Krumme v. West Point-Pepperell, Inc.

• Decision Date: 17 September 1998
• Docket Number: No. 90 Civ. 3841(SAS).,No. 89 Civ. 2016(SAS).,89 Civ. 2016(SAS).,90 Civ. 3841(SAS).
• Citation: 22 F.Supp.2d 177
• Parties: Robert D. KRUMME, Plaintiff, v. WEST POINT-PEPPERELL, INC., Defendant. Gordon E. ALLEN, John Currier, James J. Dunne, Leo Fornero, Gerard P. Mandry, Norman K. Matheson, Bruce E. Moore, Nicholas Pallotta and Cochran B. Supplee, Plaintiffs, v. WESTPOINT-PEPPERELL, INC., D. Michael Roark, C. Powers Dorsett and Barry F. Shea, Defendants.
• Court: U.S. District Court — Southern District of New York

22 F.Supp.2d 177

Robert D. KRUMME, Plaintiff, v. WEST POINT-PEPPERELL, INC., Defendant.

Gordon E. ALLEN, John Currier, James J. Dunne, Leo Fornero, Gerard P. Mandry, Norman K. Matheson, Bruce E. Moore, Nicholas Pallotta and Cochran B. Supplee, Plaintiffs, v. WESTPOINT-PEPPERELL, INC., D. Michael Roark, C. Powers Dorsett and Barry F. Shea, Defendants.

No. 89 Civ. 2016(SAS).

No. 90 Civ. 3841(SAS).

United States District Court, S.D. New York.

September 17, 1998.

Robert J. Hausen, Chadbourne & Parke, LLP, New York City, James W. Harbison, Jr., Morgan, Lewis & Bockius, LLP, New York City, for Plaintiffs.

Francis Carling, Collazo Carling & Mish, LLP, New York City, Frederick A. Brodie, Winthrop, Stimson, Putnam & Roberts, New York City, for Defendants.

AMENDED MEMORANDUM OPINION

SCHEINDLIN, District Judge.

On May 1, 1998, the United States Court of Appeals for the Second Circuit affirmed this Court's judgment in favor of all defendants in the case of Allen v. WestPoint-Pepperell, Inc., 945 F.2d 40, but vacated this Court's judgment in favor of Robert D. Krumme in the case of Krumme v. WestPoint-Pepperell, Inc., 933 F.Supp. 261.¹ In that ruling, the Court of Appeals declined to review this Court's decision that all plaintiffs are entitled to an award of attorneys' fees and costs until those amounts are determined. See generally Krumme v. WestPoint Stevens, Inc., 143 F.3d 71 (2d Cir.1998) ("Opinion").

The case was remanded to this Court "for the calculation of the plaintiffs' attorneys' fees and costs in Allen and Krumme." Id. at 88. In the Conclusion section of the Opinion, the Court summarized its holding as follows:

In Allen, we affirm the district court's judgment in favor of defendants WestPoint, Dorsett and Roark.... In Krumme, we affirm the district court's grant of summary judgment to Krumme on the issue of contract formation between Krumme and WestPoint.... With respect to Krumme's breach of contract claim, we conclude that WestPoint is entitled to summary judgment to the extent that it argues the 9.3% PBGC-based rate was the proper rate at which to compute the lump sum payments for EPI Amendment participants on April 5, 1989. We vacate the district court's judgment on the merits in Krumme and remand for further proceedings consistent with this opinion.

Id. (emphasis added).

Immediately after the Circuit's Opinion was issued, this Court scheduled a status conference at which the parties raised two issues. Following the conference, the parties submitted a total of seven letters with numerous exhibits. The Circuit's mandate was received in the District Court on July 23, 1998. It is now time to resolve the remaining issues so that this long-lived case might come to an end.

I. Entry of Judgment

On February 10, 1997, this Court entered an Order and Judgment in favor of Robert D. Krumme. After reciting that the judgment was entered in accordance with the Court's Opinions of November 2, 1995, January 2, 1996, May 13, 1996 and October 18, 1996, that Order stated in three short paragraphs that: (1) Defendant was to pay Krumme a lump sum payment of $241,192.50; (2) that interest on that amount was to be paid from March 31, 1989, at a specified interest rate; and (3) that plaintiff was entitled to recover costs and attorneys' fees. The amount of the payment to Krumme was calculated based on this Court's determination that the "discount rate" to be applied to lump sum deferred compensation payments under an employee benefit program (to cause the present value of that payment to be the equivalent of the stream of retirement benefits if paid out in lifetime monthly payments) was 5%. This determination was reversed by the Court of Appeals, which determined that the appropriate discount rate was 9.3%. As a result, the February 10 judgment was vacated.

Defendant WestPoint now argues that judgment should be entered in its favor because the Court of Appeals concluded "that WestPoint is entitled to summary judgment to the extent that it argues that the 9.3% PBGC-based rate was the proper rate at which to compute the lump sum payment...." 143 F.3d at 88 (emphasis added). WestPoint further claims that Krumme cannot be the prevailing party because it was always willing to make a lump sum payment to him at the 9.3% discount rate, but that Krumme refused to accept that payment. Krumme, on the other hand, argues that he is still the prevailing party because WestPoint (1) breached the contract to make the lump sum deferred compensation payments to Krumme when it denied the existence of a contract to do so; and (2) breached the contract when it refused to make the lump sum payments unless Krumme agreed to sign a certain election form and release.

Krumme has the better of the argument. It took eight years of litigation before the Court of Appeals declared that "we affirm the district court's grant of summary judgment to Krumme on the issue of contract formation between Krumme and WestPoint...." 143 F.3d at 88. In addition, I find that WestPoint never agreed to pay Krumme at the 9.3% discount rate unless he signed the election form and the waiver, which he was not contractually bound to do. Thus, once again, judgment must be entered in Krumme's favor. When a final judgment is prepared, following the calculation of attorneys' fees, it should track the language of the February 10, 1997 judgment, but amend the figure in paragraph 1 to reflect the use of the 9.3% discount rate rather than the 5% rate used in the original judgment.

II. The Effect of the Releases on the Award of Attorneys' Fees

After obtaining a final judgment in the district court on all issues other than the amount of the attorneys' fees, and appealing that final judgment to the Court of Appeals, WestPoint now argues that the Allen plaintiffs waived their right to an award of attorneys' fees by executing certain releases in order to obtain their lump sum deferred compensation payments.² For reasons that are still not clear to this Court, this issue was never raised in this Court until after the appellate court's decision was issued.³

WestPoint argues that it did not raise the issue because, at the time of the trial on the attorneys' fees claim, it did not know whether the court would find that the releases were valid. If the court found that the releases was invalid, WestPoint contends, then it would not need to reach the issue of whether the plaintiffs waived their claims to attorneys' fees by signing the release. If, on the other hand, the court found that the release was valid, WestPoint presumed that the release must cover any claim for attorneys' fees.

This argument makes no sense for a variety of reasons. The trial of the attorneys' fee issue took place from January 3 through January 9, 1996. That trial concerned two issues: (1) whether the Allen plaintiffs were entitled to additional payments based on the Court's conclusion that the 5% discount rate should control or whether their delivery of releases to defendant prevented any further recovery; and (2) whether all plaintiffs were entitled to attorneys' fees pursuant to the terms of the EPI Amendment.⁴ Since it was WestPoint itself that argued that the releases were valid, it should have anticipated prevailing on this issue and should have raised the argument that plaintiffs waived their right to fees by signing these releases. On May...