Herrick & Smith's initially pessimistic appraisal of B & M's prospects for success.

B. Fee Petitions and Fee Awards

Fee petitions for services rendered on behalf of entities which filed for bankruptcy before enactment of the Bankruptcy Reform Act of 1978 must be approved by the reorganization court under former section 77 of the Bankruptcy Act of 1898, 11 U.S.C. Sec. 205. Section 77(c)(2) provides that "[t]he trustee or trustees and their counsel shall receive only such compensation from the estate of the debtors the judge may from time to time allow within such maximum limits as may be approved by the [Interstate Commerce Commission ("ICC") ] as reasonable." There is similar language in section 77(c)(12), providing that "reasonable attorney's fees" may be awarded by the reorganization judge within maximum limits fixed by the ICC. Although section 77(c) entrusts the final determination of the fee to the court supervising the reorganization, the ICC's findings of fact, if "supported by evidence, may not be disturbed by a court." Reconstruction Finance Corporation v. Bankers Trust Co., 318 U.S. 163, 170, 63 S.Ct. 515, 519, 87 L.Ed. 680 (1943); see also In re Boston & Providence Railroad Corp., 428 F.2d 159, 161 (1st Cir.1970).

On February 4, 1981, Moore filed a fee petition for $269,901.27 for services rendered between January and September 1980 in connection with the labor arbitration proceedings ("First Petition"). ⁴ As required, the ICC examined the fee petition and approved the full amount requested in May 1981. The court held a hearing on June 30, 1981, but it did not act on the petition until October 1984. Apparently advised by B & M that there would be no interim billing, and on the understanding that this policy was in "keeping with the wishes of the Court," Moore did not file a petition for services rendered between October 1980 and July 1982 in the Lenfest litigation ⁵ and DPU proceedings ⁶ until February 1, 1983 ("Second Petition"). On May 19, 1983, the ICC also approved the full amount requested as the maximum compensation that was reasonable. The district court issued a series of orders between October 26, 1984 and December 28, 1984 concerning the Second Petition. In June 1983, Moore also filed a supplemental petition requesting compensation for delay in payment of the amounts requested in his First Petition, and in July 1984, requested compensation for delay with...