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Gulfstream III Associates, Inc. v. Gulfstream Aerospace Corp.

filed: May 18, 1993.

GULFSTREAM III ASSOCIATES, INC. GULFSTREAM IV ASSOCIATES, INC.
v.
GULFSTREAM AEROSPACE CORPORATION, A DELAWARE CORPORATION; GULFSTREAM AEROSPACE CORPORATION, A GEORGIA CORPORATION; GULFSTREAM AMERICAN CORPORATION; ATLANTIC AVIATION CORPORATION; CESSNA AIRCRAFT COMPANY; GATES LEARJET CORPORATION; BRITISH AEROSPACE, INC.; CANADAIR CHALLENGER, INC.; MITSUBISHI AIRCRAFT INTERNATIONAL INC. GULFSTREAM III ASSOCIATES, INC. GULFSTREAM IV ASSOCIATES, INC. APPELLANTS IN NO. 92-5263 CESSNA AIRCRAFT CO. APPELLANT IN NO. 92-5273



On Appeal from the United States District Court for the District of New Jersey. (D.C. Civil No. 88-00499).

Before: Sloviter, Chief Judge, Greenberg and Seitz, Circuit Judges.

Author: Sloviter

Opinion OF THE COURT

SLOVITER, Chief Judge.

These appeals, which concern attorneys' fees, are companions to the appeals on the merits of the underlying dispute, decided today in a separate opinion. See Gulfstream III Assocs., Inc. v. Gulfstream Aerospace Corp., Nos. 91-5932, 91-5965, 995 F.2d 425 (3d Cir. 1993) (hereafter Gulfstream III (I)). Both plaintiff Gulfstream III Associates, Inc., and defendant Cessna Aircraft Company appeal the award of attorneys' fees and expenses in the amount of $1,102,904.26 to plaintiff under Section 4 of the Clayton Act, 15 U.S.C. § 15 (1988), following a jury verdict for plaintiff on its antitrust claim. Because the facts are set forth in full in the accompanying merits opinion, we refer only briefly to those of particular relevance to the issues presented in the appeals on fees.

I.

FACTS AND PROCEDURAL HISTORY

This lawsuit was originally filed by Gulfstream III in June 1985 in federal court in California against seven manufacturers of business jet aircraft. It alleged that defendants had engaged in a horizontal price-fixing conspiracy in violation of Section 1 of the Sherman Act, 15 U.S.C. § 1 (1988 & Supp. III 1991), that resulted in a 15% overcharge on two aircraft Gulfstream III had agreed to purchase from defendant Gulfstream Aerospace Corporation (GAC) (the Gulfstream Model III, Serial Number 426 (G-III) and the Gulfstream Model IV, Serial Number 29 (G-IV))*fn1 . Between August 1985 and February 1988, six of the seven defendants settled (the Gulfstream settlements), leaving Cessna Aircraft Company as the only remaining defendant.

A related action by plaintiff's principal, Alan Rosefielde, was filed in 1982 in the New Jersey federal court against Falcon Jet Corporation, another manufacturer of business jet aircraft, and its parent company, which alleged numerous antitrust, tort, and contract claims arising out of the purchase of nine Falcon Jet aircraft. Plaintiff thereafter filed a similar complaint in its own behalf. Included in the Falcon Jet complaints was a claim alleging that Falcon Jet participated in the horizontal price-fixing conspiracy that also affected the price of the G-III purchased by Gulfstream III and at issue in the Gulfstream litigation. The Falcon Jet complaints were consolidated, and the Gulfstream case was transferred from California to the district of New Jersey. After the district court granted partial summary judgment for defendants, see Rosefielde v. Falcon Jet Corp., 701 F. Supp. 1053 (D.N.J. 1988), and before the trial in the Gulfstream litigation, the Falcon Jet litigation was settled for $4,650,001 and dismissed.

Thereafter, Gulfstream III proceeded to trial against Cessna, the sole non-settling defendant, on its price-fixing claim arising out of the purchase of the G-III. On April 23, 1991, the jury returned a verdict in Gulfstream III's favor, finding that Cessna had conspired to fix prices of business jet aircraft and that, as a result, plaintiff was overcharged by 10% on its $9,975,000 purchase price for the G-III. The resulting $997,500 verdict would have totalled $2,992,500 after trebling.

At Cessna's request, the district court deferred entry of final judgment, and Cessna moved to dismiss the complaint nunc pro tunc or, in the alternative, to enter judgment for zero dollars by reducing the verdict by the amount of the prior settlements. On August 23, 1991, the district court entered judgment for zero dollars, agreeing with Cessna that the total amount received pretrial from the Gulfstream settlements exceeded the trebled verdict, and that therefore Gulfstream III was not entitled to recover any monetary damages from Cessna. The court, however, denied that portion of the motion seeking dismissal of the complaint nunc pro tunc and denial of Gulfstream III's right to recover attorneys' fees.*fn2

On April 13, 1992, after discovery and consideration of various motions, the court entered judgment awarding Gulfstream III $1,102,904.26 in fees and expenses. Gulfstream III and Cessna both filed timely notices of appeal.

Gulfstream III's appeal challenges (1) the exclusion of fees and expenses incurred in the Falcon Jet litigation; (2) the failure to use the "lodestar" method to calculate Lord, Day & Lord's fees; (3) the 25% reduction for "limited success"; and (4) the exclusion of Alan Rosefielde's fees and expenses incurred in negotiating the Gulfstream settlements. Cessna's appeal challenges (1) Gulfstream III's right to recover any attorneys' fees or expenses in light of the zero dollar judgment; (2) the award of a delay enhancement; (3) the inclusion of the fees and expenses associated with experts retained by plaintiff who were not used at trial; and (4) the determination that Gulfstream III met its burden to establish compensable fees and expenses in several specific instances.

The function of appellate courts in reviewing attorney fee awards is "to establish the general legal principles which can then be applied by the district courts." Danny Kresky Enters. Corp. v. Magid, 716 F.2d 215, 217 (3d Cir. 1983). The application of those principles in the calculation of a reasonable attorney's fee is a matter entrusted to the discretion of the district courts. Rode v. Dellarciprete, 892 F.2d 1177, 1182 (3d Cir. 1990). Of course, we have plenary review of the question whether the district court used the proper standard in calculating a fee award. Student Pub. Interest Research Group v. AT & T Bell Labs. (SPIRG), 842 F.2d 1436, 1442 & n.3 (3d Cir. 1988).

II.

Discussion

A.

Gulfstream III's Right to Recover Attorneys' Fees

1. Proceeding to Trial

Before we review the amount of the fee award, we address Cessna's argument that Gulfstream III was not entitled to recover attorneys' fees under 15 U.S.C. § 15. Cessna first argues that Gulfstream III lacks standing and did not suffer an antitrust injury. Our opinion on the merits rejecting Cessna's argument is dispositive here. See Gulfstream III (I), Majority typescript op. at 6-10.

That opinion also disposes of Cessna's second challenge to Gulfstream III's right to recover attorneys' fees, and requires only a little additional Discussion. Cessna argues that if the district court had allocated to plaintiff's price fixing claims more than the $1 of the Falcon Jet settlement explicitly allocated to antitrust claims,*fn3 the settlement offset would have clearly exceeded plaintiff's maximum potential recovery at trial and should have precluded it from proceeding to trial.*fn4 Cessna's efforts to avoid trial were raised in a motion for summary judgment. We hold in the accompanying opinion that the court did not err in denying summary judgment because the record shows no motion by Cessna to produce the settlement documents to ...


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