author: ORINDA D. EVANS, District Judge.

text:
    MANAGEMENT SCIENCE AMERICA, INC. v. Samuel R. PIERCE, Jr., Secretary of the United States Department of Housing & Urban Development.
    Civ. No. C84-1959.
    United States District Court, N.D. Georgia, Atlanta Division.
    Nov. 27, 1984.
    Charles E. Campbell, Hicks, Maloof & Campbell, Atlanta, Ga., for plaintiff.
    Nina L. Hunt, Asst. U.S. Atty., Atlanta, Ga., for defendant.
   ORDER

ORINDA D. EVANS, District Judge.

This case is before the court on Defendant’s motion to dismiss or in the alternative for summary judgment.

FACTS

This action involves a contract between Plaintiff Management Science America (“MSA”), a developer and manufacturer of computer software, and the Department of Housing and Urban Development (“HUD”), an agency of the United States Government. Under the contract, MSA was to install, demonstrate and test a package of accounting systems software for HUD’s IMB and Sperry computer systems. This dispute concerns the software programs, or “modules,” for the Sperry system only.

The contract was executed September 30, 1982, and had an original completion date of October 1, 1983. MSA apparently did not deliver the modules by October 1. HUD did not terminate the contract, however, and in April 1984, agreed to amend the contract to set a new delivery date of July 31, 1984. At the time of amendment, HUD advised MSA that the agency would exercise its right to terminate the contract if MSA did not-have a tested and operational system installed by the new July deadline.

MSA successfully installed three of the four modules in April and May of 1984. The facts surrounding MSA’s attempts to install the fourth module and test the system at the end of July are in controversy. HUD contends that MSA failed to successfully install and demonstrate a working module despite MSA’s efforts from July 29 to August 3, 1984. MSA maintains that it was prevented from making installation by HUD’s failure to provide proper access to the computer and by the daily deletion of MSA’s work by HUD employees.

It is undisputed, however, that the system was never successfully installed and tested on the HUD computer. On August 14, 1984, the HUD contracting officer, Mr. Kenneth Dosier, issued a final decision terminating for default that portion of the contract relating to the Sperry modules. Plaintiff contends that Mr. Dosier’s decision was made arbitrarily and capriciously, in that he failed to review all pertinent facts and did not exercise his independent judgment in making the termination. After reviewing additional information supplied by MSA regarding the alleged installation difficulties, Mr. Dosier informed MSA on September 14, 1984 that he saw no reason to change his decision.

On September 26, 1984, MSA filed this action for injunctive relief against the Secretary of HUD, Mr. Samuel R. Pierce, Jr. MSA seeks an injunction barring Defendant and his agents from “proceeding with any action preventing the performance by Plaintiff of the Contract” and from awarding the contract to another company. Complaint, pp. 7-8. MSA also seeks an order enjoining Defendant from disseminating or disclosing any of MSA’s trade secrets now in Defendant’s control.

Although MSA initially asked for a temporary restraining order against Defendant, the parties subsequently agreed to maintain the status quo until further order of the court. Consent Order of October 1, 1984. Defendant then filed this motion to dismiss or in the alternative for summary judgment. A hearing was held on Defendant’s motion to dismiss on October 11, 1984.

JURISDICTION

Count One of Plaintiff’s complaint alleges that this action arises under the Fifth Amendment to the United States Constitution and the laws of the United States, and that this court therefore has jurisdiction under 28 U.S.C. § 1331(a). Plaintiff then alleges that it is entitled to judicial review of the agency’s action under 5 U.S.C. § 702.

Defendant contests the Plaintiffs claim of subject matter jurisdiction, on the grounds that Plaintiff’s claim is grounded in contract and is therefore within the exclusive jurisdiction of the United States Claims Court or the HUD Board of Contract Appeals under the Contract Disputes Act of 1978, 41 U.S.C. § 601, et seq. (“CDA”). Defendant argues that Plaintiff cannot circumvent that exclusive jurisdiction by attempting to sue under § 1331(a) and the Administrative Procedure Act (“APA”), § 702.

Plaintiff argues in response that Defendant has failed to comprehend the jurisdictional basis of its complaint. Plaintiff contends that the essence of its action is a claim that HUD officials violated federal procurement regulations in acting arbitrarily, capriciously and illegally in the performance of official functions, i.e., terminating the contract. Plaintiff denies that it is seeking either money damages or an order imposing a burden on the Government for performance of some specific function. Plaintiff maintains that it is instead seeking “an injunction against certain Government officials which will operate to permit MSA to complete performance of an act which it and its subcontractors are capable of performing which will serve to benefit the Government.” Plaintiff Brief in Response, p. 5.

Plaintiff asserts that this court’s acceptance of the Government’s position would deprive MSA of a forum in which to obtain that injunctive relief, because the United States Claims Court is statutorily proscribed from awarding the relief Plaintiff seeks. Plaintiff then discusses at length the jurisdictional statutes governing the Claims Court and the federal district courts, and concludes that nothing in those statutes or the CDA bars the district court from providing this sort of relief.

With the enactment of the Contract Disputes Act of 1978, Congress provided a comprehensive statutory system of legal and administrative remedies to resolve all disputes arising from government contracts. The CDA provides for appeals to either the agency board of contract appeals or to the United States Claims Court, and specifically abolishes the jurisdiction of the federal district courts to hear claims “founded upon any express or implied contract with the United States” which is subject to the CDA. The Senate report accompanying the CDA states the intent of Congress in no uncertain terms:

Section 10(a) is amended by allowing contractors with suits against the Government (excluding the Tennessee Valley Authority) to bring direct action only in the Court of Claims. U.S. district court jurisdiction is eliminated from Government contract claims.

S.Rep. No. 1118, 95th Cong.2d Sess., reprinted, in 1978 U.S.Code Cong. & Ad. News 5235, 5244.

Plaintiff acknowledges that § 1346 does not confer on the district court subject matter jurisdiction over contract actions seeking equitable relief. It also acknowledges that under the CDA all contract claims for damages must be brought before the U.S. Claims Court. Plaintiff instead seeks to avoid these jurisdictional barriers by arguing that its cause of action is statutory rather than contractual, thereby placing it outside Congress' clear mandate on contractual claims. As a claimant alleging arbitrary agency action in violation of statute, Plaintiff therefore argues that it is entitled to judicial review of its claims in this court under 5 U.S.C. § 702 and 28 U.S.C. § 1331.

This court’s jurisdiction over those claims therefore turns on whether Plaintiff’s action is essentially contractual or statutory in nature. The courts have repeatedly held that a government contractor cannot evade the jurisdiction of the Claims Court and its limited damages remedy by characterizing his claim as other than contractually based. Megapulse, Inc. v. Lewis, 672 F.2d 959, 967 (D.C.Cir.1982). The court in Megapulse suggested the following guidelines for making that determination:

The classification of a particular action as one which is or is not “at its essence” a contract action depends both on the source of the right on which the plaintiff bases its claims, and upon the type of relief sought (or appropriate).

672 F.2d at 968.

The court finds that Plaintiff’s action is essentially contractual. Although Plaintiff insists that it seeks merely an injunction to maintain the status quo, Plaintiff actually is seeking fifteen uninterrupted hours on the HUD computer to demonstrate its software. At the October 19 hearing, Plaintiff conceded this court could not grant it the relief it seeks without reinstating or declaring valid the contract which was terminated by HUD. The action is therefore not brought merely to restrain the wrongful actions of government officials, but to order the United States to perform the contract.

Plaintiff also argues that the source of its claims is not the contract dispute with HUD per se, but alleged violations of the federal procurement regulations. However, those violations are peripheral to the central grievance of Plaintiff’s complaint, which is the wrongful termination of the contract for default. At the hearing, Plaintiff suggested three grounds on which this court could grant it relief: (1) waiver by Defendant; (2) absence of a breach by Plaintiff; (3) failure of the contracting officer to render an independent judgment. The first two theories are obviously contract defenses, while the third is insufficient to render Plaintiff’s claims statutory in nature, rather than contractual.

If the mere allegation of procurement violations were to bring claims of this type within the jurisdiction of the district court, Congress’ intent to limit contract remedies against the government to damages in the Claims Court would be effectively circumvented. As the former Fifth Circuit has stated:

Since the United States by reason of its nature acts only through agents, it is hard to conceive of a claim falling no matter how squarely within the Tucker Act which could not be urged to involve as well agency error subject to review under the APA. Little imagination is needed to foresee the consequences of a holding that such claims as this may be reviewed either in a court having power to grant equitable relief against the United States or in one having none. We refuse to believe that Congress intended, in enacting the APA, so to destroy the Court of Claims by implication.

Warner v. Cox, 487 F.2d 1301, 1306 (5th Cir.1974). Plaintiff’s claims are therefore inappropriate for review by this court.

In support of its argument for jurisdiction, Plaintiff cites a number of cases involving government contractors and alleged procurement violations in which district courts found jurisdiction under § 702 of the APA and § 1331, and granted injunctive relief. It is primarily on the basis of these cases that Plaintiff contends this court should review its claims. However, that line of precedent constitutes a special category of contract award cases, or “frustrated bidder” cases, which are clearly in-apposite to Plaintiffs action.

In each of these frustrated bidder cases, the plaintiff is an unsuccessful bidder for a government contract. The plaintiff brings suit against the agency officials, alleging that they violated federal statute, usually in the form of procurement regulations, and thereby wrongfully awarded the contract to a competing bidder.

The distinguishing feature of the frustrated bidder, however, is that he has no contract upon which to sue the government. As a result, the frustrated bidder’s cause of action is different from that of a government contractor like MSA in three major respects.

First, the frustrated bidder’s dispute is not essentially contractual, but statutory. Since the frustrated bidder failed to secure the contract, his bid protest is' not based on a contractual relationship with the government but on the procurement regulations and statutes. Judicial review of his claims is therefore appropriate in the district courts under the Administrative Procedure Act. In contrast, MSA’s claims are essentially contractual, and turn on MSA’s performance or default under the contract rather than on the government’s compliance with its bid award standards.

Second, the frustrated bidder cannot recover damages beyond his bid preparation costs because no contract exists upon which to calculate his lost profits. Keco Industries Inc. v. United States, 428 F.2d 1233, 192 Ct.Cl. 773 (1970). In a very real sense, then, such a plaintiff’s remedy in the Claims Court is “inadequate” within the meaning of § 704 of the APA. Section 704 states, in pertinent part:

Agency action made reviewable by statute and final agency action for which there is no other adequate remedy in a court are subject to judicial review.

5 U.S.C. § 704. Review of the frustrated bidder’s regulatory claims and the granting of injunctive relief by the district court is therefore appropriate.

In contrast, successful bidders can seek and be awarded full compensatory damages for government violations in the Claims Court based on the contract entered into with the agency. That damages remedy has consistently been held to be adequate, thereby barring judicial review under the APA. See American Science & Engineering, Inc. v. Califano, 571 F.2d 58 (1st Cir.1978). Thus, the special remedial concerns of the frustrated bidder do not exist for a contractor such as MSA. The successful bidder has an adequate, congressionally designated remedy of damages in the U.S. Claims Court.

Third, since the frustrated bidder has no contract to enforce, granting him injunctive relief does not constitute the specific performance of government contracts foreclosed under § 702 by Congress. The House Report on the bill amending § 702 states:

The amendment to 5 U.S.C. § 702 is not intended to permit suit in circumstances where statutes forbid or limit the relief sought. Clause (2) of the third new sentence added to section 702 contains a second priviso concerned with situations in which Congress has consented to suit and the remedy provided is intended to be the exclusive remedy. For example, in the Court of Claims Act, Congress created a damage remedy for contract claims with jurisdiction limited to •the Court of Claims except in suits for less than $10,000. The measure is intended to foreclose specific performance of government contracts.

H.Rep. No. 1656, 94th Cong., 2d Sess., reprinted in 1976 U.S.Code Cong. & Ad. News 6121, 6133 (emphasis added).

In contrast, injunctive relief for a government contractor like MSA would amount to an injunction directing the government to reinstate and perform the terminated contract. Such relief has been forbidden by Congress and cannot be granted by this court.

The frustrated bidder cases therefore constitute a special category of contract-related actions whose theoretical bases and remedial concerns are significantly different from Plaintiffs action. The grounds for exercising district court jurisdiction in that limited factual context do not extend to a suit by a government contractor terminated for default. The frustrated bidder cases therefore do not support MSA’s claim for jurisdiction.

Plaintiff’s argument on the Federal Courts Improvement Act (“FCIA”), Pub.L. No. 97-164, 96 Stat. 25 (1982), similarly overlooks the distinction between the frustrated bidder cases and suits by government contractors.

The FCIA amended 28 U.S.C. § 1491 to allow the Claims Court to grant equitable relief on any contract claim brought before the contract is awarded. Plaintiff argues that Congress’ limitation of the Claims Court equitable powers to pre-award cases leaves the district courts free to grant injunctive relief in post-award cases. In support of its argument, Plaintiff points to the FCIA’s legislative history, in which Congress specifically states that in granting this additional jurisdiction to the Claims Court it did not intend to disturb the existing jurisdiction of the district courts.

However, the jurisdiction of the district courts which Congress explicitly avoided disturbing in the FCIA extends only to frustrated bidder cases under Scanwell Laboratories, Inc. v. Shaffer, 424 F.2d 859 (D.C.Cir.1970). The legislative history of the FCIA in the Senate states:

By conferring jurisdiction upon the Claims Court to award injunctive relief in the pre-award stage of the procurement process, the Committee does not intend to alter the current state of the substantive law in this area. Specifically, the Scanwell doctrine as enunciated by the D.C. Circuit Court of Appeals in 1970 is left intact.

Similarly, the House Report states:

It is not the intent of the Committee to change existing law as to the ability of parties to proceed in the District Court pursuant to the provisions of the Administrative Procedure Act in instances of illegal agency action. See, e.g., Scanwell Laboratories, Inc. v. Shaffer, 424 F.2d 859 (D.C.Cir.1970).

The jurisdiction which Plaintiff would invoke is thus limited to that exercised in the Scanwell line of cases.

Scanwell was the first frustrated bidder case allowed in the district courts. The plaintiff brought suit against the Administrator of the Federal Aviation Administration, alleging that the FAA had illegally awarded a contract to a competing bidder. Previously, the courts had held that such a plaintiff had no litigable rights, following the leading case of Perkins v. Lukens Steel Co., 310 U.S. 113, 60 S.Ct. 869, 84 L.Ed. 1108 (1940). In Scanwell, however, the Court of Appeals for the D.C. Circuit noted the recent broadening of the concept of standing under the APA and Abbott Laboratories v. Gardner, 387 U.S. 136, 87 S.Ct. 1507, 18 L.Ed.2d 681 (1967), and held that “one who has a prospective beneficial relationship [with the government] has standing to challenge the illegal grant of a contract to another” under the APA. 424 F.2d at 870.

The Scanwell right of action therefore only extends to bid award contests. In affirming Scanwell in the FCIA, Congress merely affirmed that district courts could continue to grant equitable relief to frustrated bidders who challenge the contract award process. The FCIA did not empower the district courts to grant relief to successful contractors whose grievances arise from their contract with the government rather than from the award process itself.

The only cases cited by Plaintiff that do not fall squarely within the frustrated bidder category are Sheehan v. Army & Air Force Exchange Service, 619 F.2d 1132 (5th Cir.1980), reh. denied, 627 F.2d 239, rev’d 456 U.S. 728, 102 S.Ct. 2118, 72 L.Ed.2d 520 (1982), on remand 686 F.2d 262 (1982), and Vibra-Tech Engineers, Inc. v. United States, 567 F.Supp. 484 (D.Colo.1983).

In Sheehan, the district court dismissed the action of a fired employee of the Army & Air Force Exchange Service (AAFES), who had brought suit against the government for wrongful discharge. The Court of Appeals reversed, finding that the district court had jurisdiction to award damages under 28 U.S.C. § 1346 and equitable relief under 28 U.S.C. § 1331 and 5 U.S.C. § 702. MSA contends that its action is similarly within the court’s jurisdiction under § 1331 and § 702.

However, Sheehan is readily distinguishable from the action at bar. Sheehan did not challenge a procurement decision made by a contracting officer, but an employment decision made by his superior. 619 F.2d at 1136. His cause of action was therefore not subject to the Contract Disputes Act, and district court jurisdiction over his suit was not precluded by 28 U.S.C. § 1346.

Furthermore, Sheehan was not essentially a contract dispute. Although the court found an implied contract between Sheehan and AAFES on the basis of the employment regulations, the Supreme Court reversed that part of the holding on appeal. In AAFES v. Sheehan, 456 U.S. 728, 102 S.Ct. 2118, 72 L.Ed.2d 520 (1982), the Court held that the Fifth Circuit erred in implying a contract from the AAFES regulations. Sheehan’s cause of action was thus primarily statutory, and therefore suitable for review by the district court rather than by the Claims Court. District court review in Sheehan thus did not “undermine the exclusive jurisdiction of the Court of Claims.” 619 F.2d at 1140, n. 14.

MSA’s claims, however, do involve a procurement decision made by a contracting officer. Its cause of action is subject to the CDA, and must be brought in the Claims Court rather than in the district court. District court review of MSA’s contractual claims would indeed infringe on the Claims Court’s exclusive jurisdiction over government contract disputes.

In Vibra-Tech Engineers, Inc. v. United States, the plaintiff Vibra-Tech submitted a bid on a proposed geological survey. The technical evaluation committee recommended awarding the contract to another bidder, but the contracting officer rejected the recommendation and awarded VibraTech the contract. Three months later, the contract awarded to Vibra-Tech was suddenly “terminated for convenience” and awarded to the plaintiffs competitor. The plaintiff sued, claiming that the termination was arbitrary and capricious in violation of the regulations.

The District Court of Colorado held that the plaintiff’s action for injunctive relief was not barred by the Contract Disputes Act, and ordered the government to reinstate the contract with Vibra-Tech. 567 F.Supp. at 487. On the basis of that decision, Plaintiff MSA argues that this court has power to grant it injunctive relief for the arbitrary termination of its contract.

At first glance, Vibra-Tech and the case at bar appear to be akin factually, since both cases concern an alleged termination of a government contract. The reasoning of the court, however, reveals that the court considered the plaintiff to be in the position of a frustrated bidder. The plaintiff’s action turned on whether the government had used the proper criteria in awarding the contract between the two final proposals. Although Vibra-Tech had been chosen as the successful bidder and subsequently terminated, the court treated it as a frustrated bidder challenging a contract award to a competitor.

This perspective is reinforced in the court’s citation of cases. The court stated that “even after enactment of the Contract Disputes Act, courts determining federal contract disputes have continued to award equitable relief.” 567 F.Supp. at 487. However, the cases cited as examples of such an award are frustrated bidder cases, not cases involving disputes over contract performance and breach. VibraTech therefore is properly characterized as a frustrated bidder case, where the plaintiff challenges the improper award of a contract.

Thus, neither Sheehan nor Vibra-Tech support Plaintiff’s claim of subject matter jurisdiction in this court. Plaintiff’s argument that it will be unable to obtain the relief it seeks if restricted to the U.S. Claims Court is correct, but unavailing. Congress has decided to bestow jurisdiction over all contract claims against the government on the Claims Court, in order to secure its expertise and avoid the fragmentation of the contracting process. In doing so, it limited the remedies available to the contractor to damages, and excluded equitable relief. The damage remedy has repeatedly been held by the courts to be adequate.

The court therefore concludes that it lacks subject matter jurisdiction over Plaintiff’s claim in Count One, and will grant Defendant’s motion to dismiss.

TRADE SECRETS

Count Two of Plaintiff’s complaint seeks an injunction to restrain Defendant from disseminating or disclosing MSA’s software in violation of 18 U.S.C. § 1905, the Trade Secrets Act. Plaintiff alleges that it is unable to verify whether the software is being protected in accordance with the contract or whether the systems are subject to be disclosed to unauthorized HUD personnel or third parties.

Defendant argues that the motion for injunction should be denied on the grounds that no affirmative agency decision to disclose has been made, and therefore no “final agency action” has been taken which may be judicially reviewed under 5 U.S.C. § 702. Furthermore, Defendant has stated by affidavit that all MSA materials relevant to the Sperry portion of the contract are in storage with access limited to the contracting officer. Defendant therefore contends that Plaintiff has not been aggrieved by any agency action.

Regardless of whether the lack of final agency action is relevant to Plaintiffs request for an injunction to avoid disclosure of the MSA software, the court finds that the record fails to suggest a basis for a viable concern on MSA’s part that such disclosure is about to occur. This failure, coupled with Defendant’s statement by affidavit that the software has been secured, entitles Defendant to summary judgment on Count Two.

While HUD has not explained its reasons for retaining the software, the agency has apparently secured the information for the duration of this suit and, presumably, for the duration of a suit by Plaintiff in the Court of Claims. If the parties are not able to reach a settlement as to return of the software and the government seeks or proposes to use or release the information, Plaintiff would clearly have a cause of action in this court under 5 U.S.C. § 702 and 18 U.S.C. § 1905. Chrysler Corp. v. Brown, 441 U.S. 281, 99 S.Ct. 1705, 60 L.Ed.2d 208 (1979). The instant order is without prejudice as to any such future claims.

SUMMARY

The court hereby GRANTS Defendant’s motion to dismiss Count One of the complaint for lack of subject matter jurisdiction. The Court DISMISSES Count Two without prejudice. Defendant’s motion for transfer of venue is hereby MOOTED with dismissal of both counts of Plaintiff’s complaint.

      . That provision states:
      The district courts shall have original jurisdiction of all civil actions arising under the Constitution, laws or treaties of the United States.
      28 U.S.C. § 1331(a).

      . Section 702 provides, in pertinent part:
      A person suffering legal wrong because of agency action, or adversely affected or aggrieved by agency action within the meaning of a relevant statute, is entitled to judicial review thereof. An action in a court of the United States seeking relief other than money damages and stating a claim that an agency or an officer or employee thereof acted or failed to act in an official capacity or under color of legal authority shall not be dismissed nor relief therein denied on the ground that it is against the United States or that the United States is an indispensable party____ Nothing herein ... (2) confers authority to grant relief if any other statute that grants consent to suit expressly or impliedly forbids the relief which is sought.
      5 U.S.C. § 702.

      . Plaintiff alleges violations of 41 C.F.R. § 24-1.312-2, 41 C.F.R. § 1-8.602-1, and 41 C.F.R. § l-8.602-3(a). Plaintiff contends that contracting officer Dosier failed to review all pertinent facts in making its decision, illegally terminated the contract when MSA was not in default, and failed to give proper notice after HUD “waived” its default rights by allowing installation to continue into August.

      . 41 U.S.C. § 606.

      . Id. at § 609(a). The CDA originally provided for appeal to the Court of Claims, which was subsequently abolished by the Federal Courts Improvement Act of 1982. However, its trial functions and authority were essentially inherited by its successor, the U.S. Claims Court. See 28 U.S.C. §§ 1491-1508; FCIA, Pub.L. 97-164, 96 Stat. 25 (1982).

      . 28 U.S.C. § 1346(a)(2) as amended now states: The district courts shall not have jurisdiction of any civil action or claim against the United States founded upon any express or implied contract with the United States ... subject to sections 8(g)(1) and 10(a)(1) of the Contract Disputes Act of 1978.

      . See also American Science & Engineering, Inc. v. Califano, 571 F.2d 58, 61 (1st Cir.1978); Alabama Rural Fire Ins. Co. v. Naylor, 530 F.2d 1221, 1229 (5th Cir.1976); International Engineering Co. v. Richardson, 512 F.2d 573, 578 (D.C.Cir.1975), cert. denied, 423 U.S. 1048, 96 S.Ct. 774, 46 L.Ed.2d 636 (1976); Group Health Inc. v. Schweiker, 549 F.Supp. 135, 139 (S.D.Fla.1982); S.J. Groves v. United States, 495 F.Supp. 201, 206 (D.Colo.1980).

      . Acme of Precision Surgical Co. Inc. v. Weinberger, 580 F.Supp. 490 (E.D.Pa.1984); American District Telegraph v. Department of Energy, 555 F.Supp. 1244 (D.D.C.1983); Scanwell Laboratories, Inc. v. Shaffer, 424 F.2d 859 (D.C.Cir. 1970); Collins & Co. General Contractors v. Claytor, 476 F.Supp. 407 (N.D.Ga.1979).

      . A frustrated bidder’s action is also not within the Contracts Dispute Act. Coastal Corporation v. U.S., 713 F.2d 728 (Fed.Cir.1983). District court jurisdiction is therefore not explicitly barred by 28 U.S.C. § 1346. See supra note 4 and accompanying text.

      . Section 1491(a)(3) now reads:
      (3) to afford complete relief on any contract claim brought before the contract is awarded, the [claims] court shall have exclusive jurisdiction to grant declaratory judgments and such equitable and extraordinary relief as it deems proper, including, but not limited to, injunctive relief____
      Prior to this amendment, the Claims Court did not have injunctive or declaratory powers, but could only award money damages. Heli-Jet Corp. v. United States, 2 Cl.Ct. 613, 619 (1983).

      . See H.R.Rep. 312, 97th Cong. 1st Sess. at 43 (1981).

      . S.Rep. No. 97-275, 97th Cong. 1st Sess., pp. 22-23 (1981), reprinted in 1982 U.S.Code Cong. & Ad.News, 11, 33.

      . H.Rep. No. 312, 97th Cong. 1st Sess. at 43 (1981).

      . For a discussion of the pre-Scanwell law, see Hayes International Corporation v. McLucas, 509 F.2d 247, 254, n. 10 and accompanying text (5th Cir.1975), cert. denied, 423 U.S. 864, 96 S.Ct. 123, 46 L.Ed.2d 92 (1976).

      . See supra note 4 and accompanying text.

      . Aero Corp. v. Department of the Navy, 540 F.Supp. 180 (D.D.C.1982) (disappointed contractor challenges award of contract to another supplier without competitive negotiation); Collins & Co., General Contractors v. Claytor, 476 F.Supp. 407 (N.D.Ga.1979) (low bidder seeks injunction against contract award to next highest bidder); Gould v. Chafee, 450 F.2d 667 (D.C.Cir.1971) (bidders challenge award of contracts to low bidder as arbitrary).

      . To the extent that Vibra-Tech holds that any contract dispute may be brought in district court on the grounds of arbitrary agency action, the court ignores its own recent precedent. In S.J. Groves v. United States, 495 F.Supp. 201 (D.Colo.1980), the District Court of Colorado discussed in detail the jurisdiction of the district courts and the Claims Court over contract disputes. The Groves court concluded that where a claim is essentially grounded in contract and review is available in the Claims Court, the determination of the claim rests exclusively with the Claims Court. 495 F.Supp. at 207.

      . See supra at p. 227.


source: Caselaw Access Project

author: CAFFREY, Chief Judge.

license: Public Domain

text:
    Isaac MANEGO, Plaintiff, v. The ORLEANS BOARD OF TRADE, et al., Defendants.
    Civ. A. No. 83-0045-C.
    United States District Court, D. Massachusetts.
    Nov. 27, 1984.

      Charles Ray Weidman, Chatman, Mass., for plaintiff.
    Samuel Hoar, Laura L. Carroll, Goodwin, Procter & Hoar, Boston, Mass., for Cape Cod 5 Cent Savings Bank and David B. Willard.
    Albert P. Zabin, Schneider, Reilly, Zabin, Connolly & Costello, Boston, Mass., for Orleans Bd. of Trade & 90 other Persons as Members.
   MEMORANDUM

CAFFREY, Chief Judge.

This is a civil action brought pursuant to antitrust statutes, 15 U.S.C. §§ 1-15, which includes a pendant state law claim for unfair business practices. M.G.L. c. 93A. The plaintiff, Isaac Manego, alleges that the defendants conspired to orchestrate the denial of license applications, thereby producing an adverse anticompetitive effect. The defendants are David Willard, The Cape Cod Five Cents Savings Bank (“Bank”), the Orleans Board of Trade (“Board of Trade”), and its members. At times relevant to the events complained of, defendant Willard was both the President of the Board of Trade and an officer of the Bank. The case is now before the court oh defendants’ motions for summary judgment. Fed.R.Civ.P. 56(b).

This case is the third round of litigation initiated by plaintiff relating to the denial of his application for entertainment and liquor licenses in the Town of Orleans, Massachusetts. In the first case, Manego v. Board of Selectmen of the Town of Orleans, C.A. No. 38824 (“Manego I”), the plaintiff sought a writ of mandamus from the Massachusetts Superior Court. Upon dismissal of that action, plaintiff instituted his second case, a civil rights action in this Court, Manego v. Cape Cod Five Cents Savings Bank, et al, C.A. No. 80-1406-MC (D.Mass. April 13, 1982) (“Manego II”) which terminated in summary judgment for the defendants. The Court of Appeals affirmed. Manego v. Cape Cod Five Cents Savings Bank, 692 F.2d 174 (1st Cir.1982).

In substance, the plaintiff’s present complaint is based on and addresses the same events that were the subject of both the earlier cases. In early 1979, the Orleans Board of Selectmen denied the plaintiff’s applications for the liquor and entertainment licenses necessary to operate a proposed disco. The plaintiff alleges that his application was denied as a result of a conspiracy among the defendants, including the Board of Trade, the Bank, and David Willard. The alleged purpose of the conspiracy was to allow the Bank, through a sham transaction, to offer similar entertainment at the nearby Lower Cape Sports Arena (“Arena”) free of competition from Mr. Manego. Indeed, it is undisputed that an entertainment license was issued to the Arena after the denial of plaintiff’s application.

Defendants Cape Cod Five Cents Savings Bank and David Willard were also defendants in Manego II. The Orleans Board of Trade was not named as a defendant in the earlier actions, and a reference to Willard’s status as president of the Board was stricken from the complaint on defendant Bank’s motion.

DEFENDANTS CAPE COD FIVE CENTS SAVINGS BANK AND DAVID WILLARD

Defendants Willard and the Bank move for summary judgment on grounds that the plaintiff’s action is barred under the doctrine of res judicata and on the grounds that the alleged conspiratorial acts are protected by the First Amendment.

Under the doctrine of res judicata “a final judgment on the merits of an action precludes the parties or their privies from relitigating issues that were or could have been raised in that action.” Allen v. McCurry, 449 U.S. 90, 94, 101 S.Ct. 411, 66 L.Ed.2d 308 (1980). Res judicata is a bar only where the subsequent case concerns the same cause of action or claim. E.g. Cromwell v. County of Sac, 94 U.S. 351, 4 Otto 351, 24 L.Ed. 195 (1876). With the adoption of the Federal Rules of Civil Procedure the concept of “cause of action” has broadened beyond that of a single legal issue narrowly drawn in a writ. See 18 J. Wright, Miller & Cooper, Federal Practice and Procedure § 4407 n. 20. The scope of preclusion has necessarily expanded with the definition of “claim” or “cause of action.” Id.

The exact contours of claim preclusion are a subject of much discussion and disagreement. See Id., 18 J. Moore, Moore’s Federal Practice ¶ 0.410[1]. The Restatement (Second) of Judgments (1982) adopts a “transactional” definition of the scope of issue preclusion:

The present trend is to see claim in factual terms and to make it coterminous with the transaction regardless of the number of substantive theories, or variant forms of relief flowing from those theories, that may be available to the plaintiff; regardless of the number of primary rights that may have been invaded; and regardless of the variations in the evidence needed to support the theories or rights. The transaction is the basis the litigative unit and may not be split.

Restatement (Second) § 24 Comment a.

A number of other approaches to the preclusive scope of an earlier action have evolved in the case law. These include:

—Whether the actions are based on identical grounds.
—Whether the factual basis of both claims is the same.
—Whether the essential facts and issues have been similarly presented in both cases.
—Whether the same right is infringed by the same wrong.
—Whether the wrong for which redress is sought is the same in both actions.
—Whether the two actions are so similar that a different judgment in the second would destroy or impair rights or interests established in the first.

21 Federal Procedure Lawyers Edition § 51:201.

The Court of Appeals for the First Circuit has articulated a position closer to the broad restatement view. Isaac v. Schwartz, 706 F.2d 15 (1st Cir.1983), Lovely v. Liberte, 498 F.2d 1261 (1st Cir.1974). In Lovely, the Court of Appeals held that a state court action for possession barred a subsequent § 1983 action because the parties were the same and concerned the same “operative nucleus of fact.” Id. at 1263. In Issac the Court went further in its analysis:

Given the initial dismissal, the issue before us is simply whether the new complaint grows out of the same transaction or series of connected transactions (Restatement (Second) of Judgments § 24) as the old complaint. If so, the fact that appellant now asserts new legal theories ... does not help him.

Supra at 17. Recently the Court of Appeals reaffirmed this approach in Casagrande v. Agoritsas, 748 F.2d 47 (1st Cir.1984).

I note that plaintiff Manego alleges facts in this antitrust action which are strikingly similar to those in Manego II. The present complaint differs only in that it names additional defendants (the Board of Trade), and alleges that the Bank planned to offer entertainment at its facility similar to that which plaintiff Manego would have provided at his disco.

The plaintiff argues that because he did not learn of the Bank’s plans until three days before summary judgment was granted, his action, based upon this new knowledge, is not barred. The plaintiff further argues that because a reference to Mr. Willard’s status as president of the Board of Trade was stricken from the Manego II pleading on defendant Bank’s motion, the antitrust issues could not have been raised in the earlier proceeding.

Despite the plaintiff’s contentions it is apparent that the present case concerns the same transaction or nucleus of fact that was adjudicated in Manego II. The mere fact that plaintiff failed to discover the Bank’s plans until shortly before a final judgment does not affect its preclusive effect. A judgment bars all claims prior to its entry. Lawlor v. National Screen Service, 349 U.S. 322, 328, 75 S.Ct. 865, 868, 99 L.Ed. 1122 (1955). Given the discovery and amendment provisions of the Federal Rules of Civil Procedure, plaintiff certainly could have obtained the necessary evidence to litigate his alternate theory in the first proceeding. Finally, the addition of new defendants in a subsequent action does not affect the preclusive effect of the judgment as to the original parties. E.g. Scarpa v. Fair, C.A. No. 82-2333, slip op. at 7 (D.Mass. April 11, 1983).

Accordingly, I rule that plaintiff’s action against defendants Cape Cod Five Cents Savings Bank and David Willard is barred, and also rule that those defendants are therefore entitled to summary judgment.

DEFENDANT ORLEANS BOARD OF TRADE

The Board of Trade moves for summary judgment on the following grounds: that the doctrine of res judicata bars the present action, that there is no genuine issue of material fact relating to the allegations of conspiracy, and that the alleged conduct had no adverse effect on interstate commerce.

Because the Board of Trade was not a party to Manego II, claim preclusion principles do not bar the present action. Furthermore, those members of the Board of Trade who were parties to the prior action may not rely on claim preclusion insofar as they are presently named as defendants in a different capacity. IB J. Moore, Moore’s Federal Practice ¶ 01411[3]. Issue preclusion, on the other hand, may bar relitigation of issues actually litigated and necessary to a prior judgment in a different cause of action, and may be asserted defensively by a stranger to the original action. Parklane Hosiery v. Shore, 439 U.S. 322, 99 S.Ct. 645, 58 L.Ed.2d 552 (1979). Accordingly, the Board of Trade argues that the plaintiff should be estopped from relitigating the issue of conspiracy, claiming that it was resolved in favor of the defendants in Manego II.

Even an express finding that there was no conspiracy among the defendants in Manego II would not bar the present case. Because the Board of Trade was not a party to the earlier action the existence of a conspiracy involving the Board was not before the Court. I rule, therefore, that the prior judgment has no preclusive effect on this aspect of the present case.

The defendant’s claim that there is no genuine issue of material fact is inexorably tied to what is commonly known as the Noerr-Pennington doctrine. See Eastern Railroad Presidents Conference v. Noerr Motor Freight Inc., 365 U.S. 127, 81 S.Ct. 523, 5 L.Ed.2d 464 (1961); United Mine Workers of America v. Pennington, 381 U.S. 657, 85 S.Ct. 1585, 14 L.Ed.2d 626 (1965). Generally stated, this doctrine exempts, with certain exceptions, concerted attempts to influence the passage or enforcement of laws from the sweep of antitrust legislation regardless of anticompetitive intent.

On the face of plaintiff’s complaint, it is apparent that the allegations which relate to the Board of Trade involve attempts to influence governmental entities. Therefore, Noerr-Pennington applies unless the activity falls within one of the exceptions to the doctrine.

The complaint sets forth the following allegations. David Willard, an employee of the Bank and President of the Board of Trade, enlisted the “conspiratorial aid and assistance” of the members of the Board to “conduct sham opposition” to Manego’s applications. He was assisted in so doing by a majority of the Board of Selectmen acting as members of the Board of Trade, who also exerted pressure on members of the Board to block the plaintiff’s plan to operate a disco in Orleans. The purpose of this plan was to assure that the plaintiff’s proposed disco would not be in a position to compete with the Bank, which planned to offer similar entertainment at the arena near plaintiff’s site. In January 1979, the Board of Trade, at a meeting chaired by Willard and attended by two of the three Orleans selectmen, unanimously voted to oppose the plaintiff’s license applications. Subsequently, Willard reported this vote to the full Board of Selectmen during the January 11 hearing on plaintiff’s license applications. Approximately 100 persons attended the meeting, many as a result of the defendants plan to oppose the applications.

The Board of Selectmen denied plaintiff’s application for a liquor license on February 8, 1979, and on February 14, 1979 held a hearing on the amusement license application. After conducting a traffic study which was intended only as a spurious excuse for denying the application, the selectmen denied the amusement license application, unlawfully, on the basis “of noise and traffic considerations.” The subsequent development of some twenty-five businesses in the area, plus the issuance of an entertainment license to the Bank’s arena, attest to the spurious nature of the selectmen’s reasons for denial. Furthermore, intersections in the area have been improved and upgraded to handle this increased traffic.

In support of motions for summary judgment, defendants have resubmitted the affidavits of Herbert Wilcox, chairman of the Board of Selectmen, David Willard, and Charles Darling, a salesman at Nickerson Lumber Company, as well as excerpts from depositions of Willard, the plaintiff, and Paul Thiebert. Although several of the affidavits were prepared for the earlier litigation in Manego I and Manego II, they are nevertheless pertinent to the issues in this case.

Herbert Wilcox states in his affidavit that he voted against the issuance of license because of the “likelihood of increased traffic hazards and noise pollution” and “gave some weight to the overwhelming sentiment of the citizens who [opposed the disco] and to the traffic committees report.” As to the issuance of a similar license to the arena, Wilcox stated that the rink held a similar license previously which had not been renewed because of an oversight. He voted for issuance because of the rinks proven “benefits to the community” and because it had never caused inconvenience or concern.

Mr. Willard’s affidavit states unequivocally that “I have never had, and, to my knowledge, no other Bank employee has had private conversations with any of the Selectmen concerning the proposed disco while Mr. Manego’s applications ... were under consideration,” and “Nor did I ... or the Bank conspire with Orleans officials to deny Mr. Manego the requested licenses [for] improper reasons.”

Mr. Willard testified at deposition that two of the Selectmen were members of the Board of Trade, but did not recall if they were present at the meeting when the disco was discussed. He further testified that he did not urge members to attend the license hearing, and that he was, at the time, an officer of the Bank. A discussion was held as to the desirability of the disco, and all but two of the 70-75 persons present opposed the project.. The next day, Willard attended the license hearing, and, as president of the Board of Trade, informed the selectmen of the vote.

Paul Thibert, who managed the rink for the Bank, testified at deposition that there was never any “discussion of any threat of competition [from Mr. Manego]” among the Bank or Board of Trade.

The substance of the materials offered by the defendants is that the selectmen denied the plaintiff’s license applications for permissible reasons, that there were no private conversations between Willard and the Selectmen, and that there was no discussion between the Bank and Board of Trade regarding Mr. Manego’s disco as a potential competitor. These are denials of conspiracy from a selectman, the President of the Board of Trade, and an Officer and an employee of the Bank.

In support of his allegations, the plaintiff has produced several affidavits, extracts from depositions, and other evidence. The supplementary affidavit of Roger Hurlich, a builder reaffirms his earlier affidavit to the effect that the Bank had pressured Nickerson Lumber Company not to sell building supplies to Manego for the proposed disco. Even if taken as true, this evidence is not probative as to any conspiracy involving the Board of Trade. In response to an interrogatory requesting facts to support the allegations of conspiracy, the plaintiff answered “The meetings of the Board of Trade with David Willard as President held in January, February and subsequently in 1979, as set forth in the minutes of said meetings, and as testified to in deposition by David Willard.” These materials reveal only that meetings were held, that two selectmen may have attended, and that the disco project was discussed and voted upon. When asked at deposition for the basis of his allegations of a conspiracy involving the selectmen, the plaintiff responded that “any time the selectmen attend a meeting and they were a member of the board of trade, that was illegal. That’s conspiracy.” The plaintiff did testify that an unidentified person had told him that officials of the Bank, Board of Trade and Board of Selectmen had met to oppose the disco, but he does not know the mans name. When asked what the Board of Trade did that was wrong, he said, “it was wrong for them to come out against me in opening a business.”

The materials under consideration must be evaluated in light of the particular requirements of the substantive law in this area, i.e. whether there is a genuine issue of material facts which would allow the plaintiff to recover under an exception to the Noerr-Pennington doctrine. The plaintiff contends that two exceptions apply: the so-called “sham” and “conspiracy” exceptions. The former, developed in a line of cases beginning with California Motor Transport Co. v. Trucking Unlimited, 404 U.S. 508, 92 S.Ct. 609, 30 L.Ed.2d 642 (1972), applies where a party seeks not to influence public officials, but to “bar their competitors from meaningful access to adjudicatory tribunals and so to usurp the decisionmaking process.” Id. at 512, 92 S.Ct. at 612. Trucking Unlimited concerned a series of “baseless repetitive claims” designed “to discourage and ultimately to prevent the [plaintiffs] from invoking the processes of the administrative agencies and courts,” Id. at 512, 92 S.Ct. at 612. Subsequent developments have held that this exception also applies to a single suit filed for an improper purpose, such as generating publicity unfavorable to a competitor. E.g. Energy Conservation v. Heliodyne, 698 F.2d 386 (9th Cir.1982). Activity disguised as petitioning which is simply an effort to interfere directly with a competitor is not protected under NoerrPennington. Clipper Express v. Rocky Mountain Motor Tariff Bureau, 690 F.2d 1240 (9th Cir.1982), cert. denied, 459 U.S. 1227, 103 S.Ct. 1234, 95 L.Ed.2d 468. Other types of activity which fall within the “sham” exception are misrepresentation, Israel v. Baxter Laboratories, Inc., 466 F.2d 272, 275-79 (D.C.Cir.1972); and threats or coercive measures to influence state officials, Sacramento Coca-Cola Bottling Co. v. Teamsters Local 150, 440 F.2d 1096 (9th Cir.), cert. denied, 404 U.S. 826, 92 S.Ct. 57, 30 L.Ed.2d 54 (1971). In order for the “sham” exception to apply:

What is needed ... is proof that the lobbyists subverted the integrity of the governmental process, that they effectively barred [the plaintiffs] access to these processes, or that the nature of these processes made their invocation something other than the “political activity” that was recognized by the NoerrPennington-Trucking Unlimited line of cases to be beyond the scope of the Sherman Act.

Federal Prescription Service v. American Pharmaceutical Ass’n, 663 F.2d 253, 262-63, (D.C.Cir.1981), cert. denied, 455 U.S. 928, 102 S.Ct. 1293, 71 L.Ed.2d 472 (1982).

The plaintiff points to a suit filed by the Bank in opposition to the Selectmen’s grant of a Building permit to Mr. Monego as such a “sham” abuse of process. He offers no evidence, or even the promise of evidence, that this suit was anything other than protected activity. Even with all inferences drawn most favorably to the plaintiff, there is no indication of misconduct which would rise to the level necessary to invoke the “sham” exception to Noerr-Pennington. At the core of this deficiency is the plaintiff’s failure to produce any evidence that the lawsuit was instituted for an unlawful purpose. The fact that the suit was subsequently, withdrawn after the Bank’s purported sale of the arena does not support an inference that the object of the suit was unlawful. Moreover, the “sham” was allegedly perpetrated by the Bank, and not the Board of Trade. Therefore, absent evidence that the Board of Trade conspired with the Bank as to this allegedly “sham” suit, it is irrelevant to the issue of the Board’s immunity under Noerr-Pennington. The plaintiff has not offered such evidence, nor has he even alleged that a conspiracy existed with regard to the suit.

The plaintiff further contends that this case falls into the “sham” exception because he was deprived of “meaningful access” to governmental entities because his experience with those entities has “been replete with animosity and conflicts of interest.” In his argument, plaintiff relies heavily upon Clipper Exxpress v. Rocky Mountain Motor Tariff, 690 F.2d 1240 (9th Cir.1980), where summary judgment for defendants was reversed on appeal. That case is distinguishable from the present action in that the Clipper defendants admitted, for the purpose of summary judgment, that they had engaged in a conspiracy to file baseless protests for the sole purpose of eliminating competition. Id. at 1250-51. The Board of Trade has made no such admissions. Rather, its president has testified that the Board of Trade merely sponsored a discussion of the project and reported this discussion to the licensing authority at a public hearing. All that the plaintiff is able to show as to his experience with the Board of Selectmen is that he was unsuccessful in his repeated attempts to obtain the necessary licenses.

It is clearly established that conduct genuinely intended to influence governmental action is immune from the sweep of antitrust law and that whether the effort is genuine or a sham is an issue of fact. Id. at 1253. Here, the plaintiff has produced no evidence in opposition to the défendants’ affidavits and deposition testimony to show, or to raise an inference, that the Board of Trade engaged in anything other than protected petitioning before the Board of Selectmen. A party opposing a motion for summary judgment may not rest on mere allegations, but must set forth specific facts showing that there is a genuine issue for trial. Fed.R.Civ.P. 56(e). I rule that the plaintiff has failed to do so.

Alternatively, the plaintiff invokes the “conspiracy” exception to Noerr-Pennington which applies where government officials participate with private individuals in a scheme to restrain trade. E.G. Duke & Co. v. Foerster, 521 F.2d 1277 (3rd Cir. 1975). In support of this contention, the plaintiff relies upon the fact that two of the three members of the Board of Selectmen were also members of the Board of Trade, and that they were present at the Board of Trade meeting when Mr. Manego’s proposal was discussed, and that other businesses were subsequently licensed in the same area.

Generally, summary judgment is inappropriate in cases involving conspiracy claims because the existence or nonexistence of a conspiracy is essentially a factual issue to be decided by the jury. Adickes v. S.H. Kress, 398 U.S. 144, 176, 90 S.Ct. 1598, 1618, 26 L.Ed.2d 142 (1970). Summary judgment may also be inappropriate in antitrust cases where “motive and intent play leading roles.” Poller v. Columbia Broadcasting System, 368 U.S. 464, 472, 82 S.Ct. 486, 490, 7 L.Ed.2d 458 (1962). There are, however, exceptions to the general rule. Where a moving party in an antitrust conspiracy case has shown that the facts relied upon in the opposing party’s allegations are not susceptible to the interpretation which he sought to give them, Rule 56(e) puts the burden on the opposing party to produce evidence in support of his allegations. First National Bank of Arizona v. Cities Service Co., 391 U.S. 253, 289-90, 88 S.Ct. 1575, 1592-83, 20 L.Ed.2d 569 (1957). Furthermore, a plaintiff may not rely upon the promise of evidence of conspiracy to be developed by cross-examination at trial. Manego v. Cape Cod Five Cents Savings Bank, et al, 692 F.2d 174 (1st Cir.1982), Hahn v. Sargent, 523 F.2d 461 (1st Cir.1975), cert. denied, 425 U.S. 904, 96 S.Ct. 1495, 47 L.Ed.2d 954 (1976).

Without express evidence of a conspiracy involving the Orleans Selectmen, the plaintiff must rely on inferences which may be drawn from their presence at the Board of Trade meeting and their subsequent actions. In an analogous situation, the Court of Appeals for the District of Columbia found that membership in an association was not evidence that regulatory officials were parties to an anticompetitive conspiracy. Federal Prescription Service v. American Pharmaceutical Ass’n, 663 F.2d 253 (D.C.Cir.1981), cert. denied, 455 U.S. 928, 102 S.Ct. 1293, 71 L.Ed.2d 472 (1982). The regulatory officials in Federal Prescription were members of state pharmacy boards, and also members of a national pharmacists association which was engaged in a program of lobbying before the state boards to oppose licensing of mail-order pharmacies. The court of appeals reversed the district court finding of conspiracy as “clearly erroneous” and ruled that the defendants were entitled to judgment as a matter of law under the Noerr-Pennington doctrine. Id.

Therefore, I find that the Selectmen’s membership in the Board of Trade is not probative of conspiracy. In addition, the subsequent grant of an entertainment license 1¡o the arena has been explained as a legitimate ^exercise of licensing authority. The plaintiff has failed to introduce any evidence to contradict this assertion.

Finally, I note that the type of conspiracy which the plaintiff must show to escape the Noerr-Pennington Doctrine differs from that normally associated with antitrust litigation. Where the alleged conspirators are potential competitors or other market participants, conspiracy may be inferred from their market behavior, a situation which renders the determination particularly unsuitable for summary judgment. In this case the plaintiff alleges a conspiracy including governmental officials. Consequently, there is no market behavior to draw inferences from. Those facts which the plaintiff has submitted are either not probative as a matter of law or are explained by the unrebutted denials of parties to the alleged conspiracy.

I rule accordingly that even with all inferences drawn most favorably to the plaintiff, there is no genuine issue of material fact which, if proven by the plaintiff, would constitute an' exception to the Noerr-Pennington Doctrine. Therefore, I rule that the defendants are entitled to judgment as a matter of law on the antitrust count. Because this disposes of the federal question portion of the case, the state law claims are dismissed.

Order accordingly.

      . In this area of law both courts and commentators have been inconsistent in their use of terminology. For purposes of clarity, I use the term "claim preclusion” to describe the preclusive effect of a judgment on the merits between parties or their privies in the same cause of action. “Issue preclusion" or "collateral estoppel" describes the preclusive effect of a prior judgment on an issue of law or fact in a different cause of action involving a party. “Res judicata" is a general term which applies to both types of preclusion.

      . Because the prior actions in Schwartz, Roy and Lovely took place in state courts, state Res

        Judicata principles were applied. In Schwartz the Circuit court described the Massachusetts approach as "perfectly traditional,” Id. 706 F.2d at 17, citing Angel v. Bullington, 330 U.S. 183, 67 S.Ct. 657, 91 L.Ed. 832 (1947).

      . The complaints in Manego I and Manego II both allege that an entertainment license was issued to the Bank after the denial of Mr. Mane-go’s application. Plaintiff claims only that he did not know what the Bank’s plans were for the licensed premises. Moreover, the events which plaintiff complained of took place primarily in the summer of 1979, years before judgment was entered.


author: HOBBS, District Judge.

text:
    Elbert ERKINS and Samuel Denson, Plaintiffs, v. Billy BRYAN, and Arthur Comer, and George Bullard, and Charlie Greene, Defendants.
    Civ. A. No. 80-180-N.
    United States District Court, M.D. Alabama, N.D.
    Nov. 27, 1984.

      William I. Grubb, II, Eufaula, Ala., Thomas M. Jacobson, Milwaukee, Wis., Walter Kelly, Milwaukee, Wis., for plaintiffs.
    Jerome A. Cooper, Birmingham, Ala., for defendants.
   MEMORANDUM OPINION

HOBBS, District Judge.

This action was commenced under Section 501(b) of the Labor-Management Reporting and Disclosure Act (LMRDA), 29 U.S.C. § 501 (1975), by two members of Local 7326, United Steelworkers of America, against defendants Billy Bryan, George Bullard, Arthur Comer, and Charlie Greene. Plaintiffs alleged that said defendants breached their fiduciary duties owed to Local 7326 by misappropriating strike funds for their own personal benefit in violation of 29 U.S.C. § 501(a). After conducting a three day trial without a jury, the Court concluded that the union was entitled to reimbursement from the defendants in the amount of $14,461.30, plus costs and interest.

This cause is now before the Court on the motion of plaintiffs for an award of attorneys’ fees. Plaintiffs’ attorneys contend that they are entitled to $305,381.25 as compensation for the services rendered to their clients in this law suit. Under LMRDA, 29 U.S.C. § 501(b), plaintiffs seek to recover these fees jointly and severally from defendants and from the United Steelworkers of America. The Court has reviewed plaintiffs’ motion, accompanied by the time sheets of plaintiffs’ attorneys and supporting affidavits, in light of the twelve factors listed in Johnson v. Georgia Highway Express, Inc., 488 F.2d 714 (5th Cir.1974), and in light of Hensley v. Eckerhart, 461 U.S. 424, 103 S.Ct. 1933, 76 L.Ed.2d 40 (1983). Consideration of these decisions, together with the facts of the instant case, leads the Court to conclude that plaintiffs are entitled to $42,000.00 in attorneys’ fees.

I. Factual Background

Elbert Erkins and Samuel Denson, plaintiffs in the above-styled action, were rank and file members of the United Steelworkers of America (International) and of its affiliate, Local 7326. Defendants Billy Bryan, George Bullard, Arthur Comer, and Charlie Green were also members of the International and Local 7326. During the relevant times herein, each defendant occupied at one time or another a position of fiduciary responsibility in Local 7326.

From December 1976 through May 1978, approximately three hundred members of Local 7326 engaged in a strike against their employer, the American Buildings Company of Eufaula, Alabama. This strike commenced at the expiration of the employment agreement between Local 7326 and the company. It was prompted by the company’s demand for new terms in the collective bargaining agreement.

During the eighteen month strike, the International sent a total of $450,000 to the union local, along with instructions that the money be deposited into a special checking account which would contain only strike and defense funds. In order to qualify for benefits from this fund, a striker was required to perform work for the union, which usually meant walking a shift at the picket line. In return he would receive a weekly benefit of twenty (later thirty) dollars. A striker could also petition the strike committee to obtain money from the fund to pay bills or other obligations. To obtain this additional assistance, the striker would have to demonstrate an urgent need. The members of the union were instructed at the outset of the strike to exhaust their own financial resources and seek alternative sources of income (e.g., unemployment compensation) before petitioning the committee for assistance. During the course of the strike, literally hundreds of union members’ bills were paid from the strike funds.

Despite vigorous efforts by the union, the strike was lost when the employees voted not to be represented by the union at a decertification election. The results of this election became final when the union’s objections to the decertification election were rejected by the National Labor Relations Board.

After losing the decertification election, Local 7326 was no longer authorized to represent the employees at the company’s Eufaula plant. Since Local 7326 did not serve as the bargaining representative for employees of any other employer, a representative of the International was appointed as administrator to conclude the affairs of Local 7326. Following his appointment, Local 7326 ceased to exist for all practical purposes. Funds which were not expended during the strike or during the period when the local’s affairs were being concluded by the administrator were eventually returned to the International.

Shortly after the conclusion of the strike, plaintiffs and other union members met with the administrator to discuss whether any of the defendants had misappropriated strike funds. Following this meeting plaintiffs remained suspicious that strike funds had been wrongly appropriated by defendants. They decided to conduct their own investigation. They traveled to Milwaukee, Wisconsin in June 1979 to secure the assistance of Mr. Thomas Jacobson, an attorney. At first plaintiffs were unable to meet the fee demands of Mr. Jacobson. However, they returned in October 1979 with sufficient funds to retain him. After travelling to Eufaula and conducting his own investigation, Mr. Jacobson discovered sufficient information to warrant contacting the International and demanding that the union file suit against the defendants. The International refused and instead forwarded the information provided to it by Mr. Jacobson to the Department of Labor for its consideration.

On May 1, 1980, plaintiffs sought leave from this Court to file suit against defendants under Section 501(b). In their verified proposed complaint, plaintiffs asserted that defendants committed numerous violations of their fiduciary obligations as officers or representatives of Local Union 7326. The verified proposed complaint requested an accounting and reimbursement of any misappropriated strike funds. The Court heard testimony from the plaintiffs and determined that the good cause requirement of Section 501(b) had been satisfied. The Court also found that plaintiffs had satisfied the statutory requirement of making a demand upon the International to bring suit against defendants. Because the International had refused to sue the defendants, this Court allowed plaintiffs to proceed with their complaint.

On June 12, 1980, the International filed a motion to intervene in this lawsuit for the special purpose of seeking to vacate this Court’s order allowing plaintiffs to commence this action. The Court allowed the International to intervene for this limited purpose. When at a hearing plaintiffs, through their attorney, conceded that they were not union members at the time suit was filed, this Court held that plaintiffs lacked standing to bring this suit, and, therefore, withdrew its leave to file suit. 494 F.Supp. 732. Plaintiffs appealed, and the Court of Appeals reversed, holding that plaintiffs remained “members” of the union within the meaning of Section 501(b). Erkins v. Bryan, 663 F.2d 1048 (11th Cir. 1981), cert. denied, 459 U.S. 989, 103 S.Ct. 343, 74 L.Ed.2d 384 (1982).

Plaintiffs also sought to bring'a class action alleging that the union breached its duty of fair representation. This Court held such suit was time barred. Plaintiffs appealed to the Court of Appeals, which affirmed this ruling. Plaintiffs also were instrumental in having a federal suit brought against these same defendants for criminal conversion. After a lengthy trial, the defendants were acquitted of the criminal charges by a jury verdict.

After the conclusion of the criminal case, plaintiffs presented evidence in this civil suit over the course of three days regarding the travel expenses, strike benefits, and payments for personal expenses that defendants had received from the strike and defense fund. Out of the $450,000 allotted for the three hundred members of Local 7326, the four defendants received thirty-one percent of the funds, or $140,000.

It is undisputed, however, that the four defendants remained as leaders of the strike for substantially its entire duration of eighteen months. Their duties as leaders of the strike precluded them from obtaining other work, whereas most of the other union members obtained other jobs within a few weeks or months of the beginning of the strike. Moreover, all of the defendants made many trips to other states in aid of the strike, and much of the money which they received from the defense fund was by way of reimbursement for such travel expenses.

The documentation presented by plaintiffs to substantiate charges of abuse and mismanagement by defendants included over two hundred checks that plaintiffs had selected to challenge as having been issued to one or more of the defendants in breach of their fiduciary duty. The Court notes that in order to secure this judgment against defendants, plaintiffs had to overcome difficult legal and factual obstacles that arose during the course of this protracted litigation.

II. Attorneys’ Fees

A. Extent of Union Liability

A threshold question for this Court to consider in arriving at a reasonable figure for attorneys’ fees is whether the Court will allow plaintiffs’ award to exceed their recovery in the case. The question is an important one in a case where plaintiffs claim attorneys’ fees of $305,387.25, and their judgment amounted to only $14,-461.30.

The statutory provisions governing attorneys’ fees in actions brought under the Labor-Management Reporting and Disclosure Act is § 501(b) of the Act. This section provides that a trial judge

may allot a reasonable part of the recovery in any action under this subsection to pay the fees of counsel prosecuting the suit at the instance of the member of the labor organization and to compensate such member for any expenses necessarily paid or incurred by him in connection with the litigation.

29 U.S.C. § 501(b). The International interprets this section to mean that the amount recovered by plaintiffs becomes the fund out of which the Court may allot “a reasonable part” as attorneys’ fees, so that the fees can never exceed the recovery. The union argues that the legislative history supports its position. Moreover, the union argues that plajntiffs are seeking to impose on the union the obligation to pay hundreds of thousands of dollars in a law suit where it is not even a party. Its only participation has been by way of limited intervention (1) to oppose the bringing of the law suit for its alleged use and benefit, and (2) to oppose plaintiffs’ efforts to collect staggering attorney fees from the union.

Plaintiffs argue that so restrictive an interpretation of the LMRDA provisions does not take the Act’s broad purposes into account. LMRDA establishes fiduciary obligations for union officers who occupy positions of trust in a labor organization. 29 U.S.C. § 501(a). When these duties are violated, the Act provides criminal penalties for those who embezzle union funds. § 501(c). It also allows members of the union to file a civil suit for an accounting of union assets. § 501(b). Congress, in enacting LMRDA, remarked that

A union treasury should not be managed as the private property of union officers, however well intentioned, but as a fund governed by fiduciary standards appropriate to this type of organization. The members who are the real owners of the money and property of the organization are entitled to a full accounting of all transactions involving their property.

Senate Comm, on Labor and Public Welfare, Labor-Management Reporting and Disclosure Act of 1959, S.Rep. No. 187, 86th Cong., 1st Sess., reprinted in 1959 U.S.Code Cong. & Ad.News 2318, 2324.

Whatever may be the merits of the proper interpretation of the intention of Congress, courts have consistently rejected the unions’ contentions that counsel fees should be limited to the amount of the monetary recovery. Local No. 92 v. Norris, 383 F.2d 735, 742 (5th Cir.1967); Bakery and Confectionery Workers Int’l v. Ratner, 335 F.2d 691 (D.C.Cir.1964); Highway Truck Drivers & Helpers Local 107 v. Cohen, 220 F.Supp. 735 (E.D.Pa.1963). Awards have been based on the theory that the union has benefitted from the results of the litigation initiated by plaintiff. Under this theory, the benefits of the litigation may accrue to unions that were not formal parties in the case, and may exceed the monetary recovery in cases where plaintiffs obtained a favorable, nonmonetary benefit for the union. Id. In no case, however, has the claim for attorney fees been so disproportionate to plaintiff’s potential or actual recovery as in the instant case.

In Bakery and Confectionery Workers Int’l v. Ratner, 335 F.2d 691 (D.C.Cir.1964), for example, the court referred to “the establishment of proper accounting procedures, the calling of a convention for membership expression and control, and the requirement of conformity by the officers with the International constitution” as possible benefits for the Bakery and Confectionery Workers that would merit an award of, counsel fees. The monetary recovery, observed the court, may constitute a source for the payment of counsel fees, but the recovery is not the exclusive source for these fees. 335 F.2d at 696-97.

In the present case, the Court is of the opinion that plaintiffs conferred some benefit upon the union which is in excess of their monetary recovery. This lawsuit benefitted the International in two respects. First, it demonstrated to the union that the International’s elaborate system for controlling expenditures of its general funds [see Declaration of Thomas Striegel] existed only on paper in regard to Local 7326. Defendants administered over $450,000 of union funds, but did not maintain adequate records of their expenditures, and misappropriated $14,461.30.

Second, the case pointed out the need for union officials to take their fiduciary obligations seriously, and vigorously to investigate charges of wrongdoing by local officials. Before plaintiffs instituted this action, they met with union officials and asked them to investigate plaintiffs’ charges that defendants had abused their positions of trust in the local union. The International seemingly refused to investigate, and at all events refused to file suit against defendants, electing to forward the information it had received from plaintiffs to the Department of Labor. There is every reason to believe that if the International had elected to conduct its own internal investigation of the local and to file suit, the same results achieved by plaintiffs could have been attained at much less cost than the cost claimed by plaintiffs. To the extent, however, that the International allows itself to be put in a position where third parties enforce its fiduciary obligations and investigate charges against local officers, judicial decisions binding on this Court require that the International must be prepared to pay for all or a part of this outside help, even if the costs exceed the monetary recovery.

B. Determination of Fee Award

Having decided that plaintiff’s attorneys are entitled to an award of fees, the Court must now determine the amount that counsel should receive. Plaintiffs have the burden of proving to the Court that they are entitled to an award of attorneys’ fees. Johnson v. Georgia Highway Express, Inc., 488 F.2d 714, 720 (5th Cir.1974). They have submitted affidavits and time sheets in support of their claim that they should receive the sum of $305,381.25. Plaintiffs arrive at this figure by multiplying the hours that three of plaintiff’s attorneys worked on this matter times the hourly rate for each attorney. This results in a total of $203,587.50. Plaintiffs then increase this figure by a factor of fifty percent, a fee enhancement that plaintiffs claim is appropriate in this case.

In evaluating plaintiff’s motion, the Court has paid particular attention to Hensley v. Eckerhart, 461 U.S. 424, 103 S.Ct. 1933, 76 L.Ed.2d 40 (1983), and Johnson v. Georgia Highway Express, Inc., 488 F.2d 714 (5th Cir.1974). Hensley teaches that the “most useful starting point for determining the amount of a reasonable fee is the number of hours reasonably expended on the litigation multiplied by a reasonable hourly rate. This calculation provides an objective basis on which to make an initial estimate of the value of a lawyer’s services.” 103 S.Ct. at 1939.

The figures that plaintiffs have submitted to the Court on this issue are as follows:

Thomas M. Jacobson (1045.50 hrs at $125) $130,687.50
Thomas M. Jacobson (travel, 93 hrs at $25) 2,325.00
Walter P. Kelly (483 hrs at $125) 60,375.00
William I. Grubb (127.50 hrs at $80) 10,200.00
TOTAL (without 50% enhancement) $203,587.50.

Plaintiffs have also included itemizations of the time that counsel have spent on this case, along with supporting affidavits from local attorneys regarding plaintiffs’ hourly rates. In these affidavits, the attorneys state their belief that plaintiffs’ requests are reasonable and that local attorneys charge anywhere from $75 to $200 per hour for services similar to those performed by plaintiffs’ counsel.

The Court believes that counteraffidavits and discovery could possibly form the basis for challenging whether all of counsel’s time was reasonably spent, but this Court is mindful of the Supreme Court’s admonition in Hensley not to turn the attorney fee petition into a second major trial. Already the time claimed for the fees of plaintiffs’ attorneys is many times the amount in controversy. Accordingly, this Court will review plaintiffs’ submissions in light of the Court’s experience as a member of the local bar for approximately thirty years and as one who routinely has set fees for lawyers in litigation in this Court for the past several years, taking such aid as the affidavits filed by the parties afford.

The Court is of the opinion that if the only consideration in setting fees in this case is the number of hours reasonably spent by plaintiffs’ attorneys times an appropriate hourly rate, plaintiffs would be entitled to an hourly rate of $90 per hour. Fees awarded by this Court have ranged from $40 an hour for beginning attorneys to as much as $100 an hour in a contingent fee case with excellent results for a skillful, prevailing attorney. This Court recognizes that plaintiffs were represented by able, dedicated attorneys.

After reviewing counsel’s itemizations, the Court believes that some of the time listed was unnecessary, duplicative or poorly documented. For example, plaintiff had three attorneys present throughout the trial; defendants had one. But defendants are asked to pay for lawyers for their adversaries which clearly they could not have afforded for themselves. This Court recognizes that three attorneys at a trial may be helpful, but this Court has held that such a luxury as even two counsel at a trial should not be paid for by the losing party where defendants were represented by only one attorney — particularly is this true where defendants have very limited resources. Joyner v. AAA Cooper Transportation Co., CA No. 82-884-N (M.D.Ala. Mar. 8, 1984), and see Johnson v. Georgia Highway Express, 488 F.2d 714, 717 (5th Cir.1974). This Court is satisfied that much of the work of the attorneys outside the courtroom was also duplicative even where the attorneys sought to limit the amount of duplicative work.

A careful scrutiny might afford a basis for challenging some of the hours claimed on a basis other than duplicative hours. For example, the record of Mr. Kelly is itemized entirely in one hour increments, and the accompanying explanation in some cases does not seem to justify the amount of time claimed. But this Court is satisfied that the attorneys for plaintiffs have spent hundreds of hours productively on this case. If the amount in controversy and the results achieved justified fees based on the simple arithmetic of multiplying hours productively employed, times a reasonable hourly rate for plaintiffs’ attorneys, the Court would conclude that the fee should be no less than $95,000 to $100,000. The Court has reduced the amount that plaintiffs may require the union and/or the defendants to pay for plaintiffs’ attorneys based on the results obtained and the amount in controversy.

Johnson v. Georgia Highway Express, 488 F.2d at 717, notes the factors that should be considered by the district court in arriving at an appropriate fee.

(1) Time and labor required: The Court has concluded that plaintiffs’ attorneys spent more time than was reasonably required to prosecute this case successfully, but that plaintiffs’ attorneys spent a thousand or more productive hours in representing their clients.

(2) The novelty and difficulty of the questions: The case presented a novel question on the issue of standing that was resolved in favor of plaintiffs on appeal. Erkins v. Bryan, 663 F.2d 1048 (11th Cir. 1981). In addition, plaintiffs’ proof depended on the difficult chore of assembling and reviewing numerous checks in an effort to make sense out of the Local’s chaotic financial records. Beyond the complexities of the accounting, the trial itself represented no novel or difficult questions.

(3) The skill requisite to perform the legal service properly: Attorneys for plaintiff demonstrated skill and tenacity in persevering in the representation of their clients, despite many obstacles which they had to overcome.

(4) The preclusion of other employment by the attorney due to acceptance of the case. Counsel’s representation of plaintiffs did not create any conflicts of interest which hindered their ability to represent other clients, nor did it impose upon the time of attorneys involved to an unusual degree.

(5) The customary fee. The Court has answered this question in its discussion of an appropriate hourly rate.

(6) Whether the fee is fixed or contingent. The Johnson court employs this variable as an aid to the Court “in demonstrating the attorney’s fee expectations when he accepted the case.” 488 F.2d at 718. Plaintiffs have asked the Court to view the fee as contingent and add 50 percent to a generous hourly rate by way of enhancement. The Court recognizes some merit in the argument of plaintiffs’ counsel that the $10,000 retainer fee (which, counsel inform the Court, was spent on expenses) should not alter the substantial contingent nature of the fee agreement in this case. A case in which an attorney is paid ten thousand dollars as a retainer is not entirely contingent, but in view of the hundreds of hours expended by plaintiffs’ attorneys, the ten thousand dollars was clearly inadequate payment and the representation should invoke consideration similar to a contingent fee case. Copeland v. Marshall, 641 F.2d 880, 893 (D.C.Cir.1980) (en banc).

(7) Time limitations imposed by the client or the circumstances. The Court is not aware of any unusual time constraints in this matter.

(8) The amount involved and the results obtained. The Court is of the opinion that, considering the amount involved, no attorney could reasonably have believed that he would be entitled to a $300,000 fee in this case if his own client were paying the bill. The total amount of money received by all defendants from the strike fund was $140,000, Plaintiffs realized from the start that defendants were entitled to a large part of this money for work they performed during the strike and for urgent expenses which were paid for them as for other union members. The maximum possible recovery for plaintiffs at the outset of the trial was in the area of $50,-000.00.

Plaintiffs’ attorneys might well have anticipated that they would expose mismanagement in the union, which would benefit the International, and serve as additional justification for the suit. The level of mismanagement, however, was directly related to the amount of funds misused by defendants. In this respect, plaintiffs should have been alerted that the amount of their attorney fees involving three attorneys with two of them from more than a thousand miles distance from the trial, was out of all proportion to the potential recovery.

Admittedly, plaintiffs had difficulty in marshalling the evidence to prove their case in large part because of the inadequate records and memories of defendants. Nevertheless, if the maximum possible recovery was somewhere in the area of $50,-000, the actual results obtained, $14,461.30, were a good deal less.

If plaintiff succeeded on some of his claims, but failed to succeed on others, the time spent pursuing the unsuccessful claims is not compensable if the unsuccessful claims are not related to the successful ones. Hensley, 103 S.Ct. at 1940. On the issue of whether plaintiffs’ claims were related, the Court will treat all claims as related. None of plaintiffs’ time will be disallowed for unsuccessfully pursuing an unrelated claim.

(9) The experience, reputation, and ability of the attorneys. The quality of counsel’s representation has already been noted in determining an appropriate hourly rate. This Court recognizes that plaintiffs were represented by able, dedicated attorneys.

(10) The “undesirability” of the case. The Court does not believe that counsel will suffer economic hardship resulting from their representation of plaintiffs in this matter, or that the case was “undesirable” except for the length of time from the filing of the suit to its conclusion and the travel involved for all of plaintiffs’ attorneys.

(11) The nature and length of the professional relationship with the client. Plaintiffs’ attorneys did not have a prior relationship with their clients.

(12) Awards in similar cases. Judgments in two similar cases have been roughly equivalent to plaintiffs’ monetary judgment. In Local No. 92 v. Norris, 383 F.2d 735 (5th Cir.1967), plaintiffs obtained a judgment of $22,896.01, and received attorneys’ fees of $15,729.47. In Highway Truck Drivers v. Cohen, 220 F.Supp. 735 (E.D.Pa.1963), plaintiff received a verdict of $24,921.44, and $38,000.00 in attorneys’ fees.

The twelve factors listed above are not accorded equal weight in arriving at a reasonable fee. Under Hensley, “the most critical factor” used in evaluating the product of the attorneys’ reasonable hours times a reasonable rate is the results obtained by plaintiff. 103 S.Ct. at 1941. In this case, the fee award has been primarily influenced by the fact that plaintiffs did not achieve a level of success that would make the hours reasonably expended a satisfactory basis for making the fee award. Id. at 1940. The Court in Hensley noted that where “plaintiff has achieved only partial or limited success, the product of hours reasonably expended on the litigation as a whole times a reasonable hourly rate may be an excessive amount. This will be true even where plaintiff’s claims were interrelated, nonfrivolous, and raised in good faith.” 103 S.Ct. at 1941.

For example, in Earl v. Beaulieu, 620 F.2d 101 (5th Cir.1980), a Truth-In-Lending Act case, plaintiff’s recovery was $220, and plaintiff sought $1,020 for plaintiffs attorney fees. The court in Earl limited the attorney fees to the amount of the recovery; i.e., $220. The court emphasized that the basis for so limited an award was “the amount involved and the results obtained.” Id. at 103.

In cases such as this one, where the fee awarded exceeds the amount of the judgment, the Court believes that there should be a relationship between the two. In Pearson v. Colonial Financial Services, Inc., 530 F.Supp. 599 (1982), a case brought before this Court, plaintiff sought attorneys’ fees from the losing party which were fifteen times her recovery. Plaintiff received an award of attorney fees in excess of her judgment, but this award was for $6,000 in fees to plaintiff’s attorneys rather than the $31,594.00 which had been sought. In rejecting most of plaintiff’s claim for attorney fees, this Court made it clear that the primary reason was that the claimed fee was out of proportion to the amount in controversy and to the results obtained. Id. at 602.

In the present case, the union has made a strong argument based on legislative history that the union cannot be required to pay a fee in excess of the amount recovered. Judicial precedent deemed binding on this Court has held that the union can be required to pay in excess of the amount of the judgment. The Court notes, however, that plaintiffs are seeking attorneys' fees and costs which are more than twenty times the amount of the judgment. These fees and costs are $290,000.00 greater than the monetary benefit to the union, in a case that was allegedly brought for its benefit.

In ruling on plaintiffs’ petition, this Court has tried to establish a correlation between the amount of the judgment and the amount awarded for attorneys’ fees. If no such correlation is required, the fee to be awarded could become a devastating weapon with which to bludgeon settlements. 530 F.Supp. at 601. In a hypothetical case, an attorney could demand that a union pursue a claim against a former officer of a defunct local union. The union may know that the former officer is insolvent. It may also know that it would cost far, far more to pursue the claim than the claim is worth. Nevertheless, the union must sue the former union officer over even trivial amounts. This could hardly have been the intent of Congress, nor would it be in the public interest.

After a review of the legislative history of LMRDA, this Court has found no indication that Congress, in allowing third parties to enforce the fiduciary obligations of union officials, intended that these parties should hold such a club to coerce decisions of a labor organization. The union should be allowed to exercise its own judgment regarding the merits of a suit without the fear of being forced to pay staggeringly large attorneys’ fees which are not related to the expected recovery. In light of these considerations, the Court will order, by separate judgment, that defendants and the union are jointly liable for attorneys’ fees to plaintiffs in the amount of $42,000.00.