Shimman v. International Union of Operating Engineers, Local 18

Decision Date01 October 1984
Docket NumberNo. 82-3370,82-3370
Citation744 F.2d 1226
Parties117 L.R.R.M. (BNA) 2579, 53 USLW 2197, 101 Lab.Cas. P 11,207 John C. SHIMMAN, Plaintiff-Appellee, v. INTERNATIONAL UNION OF OPERATING ENGINEERS, LOCAL 18, Defendant-Appellant.
CourtU.S. Court of Appeals — Sixth Circuit

William Fadel (argued), Wuliger, Fadel & Beyer, Richard H. Verheij, Cleveland, Ohio, for defendant-appellant.

Cary Rodman Cooper, Cooper, Straub, Walinski & Cramer, Thomas J. Tucker (argued), Stephen M. Dane, Toledo, Ohio, for plaintiff-appellee.

Before LIVELY, Chief Judge and EDWARDS, ENGEL, KEITH, MERRITT, KENNEDY, MARTIN, CONTIE, KRUPANSKY

and WELLFORD, Circuit Judges. *

CORNELIA G. KENNEDY, Circuit Judge.

This appeal presents the question of whether Shimman could be awarded his attorney fees incurred during an earlier appeal in this case. We hold that there was no basis for the award and reverse.

I. Introduction

In 1973 John C. Shimman brought suit against the International Union of Operating Engineers, Local 18 ("Local 18"); the International Union of Operating Engineers, AFL-CIO; John Frank, an officer of Local 18; and Terry and James Grothaus, members of Local 18. The complaint alleged violations of Sec. 101(a) of the Labor-Management Reporting Disclosure Act of 1959 ("LMRDA"), 29 U.S.C. Sec. 411(a); 42 U.S.C. Secs. 1985 and 1986; and Ohio common law of assault and battery.

A bench trial was held in the District Court, bifurcated between issues of liability and damages. The essential facts developed at trial were that Terry and James Grothaus, at Frank's direction, assaulted Shimman at a district union meeting pursuant to a plan to intimidate and suppress the dissident movement in the union. Shimman was a dissident union member opposed to the union leadership. 1 The District Court found all defendants liable on the LMRDA and Ohio common law counts, and dismissed the counts under 42 U.S.C. Secs. 1985 and 1986 as to all defendants. The District Court then awarded Shimman compensatory damages, attorney fees, and substantial punitive damages against all defendants. On appeal, a panel of this Court reversed the judgment against the International Union and reduced the amount of punitive damages assessed against the other defendants, but otherwise affirmed the District Court. 2

Shimman then applied to the District Court for additional attorney fees for work done on the appeal. The defendants contested the District Court's authority to award attorney fees for the appeal, but did not question the amount sought. The District Court awarded Shimman $56,178.00 in attorney fees for the appeal, holding that such an award was authorized because of defendants' bad faith and malicious conduct. Defendant Local 18 appealed the award, which was affirmed by a divided panel of this Court. Shimman v. International Union of Operating Engineers, Local 18, 719 F.2d 879 (6th Cir.1983). On December 5, 1983 this Court vacated the panel's opinion and granted rehearing en banc.

Shimman contends that the District Court's award of attorney fees incurred during the earlier appeal may be justified under any of four bases: (1) the "bad faith" exception to the American Rule that attorney fees are generally not allowed; (2) the "common benefit" exception to the American Rule; (3) the Civil Rights Attorney's Fees Awards Act of 1976, 42 U.S.C. Sec. 1988; and (4) Ohio common law, which allows attorney fees in assault and battery cases. We examine each of these rationales in turn to see if they support the District Court's award.

II. Bad Faith

The District Court held that it had authority to award attorney fees incurred at trial because it found that its "findings and conclusions upon the liability issue make abundantly clear that all of the defendants here acted in bad faith, vexatiously, maliciously, wantonly, wilfully, and entirely for oppressive reasons. They could not have innocently misunderstood that the LMRDA prohibited them from doing what they did." After the 1980 appeal, the District Court then held that the same findings of malice and bad faith supported an award of attorney fees for the appeal. The District Court thus did not reach the three other grounds proposed by Shimman. This Court must therefore decide whether an award of appellate attorney fees is allowable where the defendants' acts giving rise to the underlying LMRDA cause of action were malicious and in bad faith. 3

It has long been the general rule in the United States that a prevailing party may not ordinarily recover attorneys fees in the absence of a statute or enforceable contract providing for a fee award. This "American Rule" regarding attorney fees was adopted by the Supreme Court in Arcambel v. Wiseman, 3 U.S. (3 Dall.) 306, 1 L.Ed. 613 (1796). The American Rule applies to a claim for compensatory damages expressly created by a federal statute. F.D. Rich Co. v. United States ex rel. Industrial Lumber Co., 417 U.S. 116, 94 S.Ct. 2157, 40 L.Ed.2d 703 (1974). The American Rule's failure to fully compensate an injured party is justified by the rationale that "since litigation is at best uncertain one should not be penalized for merely defending or prosecuting a lawsuit, and that the poor might be unjustly discouraged from instituting actions to vindicate their rights if the penalty for losing included the fees of their opponents' counsel." Fleischmann Distilling Corp. v. Maier Brewing Co., 386 U.S. 714, 718, 87 S.Ct. 1404, 1407, 18 L.Ed.2d 475 (1967). The general American Rule has been reaffirmed numerous times by the Supreme Court. See, e.g., Hensley v. Eckerhart, 461 U.S. 424, 103 S.Ct. 1933, 76 L.Ed.2d 40 (1983); Summit Valley Industries v. Local 112, United Brotherhood of Carpenters, 456 U.S. 717, 102 S.Ct. 2112, 72 L.Ed.2d 511 (1982); Alyeska Pipeline Service Co. v. Wilderness Society, 421 U.S. 240, 95 S.Ct. 1612, 44 L.Ed.2d 141 (1975).

The "bad faith" exception to the American Rule allows attorney fees in certain exceptional cases where the opposing party has acted in bad faith. The earliest Supreme Court case cited for this exception is Vaughan v. Atkinson, 369 U.S. 527, 82 S.Ct. 997, 8 L.Ed.2d 88 (1962). Vaughan was an admiralty suit by a seaman against shipowners for damages for failure to pay maintenance and cure while the seaman was recovering from an illness contracted aboard ship. Under admiralty law, the shipowners had a duty to provide the seaman with maintenance and cure while convalescing, and if they failed to provide maintenance and cure the shipowners were liable for consequential damages arising from their failure to pay. The Supreme Court allowed the seaman attorney fees incurred in his suit to recover maintenance as an item of damages for the shipowners' failure to pay maintenance. The Court reasoned that the shipowners:

were callous in their attitude, making no investigation of [the seaman's] claim and by their silence neither admitting nor denying it. As a result of that recalcitrance, [the seaman] was forced to hire a lawyer and go to court to get what was plainly owed him under laws that are centuries old. The default was willful and persistent.

369 U.S. at 530-31, 82 S.Ct. at 999-1000. In the first Supreme Court case citing Vaughan as establishing an exception to the American Rule, Fleischmann Distilling Corp. v. Maier Brewing Co., 386 U.S. 714, 718, 87 S.Ct. 1404, 1407, 18 L.Ed.2d 475 (1967), the Court indicated that Vaughan was limited to calculating compensatory damages in admiralty cases. One year after Fleischmann and six years after Vaughan, however, the Supreme Court noted that "it has long been held that a federal court may award counsel fees to a successful plaintiff where a defense has been maintained 'in bad faith, vexatiously, wantonly, or for oppressive reasons.' " Newman v. Piggie Park Enterprises, 390 U.S. 400, 402 n. 4, 88 S.Ct. 964, 966 n. 4, 19 L.Ed.2d 1263 (1968) (quoting 6 Moore's Federal Practice 1352 (1966 ed.)). In more recent cases, the Supreme Court has nonetheless cited Vaughan as the precursor of the broader principle espoused in Newman. See Summit Valley Industries v. Local 112, United Brotherhood of Carpenters, 456 U.S. 717, 721, 102 S.Ct. 2112, 2114, 72 L.Ed.2d 511 (1982); Alyeska Pipeline Service Co. v. Wilderness Society, 421 U.S. 240, 259, 95 S.Ct. 1612, 1622, 44 L.Ed.2d 141 (1975); F.D. Rich Co. v. United States ex rel. Industrial Lumber Co., 417 U.S. 116, 129, 94 S.Ct. 2157, 2165, 40 L.Ed.2d 703 (1974); Hall v. Cole, 412 U.S. 1, 5, 93 S.Ct. 1943, 1946, 36 L.Ed.2d 702 (1973).

Although the bad faith exception is firmly established in Supreme Court precedent, its limits are not precisely defined. In the present case, the only bad faith found to exist was that inherent in the acts giving rise to the substantive claim. We are therefore faced with the question of whether the bad faith exception covers this type of bad faith.

The bad faith considered by courts construing this exception generally falls within one of three categories: (1) bad faith occurring during the course of the litigation; (2) bad faith in bringing an action or in causing an action to be brought; and (3) bad faith in the acts giving rise to the substantive claim. 4 Bad faith in the conduct of the litigation, resulting in a fee award as a sanction for abuse of the judicial process, is the most familiar type of bad faith under which fees are awarded. 5 Courts have also consistently recognized attorney fees as awardable where a meritless claim or defense is maintained in bad faith. 6 Care must be taken to distinguish a defendant's bad faith in necessitating that an action be filed or in maintaining a defense from a defendant's bad faith in the acts giving rise to the claim. This distinction may be seen in the decision in Vaughan v. Atkinson, 369 U.S. 527, 82 S.Ct. 997, 8 L.Ed.2d 88 (1962), which first established the bad faith exception. In Vaughan the defendants were not found to have acted in bad faith by causing the...

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