Opinion ID: 740690
Heading Depth: 1
Heading Rank: 1

Heading: Bryant's appeal.

Text: 4 Bryant appeals the denial of § 11(e) attorneys' fees from those plaintiffs who never communicated with him before investing, i.e. Calvin Klein and his partner Barry K. Schwartz d.b.a. Barry K. Schwartz Partnership, Kenneth Franzheim II, Zenya Yoshida d.b.a. Shadai Farms, Earl H. Schultz, Robert D. Stratmore, and Richard D. Schultz (collectively the Klein appellees). 5
6 The Federal Rules of Appellate Procedure require that a party file a notice of appeal within 30 days after the date of entry of the judgment or order appealed from. Fed.R.App.P. 4(a)(1). Bryant's notice of appeal was filed more than thirty days after the order denying Bryant's motion for attorneys' fees against appellees Schultz, Barry K. Schwartz Partnership, Franzheim and Yoshida. The Klein appellees argue that therefore the appeal is not timely as to that set of appellees. 7 However, appeal is permitted under 28 U.S.C. § 1291 only when there is a final judgment that resolves all of the consolidated actions unless a [Rule] 54(b) certification is entered by the district court. Huene v. United States, 743 F.2d 703, 705 (9th Cir.1984). The final orders in Stratmore v. Combs and Central Bank & Trust Co. v. McGonigle were not filed until November 22, 1996. Bryant filed a notice of appeal within thirty days--on December 18, 1996. Because the Stratmore and McGonigle cases were consolidated for trial with other cases herein appealed, under Huene Bryant could not appeal until November 22, 1996. The thirty-day clock did not start until then. Bryant's appeals are therefore timely. 8 B. Did the district court act within its discretion in declining to award Bryant attorneys' fees under § 11(e)? 9
10 District courts may award attorneys' fees under § 11(e) for claims which bordered on the frivolous. Layman v. Combs, 994 F.2d 1344, 1353 (9th Cir.1992), cert. denied, 114 S.Ct. 303 (1993). 11 This court reviews the district court's decision not to award attorneys' fees under § 11(e) for abuse of discretion: 12 The statutory language leaves the district court broad discretion to consider and balance the relevant facts and policies. We will not disturb the district court's exercise of discretion unless we have a definite and firm conviction that the court committed a clear error of judgment in the conclusion it reached after a weighing of the relevant factors. 13 Stitt v. Williams, 919 F.2d 516, 531 (9th Cir.1990). 14
15 On June 15, 1988, the U.S. Supreme Court defined seller for purposes of § 12(1) in Pinter v. Dahl, 486 U.S. 622 (1988). The Court rejected the Ninth Circuit's substantial factor test and defined seller as one who successfully solicits the purchase, motivated at least in part by a desire to serve his own financial interests or those of the securities owner. Id. at 647. In September 1988 Bryant moved for summary judgment on the § 12 claims, which the district court granted in December 1988, ruling that Bryant was not a seller under the new Pinter standard. 16 Under the pre-Pinter standard for seller, [t]he test is whether the injury to the plaintiff flowed directly and proximately from the actions of the defendant. SEC v. Seaboard Corp., 677 F.2d 1289, 1294 (9th Cir.1982). A defendant's actions must be both necessary to and a substantial factor in the sales transaction. SEC v. Murphy, 626 F2d 633, 650 (9th Cir.1980). 17 Under either standard, Bryant was clearly not a seller for purposes of § 12. Bryant never spoke to any of the Klein appellees before they invested; nor did he draft the private placement memorandum or its supplement. He had no effect on their investment decisions. It is thus impossible to argue that he was both necessary and a substantial factor in the sales transaction, or that he successfully solicited the purchases in any way. The § 12 claims against Bryant bordered on the frivolous; the district court abused its discretion in denying attorneys' fees to Bryant. We thus remand for the district court to issue an appropriate award of attorneys' fees to Bryant. 18
19 In July 1987 this court announced that it no longer recognized a private right of action under § 17(a). In re Washington Pub. Power Supply Sys. Sec. Litig. (WPPSS ), 823 F.2d 1349, 1358 (9th Cir.1987). Since the Klein appellees consented to the dismissal of their § 17 claims as soon as WPPSS rendered them meritless, the district court did not abuse its discretion in denying attorneys' fees as to these claims. 20