Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-caDC-97-07107/USCOURTS-caDC-97-07107-0/pdf.json

Parties Involved:
Kidder Peabody & Co
Appellee
Linda E. LaPrade

Liddle & Robinson, L.L.P
Appellant

Document Text:

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United States Court of Appeals

FOR THE DISTRICT OF COLUMBIA CIRCUIT

Argued May 15, 1998 Decided June 23, 1998

No. 97-7107

Linda E. LaPrade,

Liddle & Robinson, L.L.P,

Appellant

v.

Kidder Peabody & Co., Incorporated,

Appellee

Appeal from the United States District Court

for the District of Columbia

(No. 91cv03330)

Jacob A. Stein argued the cause for appellant, with whom

George A. Fisher was on the briefs.

Andrew J. Schaffran argued the cause for appellee, with

whom Kathy B. Houlihan was on the brief.

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Before: Williams, Randolph and Rogers, Circuit Judges.

Opinion for the Court filed by Circuit Judge Rogers.

Rogers, Circuit Judge: In June 1992, the district court

stayed an action brought by Linda E. LaPrade against her

former employer, Kidder Peabody & Co., because the dispute

was covered by a valid arbitration agreement. Due to various delays, the first set of arbitration sessions did not take

place until May and June of 1995 and the next set was not

scheduled to begin until November 1996. The day before the

arbitration was to resume, LaPrade's counsel, appellant Liddle & Robinson, L.L.P., obtained an ex parte order from a

New York state court staying the arbitration. Liddle &

Robinson did not inform that court of the district court's

earlier order staying the original action and retaining jurisdiction. On the motion of Kidder Peabody, the district court

lifted the stay imposed by the state court, imposed sanctions

against Liddle & Robinson under 28 U.S.C. s 1927 for its

"vexatious and dilatory tactics," and awarded Kidder Peabody

$74,951.14 in attorneys' fees. On appeal, Liddle & Robinson

contends that the district court did not have jurisdiction to

enter this order and that it abused its discretion by imposing

sanctions. We affirm.

I.

On December 31, 1991, LaPrade filed suit against Kidder

Peabody in the United States District Court for the District

of Columbia. She asserted various common law and statutory claims arising from her employment and termination by

Kidder Peabody; jurisdiction was based on diversity of citizenship under 28 U.S.C. s 1332. Because LaPrade and

Kidder Peabody had entered into an arbitration agreement,

Kidder Peabody moved to stay the action pursuant to section

3 of the Federal Arbitration Act ("Arbitration Act"), which

directs that the court "shall on application of one of the

parties stay the trial of the action until such arbitration has

been had in accordance with the terms of the agreement." 9

U.S.C. s 3 (1994). On June 24, 1992, the district court

granted Kidder Peabody's motion to stay the action pending

arbitration and retained jurisdiction, instructing "the parties

[to] notify the Court once arbitration is completed as to what

further proceedings in this Court are appropriate."

Arbitration did not proceed smoothly. After appealing the

initial stay order unsuccessfully and filing a second action in

the district court against Kidder Peabody, which was consolidated with the first and likewise stayed pending arbitration,1

LaPrade finally commenced arbitration before the National

Association of Securities Dealers ("NASD") on September 30,

1993. After extensive discovery and repeated scheduling

conflicts, the NASD held twelve hearing sessions in New

York City between May 1 and June 21, 1995, almost three

years after the initial stay order by the district court. Additional scheduling conflicts and a dispute among the members

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of the arbitration panel resulted in further delays, and the

next round of hearings was not scheduled to begin until

November 20, 1996.

The day before the hearings were set to recommence,

however, Liddle & Robinson, whom LaPrade had retained to

represent her before the NASD, filed an action in New York

state court seeking an ex parte order that "the arbitration

hearings ... be stayed and the parties referred to their court

remedies, or in the alternative, that the NASD be ordered to

disqualify the present arbitration panel, and for such other

and further relief as may be just and proper." Notably,

Liddle & Robinson did not notify the New York state court

that the federal district court had earlier entered an order

staying LaPrade's action pending arbitration but retaining

jurisdiction. The New York state court issued the requested

ex parte order staying the arbitration, and the series of nine

arbitration sessions scheduled to begin the next day was

canceled.

Informed of Liddle & Robinson's ex parte actions before

the New York state court only after the stay was granted,

__________

1 In its order of March 23, 1994, which consolidated the first

and second actions, the district court again directed the parties to

"notify the Court once arbitration is completed as to what further

proceedings in this Court are appropriate."

Kidder Peabody returned to the district court on November

25, 1996, requesting an emergency order directing LaPrade

to withdraw her petition in New York state court, holding

Liddle & Robinson in contempt, and imposing sanctions pursuant to 28 U.S.C. s 1927. The district court denied the

request for a temporary restraining order, but subsequently

issued a preliminary injunction and granted Kidder Peabody's

other requests for relief. The New York state court action,

the district court found, "constitutes an interference with the

arbitration currently pending between the parties ... [and]

an interference with the jurisdiction of this Court." Thus, the

district court enjoined LaPrade and her counsel from engaging in further proceedings before the New York state court,

lifted the stay imposed by that court, and entered sanctions

against Liddle & Robinson. On this last point, the district

court ordered that:

plaintiff's counsel, the law firm of Liddle & Robinson, ...

shall compensate Kidder, Peabody & Co., for the vexatious and dilatory tactics of plaintiff's counsel in filing ex

parte papers in the State Court proceeding, without any

notice to the State Court of the actions pending before

this Court, and without any notice to the State Court of

this Court's arbitration orders, all of which multiplied the

proceedings.

The district court directed Kidder Peabody to file a statement of "the attorneys' fees, costs, and other expenses reasonably incurred as a result of the improper activities of

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plaintiff's counsel." Thereafter, Kidder Peabody submitted a

figure of $83,279.04, based on a total of 333.5 hours of work

by six partners, seven associates, two legal assistants, and

four other staffers of Kidder Peabody's counsel. Eighty-six

percent of the hours worked by partners was attributable to

one partner, however, and eighty-nine percent of the hours

worked by associates was attributable to three particular

associates. Liddle & Robinson objected to both the district

court's decision to grant attorneys' fees and the amount

sought by Kidder Peabody. In particular, Liddle & Robinson

claimed that the award of fees was inappropriate because its

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pursuit of an ex parte state court order was a tactic previously approved by the Second Circuit in McMahon v. Shearson/American Express, Inc., 896 F.2d 17 (2d Cir. 1990); that

the attorneys' fees statement showed that Kidder Peabody's

counsel performed duplicative and excessive work (although

Liddle & Robinson did not challenge the reasonableness of

the rate charged per hour); that there was no proof that

Kidder Peabody had actually "incurred" the claimed expenses; and that an evidentiary hearing was necessary to

determine which fees and expenses were reasonably incurred.

The district court rejected Liddle & Robinson's attempts to

reargue the merits of the sanctions award but agreed that

Kidder Peabody's proposed figure for attorneys' fees required

some adjustment. The court found that Kidder Peabody's

counsel had expended an unreasonable number of hours on

the project; thus, the district court reduced the award from

the requested figure of $83,279.04 to a figure ten percent

lower: $74,951.14.

II.

Liddle & Robinson first contends that the district court

lacked jurisdiction to enter the sanctions order. Although the

district court clearly intended to retain jurisdiction over the

stayed actions, Liddle & Robinson maintains that it could not

do so under the Arbitration Act. The district court only

stayed the actions and never actually ordered the parties to

enter arbitration. Hence, Liddle & Robinson contends, it had

no jurisdiction over the arbitration proceedings in New York

City, and thus no jurisdiction to impose sanctions based on

Liddle & Robinson's conduct related to those proceedings.

Liddle & Robinson's contention turns on the distinction

between sections 3 and 4 of the Arbitration Act. Section 3

empowers a district court only to stay an action, leaving to

the claimant the choice of arbitrating the claims or abandoning them.2 See 9 U.S.C. s 3; see also The Anaconda v.

__________

2 Section 3 of the Arbitration Act provides:

American Sugar Refining Co., 322 U.S. 42, 45 (1944). Section 4 allows the court to issue orders directing arbitration.3

See 9 U.S.C. s 4 (1994). The district court stayed the actions

brought by LaPrade against Kidder Peabody under section 3,

and did not direct arbitration under section 4; hence, Liddle

& Robinson contends that the district court had "no power to

superintend and direct the pending arbitration in New York

City."

However, the district court did not have to rely upon the

Arbitration Act for jurisdiction. The district court's jurisdiction derived from the original diversity suit, which was only

__________

If any suit or proceeding be brought in any of the courts of the

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United States upon any issue referable to arbitration under an

agreement in writing for such arbitration, the court in which

such suit is pending, upon being satisfied that the issue involved in such suit or proceeding is referable to arbitration

under such an agreement, shall on application of one of the

parties stay the trial of the action until such arbitration has

been had in accordance with the terms of the agreement,

providing the applicant for the stay is not in default in proceeding with such arbitration.

9 U.S.C. s 3.

3 Section 4 of the Arbitration Act provides, in relevant part:

A party aggrieved by the alleged failure, neglect, or refusal of

another to arbitrate under a written agreement for arbitration

may petition any United States district court which, save for

such agreement, would have jurisdiction under title 28, in a civil

action or in admiralty of the subject matter of a suit arising out

of the controversy between the parties, for an order directing

that such arbitration proceed in the manner provided for in

such agreement.... The court shall hear the parties, and

upon being satisfied that the making of the agreement for

arbitration or the failure to comply therewith is not in issue,

the court shall make an order directing the parties to proceed

to arbitration in accordance with the terms of the agreement.

The hearing and proceedings, under such agreement, shall be

within the district in which the petition for an order directing

such arbitration is filed.

9 U.S.C. s 4.

stayed (not dismissed) pending the results of arbitration.

While Liddle & Robinson is correct that section 3 of the

Arbitration Act was not itself a source of jurisdiction for the

district court to consider Kidder Peabody's motion for sanctions, see Moses H. Cone Memorial Hosp. v. Mercury Constr.

Corp., 460 U.S. 1, 25 n.32 (1983), it also did not divest the

district court of jurisdiction over the case: "The section

obviously envisages action in a court on a cause of action and

does not oust the court's jurisdiction of the action, though the

parties have agreed to arbitrate." The Anaconda, 322 U.S. at

44; accord Morris v. Morgan Stanley & Co., 942 F.2d 648,

653-54 (9th Cir. 1991); Transportes Caribe, S.A. v. M/V

Feder Trader, 860 F.2d 637, 638-39 (5th Cir. 1988); see also

Merill Lynch, Pierce, Fenner & Smith, Inc. v. Cunningham,

736 F. Supp. 887, 889 (N.D. Ill. 1990).

Even if Liddle & Robinson means to contend that, although

the district court still had jurisdiction over the original suit,

its jurisdiction was suspended until the arbitration was complete, the contention similarly fails. The Arbitration Act

contemplates that courts should not interfere with arbitrations by making interlocutory rulings, see, e.g., Prima Paint

Corp. v. Flood & Conklin Mfg. Co., 388 U.S. 395, 404 (1967);

In re Arbitration Between Michaels & Mariforum Shipping,

S.A., 624 F.2d 411, 414 (2d Cir. 1980), but this general

proposition does not aid Liddle & Robinson. The rationale

behind the principle disfavoring judicial interference with

arbitration supports what the district court did here. The

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principle is based on the "congressional purpose that the

arbitration procedure, when selected by the parties to a

contract, be speedy and not subject to delay and obstruction

in the courts." Prima Paint Corp., 388 U.S. at 404; accord

Moses H. Cone, 460 U.S. at 23. In the instant case, the

district court stayed LaPrade's actions, instructing her, in

effect, that she could not litigate her claims directly in court,

but could only arbitrate them or abandon them. If a party in

her position could subsequently go to another court in an

attempt to avoid the effect of the order, that party would

have an easy route to delay and obstruct the proceedings.

The Arbitration Act contemplates no such illogical result and

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Liddle & Robinson can point to no persuasive authority

suggesting that conclusion.

Rather than interfering with the arbitration proceeding, the

district court was attempting to protect that proceeding and

the effect of its own order. The district court had ordered

LaPrade that she could not pursue her civil remedies without

first submitting to arbitration but, in clear contradiction of

that order, Liddle & Robinson appealed to the state court to

stay the arbitration and remit the parties to judicial remedies,

without even informing that court of the district court's

instructions. Clearly, the district court had jurisdiction to

address this situation: it retained jurisdiction over the original suit, and the Arbitration Act did not divest it of jurisdiction to ensure that the parties adhered to its previous order

under the Arbitration Act. Liddle & Robinson's contention

that the district court was without jurisdiction to impose

sanctions is meritless.4

III.

The question remains whether the district court abused its

discretion in imposing sanctions for Liddle & Robinson's

"vexatious and dilatory tactics" under 28 U.S.C. s 1927, which

provides:

Any attorney or other person admitted to conduct cases

in any court of the United States or any Territory

thereof who so multiplies the proceedings in any case

__________

4 The Arbitration Act does not provide that the district court

loses venue if the arbitration proceeds in another judicial district.

See, e.g., Apex Plumbing Supply, Inc. v. U.S. Supply Co., 1998 WL

188633, at *2-*4 (4th Cir. Apr. 22, 1998); Smiga v. Dean Witter

Reynolds, Inc., 766 F.2d 698, 706 (2d Cir. 1985). We have no

occasion to address whether other state or federal courts could have

provided Kidder Peabody with similar relief. It suffices to note

that once venue was established in regard to institution of the

lawsuit, see Minnesota Mining & Mfg. Co. v. Eco Chem., Inc., 757

F.2d 1256, 1264 (Fed. Cir. 1985), the district court did not lose

venue because the parties arbitrated elsewhere.

unreasonably and vexatiously may be required by the

court to satisfy personally the excess costs, expenses, and

attorneys' fees reasonably incurred because of such conduct.

28 U.S.C. s 1927 (1994). Liddle & Robinson contends that

the district court abused its discretion in imposing sanctions,

in setting the level of the attorneys' fees award, and in

refusing to hold an evidentiary hearing on the attorneys' fees

issue. This court reviews a district court's decision to award

attorneys' fees under 28 U.S.C. s 1927, and the way it

chooses to set the award, only for abuse of discretion. See

Copeland v. Marshall, 641 F.2d 880, 901 (D.C. Cir. 1980) (en

banc). Although this court has not directly established the

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standard of review for a district court's decision whether to

hold an evidentiary hearing on an attorneys' fees application,

the appropriate standard again appears to be abuse of discretion. See D.D.C.R. 108(f); McLaughlin v. Bradlee, 803 F.2d

1197, 1205-06 (D.C. Cir. 1986); Copeland, 641 F.2d at 905.

We find none.

A.

First, Liddle & Robinson contends that the district court's

decision to impose sanctions under 28 U.S.C. s 1927 was an

abuse of discretion because the decision to seek an ex parte

order in New York state court was justified by precedent and

thus neither "unreasonable" nor "vexatious" under the statute. Liddle & Robinson maintains that the Second Circuit

specifically approved this tactic in a substantially similar case,

McMahon v. Shearson/American Express, Inc., 896 F.2d 17

(2d Cir. 1990), and thus that Liddle & Robinson's actions

could not have been so unreasonable as to merit sanctions.

A review of McMahon shows how different that case is

from this one. Plaintiffs Eugene and Julia McMahon sued

defendant Shearson/American Express ("Shearson") in district court based on allegations of fraud and misrepresentation in its management of their profit sharing and pension

plans. See id. at 19. Upon opening their accounts, the

McMahons had signed customers' agreements that included

an arbitration provision, and after they filed their complaint,

Shearson sent them a letter indicating its intent to file a

motion to compel arbitration and requesting that they select

an arbitral forum, as was their right under the arbitration

provision. See id. The McMahons responded that the issue

of the arbitral forum was premature and that they would

select a forum only after a court declared the arbitration

provision enforceable, at which point Shearson, claiming that

the McMahons had waived their right, chose the New York

Stock Exchange ("NYSE") as the forum. See id. On Shearson's motion, the district court stayed certain portions of the

action under section 3 of the Arbitration Act. See id. at 19-

20. When the appeals from that order were completed, the

issue of arbitral forum resurfaced: the McMahons claimed

that they retained the option to choose a forum, while Shearson maintained that its previous selection of the NYSE was

binding. See id. at 20. Declining to resolve the issue, the

district court directed the parties to reach agreement on their

own, but the two sides subsequently began two separate

arbitration proceedings--Shearson at the NYSE and the

McMahons at the American Arbitration Association. See id.

At that point, seeking to vindicate his clients' right to choose

the arbitral forum, the McMahons' counsel filed an ex parte

motion in New York state court for an order to show cause

why the NYSE arbitration should not be stayed. See id.

The defendant sought relief from the district court, and the

McMahons' counsel agreed to postpone the proceedings before the state court. See id. Ruling that the defendant's

initial election of the NYSE forum was valid, the district

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court imposed sanctions against plaintiffs' counsel under both

Federal Rule of Civil Procedure 11 and 28 U.S.C. s 1927.

See id. at 20-21.

Because of its conclusion that the actions of the McMahons'

counsel had not been taken in bad faith, the Second Circuit

reversed the imposition of sanctions under 28 U.S.C. s 1927.

See id. at 23-24. Noting that the district court had expressly

declined to decide the issue of the arbitral forum, the court

sketched the counsel's unpalatable options:

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Examining [counsel's] alternatives for preserving his

clients' right to choose a forum, we conclude that his

choices were limited. One was a return to federal

court--where the judge had already refused to rule.

Another was to seek relief from state court, pursuant to

a New York statute governing arbitration.

Id. at 23. The court concluded that counsel's "decision to

involve the state court in the dispute was perhaps unorthodox, but under the circumstances ... [could not] be characterized either as subterfuge or an attempt to evade the

jurisdiction of the federal court," id., but rather seemed "a

good faith attempt to preserve what counsel believed to be his

clients' right to choose an arbitral forum," id. at 24.

McMahon is distinguishable from the instant case in many

important respects. Perhaps most notably, the McMahons'

counsel went to the state court for resolution of an issue the

district court had declined to settle; in the instant case, by

contrast, Liddle & Robinson went to state court for relief that

was plainly inconsistent with the previous district court order.

The McMahons' counsel filed for an ex parte order in order to

protect the arbitration procedure by establishing the correct

arbitral forum, not to circumvent the arbitration altogether;

as the Second Circuit emphasized, the attempt to secure an

ex parte order was not "an attempt to evade the jurisdiction

of the federal court," id. at 23. Here the opposite appears

true. See supra Part II. Furthermore, the timing of Liddle

& Robinson's excursion to state court was more egregious:

the McMahon's counsel went to state court at the start of the

arbitration, see McMahon v. Shearson/American Express

Inc., 709 F. Supp. 369, 372 (S.D.N.Y. 1989), rev'd, 896 F.2d 17

(2d Cir. 1990), whereas Liddle & Robinson sought state court

relief after extensive discovery had been completed, on the

day before hearings were to recommence after a seventeenmonth delay. Finally, unlike Liddle & Robinson, the McMahons' counsel at least informed the state court of the district

court's role in the proceedings, although the district court

found the representations to the state court deceptive. See

id. at 375 n.22. McMahon does not justify Liddle & Robinson's actions.

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Four and one-half years after the initial suit was stayed

and the day before hearings were to restart after seventeen

months of delay, Liddle & Robinson filed an ex parte action in

New York state court to stay the hearings, without informing

that court of the district court's orders or the district court's

ongoing jurisdiction. Under the circumstances, the district

court was well within its discretion to impose sanctions under

28 U.S.C. s 1927.

B.

Second, Liddle & Robinson contends that, even if the

district court could have imposed sanctions, it did not support

its order with sufficient findings of fact. This court has not

yet established whether the standard for imposition of sanctions under 28 U.S.C. s 1927 should be "recklessness" or the

more stringent "bad faith." See United States v. Wallace,

964 F.2d 1214, 1218-19 (D.C. Cir. 1992). Liddle & Robinson

contends that, no matter the proper standard, the district

court did not make findings of fact sufficient to support its

decision to sanction. To the contrary, the record makes clear

that, no matter which standard applies, the district court

found that Liddle & Robinson's actions qualified.

Although the district court concluded that Liddle & Robinson's actions were "vexatious and dilatory" and "improper,"

and clearly believed that Liddle & Robinson was acting in bad

faith, Liddle & Robinson objects to the district court's failure

actually to make a finding of recklessness or bad faith. In

the key passage in the order imposing sanctions, the court

ordered,

pursuant to 28 U.S.C. s 1927, that plaintiff's counsel, the

law firm of Liddle & Robinson, shall compensate Kidder,

Peabody & Co., for the vexatious and dilatory tactics of

plaintiff's counsel in filing ex parte papers in the State

Court proceeding, without any notice to the State Court

of the actions pending before this Court, and without any

notice to the State Court of this court's arbitration

orders, all of which multiplied the proceedings.

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Later, in the order setting the award, the court specifically

found that Liddle & Robinson's actions "unreasonably and

vexatiously" multiplied the proceedings. These passages certainly imply that the district court thought the firm was

acting in bad faith, but Liddle & Robinson is correct that the

district court never stated this explicitly in its orders.

The fact that the district court never explicitly said the

words "bad faith" or "recklessness" does not demonstrate an

abuse of discretion: "these words are not talismans required

for affirmance." Eisenman v. Peoro (In re Peoro), 793 F.2d

1048, 1051 (9th Cir. 1986). According to the language of 28

U.S.C. s 1927, the district court must find that "the offending

attorney's multiplication of the proceedings was both 'unreasonable' and 'vexatious.' " Travelers Ins. v. St. Jude Hosp. of

Kenner, La., 38 F.3d 1414, 1416-17 (5th Cir. 1994) (quoting

FDIC v. Conner, 20 F.3d 1376, 1384 (5th Cir. 1994)). For

such a finding to be valid, "evidence of recklessness, bad faith,

or improper motive must be present." Id. at 1517. Here the

district court made the requisite findings that Liddle &

Robinson's actions were unreasonable and vexatious, and

there was sufficient evidence of bad faith and recklessness to

support these findings. Moreover, given the ample evidence

that the district court believed Liddle & Robinson acted in

bad faith and recklessly,5 it would be an empty formalism to

find an abuse of discretion simply because the district court

failed to invoke the magic words "bad faith" or "recklessness," and we decline to do so.

C.

Third, Liddle & Robinson contends that, even if sanctions

were appropriate, the district court abused its discretion in

awarding $74,951.14. In particular, Liddle & Robinson contends that the statement filed by Kidder Peabody was so

"outrageously unreasonable" that, under Environmental De-

__________

5 In numerous pointed statements to a representative of Liddle

& Robinson in two hearings, the district court made clear its view

that the facts supported an award of attorneys' fees whether the

proper standard was recklessness or bad faith.

fense Fund, Inc. v. Reilly, 1 F.3d 1254 (D.C. Cir. 1993), the

district court ought to have denied Kidder Peabody any

award at all. Id. at 1258. Instead, considering the proposed

fee award of $83,279.04 based on 333.5 hours of work by

Kidder Peabody's counsel, the district court awarded

$74,951.14, a figure ten percent below Kidder Peabody's

lodestar figure.

Admittedly, 333.5 hours of work seems a high figure for

actions taken in response to Liddle & Robinson's ex parte

action in state court, and it seems a bit excessive that six

partners, seven associates, two legal assistants, and four

other staffers worked on the matter. Although Liddle &

Robinson did not challenge the rate charged per hour, the

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district court agreed that the basis for the resulting fees was

unreasonable "both in terms of the number of attorneys and

the number of hours." Faced with these unreasonable figures, the district court heeded this court's decision in Copeland v. Marshall, 641 F.2d 880 (D.C. Cir. 1980) (en banc), in

which the court held that a district court judge--"recognizing,

as he did, that some duplication or waste of effort had

occurred--did not err in simply reducing the proposed 'lodestar' fee by a reasonable amount without performing an itemby-item accounting." Id. at 903. Although a district court

might in some circumstances consider a fee request, or a

particular item within a fee request, so "outrageously unreasonable" that outright denial of the request or an item within

the request would be appropriate, Environmental Defense

Fund, 1 F.3d at 1258 (quoting Brown v. Stackler, 612 F.2d

1057, 1059 (7th Cir. 1980)) (internal quotation marks omitted),

the district court's decision to award a lesser figure than the

lodestar request, rather than denying the request outright,

was within the district court's discretion.6 See id. at 1260;

Copeland, 641 F.2d at 900-08.

__________

6 Liddle & Robinson's assertion that the record contains no

proof that Kidder Peabody actually "incurred" these costs (that is,

actually paid its counsel for services rendered) is belied by a

certificate filed by Kidder Peabody's counsel stating that Kidder

Peabody paid its counsel $83,279.04. See Fed. R. App. P. 10(a); D.C.

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D.

Nor is Liddle & Robinson's position that the district court

abused its discretion by not holding an evidentiary hearing on

the attorneys' fees issue after the court decided to impose

sanctions persuasive. This failure, Liddle & Robinson insists,

violated due process because 28 U.S.C. s 1927 is a punitive

statute and, hence, Liddle & Robinson should have been

allowed to inquire at an evidentiary hearing into what expenses were actually incurred and how reasonable such expenses were.

Although a hearing may certainly be "useful" in some

instances, see Copeland, 641 F.2d at 905, and "it is perhaps

conceivable that due process could require a hearing on

sanctions ... in certain circumstances," a hearing is not

required in all circumstances. McLaughlin, 803 F.2d at 1205.

Regarding sanctions under Federal Rule of Civil Procedure

11, the court stated in McLaughlin:

The trial court, as a primary participant in the proceedings, had already observed those elements of the litigation most relevant to the criteria for imposing sanctions

under the rule, most notably McLaughlin's conduct during the trial.... The opportunity the District Court

provided McLaughlin to respond to the defendants' applications for fees and costs gave him ample opportunity to

set forth whatever objections he had to the level of

sanctions imposed.

Id. at 1205-06 (citation omitted). Here, as in McLaughlin,

the party against whom sanctions have been imposed has had

ample opportunity to set forth arguments in opposition to

sanctions. Liddle & Robinson has no valid objection based in

due process, and the district court did not abuse its discretion

in deciding that a hearing was unnecessary.

Accordingly, we hold that the district court had jurisdiction

to impose sanctions upon Liddle & Robinson and that in so

doing it did not abuse its discretion, and we affirm.

__________

Cir. R. 30(b). Liddle & Robinson has introduced no contradictory

evidence.

USCA Case #97-7107 Document #361690 Filed: 06/23/1998 Page 15 of 15