Southwest Marine, Inc. v. Campbell Industries

• Decision Date: 25 February 1987
• Docket Number: No. 85-6157,85-6157
• Citation: 811 F.2d 501
• Parties: 1987-1 Trade Cases 67,566 SOUTHWEST MARINE, INC., a corporation, Plaintiff-Appellant, v. CAMPBELL INDUSTRIES, a corporation, et al., Defendants, Triple "A" Machine Shop, Inc., a corporation, Defendant-Appellee.
• Court: U.S. Court of Appeals — Ninth Circuit

Page 501

811 F.2d 501

1987-1 Trade Cases 67,566

SOUTHWEST MARINE, INC., a corporation, Plaintiff-Appellant, v. CAMPBELL INDUSTRIES, a corporation, et al., Defendants, Triple "A" Machine Shop, Inc., a corporation, Defendant-Appellee.

No. 85-6157.

United States Court of Appeals, Ninth Circuit.

Argued and Submitted July 11, 1986.

Decided Feb. 25, 1987.

Fredman, Silverberg and Lewis, Inc., Michael J. Roberts, San Diego, Cal., for plaintiff-appellant.

Eugene Crew, San Francisco, Cal., for defendant-appellee.

Appeal from the United States District Court for the Southern District of California; Earl B. Gilliam, Judge.

Prior report: 9th Cir., 796 F.2d 291.

Before CANBY, REINHARDT and NOONAN, Circuit Judges.

ORDER

Triple "A" Machine Shop's suggestion for en banc consideration is rejected. A vote was taken, but a majority of the active judges were not in favor of en banc consideration.

OPINION

REINHARDT, Circuit Judge:

The petition for rehearing is denied. Triple "A" Machine Shop's reliance on Kentucky v. Graham, 473 U.S. 159, 105 S.Ct. 3099, 87 L.Ed.2d 114 (1985), is misplaced. Kentucky v. Graham held only that a government entity cannot be held liable in an action against a government official in his personal capacity. The decision in no way alters or affects the basic rule that a prevailing party may be awarded attorneys' fees pursuant to Section 1988. Most important of all, the Court expressly disavowed any intent to change the current law with respect to the criteria for, or definition of, a "prevailing party". As the Court explicitly said: "We express no view as to the nature or degree of success necessary to make a plaintiff a prevailing party. See Maher v. Gagne, 448 U.S. 122, 100 S.Ct. 2570, 65 L.Ed.2d 653 (1980)." 105 S.Ct. at 3105 n. 9.

Thus the law of the case, Southwest Marine v. Campbell Industries, 732 F.2d 744 (9th Cir.1985), remains applicable. Moreover, in our view, that law was properly decided. For reasons stated in the above cited opinion, Southwest Marine was the prevailing party.

NOONAN, Circuit Judge, with whom GOODWIN, SNEED, and J. BLAINE ANDERSON, Circuit Judges, join dissenting from the denial of en banc rehearing:

The opinion of the court in this case is defensible if either of the following propositions is valid:

1. A losing litigant is entitled to be paid his attorneys' fees by the winning litigant.

2. Once a court makes a serious mistake, the court should not correct the mistake, even though its error is called to its attention and the litigation is still in progress.

The present case treats the award of fees under the antitrust laws, 15 U.S.C. Sec. 26, as parallel to awards under 42 U.S.C. Sec. 1988. In Kentucky v. Graham, 473 U.S. 159, 105 S.Ct. 3099, 87 L.Ed.2d 114 (1985) a unanimous decision of the Supreme Court, Justice Marshall writing for the Court made a number of statements on court-awarded attorneys' fees under 42 U.S.C. Sec. 1988,--statements which very strictly read could be taken as dicta but which form the warp and woof of the Court's reasoning and which, because of the precedential force of Sec. 1988 cases, are highly relevant here. Kentucky v. Graham is of a breadth and weight that makes disregard of its teaching all but direct defiance of the Supreme Court.

In Kentucky v. Graham, Justice Marshall for the Court wrote:

... It is clear that the logical place to look for recovery of fees is to the losing party--the party legally responsible for relief on the merits.

Id. at 3104.

Justice Marshall also wrote:

That a plaintiff has prevailed against one party does not entitle him to fees from another party, let alone from a non-party.

Id. at 3106.

Justice Marshall further wrote:

... fee and merits liability run together.

Id. at 3108.

In the present case, recovery of fees has been looked to in the illogical place--the winning party, the party found to be not responsible for relief on the merits.

In the present case, the plaintiff prevailed against one party by means of settlement and is now awarded fees from another party which did not settle, a party which in fact did prevail against the plaintiff.

In the present case, fee and merits liability do not run together, but liability for the fee is attached to a defendant that has won on the merits.

The only conceivable justification for this bizarre result is that the law of the case in an earlier phase of this litigation had established that the victorious defendant should be liable. In the earlier phase, a per curiam opinion stated that "the defendants decided to permit Southwest Marine to use the dock under an assignment from National Steel & Shipbuilding Co." Southwest Marine, Inc. v. Campbell Industries, 732 F.2d 744, 747 (9th Cir.1984). The opinion went on to say that the plaintiff had "prevailed within the meaning of 42 U.S.C. Sec. 1988." The implication of the opinion was that the plaintiff had prevailed against both defendants.

Two major difficulties exist in treating the law of the case thus set out as binding now:

First, the law of the case is not binding when the law changes. Kentucky v. Graham clarified the law of court-awarded attorneys' fees in such a way that it should be read as changing the law subsequent to this court's earlier decision. Accordingly, the earlier opinion should give way.

Second, the law of the case does not have the same binding force as res judicata. As Justice Holmes succinctly put it:

In the absence of statute the phrase, law of the case, as applied to the effect of previous orders on the later action of the court rendering them in the same case, merely expresses the practice of courts generally to refuse to reopen what has been decided, not a limit to their power.

Messenger v. Anderson, 225 U.S. 436, 444, 32 S.Ct. 739, 740, 56 L.Ed. 1152 (1912). The difference between the law of the case and res judicata is that "one directs discretion, the other supersedes it and compels judgment." Southern Railway Co. v. Clift, 260 U.S. 316, 319, 43 S.Ct. 126, 127, 67 L.Ed. 283 (1922).

We are dealing then with what is properly a matter of discretion--discretion so vague that the law of the...