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Bittner v. Sadoff & Rudoy Industries

decided: February 7, 1984.


Appeal from the United States District Court for the Eastern District of Wisconsin. No. 79 C 660 -- John W. Reynolds, Judge.

Wood and Posner, Circuit Judges, and Dumbauld, Senior District Judge.*fn*

Author: Posner

POSNER, Circuit Judge.

The plaintiff, Max Bittner, appeals from a judgment for the defendant, 98 F.R.D. 310, Sadoff & Rudoy Industries, a Wisconsin firm in the scrap-metal business, and from a separate order awarding attorney's fees to the defendant in an amount yet to be determined. The appeals bring up to us a variety of issues, of which the most difficult relate to procedural and substantive aspects of attorney-fee awards under ERISA (Employee Retirement Income Security Act), 29 U.S.C. §§ 1001 et seq.

Bittner (a vice-president of Sadoff & Rudoy, reporting to Edward Rudoy, the firm's general manager) and his family were entitled to medical benefits under the firm's employee benefit plan, a plan subject to ERISA. Bittner's son became mentally disabled. For a time Bittner received benefits under the plan for his son's condition, but these eventually were terminated, Bittner thought in violation of the terms of the plan. Rudoy invited him to file a friendly lawsuit against the company to resolve their dispute, and he did so. But the suit (brought in state court, and later dismissed) was not friendly. Besides continued benefits it asked for $500,000 in punitive damages from the company and from Rudoy himself on the ground that the termination of benefits had been "calculated and intended to cause the plaintiff emotional distress and mental instability for the ultimate purpose of obtaining monetary advantage for the defendants." When Rudoy read the complaint he summoned Bittner to his office and fired him. In the words of the district judge, "The confrontation between Mr. Rudoy and Mr. Bittner included no discussion of or reference to that part of the complaint in the state court action which sought a declaration of Mr. Bittner's rights under the [plan]. The only discussion of the complaint related to those parts of the complaint that sought compensatory and punitive damages for alleged intentional infliction of emotional distress. The discussion also involved allegations by Mr. Bittner that Mr. Rudoy had cheated the IRS and stolen from a client."

Bittner then brought the present suit, a damage action based on a provision in ERISA that makes it "unlawful for any person to discharge . . . a participant or beneficiary for exercising any right to which he is entitled under the provisions of an employee benefit plan . . . ." 29 U.S.C. § 1140. Sadoff & Rudoy admits that if it fired Bittner because he sued it for benefits under ERISA it violated section 1140; but the district judge, who granted the defendant's motion to dismiss the complaint under Fed.R.Civ.P. 41(b) at the close of the plaintiff's case, found that Bittner was not fired for that reason. The judge did not say what the true reasons were, but he implied in the passage quoted earlier -- and the record conclusively shows -- that one was that Bittner had joined with his ERISA claim a claim for punitive damages for intentional infliction of emotional distress. If Bittner had sued Sadoff & Rudoy solely under Wisconsin tort law, and Rudoy had fired him, obviously Bittner could not complain that he had been fired in retaliation for exercising his rights under ERISA. His remedy, if there was any, would be a suit under the Wisconsin law of wrongful discharge, narrowly construed in Brockmeyer v. Dun & Bradstreet, 113 Wis. 2d 561, 572-74, 335 N.W.2d 834, 840-41 (1983). It should make no difference that instead of bringing a separate suit claiming damages for intentional infliction of emotional distress Bittner joined that claim with his ERISA claim in a single state court suit.

There is no question that Bittner's claim of intentional infliction of emotional distress was indeed based on state law and not on ERISA. The only type of civil action under ERISA that may be brought in state court is an action by a participant or beneficiary "to recover benefits due to him under the terms of his plan, to enforce his rights under the terms of the plan, or to clarify his rights to future benefits under the terms of the plan." 29 U.S.C. § 1132(a)(1)(B); see 29 U.S.C. § 1132(e)(1). The quoted language confers no right to sue for mental suffering caused by a violation of the terms of a plan. True, if Bittner had reasonably and in good faith, though mistakenly, sought a form of relief to which he was not entitled by ERISA, and Rudoy had fired him in pique at his doing so, the defendant might be liable for retaliation. See Power Systems, Inc. v. NLRB, 601 F.2d 936, 939-40 (7th Cir. 1979); Pettway v. American Cast Iron Pipe Co., 411 F.2d 998, 1007 (5th Cir. 1969). But all concerned have assumed from the beginning that Bittner's claim for punitive damages -- the spark that ignited Rudoy -- was based on state law rather than on a misconception (which could hardly have been reasonable) by Bittner of his rights under ERISA. As we are persuaded that the district court's findings concerning Rudoy's motive for firing Bittner were not clearly erroneous, we must therefore conclude that he was not fired for suing Sadoff & Rudoy under ERISA.

Bittner also argues that the district court erred in excluding certain letters that he contends illuminate Rudoy's motive. Since this was a bench trial, and the letters were not voluminous, it would have been better for the judge to have admitted them and given them such weight as they were worth. But their relevance was slight, and it is inconceivable to us that the district judge would have reached a different conclusion if he had admitted them. If there was error, it was harmless.

The remaining issues relate to attorney's fees. Fourteen days after the entry of judgment in its favor, Sadoff & Rudoy moved for an award of more than $40,000 in attorney's fees under 29 U.S.C. § 1132(g)(1), which provides that, "In any action under this subchapter by a participant, beneficiary, or fiduciary, the court in its discretion may allow a reasonable attorney's fee and costs of action to either party." The district judge held that Sadoff & Rudoy was entitled to a reasonable attorney's fee because Bittner's section 1140 retaliation claim had been frivolous, but he also held that Sadoff & Rudoy had not itemized its legal expenses adequately and told it to resubmit its claim. Sadoff & Rudoy submitted a claim for some $8,000 in attorney's fees on which the district judge has yet to act. This appeal is from the order declaring that Sadoff & Rudoy was entitled to fees but refusing to award the amount sought.

The first question is whether the order was final, and so appealable, see 28 U.S.C. § 1291, when it did not specify the amount of fees to be awarded. We have found no cases on this point. A superficially compelling analogy is that a judgment declaring the defendant liable to the plaintiff for damages but not fixing the amount of damages is not final. Liberty Mutual Ins. Co. v. Wetzel, 424 U.S. 737, 744, 47 L. Ed. 2d 435, 96 S. Ct. 1202 (1976). The reason is to spare the court of appeals from having to consider liability and damage issues in separate appeals. Freeman United Coal Mining Co. v. Director, Office of Workers' Compensation Programs, 721 F.2d 629, 630 (7th Cir. 1983). And it is true that if we decided in this appeal that Sadoff & Rudoy was entitled to an award of attorney's fees, we might have to decide in a later appeal whether the amount of the award was proper. But if we wait for that appeal before deciding whether any award should have been made, we shall lose the chance to consider liability and (some) attorney's fee issues at the same time, which we can do here because the order holding that Sadoff & Rudoy was entitled to attorney's fees was entered shortly after the final judgment and therefore the appeals from both could be and were consolidated without delaying either appeal.

These circumstances bring into play the principle that "a court of appeals may, in the interest of orderly judicial administration, review matters beyond that which supplies appellate jurisdiction." Scarlett v. Seaboard Coast Line R.R., 676 F.2d 1043, 1052 (5th Cir. 1982); see also Shaffer v. Globe Protection, Inc., 721 F.2d 1121, 1124 (7th Cir. 1983). The judgment dismissing the complaint is properly before us, independently of the attorney's fee award, because a judgment is not deprived of its finality by the fact that the district court has not yet acted on a party's claim for statutory attorney's fees. Freeman United Coal Mining Co. v. Director, Office of Workers' Compensation Programs, supra, 721 F.2d at 631; Abrams v. Interco Inc., 719 F.2d 23, 26-27 (2d Cir. 1983). We might as well decide at the same time what are likely to be the dispositive issues relating to the award of attorney's fees. It is possible but unlikely that we shall have to consider the award again.

And if we waited, we still might have to decide two fee appeals -- one from the award for work in the district court, the other from an award for work in this court, since a party who is awarded fees for winning in the district court will usually get fees for defending his victory in the court of appeals. See, e.g., Muscare v. Quinn, 680 F.2d 42, 45 (7th Cir. 1982); Bond v. Stanton, 630 F.2d 1231, 1235 (7th Cir. 1980). If instead we decide the present appeal from the fee order -- and suppose we affirmed that order -- the district court, by waiting till the appellate proceedings were concluded, could make a single award covering both the district court and the court of appeals proceedings. Then there would be a single appealable order on the amount of fees.

The sad fact is that there is no sure way of preventing multiple appeals in a case where the prevailing party has rights under an attorney's fee statute as well as substantive rights. There would be no net judicial economy, but if anything a net diseconomy, if we held that we could not consider the merits of the fee order until the amount of fees to be awarded is fixed. We think we can.

The next question, also one of first impression, is whether the request for fees was filed in the district court on time. It was if fees under section 1132(g)(1) are properly taxable as costs under Rule 54(d) of the Federal Rules of Civil Procedure, which has no deadline except the implied one of reasonableness, not here exceeded. Although local rules of court sometimes require that a motion for costs be filed within a specified period after the judgment is entered, often five days, these rules have been held inapplicable to motions for attorney's fees. Gautreaux v. Chicago Housing Authority, 690 F.2d 601, 611 (7th Cir. 1982). But the defendant's request was not timely ...

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