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USCA1 Opinion

UNITED STATES COURT OF APPEALS


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

_________________________

Nos. 95-2286
95-2287
95-2288

IN RE:

THREE ADDITIONAL APPEALS ARISING OUT OF THE

SAN JUAN DUPONT PLAZA HOTEL FIRE LITIGATION.

_________________________

APPEALS FROM THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF PUERTO RICO

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


__________________________

_________________________

Before

Selya, Cyr and Lynch,

Circuit Judges.
_______________

_________________________

Peter B. Ackerman, with whom


__________________
Myers were
_____

on brief, for

Central Nat'l

W. Mark Wood
____________

and O'Melveny &


___________

appellants California Union

Ins. Co.,

Ins. Co. of Omaha, Ins. Co. of N. Am., and Pacific

Employers Ins. Co.

Paul K. Connolly, Jr., with whom Damian R. LaPlaca, LeBoeuf,


_____________________
_________________ ________

Lamb, Greene & MacRae, L.L.P., Andrew K. Epting, Jr., G. Trenholm


_____________________________ _____________________ ___________
Walker,
______

and The Wise Law Firm were on


__________________

brief, for the remaining

appellants.
Joseph L. Golden for appellees Tertiary, Inc. et al.

________________

Theodore A. Pianko and Christie, Parker & Hale on brief for


___________________
_______________________
appellees Hotel Systems International, et al.

_________________________

August 19, 1996

_________________________

SELYA, Circuit

Judge.

These appeals

commemorate the

SELYA, Circuit Judge.


______________

latest flight of the phoenix that rises repeatedly from the ashes

of the tragic fire that engulfed the San

decade ago.

Today,

we review

Juan Dupont Plaza Hotel

the district

following the remand that we ordered

court's actions

in an earlier opinion.

See
___

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

Fire Litig.,
___________

that

the

parameters

994 F.2d 956 (1st

district

court's

that we set in

Cir. 1993).

Finding,

determinations

comport

Two Appeals and


___________

as we do,

with

the

fall squarely within

the realm of judicial discretion, we affirm.

I.
I.

BACKGROUND
BACKGROUND

We sketch

the background of

these appeals,

cognizant

that

readers who hunger for more detail

can find it in a myriad

of reported cases, including our earlier opinion.

See, e.g., id.


___ ____ ___

at 959-60.

The

smoldering

sprawling litigation

embers

of

the

that

burst

charred hotel

forth from

encompassed

the

wrongful

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

by more

In

an

than 2,000 plaintiffs against more

effort

proceedings,

management

liaison

to tame

the district

system.

counsels (to

court and the legion

as

among

this

the

The

behemoth

court

than 200 defendants.

and

devised

system included

to orchestrate

an

the

facilitate interactions

innovative

the

case-

appointment

both between

of

the

of lawyers linked to the litigation as well

lawyers themselves);

the

Discovery Committee ("JDC") to coordinate

formation

of a

Joint

discovery initiatives;

and

the creation

resting

like.

place for

See
___

of a

Joint Document

all pleadings,

id. at 959.
___

To pay

Depository ("JDD")

discovery materials,

as a

and the

for this case-management system,

the trial judge imposed mandatory assessments on all litigants.

The

appellants

(whom

we

shall

call

"the

pre-fire

insurers")

comprise thirteen insurance companies that had issued

liability policies to firms which eventually became defendants in

the underlying

various

litigation.1

claimants

indemnification,

expired

original

prior

and

sued

notwithstanding

to the

plaintiffs

defendants.

then

The quondam insureds

the

that

conflagration.

joined

the

settled with

pre-fire

insurers

for

all

policies

had

Not

pre-fire

the

to be

outdone, the

insurers

as

direct

Though they had been brought late into the fray, the

district court levied an assessment against each pre-fire insurer

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

roughly $41,500).

slated

for use

Like all such

in defraying

the

assessments, these funds

expenses associated

were

with the

case-management scheme.

Fairly early

in the game, the

pre-fire insurers moved

for summary judgment on all claims against them.

interval, the

district court

sua sponte that


___ ______

granted their motions

they bear their own

the pre-fire insurers no

After a lengthy

costs.

but ordered

The court

opportunity to be heard.

afforded

Moreover, it

did not specifically mention the cost-sharing assessments.


____________________

1Nineteen
appealed.

pre-fire

One of

insurers

Only

fourteen

them, Puerto Rico American Insurance

Co., has

since capitulated.

were

sued.

The pre-fire insurers appealed the denial of costs.

deciding

those appeals, we ruled, inter alia, that a trial court


_____ ____

has the power to reallocate monetary assessments imposed

of

a case-management

system.

district court did not

to seek reallocation

might

ask

circumstances

burden.

In

the

See
___

id.
___

at 965.

give the pre-fire insurers a

of those

district

warranted

See id. at 969.


___ ___

but, in the end, it went

costs, we remanded

court

some

to

determine

redistribution

of

as part

Because the

fair chance

so that

whether

the

they

the

payment

The pre-fire insurers made the request,

unrequited.

See In re San Juan Dupont


___ ______________________

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

1995).

On appeal,

the

pre-fire

district court ignored the guideposts

for

evaluating case-management

also contend that the

had

they

contend

cost-reallocation claims.

facie case for

they did

that

the

we erected in Two Appeals


____________

lower court failed to recognize

established a prima

complain that

insurers

They

that they

reallocation.

Finally,

any benefit

from the

not receive

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

refused to relieve them from the standardized assessments.2


____________________

2In a reply brief, certain of the pre-fire insurers complain


that they have not
to determine
remains on

been given access to the

how funds were


hand.

spent, or how

They develop no

depository accounts
much, if

legal argument

any, money
out of

this

complaint, and it is beyond peradventure that we will not address


an

issue when the party raising it

fails to treat it seriously.

See, e.g.,
___ ____

United States v. Zannino,


_____________
_______

(describing the
in

895 F.2d 1, 17

"settled appellate rule that

perfunctory

manner,

developed argumentation,

unaccompanied

(1st Cir.)

issues adverted to
by

are deemed waived"),

some

effort

at

cert. denied, 494


_____ ______

U.S. 1082 (1990).

II.
II.

DISCUSSION
DISCUSSION

Because

the

district

court

has

spelled

acceptable basis for its cost-sharing orders and for

out

an

its refusal

to

grant a

special dispensation

to the

pre-fire

insurers, we

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

few amplificative comments.

First:
First:
_____

identified the

Order

here

The

general

insurers

legal standard applicable to

No. 581.

because

pre-fire

They

the

insist that plenary

trial

judge ignored

guides for evaluating

have

incorrectly

appellate review of

review is appropriate

and/or

mishandled

cost-reallocation claims

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


___________

the

that we

This

argument elevates form over substance.

In Two Appeals we delineated several factors that might


___________

be

considered in

mulling

whether

to reallocate

court-ordered

case-management expenses.

hoped

See
___

994 F.2d at 966-68.

Although we

that these suggestions would provide "a modicum of general

guidance

to the

district courts," id.


___

at 967, we

made it very

clear that the trier's judgment is inevitably a critical

element

in determining which factors have relevance in a particular case,

what other factors may

to various factors.

be pertinent, and what weights

In that connection we wrote:

By definition,

cost-sharing orders originate

with the district court as a component of the


court's case-management function.
district

judge's

circumstances
conceived,
and

intimate knowledge

under

his

purposes of

Given the

which the

imposts were

familiarity with
the assessments,

row seat throughout

of the

the nature
his front

the litigation, and

his

to assign

matchless ability to measure the benefits and


burdens
light

of cost-sharing
of

stakes,

the
we are

to

the parties

in

progress

and

litigation's
convinced that

the district

judge has the coign of vantage best suited to


determining, in the first
and

if so,

how,

the

instance, whether,

initial

cost-sharing

orders should be modified.

Id. at 968.
___

This

issue

is

fact-sensitive,

and

even

cursory

reading of the record reveals that the district court stayed well

within the broad contours

of the inquiry that we

had suggested.

Stripped

of rhetorical

complaint

is

not

flourishes, the pre-fire

that

the judge

misunderstood

factors but that he weighed them haphazardly.

focus

is the

challenge

undeniable fact

the

that,

court's factbound

insurers actually benefitted from

management devices (like

subsidize.

So

viewed,

disputes that invite discretionary

where,

as here,

matter is

equitable discretion, see


___

e.g.,
____

Koon v. United States,


____
_____________

13, 1996).

conclusion

relevant

Emblematic of this

the appellants

that

the pre-fire

the elaborate network of case-

appeals

payments helped to

raise

judgments.

committed

id. at
___

the

at bottom,

the JDD) that their

these

insurers' real

fact-sensitive

In

to the

circumstances

trial

965, deference is

64 U.S.L.W. 4512,

due.

judge's

See,
___

4517 (U.S. June

That ends the standard-of-review contretemps.

in Koon, the
____

pre-fire insurers merely

factbound dispute

on "a higher

for abuse

of the

seek to recharacterize

level of

appellate court therefore ought

generality."

to limit its review to

trial court's discretion.

Here, as

See id.;
___ ___

Id.
___

An

a search

see also
___ ____

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


_________________
______________________________

875

(1st Cir.

equitable

judge,

1995)

remedies for

abuse of

trial

court's choice

discretion because

among

"the trial

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

evidence, is

in

scales

balance

into

a considerably

Rosario-Torres v.
______________

1989)

(reviewing a

(en

than

what

are

And

the

essentially

position to

appellate

Hernandez-Colon, 889
_______________

banc)).

transform

an

better

bring

tribunal'")

F.2d 314, 323

pre-fire

factual

insurers'

findings

the

(quoting

(1st Cir.

attempt

into

to

legal

conclusions by the alchemy of words is insufficient to alter this

standard

parties

of review.

to

costumery,"

profit

Since

by

appellate courts

dressing

factual

Reliance Steel Prods., Inc.


____________________________

"will not

disputes

in

permit

`legal'

v. National Fire Ins.


___________________

Co.,
___

880

remains

F.2d 575,

577 (1st

the appropriate

Cir.

benchmark

1989), abuse

against

of discretion

which the

district

court's ruling must be measured.

Second:
Second:
______

The pre-fire insurers

misconstrue our comment

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

for some reallocation of the assessments."

at

968.

They

interpret this

language

Two Appeals, 994 F.2d


___________

as signifying

remand the appellees had a burden to proffer

to

rebut

this prima

should have responded

facie case,

and

to the lack of any formal rebuttal.

evidence sufficient

that the

in terms both to the

that on

district court

prima facie case and

This self-serving reading of

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

will bear.

In

Two Appeals,
____________

reallocation because

969.

talisman

We

did not

indicating

remanded

the district court

fire insurers the opportunity

at

we

use the

that the

the

question

of

had not given

the pre-

to argue their position.

See id.
___ ___

phrase "prima

pre-fire

facie case"

insurers

as a

had proved

point, but, rather, as

a means of describing the

they had tendered in support of reallocation.

usage

was

intended merely

advisable because,

on the

pre-fire insurers had

the district court's

hand neither a

to

Id. at
___

demonstrate

exiguous record

offered enough of

consideration of

arguments that
_________

that

968.

a remand

This

was

then before

us, the

an argument to

warrant

their claim.

precise knowledge of the facts

We had

at

nor a valid means

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

Thus, we

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

before us that appellants have a colorable basis for arguing that


_________
_________ _____

they

derived

minimal

(emphasis supplied).

benefits

And,

from

the

assessments."

in words that should have

Id.
___

erased any

doubt, we added:

Nonetheless,
unproven.
________
the

this

There may

hypothesis

remains
_______

be more here than meets

eye; for one thing, the appellate record

does not speak in any detail to the equities.


.

. .

[T]here are

mulled on
trial

remand

judge's

important.
case must

We

pregnant questions to be
questions

viewpoint

on which
is

the

especially

conclude, therefore, that the

be returned to the

for further proceedings before

district court
Judge Acosta.

We intimate no opinion as to the appropriate


_____________________________________________
outcome of these proceedings.
____________________________

Id. at 968-69 (emphasis supplied).


___

authority

to

exercise

discretion

Judge Acosta,

in

both

therefore, had

marshalling

and

balancing the relevant factors.

any special significance to

case" language

He was not compelled

to attach

the largely theoretical "prima facie

that the pre-fire

insurers pluck out

of context

from our earlier opinion.

insurers

Third:
Third:
_____

The district

did in

fact

court's finding that the pre-fire

receive a

existence of the case-management

an abuse-of-discretion

they received no

test.

significant

benefit from

system withstands review

The pre-fire

benefit from the devices

the

under

insurers assert that

because (1) discovery

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

case, (2)

they were

perfectly capable

what the JDD accomplished for them,

rely

on the

material in

the JDD

of doing

for themselves

and (3) they did not need to

since they

sought

(and were

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

against them.3

581,

supra,
_____

We

at 9,

agree with the district court,

that these

assertions

see Order No.


___

stem from

an overly

simplistic view of the pre-fire insurers' situation.

For one thing, Judge Acosta specifically found that the

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

pre-fire insurers.

though perhaps

See id.
___ ___

at 10.

not inevitable, is

We think that

supportable.

this finding,

The fact

that

discovery had been

concluded was

a two-edged sword.

While

it

____________________

3The

pre-fire insurers

concentrate their

because, in their view, nothing else


outlook.

The case-management

whole.

The

information

JDC

played

fire on

mattered.

the JDD

This is a myopic

system functioned as an integrated


a

pivotal

role

in

producing

the

stored in the JDD, and the liaison consuls saved all

parties time and money at every stage of the farflung litigation.

meant

that the pre-fire insurers did not

have to use the JDD to

keep track of

ongoing discovery,

it also meant

available to them in a single location all

service

lists,

proceedings,

memoranda,

pretrial

trial

as well

documents,

transcripts,

as docket

transpired up to that time."

that they

pleadings, discovery,

records

evidence

"had

of

all

utilized

reference[s] as

court

at trials,

to all

that had

Id. at 8.
___

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

insurers

might have

management

devised

system

could

depended

not

preferred

that

on the court's authority

within

the

scope

go

it

district

have operated

participate and to share

acted

the

to

on

alone.

court

to order all

its

case-

painstakingly

voluntary

the associated costs.

of

so

The

basis.

It

parties both to

Since

case-management

the court

powers

in

establishing the overall paradigm,

see Two Appeals, 994 F.2d


___ ___________

965; In re Recticel Foam Corp., 859


___________________________

1988),

we

give short

insurers would have

shrift to

the

F.2d 1000, 1004

notion that

been better off conducting

at

(1st Cir.

the pre-fire

their defense in

more traditional surroundings.

Finally,

the district

court found specially

that the

materials

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

insurers.

See
___

also

supportable.

fire insurers

the

Order No. 581,

After

all, the allegations

developed during, and

discovery process.

searched,

supra, at 8-9.
_____

This finding

against the pre-

arose from the

Thus, materials

in the

is

results of,

JDD had

to be

and some were directly relevant to the claims asserted

10

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

put

it, "upon being served with [a]

against them

the

As the district court

copy of the claims asserted

two or three years after the initial complaint [in

underlying

litigation]

had

been

filed

[the

pre-fire

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

efficient Joint Document Depository,

proceedings

and

have

readily

ascertain the status of the

available

all

documentation

pertinent to their case."

The proof of

Id. at 9.
___

the pudding is in

the pre-fire insurers'

admission that their confidence knew certain limits.

Faced

with

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

full-scale

trial preparations

their dispositive motions.

discovery, and as

pretrial

resulting,

for

orders)

example,

ordering

the pendency

of

The preparations envisioned reopening

a necessary

applicable

documents and

notwithstanding

prelude (under the

entailed

in

making

in excess

contained stored information.

In

of

heavy use

copies

of

110 computer

terms of

of

the

over

the

JDD,

275,000

disks

that

light of these statistics, the

"no benefit" claim rings hollow.

The

pre-fire insurers attempt to downplay the district

court's finding and the

that they eventually

of law.

In

little need

statistics that support it on

the basis

succeeded in obtaining judgment as a matter

their view, this

to rely on

outcome signifies

the JDD.

In an allied

that they

vein, they note

that they did not refer to any documents contained in

their summary judgment motions.

had

the JDD in

We believe that these rejoinders

11

miss the point.

Although the pre-fire insurers ultimately proved

themselves able to defeat the claims without relying on discovery

materials, simple prudence required them carefully to check those

materials

(if

for no

other reason

possible denial

of their Rule 56

advantage

the

that

compilation

of

those

pre-assembled,

accessible.

materials

to guard

against the

motions), and it was

materials were

cross-indexed, and readily

than

In

to their

catalogued,

a similar vein,

necessarily

assisted

in

the

the

processing of their motions.

Furthermore,

litigation

of

other

as the district court explained, previous

issues

extensive discovery) had framed

court to resolve

relative ease.

earlier in

trial

(including

the issues, thereby enabling the

the claims against

The pre-fire

the

the pre-fire insurers

insurers (who have

the burden

with

to

prove

answer

rather,

they are

to

entitled

this

ask

to reallocation)

observation

us to

accept on

district court did not

in their

faith

offer no

appellate

convincing

briefs,

their assumption

rely on its knowledge of

but,

that the

the litigation,

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

in their favor.

We are

unwilling to buy so

large a pig

in so

recondite a poke.

Fourth:
Fourth:
______

the extent to

litigation

which the

affected

relative benefits

system.

The pre-fire insurers refuse to recognize

and

size and complexity

the

district

court's

burdens imposed

In our judgment,

it is this

by

of the

underlying

evaluation

the

of

the

case-management

blind spot that

explains

12

their

contention that

compare

relative

the district

costs

and

court failed

benefits

between

adequately to

and

among

the

parties.

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


___________

which

"dominates the

decision to

reallocating

constellation

of factors

bearing on

the

reallocate" is that a district court should consider

case-management

assessments

if

and

when

"it

determines that

a party

or group of

parties has

significantly

failed to derive the expected benefits from burdens imposed under

cost-sharing

derived

orders entered

those

benefits to

earlier in

the litigation,

significantly

greater or

extent than other similarly situated parties."

F.2d at

966.

But

at the

same time

we

or has

lesser

Two Appeals, 994


____________

emphasized that

"the

relative weight

and impact of relevant

considerations will vary

from

to

at

situation

comparative

reallocation

expected

benefits

situation."

are

always

Id.
___

967.

salient

Even

aspect

though

of

the

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


___ ___

to measure benefits and burdens with the precision of a

micrometer in an antiseptic laboratory setting.

This

vastly complicated case (or, more accurately put,

compendium of cases)

whose claims have

theories of

standard.

which involves upwards of 2,000 plaintiffs

run the gamut

liability

of imaginable and

illustrates

the

need for

unimaginable

flexible

In such circumstances, it is simply not practicable to

contrive a clean matrix of benefits and burdens.

The best that a

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

13

justice, whether

benefits and

significant disparities in the

burdens demand

See id. at 966.


___ ___

readjustment of a

distribution of

generic formula.

This is precisely the approach that the district

court took on remand.

III.
III.

CONCLUSION
CONCLUSION

We need go no

this

convoluted case,

knowledge

of

strategies,

further.4

its

the issues,

the

Based on its

familiarity with

and

trial court

its

is in

awareness

the

experience with

the evidence,

of the

best position

its

parties'

to make

delicate case-management judgments, including judgments about the

reallocation of expenses previously assessed.

Here,

the trial

court

determined that

each pre-fire

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

expenses.

Because the district court's refusal to reallocate the

expense shares does not constitute a serious lapse in judgment of

the kind that

must occur before we will reverse

under an abuse-

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


___ ___________
________

v. Cryovac, Inc.,
_____________

at

liberty to

pristine

862 F.2d 910, 923 (1st Cir.

second-guess

page,

might

it.

have

1988), we are not

Though we,

balanced

if

some

writing on

of

the

factors

____________________

4The

pre-fire

insurers

"frivolousness" of the
or

weakness

influence
Appeals,
_______

of

994 F.2d

at

decretory significance

on

what

claims against them.

the claims

the outcome

harp

of

is
a

967,

one of

quest
that

they

many

factors

does

that the pre-fire insurers

Reallocating cost-sharing

the

While the strength

for reallocation,
factor

term

assessments is a matter

not

that may
see
___

Two
___

carry

the

attach to it.

of equity; it

is

not a

award of

substitute for, and


sanctions for

should not

be confused

filing groundless claims

with, an

under Fed.

R.

Civ. P. 11.

14

differently

systemic

or taken a divergent

benefits received

by

view of the

the pre-fire

importance of the

insurers, we

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


___________

made

Affirmed.
Affirmed.
________

15