Mary Collins v. PBGC , 881 F.3d 69 ( 2018 )

United States Court of Appeals
FOR THE DISTRICT OF COLUMBIA CIRCUIT
Argued December 4, 2017 January 30, 2018
No. 16-5310
MARY E. COLLINS, INDIVIDUALLY AND ON BEHALF OF ALL
OTHERS SIMILARLY SITUATED, ET AL.,
APPELLANTS
v.
PENSION BENEFIT GUARANTY CORPORATION AND M & M
TRANSPORTATION COMPANY PENSION PLAN,
APPELLEES
Consolidated with 16-5318
Appeals from the United States District Court
for the District of Columbia
(No. 1:88-cv-03406)
(No. 1:89-cv-02997)
John R. Ates argued the cause for the appellants. Allison
C. Pienta was with him on brief. Stephen R. Bruce and Ann
Curry Thompson entered an appearance.
Nicole Hagan, Deputy Assistant General Counsel, Pension
Benefit Guaranty Corporation, argued the cause for the
appellee. Judith R. Starr, General Counsel, Israel Goldowtiz,
Deputy General Counsel, Paula Connelly, Assistant General
2
Counsel, Anna Lofton, Attorney, Charles G. Cole, Gwendolyn
Prothro-Renigar and Molly B. Fox were with her on brief.
Joseph J. Shelton, Assistant General Counsel, Pension Benefit
Guaranty Corporation, entered an appearance.
Before: HENDERSON and ROGERS, Circuit Judges, and
SENTELLE, Senior Circuit Judge.
KAREN LECRAFT HENDERSON, Circuit Judge: The issue in
this appeal is whether defendant Pension Benefit Guaranty
Corporation (PBGC) must pay attorneys’ fees beyond an
agreed ten-year period for wrapping up a class-action
settlement. Counsel for named plaintiffs Mary Collins and
Estella Page and the plaintiff class assert that the PBGC
violated the wrap-up agreement by doing too little to identify
and make payments to class members. The district court denied
counsel’s motion to compel payment of fees that they say
should have been but were not paid as a result of the PBGC’s
alleged footdragging. Because we conclude the ten-year period
for payment of attorneys’ fees is unambiguous and has expired,
we affirm.
I. BACKGROUND
The underlying class action in this case sought payments
for pension beneficiaries whose federally guaranteed pension
plans had collapsed in the years immediately following
creation of the PBGC. The PBGC reached a settlement with the
class whereby a class action settlement board (CASB) was
created and a private search firm retained to locate and make
payments to class members. The plan succeeded beyond
anyone’s expectations, yielding over $1 billion in settlement
payments—more than ten times the parties’ estimate at the time
of the settlement. Class counsel, as a participant in the CASB,
helped administer the settlement and worked on its own and
3
with the private search firm to identify class members. In
exchange, and as compensation for its work preceding the
creation of the CASB, the settlement agreement entitled class
counsel to eight per cent of every settlement payment, netting
class counsel more than $85 million.
In 2001 the parties negotiated a “wrap-up agreement” to
shut down the CASB and transfer its remaining responsibilities
to the PBGC, which that year began an in-house pension search
operation. See Joint Appendix (JA) 194–204 (wrap-up
agreement). Under the wrap-up agreement, the PBGC was to
continue paying attorneys’ fees of eight per cent on every
settlement payment “for a ten-year period” beginning with the
transfer of payment liability to the PBGC pension search
program “after August 31, 2002.” JA 201. 1 The parties’
infighting prevented the timely effectuation of the wrap-up
agreement and the CASB continued in operation for several
years after the PBGC had taken over the settlement payments.
According to class counsel, the PBGC was preventing the full
1
The fee provision reads in full:
The modification of PBGC’s liability to pay
settlement benefits to permit settlement benefit
payments through PBGC’s Pension Search program
after August 31, 2002, instead of through the
Settlement Benefits Fund, shall not modify the U.S.
District Court’s June 7, 1996 Order awarding
attorneys’ fees as a percentage of class counsel’s
recovery on behalf of the class. Attorneys’ fees shall
continue to be deducted when settlement benefit
payments are made to class members at the 8% rate
provided in the U.S. District Court’s June 7, 1996
Order for a ten-year period. Thereafter, PBGC shall
have no further liability to class counsel in this case.
JA 201.
4
payment of settlement benefits during this time and therefore
failed to pay class counsel their due. The PBGC says it was
doing everything the wrap-up agreement required and at all
events continued paying class counsel an eight per cent cut of
all settlement payments. Ten years after the wrap-up agreement
took effect, the PBGC stopped making payments to class
counsel.
As the PBGC read it, the wrap-up agreement required that
the fee payments cease. The agreement provides for payment
of attorneys’ fees “for a ten-year period” “after August 31,
2002,” after which period “PBGC shall have no further liability
to class counsel in this case.” Class counsel went to court
seeking continuation of the payments, arguing that the running
of the ten-year period was subject to the PBGC’s fully
performing its end of the bargain, which in class counsel’s view
the PBGC did not do. On October 3, 2016 the district court
denied class counsel’s motion to compel continued payment of
attorneys’ fees beyond the ten-year wrap-up period. See Page
v. Pension Benefit Guar. Corp., 213 F. Supp. 3d 200 (D.D.C.
2016). Class counsel timely appealed.
II. STANDARD OF REVIEW
The district court’s order is final for jurisdictional
purposes because it “conclusively resolves the last outstanding
issue regarding the amount of and entitlement to [class
counsel’s] fees and expenses.” Cobell v. Jewell, 802 F.3d 12,
22 (D.C. Cir. 2015).
The parties disagree over the standard of review. Class
counsel insists that each of their claims should be reviewed de
novo; the PBGC contends that the district court’s conclusion
that it had fully complied with the wrap-up agreement was a
finding of fact subject to clear-error review. Although the
district court’s interpretation of the wrap-up agreement is
5
subject to de novo review, see Richardson v. Edwards, 127
F.3d 97, 101 (D.C. Cir. 1997) (“We customarily review
decisions interpreting consent decrees . . . de novo, in the same
manner as we review decisions interpreting contracts.”),
whether the PBGC’s actions satisfied the requirements of a
court-ordered consent decree is arguably a question of fact,
which “will not be found clearly erroneous unless the court’s
account of the evidence is implausible in view of the entire
record and it is apparent that its findings are clearly mistaken.”
Robinson v. Am. Airlines, Inc., 908 F.2d 1020, 1022–23 (D.C.
Cir. 1990). Class counsel has given us no reason to question
the district court’s fact-finding and, accordingly, we interpret
de novo the wrap-up agreement on the factual record developed
in district court.
III. ANALYSIS
Class counsel argues that the wrap-up agreement’s ten-
year period for payment of attorneys’ fees is ambiguous and
therefore we must construe it based on evidence beyond the
four corners of the agreement. See Keepseagle v. Perdue, 856
F.3d 1039, 1047 (D.C. Cir. 2017) (“If we find that the relevant
clause is subject to more than one reasonable interpretation, we
consider ‘what a reasonable person in the position of the parties
would have thought the disputed language meant’” (quoting
Armenian Assembly of Am., Inc. v. Cafesjian, 758 F.3d 265,
278 (D.C. Cir. 2014))). Failing that, class counsel argues that
the PBGC prevented class counsel from fully performing under
the wrap-up agreement and that, accordingly, class counsel
should continue to be compensated beyond the ten-year cutoff.
Neither argument is persuasive.
A. THE TEN-YEAR PERIOD IS UNAMBIGUOUS.
It is a commonplace of contract law that we will give the
parties’ agreement the meaning they have given it themselves.
6
See Armenian Assembly, 758 F.3d at 280 (“[N]o sense of
buyer’s remorse can empower us to rewrite the plain terms of
the contract to which [the parties] agreed.”). In class counsel’s
telling, the parties intended that class counsel be paid not “for
a ten-year period” simpliciter but rather for a ten-year period
running by fits and starts with the PBGC’s satisfactory
performance of the wrap-up agreement. This argument fails for
at least two reasons.
First, class counsel urges that the ambiguity of the ten-year
term is apparent in light of the wrap-up agreement as a whole.
But class counsel identifies and careful reading discloses
nothing in the agreement as a whole that creates such an
ambiguity. Rather than adverting to any evidence in the
agreement, class counsel points to the parties’ voluntary
extension of two other time periods in the agreement as
evidence that “ten years” does not in fact mean ten years.
Although the wrap-up agreement called for payments to the
contingent distribution reserve for five years, those payments
continued for ten. And instead of making address-locator
payments for three years, as required by the agreement, the
parties voluntarily continued them for six. Class counsel cites
the PBGC’s voluntary continuation of these payments beyond
the contractually required term as evidence that it is under a
duty to continue making attorneys’-fees payments as well.
Class counsel fails to recognize that voluntarily going beyond
what the contract requires does not make the contract’s
requirements ambiguous. “The court may not create ambiguity
where none exists,” Carey Canada, Inc. v. Columbia Cas. Co.,
940 F.2d 1548, 1556 (D.C. Cir. 1991), and none exists here.
This first point alone is fatal to class counsel’s argument.
Yet even if we were to conclude that the fee provision is
ambiguous—which it is not—there is a second reason class
counsel must lose: there is nothing even outside the four
7
corners of the wrap-up agreement to suggest that the PBGC
should pay attorneys’ fees beyond the agreement’s ten-year
period. Class counsel have offered no evidence that the parties
intended to condition the running of the ten-year period on
specific actions of the PBGC other than performance of the
wrap-up agreement. Our de novo interpretation of the wrap-up
agreement gives us no reason to question the district court’s
conclusion that the PBGC fully performed notwithstanding
class counsel’s unsupported assertions to the contrary.
B. PBGC DID NOT PREVENT CLASS COUNSEL’S
PERFORMANCE OF THE WRAP-UP AGREEMENT.
Class counsel argues in the alternative that they are entitled
to additional fee payments because the PBGC prevented class
counsel’s performance of the wrap-up agreement. The problem
with this argument is that even if there were any bad behavior
on the PBGC’s part, there was no prevention. It is far from clear
whether the wrap-up agreement required continued
performance by class counsel after August 31, 2002, when their
contractual obligation to help administer the settlement through
the CASB ceased. See generally JA 194–204 (wrap-up
agreement). But it does not matter if class counsel’s continued
work after August 31, 2002 was voluntary or mandatory,
because even if class counsel were right on the law of
prevention, they are wrong on the facts: class counsel did
continue to locate class members after August 31, 2002, and
the PBGC continued to pay them the eight per cent fee on those
members’ benefits.
Class counsel, however, are wrong on the law, too. The
doctrine of prevention excuses performance by one party to a
contract if its counterparty “hinders, prevents or makes
impossible performance by the [first] party.” WILLISTON ON
CONTRACTS 4th § 39.3. “Under the doctrine, a contracting
8
party whose performance of its promise is prevented by the
other party is not obligated to perform and is excused from any
further offer of performance.” Id. “Since each party to a
contract impliedly agrees not to prevent the other party from
performing and not to render performance impossible, a
contracting party whose unjustified action prevents the other
party from performing may not claim that the other party has
not performed and that party is, in fact, breaching the contract.”
17A AM. JUR. 2D CONTRACTS § 675. “The prevention doctrine
is an exception to the general rule that one has no duty to
perform under a contract containing a condition precedent until
the condition occurs. The doctrine excuses a condition
precedent when a party wrongfully prevents the condition from
occurring.” Dist.-Realty Title Ins. Corp. v. Ensmann, 767 F.2d
1018, 1023 (D.C. Cir. 1985). “Generally, one is not bound by
a conditional contract until the condition occurs. The doctrine
of prevention is an exception to this general rule. This doctrine
provides that when a promisor wrongfully prevents a condition
from occurring that condition is excused.” Shear v. Nat’l Rifle
Ass’n of Am., 606 F.2d 1251, 1254–55 (D.C. Cir. 1979).
These statements describing the prevention doctrine
plainly refute class counsel’s invocation of it. Two
fundamental elements of prevention are missing here. First, the
wrap-up agreement is not a conditional contract: no party’s
performance was conditioned on the performance of any other
party or on the occurrence of any external condition.
Responsibility for settlement payments transferred to the
PBGC when the wrap-up agreement became effective on
August 31, 2002. The PBGC fully satisfied its obligation to pay
attorneys’ fees for ten years after that date. That class counsel
continued to locate settlement beneficiaries, whether its efforts
were voluntary or mandatory, demonstrates that the PBGC did
not “hinder,” much less “make impossible,” class counsel’s
work on behalf of the class. See WILLISTON, supra, § 39.3.
9
Second, if we assume away the difficulties in applying the
prevention doctrine to a non-conditional contract, class counsel
must yet contend with the problem that prevention is a shield,
not a sword. See Shear, 606 F.2d at 1255 (“Prevention . . . can
negate a requirement to satisfy a condition precedent.”). The
PBGC has not alleged any nonperformance by class counsel
against which prevention could be invoked as a defense. Class
counsel have nevertheless attempted—unsuccessfully—to
fashion a cause of action out of the prevention doctrine. We
will not subject the doctrine to such an ill fit. 2
IV. CONCLUSION
When they entered the wrap-up agreement, the parties
intended that the wrap-up would be complete within ten
years—indeed, they believed it would be complete much
sooner. JA 204 (anticipating wrap-up would end by the end of
2002). Class counsel assumed the risk that ten more years of
fees would not carry them through the end of the case; the
PBGC in return agreed to continue paying fees long after class
counsel had stopped working on the case. There is no reason to
2
Because we affirm the district court, we need not resolve class
counsel’s request for reassignment of their fee request to a different
district judge. We wish to make clear, however, that class counsel’s
discontent with the district judge is utterly without merit. Class
counsel can unquestionably be said, as the district court so said, to
have “pocketed” (“place[d] in or as if in one’s pocket”) a “windfall”
(“a sudden and unexpected piece of good fortune or personal gain”)
by virtue of the unforeseen success of the class settlement, which can
fairly be described as a “well” (“a source [of revenue] to be drawn
upon”) that figuratively “ran dry” when the ten-year period expired.
See AM. HERITAGE DICT. 956, 1372, 1383 (2d Coll. ed. 1982). There
are few occasions for the “extraordinary remedy” of reassignment,
In re Kellogg Brown & Root, Inc., 796 F.3d 137, 151 (D.C. Cir.
2015), and this case is plainly not among them.
10
relieve class counsel of the bargain they knowingly struck in
the wrap-up agreement.
For the foregoing reasons, the district court’s denial of the
motion to compel payment of attorneys’ fees is affirmed.
So ordered.