Court Opinion

ID: 2964300
Source: CourtListenerOpinion
Date Created: 2015-09-21 21:23:40.90936+00
Date Added: 2024-06-11T11:42:53.906314
License: Public Domain

USCA1 Opinion

	

                            UNITED STATES COURT OF APPEALS
                            UNITED STATES COURT OF APPEALS
                                FOR THE FIRST CIRCUIT
                                FOR THE FIRST CIRCUIT

                              _________________________

          Nos. 95-2286
               95-2287
               95-2288

                 IN RE:  THREE ADDITIONAL APPEALS ARISING OUT OF THE

                     SAN JUAN DUPONT PLAZA HOTEL FIRE LITIGATION.

                              _________________________

                    APPEALS FROM THE UNITED STATES DISTRICT COURT

                           FOR THE DISTRICT OF PUERTO RICO

                 [Hon. Raymond L. Acosta, Senior U.S. District Judge]
                                          __________________________

                              _________________________

                                        Before

                                Selya, Cyr and Lynch,

                                   Circuit Judges.
                                   _______________

                              _________________________

               Peter  B. Ackerman, with whom  W. Mark Wood  and O'Melveny &
               __________________             ____________      ___________
          Myers were  on brief, for  appellants California Union  Ins. Co.,
          _____
          Central Nat'l  Ins. Co. of Omaha, Ins. Co. of N. Am., and Pacific
          Employers Ins. Co.
               Paul K. Connolly, Jr., with whom Damian R. LaPlaca, LeBoeuf,
               _____________________            _________________  ________
          Lamb, Greene & MacRae, L.L.P., Andrew K. Epting, Jr., G. Trenholm
          _____________________________  _____________________  ___________
          Walker,  and The Wise Law  Firm were on  brief, for the remaining
          ______       __________________
          appellants.
               Joseph L. Golden for appellees Tertiary, Inc. et al.
               ________________
               Theodore  A. Pianko and Christie, Parker & Hale on brief for
               ___________________     _______________________
          appellees Hotel Systems International, et al.

                              _________________________

                                   August 19, 1996

                              _________________________

                    SELYA, Circuit  Judge.   These appeals  commemorate the
                    SELYA, Circuit  Judge.
                           ______________

          latest flight of the phoenix that rises repeatedly from the ashes

          of the tragic fire that engulfed the San  Juan Dupont Plaza Hotel

          a  decade ago.   Today,  we review  the district  court's actions

          following the remand that we ordered  in an earlier opinion.  See
                                                                        ___

          In re Two Appeals Arising Out  of the San Juan Dupont Plaza Hotel
          _________________________________________________________________

          Fire Litig.,  994 F.2d 956 (1st  Cir. 1993).  Finding,  as we do,
          ___________

          that  the  district  court's   determinations  comport  with  the

          parameters  that we set in  Two Appeals and  fall squarely within
                                      ___________

          the realm of judicial discretion, we affirm.

          I.  BACKGROUND
          I.  BACKGROUND

                    We sketch  the background of  these appeals,  cognizant

          that  readers who hunger for more detail  can find it in a myriad

          of reported cases, including our earlier opinion.  See, e.g., id.
                                                             ___  ____  ___

          at 959-60.

                    The  sprawling litigation  that  burst  forth from  the

          smoldering  embers  of  the  charred hotel  encompassed  wrongful

          death, personal injury, property damage, and other claims brought

          by more  than 2,000 plaintiffs against more  than 200 defendants.

          In  an  effort  to tame  this  behemoth  and  to orchestrate  the

          proceedings,  the district  court  devised  an  innovative  case-

          management  system.    The  system included  the  appointment  of

          liaison  counsels (to  facilitate interactions  both between  the

          court and the legion  of lawyers linked to the litigation as well

          as  among  the  lawyers themselves);  the  formation  of a  Joint

          Discovery Committee ("JDC") to coordinate  discovery initiatives;

                                          2

          and  the creation  of a  Joint Document  Depository ("JDD")  as a

          resting  place for  all pleadings,  discovery materials,  and the

          like.  See  id. at 959.  To pay  for this case-management system,
                 ___  ___

          the trial judge imposed mandatory assessments on all litigants.

                    The  appellants  (whom  we  shall  call  "the  pre-fire

          insurers")  comprise thirteen insurance companies that had issued

          liability policies to firms which eventually became defendants in

          the underlying  litigation.1   The quondam insureds  settled with

          various  claimants  and  then  sued  the  pre-fire  insurers  for

          indemnification,   notwithstanding  that  all  the  policies  had

          expired  prior  to the  conflagration.   Not  to be  outdone, the

          original  plaintiffs  joined  the  pre-fire  insurers  as  direct

          defendants.  Though they had been brought late into the fray, the

          district court levied an assessment against each pre-fire insurer

          for a standard "defendant's share" (which, over time, amounted to

          roughly $41,500).   Like all such  assessments, these funds  were

          slated  for use  in defraying  the  expenses associated  with the

          case-management scheme.

                    Fairly early  in the game, the  pre-fire insurers moved

          for summary judgment on all claims against them.  After a lengthy

          interval, the  district court  granted their motions  but ordered

          sua sponte that  they bear their own  costs.  The court  afforded
          ___ ______

          the pre-fire insurers no  opportunity to be heard.   Moreover, it

          did not specifically mention the cost-sharing assessments.
                              
          ____________________

               1Nineteen  pre-fire  insurers  were  sued.    Only  fourteen
          appealed.  One of  them, Puerto Rico American Insurance  Co., has
          since capitulated.

                                          3

                    The pre-fire insurers appealed the denial of costs.  In

          deciding  those appeals, we ruled, inter alia, that a trial court
                                             _____ ____

          has the power to reallocate monetary assessments imposed  as part

          of  a case-management  system.   See  id.  at 965.    Because the
                                           ___  ___

          district court did not  give the pre-fire insurers a  fair chance

          to seek reallocation  of those  costs, we remanded  so that  they

          might   ask  the   district  court   to  determine   whether  the

          circumstances  warranted  some  redistribution  of   the  payment

          burden.  See id. at 969.  The pre-fire insurers made the request,
                   ___ ___

          but, in the end, it went  unrequited.  See In re San Juan  Dupont
                                                 ___ ______________________

          Plaza  Hotel Fire Litig., MDL-721, Order No. 581 (D.P.R. Aug. 17,
          ________________________

          1995).

                    On appeal,  the  pre-fire  insurers  contend  that  the

          district court ignored the guideposts  we erected in Two  Appeals
                                                               ____________

          for  evaluating case-management  cost-reallocation claims.   They

          also contend that the  lower court failed to recognize  that they

          had  established a prima  facie case for  reallocation.  Finally,

          they  complain that  they did  not receive  any benefit  from the

          case-management system, and that, therefore, the court improperly

          refused to relieve them from the standardized assessments.2
                              
          ____________________

               2In a reply brief, certain of the pre-fire insurers complain
          that they have not  been given access to the  depository accounts
          to determine  how funds were  spent, or how  much, if  any, money
          remains on  hand.   They develop no  legal argument  out of  this
          complaint, and it is beyond peradventure that we will not address
          an  issue when the party raising it  fails to treat it seriously.
          See, e.g.,  United States v. Zannino,  895 F.2d 1, 17  (1st Cir.)
          ___  ____   _____________    _______
          (describing the  "settled appellate rule that  issues adverted to
          in  a  perfunctory  manner,   unaccompanied  by  some  effort  at
          developed argumentation,  are deemed waived"),  cert. denied, 494
                                                          _____ ______
          U.S. 1082 (1990).

                                          4

          II.  DISCUSSION
          II.  DISCUSSION

                    Because  the   district  court   has  spelled   out  an

          acceptable basis for its cost-sharing orders and for  its refusal

          to  grant a  special dispensation  to the  pre-fire  insurers, we

          affirm principally on the strength of its rescript, adding only a

          few amplificative comments.

                    First:     The   pre-fire  insurers   have  incorrectly
                    First:
                    _____

          identified the  legal standard applicable to  appellate review of

          Order  No. 581.  They  insist that plenary  review is appropriate

          here  because  the  trial  judge ignored  and/or  mishandled  the

          general  guides for evaluating  cost-reallocation claims  that we

          limned in Two Appeals, thereby committing an error of law.   This
                    ___________

          argument elevates form over substance.

                    In Two Appeals we delineated several factors that might
                       ___________

          be  considered in  mulling  whether  to reallocate  court-ordered

          case-management expenses.  See  994 F.2d at 966-68.   Although we
                                     ___

          hoped  that these suggestions would provide "a modicum of general

          guidance  to the  district courts," id.  at 967, we  made it very
                                              ___

          clear that the trier's judgment is inevitably a critical  element

          in determining which factors have relevance in a particular case,

          what other factors may  be pertinent, and what weights  to assign

          to various factors.  In that connection we wrote:

                    By definition,  cost-sharing orders originate
                    with the district court as a component of the
                    court's case-management function.   Given the
                    district  judge's  intimate knowledge  of the
                    circumstances  under  which the  imposts were
                    conceived,  his  familiarity with  the nature
                    and  purposes of  the assessments,  his front
                    row seat throughout  the litigation, and  his

                                          5

                    matchless ability to measure the benefits and
                    burdens  of cost-sharing  to  the parties  in
                    light  of  the   litigation's  progress   and
                    stakes,  we are  convinced that  the district
                    judge has the coign of vantage best suited to
                    determining, in the first  instance, whether,
                    and  if so,  how,  the  initial  cost-sharing
                    orders should be modified.

          Id. at 968.
          ___

                    This  issue  is  fact-sensitive,  and  even  a  cursory

          reading of the record reveals that the district court stayed well

          within the broad contours  of the inquiry that we  had suggested.

          Stripped  of rhetorical  flourishes, the pre-fire  insurers' real

          complaint  is  not  that  the judge  misunderstood  the  relevant

          factors but that he weighed them haphazardly.  Emblematic of this

          focus  is the  undeniable fact  that,  at bottom,  the appellants

          challenge  the  court's factbound  conclusion  that  the pre-fire

          insurers actually benefitted from  the elaborate network of case-

          management devices (like  the JDD) that their  payments helped to

          subsidize.     So  viewed,  these  appeals  raise  fact-sensitive

          disputes that invite discretionary  judgments.  In  circumstances

          where,  as here,  a  matter is  committed  to the  trial  judge's

          equitable discretion, see  id. at  965, deference is  due.   See,
                                ___  ___                               ___

          e.g.,  Koon v. United States,  64 U.S.L.W. 4512,  4517 (U.S. June
          ____   ____    _____________

          13, 1996).

                    That ends the standard-of-review contretemps.  Here, as

          in Koon, the  pre-fire insurers merely  seek to recharacterize  a
             ____

          factbound dispute  on "a higher  level of  generality."  Id.   An
                                                                   ___

          appellate court therefore ought  to limit its review to  a search

          for abuse  of the  trial court's discretion.   See id.;  see also
                                                         ___ ___   ___ ____

                                          6

          Texaco P.R., Inc. v. Department of Consumer Affairs, 60 F.3d 867,
          _________________    ______________________________

          875  (1st Cir.  1995)  (reviewing a  trial  court's choice  among

          equitable  remedies for  abuse of  discretion because  "the trial

          judge,  `who has had first-hand exposure to the litigants and the

          evidence, is  in  a considerably  better  position to  bring  the

          scales  into  balance  than  an  appellate  tribunal'")  (quoting

          Rosario-Torres v.  Hernandez-Colon, 889  F.2d 314, 323  (1st Cir.
          ______________     _______________

          1989)  (en  banc)).    And  the  pre-fire  insurers'  attempt  to

          transform  what  are  essentially  factual  findings  into  legal

          conclusions by the alchemy of words is insufficient to alter this

          standard  of review.   Since  appellate courts  "will not  permit

          parties  to  profit  by  dressing  factual  disputes  in  `legal'

          costumery,"  Reliance  Steel Prods., Inc.  v. National Fire  Ins.
                       ____________________________     ___________________

          Co.,  880  F.2d 575,  577 (1st  Cir.  1989), abuse  of discretion
          ___

          remains  the appropriate  benchmark  against  which the  district

          court's ruling must be measured.

                    Second:  The pre-fire insurers  misconstrue our comment
                    Second:
                    ______

          that they had previously established "at least a prima facie case
                                                           _____ _____

          for some reallocation of the assessments."  Two Appeals, 994 F.2d
                                                      ___________

          at  968.   They  interpret this  language  as signifying  that on

          remand the appellees had a burden to proffer  evidence sufficient

          to  rebut  this prima  facie case,  and  that the  district court

          should have responded  in terms both to the  prima facie case and

          to the lack of any formal rebuttal.  This self-serving reading of

          Two Appeals injects more into the quoted comment than the context
          ___________

          will bear.

                                          7

                    In   Two  Appeals,   we   remanded   the  question   of
                         ____________

          reallocation because  the district court  had not given  the pre-

          fire insurers the opportunity  to argue their position.   See id.
                                                                    ___ ___

          at  969.   We  did not  use the  phrase "prima  facie case"  as a

          talisman  indicating  that the  pre-fire  insurers  had proved  a

          point, but, rather, as  a means of describing the  arguments that
                                                             _________

          they had tendered in support of reallocation.  Id. at  968.  This
                                                         ___

          usage  was  intended merely  to  demonstrate  that  a remand  was

          advisable because,  on the  exiguous record  then before  us, the

          pre-fire insurers had  offered enough of  an argument to  warrant

          the district court's  consideration of  their claim.   We had  at

          hand neither a  precise knowledge of the facts  nor a valid means

          of testing the integrity of the pre-fire insurers' asseverations.

          Thus, we  could say no more than that "it appears from the record
                                                            _______________

          before us that appellants have a colorable basis for arguing that
          _________                        _________ _____

          they  derived  minimal  benefits  from  the  assessments."    Id.
                                                                        ___

          (emphasis supplied).  And,  in words that should have  erased any

          doubt, we added:

                    Nonetheless,    this    hypothesis    remains
                                                          _______
                    unproven.  There may  be more here than meets
                    ________
                    the  eye; for one thing, the appellate record
                    does not speak in any detail to the equities.
                    .  . .  [T]here are  pregnant questions to be
                    mulled on  remand    questions  on which  the
                    trial   judge's   viewpoint   is   especially
                    important.  We  conclude, therefore, that the
                    case must  be returned to the  district court
                    for further proceedings before  Judge Acosta.
                    We intimate no opinion as  to the appropriate
                    _____________________________________________
                    outcome of these proceedings.
                    ____________________________

          Id. at 968-69 (emphasis supplied).  Judge Acosta,  therefore, had
          ___

          authority  to   exercise  discretion  in  both   marshalling  and

                                          8

          balancing the relevant factors.   He was not compelled  to attach

          any special significance to  the largely theoretical "prima facie

          case" language  that the pre-fire  insurers pluck out  of context

          from our earlier opinion.

                    Third:  The district  court's finding that the pre-fire
                    Third:
                    _____

          insurers  did in  fact  receive a  significant  benefit from  the

          existence of the case-management  system withstands review  under

          an abuse-of-discretion  test.  The pre-fire  insurers assert that

          they received no  benefit from the devices  because (1) discovery

          already had been completed at the time they were brought into the

          case, (2)  they were  perfectly capable  of doing  for themselves

          what the JDD accomplished for them,  and (3) they did not need to

          rely  on the  material in  the JDD  since they  sought  (and were

          granted) summary judgment as a matter of law on the claims lodged

          against them.3  We  agree with the district court,  see Order No.
                                                              ___

          581,  supra,  at 9,  that these  assertions  stem from  an overly
                _____

          simplistic view of the pre-fire insurers' situation.

                    For one thing, Judge Acosta specifically found that the

          timing of discovery did not warrant a reduction of charges to the

          pre-fire insurers.  See id.  at 10.  We think that  this finding,
                              ___ ___

          though perhaps  not inevitable, is  supportable.   The fact  that

          discovery had been  concluded was  a two-edged sword.   While  it

                              
          ____________________

               3The  pre-fire insurers  concentrate their  fire on  the JDD
          because, in their view, nothing else  mattered.  This is a myopic
          outlook.  The case-management  system functioned as an integrated
          whole.     The  JDC  played  a  pivotal  role  in  producing  the
          information  stored in the JDD, and the liaison consuls saved all
          parties time and money at every stage of the farflung litigation.

                                          9

          meant  that the pre-fire insurers did not  have to use the JDD to

          keep track of  ongoing discovery,  it also meant  that they  "had

          available to them in a single location all  pleadings, discovery,

          service   lists,  pretrial  documents,   records  of   all  court

          proceedings,  trial  transcripts,  evidence  utilized  at trials,

          memoranda,  as well  as docket  reference[s] as  to all  that had

          transpired up to that time."  Id. at 8.
                                        ___

                    For another thing, it is of no moment that the pre-fire

          insurers  might have  preferred  to  go  it  alone.    The  case-

          management  system  that  the  district  court  so  painstakingly

          devised  could  not  have operated  on  a  voluntary  basis.   It

          depended  on the court's authority  to order all  parties both to

          participate and to share  the associated costs.  Since  the court

          acted  within   the  scope  of  its   case-management  powers  in

          establishing the overall paradigm,  see Two Appeals, 994 F.2d  at
                                              ___ ___________

          965; In  re Recticel Foam  Corp., 859  F.2d 1000, 1004  (1st Cir.
               ___________________________

          1988),  we  give short  shrift to  the  notion that  the pre-fire

          insurers would have  been better off conducting  their defense in

          more traditional surroundings.

                    Finally,  the district  court found specially  that the

          materials  in the JDD were of significant benefit to the pre-fire

          insurers.  See  Order No. 581,  supra, at 8-9.   This finding  is
                     ___                  _____

          also  supportable.  After  all, the allegations  against the pre-

          fire insurers  developed during, and  arose from the  results of,

          the  discovery process.   Thus, materials  in the  JDD had  to be

          searched,  and some were directly relevant to the claims asserted

                                          10

          and/or to the pre-fire insurers' defenses.  As the district court

          put  it, "upon being served with [a]  copy of the claims asserted

          against them   two or three years after the initial complaint [in

          the  underlying  litigation]  had  been  filed     [the  pre-fire

          insurers] could, through the availability of a well-organized and

          efficient Joint Document Depository,  ascertain the status of the

          proceedings   and  have   readily  available   all  documentation

          pertinent to their case."  Id. at 9.
                                     ___

                    The proof of  the pudding is in  the pre-fire insurers'

          admission that their confidence knew certain limits.  Faced  with

          upward of $200,000,000 in claims, the pre-fire insurers undertook

          full-scale  trial preparations  notwithstanding  the pendency  of

          their dispositive motions.  The preparations envisioned reopening

          discovery, and as  a necessary  prelude (under the  terms of  the

          applicable  pretrial  orders)  entailed  heavy use  of  the  JDD,

          resulting,  for  example,  in   making  copies  of  over  275,000

          documents and  ordering  in excess  of  110 computer  disks  that

          contained stored information.  In  light of these statistics, the

          "no benefit" claim rings hollow. 

                    The  pre-fire insurers attempt to downplay the district

          court's finding and the  statistics that support it on  the basis

          that they eventually  succeeded in obtaining judgment as a matter

          of law.   In  their view, this  outcome signifies  that they  had

          little need  to rely on  the JDD.   In an allied  vein, they note

          that they did not refer to any documents contained in  the JDD in

          their summary judgment motions.  We believe that these rejoinders

                                          11

          miss the point.  Although the pre-fire insurers ultimately proved

          themselves able to defeat the claims without relying on discovery

          materials, simple prudence required them carefully to check those

          materials  (if  for no  other reason  than  to guard  against the

          possible denial  of their Rule 56  motions), and it was  to their

          advantage  that  the  materials were  pre-assembled,  catalogued,

          cross-indexed, and readily  accessible.  In  a similar vein,  the

          compilation  of  those  materials  necessarily  assisted  in  the

          processing of their motions.

                    Furthermore,  as the district court explained, previous

          litigation  of  other  issues  earlier in  the  trial  (including

          extensive discovery) had framed  the issues, thereby enabling the

          court to resolve  the claims against  the pre-fire insurers  with

          relative ease.   The pre-fire  insurers (who have  the burden  to

          prove  they are  entitled  to reallocation)  offer no  convincing

          answer  to  this  observation  in their  appellate  briefs,  but,

          rather,  ask  us to  accept on  faith  their assumption  that the

          district court did not  rely on its knowledge of  the litigation,

          gleaned in large part through the case-management system, to rule

          in their favor.   We are  unwilling to buy so  large a pig  in so

          recondite a poke.

                         Fourth:  The pre-fire insurers refuse to recognize
                         Fourth:
                         ______

          the extent to  which the  size and complexity  of the  underlying

          litigation  affected  the  district  court's  evaluation  of  the

          relative benefits  and  burdens imposed  by  the  case-management

          system.   In our judgment,  it is this  blind spot that  explains

                                          12

          their  contention that  the district  court failed  adequately to

          compare  relative  costs  and  benefits  between  and  among  the

          parties.

                    To be sure, we stated in Two Appeals that the principle
                                             ___________

          which  "dominates the  constellation  of factors  bearing on  the

          decision to  reallocate" is that a district court should consider

          reallocating   case-management  assessments   if  and   when  "it

          determines that  a party  or group of  parties has  significantly

          failed to derive the expected benefits from burdens imposed under

          cost-sharing  orders entered  earlier in  the litigation,  or has

          derived  those  benefits to  a  significantly  greater or  lesser

          extent than other similarly situated parties."  Two  Appeals, 994
                                                          ____________

          F.2d at  966.   But  at the  same time  we  emphasized that  "the

          relative weight  and impact of relevant  considerations will vary

          from  situation  to  situation."    Id.  at  967.    Even  though
                                              ___

          comparative  benefits   are  always  a  salient   aspect  of  the

          reallocation  calculus, see id. at 966, district courts cannot be
                                  ___ ___

          expected  to measure benefits and burdens with the precision of a

          micrometer in an antiseptic laboratory setting.

                    This  vastly complicated case (or, more accurately put,

          compendium of cases)   which involves upwards of 2,000 plaintiffs

          whose claims have  run the gamut  of imaginable and  unimaginable

          theories of  liability    illustrates  the  need for  a  flexible

          standard.  In such circumstances, it is simply not practicable to

          contrive a clean matrix of benefits and burdens.  The best that a

          trial court can do is to determine, as a matter of rough remedial

                                          13

          justice, whether  significant disparities in the  distribution of

          benefits and  burdens demand  readjustment of a  generic formula.

          See id. at 966.  This is precisely the approach that the district
          ___ ___

          court took on remand.

          III.  CONCLUSION
          III.  CONCLUSION

                    We need go no  further.4  Based on its  experience with

          this  convoluted case,  its  familiarity with  the evidence,  its

          knowledge  of  the issues,  and  its  awareness  of the  parties'

          strategies,  the  trial court  is in  the  best position  to make

          delicate case-management judgments, including judgments about the

          reallocation of expenses previously assessed.

                    Here,  the trial  court  determined that  each pre-fire

          insurer should bear a full "defendant's share" of case-management

          expenses.  Because the district court's refusal to reallocate the

          expense shares does not constitute a serious lapse in judgment of

          the kind that  must occur before we will reverse  under an abuse-

          of-discretion standard, see Texaco P.R., 60 F.3d at 875; Anderson
                                  ___ ___________                  ________

          v. Cryovac, Inc.,  862 F.2d 910, 923 (1st Cir.  1988), we are not
             _____________

          at  liberty to  second-guess  it.   Though we,  if  writing on  a

          pristine  page,   might  have   balanced  some  of   the  factors

                              
          ____________________

               4The  pre-fire   insurers  harp   on  what  they   term  the
          "frivolousness" of the  claims against them.   While the strength
          or  weakness  of  the claims  is  one of  many  factors  that may
          influence  the outcome  of  a  quest  for reallocation,  see  Two
                                                                   ___  ___
          Appeals,  994 F.2d  at  967,  that  factor  does  not  carry  the
          _______
          decretory significance  that the pre-fire insurers  attach to it.
          Reallocating cost-sharing  assessments is a matter  of equity; it
          is  not a  substitute for, and  should not  be confused  with, an
          award of  sanctions for  filing groundless claims  under Fed.  R.
          Civ. P. 11.

                                          14

          differently  or taken a divergent  view of the  importance of the

          systemic  benefits received  by  the pre-fire  insurers, we  made

          clear in Two Appeals that the call is not ours to make.
                   ___________

          Affirmed.
          Affirmed.
          ________

                                          15