
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  W. Mark Wood  and O'Melveny &               __________________             ____________      ___________          Myers were  on brief, for  appellants California Union  Ins. Co.,          _____          Central Nat'l  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  Juan Dupont Plaza Hotel          a  decade ago.   Today,  we review  the district  court's actions          following the remand that we ordered  in an earlier opinion.  See                                                                        ___          In re Two Appeals Arising Out  of the San Juan Dupont Plaza Hotel          _________________________________________________________________          Fire Litig.,  994 F.2d 956 (1st  Cir. 1993).  Finding,  as we do,          ___________          that  the  district  court's   determinations  comport  with  the          parameters  that we set in  Two Appeals and  fall squarely within                                      ___________          the realm of judicial discretion, we affirm.          I.  BACKGROUND          I.  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  sprawling litigation  that  burst  forth from  the          smoldering  embers  of  the  charred hotel  encompassed  wrongful          death, personal injury, property damage, and other claims brought          by more  than 2,000 plaintiffs against more  than 200 defendants.          In  an  effort  to tame  this  behemoth  and  to orchestrate  the          proceedings,  the district  court  devised  an  innovative  case-          management  system.    The  system included  the  appointment  of          liaison  counsels (to  facilitate interactions  both between  the          court and the legion  of lawyers linked to the litigation as well          as  among  the  lawyers themselves);  the  formation  of a  Joint          Discovery Committee ("JDC") to coordinate  discovery initiatives;                                          2          and  the creation  of a  Joint Document  Depository ("JDD")  as a          resting  place for  all pleadings,  discovery materials,  and the          like.  See  id. at 959.  To pay  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  litigation.1   The quondam insureds  settled with          various  claimants  and  then  sued  the  pre-fire  insurers  for          indemnification,   notwithstanding  that  all  the  policies  had          expired  prior  to the  conflagration.   Not  to be  outdone, the          original  plaintiffs  joined  the  pre-fire  insurers  as  direct          defendants.  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).   Like all such  assessments, these funds  were          slated  for use  in defraying  the  expenses associated  with the          case-management scheme.                    Fairly early  in the game, the  pre-fire insurers moved          for summary judgment on all claims against them.  After a lengthy          interval, the  district court  granted their motions  but ordered          sua sponte that  they bear their own  costs.  The court  afforded          ___ ______          the pre-fire insurers no  opportunity to be heard.   Moreover, it          did not specifically mention the cost-sharing assessments.                                        ____________________               1Nineteen  pre-fire  insurers  were  sued.    Only  fourteen          appealed.  One of  them, Puerto Rico American Insurance  Co., has          since capitulated.                                          3                    The pre-fire insurers appealed the denial of costs.  In          deciding  those appeals, we ruled, inter alia, that a trial court                                             _____ ____          has the power to reallocate monetary assessments imposed  as part          of  a case-management  system.   See  id.  at 965.    Because the                                           ___  ___          district court did not  give the pre-fire insurers a  fair chance          to seek reallocation  of those  costs, we remanded  so that  they          might   ask  the   district  court   to  determine   whether  the          circumstances  warranted  some  redistribution  of   the  payment          burden.  See id. at 969.  The pre-fire insurers made the request,                   ___ ___          but, in the end, it went  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  insurers  contend  that  the          district court ignored the guideposts  we erected in Two  Appeals                                                               ____________          for  evaluating case-management  cost-reallocation claims.   They          also contend that the  lower court failed to recognize  that they          had  established a prima  facie case for  reallocation.  Finally,          they  complain that  they did  not receive  any benefit  from the          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  been given access to the  depository accounts          to determine  how funds were  spent, or how  much, if  any, money          remains on  hand.   They develop no  legal argument  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,  895 F.2d 1, 17  (1st Cir.)          ___  ____   _____________    _______          (describing the  "settled appellate rule that  issues adverted to          in  a  perfunctory  manner,   unaccompanied  by  some  effort  at          developed argumentation,  are deemed waived"),  cert. denied, 494                                                          _____ ______          U.S. 1082 (1990).                                          4          II.  DISCUSSION          II.  DISCUSSION                    Because  the   district  court   has  spelled   out  an          acceptable basis for its cost-sharing orders and for  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:     The   pre-fire  insurers   have  incorrectly                    First:                    _____          identified the  legal standard applicable to  appellate review of          Order  No. 581.  They  insist that plenary  review is appropriate          here  because  the  trial  judge ignored  and/or  mishandled  the          general  guides for evaluating  cost-reallocation claims  that we          limned in Two Appeals, thereby committing an error of law.   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.  See  994 F.2d at 966-68.   Although we                                     ___          hoped  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  be pertinent, and what weights  to assign          to various factors.  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.   Given the                    district  judge's  intimate knowledge  of the                    circumstances  under  which the  imposts were                    conceived,  his  familiarity with  the nature                    and  purposes of  the assessments,  his front                    row seat throughout  the litigation, and  his                                          5                    matchless ability to measure the benefits and                    burdens  of cost-sharing  to  the parties  in                    light  of  the   litigation's  progress   and                    stakes,  we are  convinced that  the district                    judge has the coign of vantage best suited to                    determining, in the first  instance, whether,                    and  if so,  how,  the  initial  cost-sharing                    orders should be modified.          Id. at 968.          ___                    This  issue  is  fact-sensitive,  and  even  a  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  flourishes, the pre-fire  insurers' real          complaint  is  not  that  the judge  misunderstood  the  relevant          factors but that he weighed them haphazardly.  Emblematic of this          focus  is the  undeniable fact  that,  at bottom,  the appellants          challenge  the  court's factbound  conclusion  that  the pre-fire          insurers actually benefitted from  the elaborate network of case-          management devices (like  the JDD) that their  payments helped to          subsidize.     So  viewed,  these  appeals  raise  fact-sensitive          disputes that invite discretionary  judgments.  In  circumstances          where,  as here,  a  matter is  committed  to the  trial  judge's          equitable discretion, see  id. at  965, deference is  due.   See,                                ___  ___                               ___          e.g.,  Koon v. United States,  64 U.S.L.W. 4512,  4517 (U.S. June          ____   ____    _____________          13, 1996).                    That ends the standard-of-review contretemps.  Here, as          in Koon, the  pre-fire insurers merely  seek to recharacterize  a             ____          factbound dispute  on "a higher  level of  generality."  Id.   An                                                                   ___          appellate court therefore ought  to limit its review to  a search          for abuse  of the  trial court's discretion.   See id.;  see also                                                         ___ ___   ___ ____                                          6          Texaco P.R., Inc. v. Department of Consumer Affairs, 60 F.3d 867,          _________________    ______________________________          875  (1st Cir.  1995)  (reviewing a  trial  court's choice  among          equitable  remedies for  abuse of  discretion because  "the trial          judge,  `who has had first-hand exposure to the litigants and the          evidence, is  in  a considerably  better  position to  bring  the          scales  into  balance  than  an  appellate  tribunal'")  (quoting          Rosario-Torres v.  Hernandez-Colon, 889  F.2d 314, 323  (1st Cir.          ______________     _______________          1989)  (en  banc)).    And  the  pre-fire  insurers'  attempt  to          transform  what  are  essentially  factual  findings  into  legal          conclusions by the alchemy of words is insufficient to alter this          standard  of review.   Since  appellate courts  "will not  permit          parties  to  profit  by  dressing  factual  disputes  in  `legal'          costumery,"  Reliance  Steel Prods., Inc.  v. National Fire  Ins.                       ____________________________     ___________________          Co.,  880  F.2d 575,  577 (1st  Cir.  1989), abuse  of discretion          ___          remains  the appropriate  benchmark  against  which the  district          court's ruling must be measured.                    Second:  The pre-fire insurers  misconstrue our comment                    Second:                    ______          that they had previously established "at least a prima facie case                                                           _____ _____          for some reallocation of the assessments."  Two Appeals, 994 F.2d                                                      ___________          at  968.   They  interpret this  language  as signifying  that on          remand the appellees had a burden to proffer  evidence sufficient          to  rebut  this prima  facie case,  and  that the  district court          should have responded  in terms both to the  prima facie case and          to the lack of any formal rebuttal.  This self-serving reading of          Two Appeals injects more into the quoted comment than the context          ___________          will bear.                                          7                    In   Two  Appeals,   we   remanded   the  question   of                         ____________          reallocation because  the district court  had not given  the pre-          fire insurers the opportunity  to argue their position.   See id.                                                                    ___ ___          at  969.   We  did not  use the  phrase "prima  facie case"  as a          talisman  indicating  that the  pre-fire  insurers  had proved  a          point, but, rather, as  a means of describing the  arguments that                                                             _________          they had tendered in support of reallocation.  Id. at  968.  This                                                         ___          usage  was  intended merely  to  demonstrate  that  a remand  was          advisable because,  on the  exiguous record  then before  us, the          pre-fire insurers had  offered enough of  an argument to  warrant          the district court's  consideration of  their claim.   We had  at          hand neither a  precise knowledge of the facts  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  benefits  from  the  assessments."    Id.                                                                        ___          (emphasis supplied).  And,  in words that should have  erased any          doubt, we added:                    Nonetheless,    this    hypothesis    remains                                                          _______                    unproven.  There may  be more here than meets                    ________                    the  eye; for one thing, the appellate record                    does not speak in any detail to the equities.                    .  . .  [T]here are  pregnant questions to be                    mulled on  remand    questions  on which  the                    trial   judge's   viewpoint   is   especially                    important.  We  conclude, therefore, that the                    case must  be returned to the  district court                    for further proceedings before  Judge Acosta.                    We intimate no opinion as  to the appropriate                    _____________________________________________                    outcome of these proceedings.                    ____________________________          Id. at 968-69 (emphasis supplied).  Judge Acosta,  therefore, had          ___          authority  to   exercise  discretion  in  both   marshalling  and                                          8          balancing the relevant factors.   He was not compelled  to attach          any special significance to  the largely theoretical "prima facie          case" language  that the pre-fire  insurers pluck out  of context          from our earlier opinion.                    Third:  The district  court's finding that the pre-fire                    Third:                    _____          insurers  did in  fact  receive a  significant  benefit from  the          existence of the case-management  system withstands review  under          an abuse-of-discretion  test.  The pre-fire  insurers assert that          they received no  benefit from the devices  because (1) discovery          already had been completed at the time they were brought into the          case, (2)  they were  perfectly capable  of doing  for themselves          what the JDD accomplished for them,  and (3) they did not need to          rely  on the  material in  the JDD  since they  sought  (and were          granted) summary judgment as a matter of law on the claims lodged          against them.3  We  agree with the district court,  see Order No.                                                              ___          581,  supra,  at 9,  that these  assertions  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.  See id.  at 10.  We think that  this finding,                              ___ ___          though perhaps  not inevitable, is  supportable.   The fact  that          discovery had been  concluded was  a two-edged sword.   While  it                                        ____________________               3The  pre-fire insurers  concentrate their  fire on  the JDD          because, in their view, nothing else  mattered.  This is a myopic          outlook.  The case-management  system functioned as an integrated          whole.     The  JDC  played  a  pivotal  role  in  producing  the          information  stored in the JDD, and the liaison consuls saved all          parties time and money at every stage of the farflung litigation.                                          9          meant  that the pre-fire insurers did not  have to use the JDD to          keep track of  ongoing discovery,  it also meant  that they  "had          available to them in a single location all  pleadings, discovery,          service   lists,  pretrial  documents,   records  of   all  court          proceedings,  trial  transcripts,  evidence  utilized  at trials,          memoranda,  as well  as docket  reference[s] as  to all  that had          transpired up to that time."  Id. at 8.                                        ___                    For another thing, it is of no moment that the pre-fire          insurers  might have  preferred  to  go  it  alone.    The  case-          management  system  that  the  district  court  so  painstakingly          devised  could  not  have operated  on  a  voluntary  basis.   It          depended  on the court's authority  to order all  parties both to          participate and to share  the associated costs.  Since  the court          acted  within   the  scope  of  its   case-management  powers  in          establishing the overall paradigm,  see Two Appeals, 994 F.2d  at                                              ___ ___________          965; In  re Recticel Foam  Corp., 859  F.2d 1000, 1004  (1st Cir.               ___________________________          1988),  we  give short  shrift to  the  notion that  the pre-fire          insurers would have  been better off conducting  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  Order No. 581,  supra, at 8-9.   This finding  is                     ___                  _____          also  supportable.  After  all, the allegations  against the pre-          fire insurers  developed during, and  arose from the  results of,          the  discovery process.   Thus, materials  in the  JDD had  to be          searched,  and some were directly relevant to the claims asserted                                          10          and/or to the pre-fire insurers' defenses.  As the district court          put  it, "upon being served with [a]  copy of the claims asserted          against them   two or three years after the initial complaint [in          the  underlying  litigation]  had  been  filed     [the  pre-fire          insurers] could, through the availability of a well-organized and          efficient Joint Document Depository,  ascertain the status of the          proceedings   and  have   readily  available   all  documentation          pertinent to their case."  Id. at 9.                                     ___                    The proof of  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  notwithstanding  the pendency  of          their dispositive motions.  The preparations envisioned reopening          discovery, and as  a necessary  prelude (under the  terms of  the          applicable  pretrial  orders)  entailed  heavy use  of  the  JDD,          resulting,  for  example,  in   making  copies  of  over  275,000          documents and  ordering  in excess  of  110 computer  disks  that          contained stored information.  In  light of these statistics, the          "no benefit" claim rings hollow.                     The  pre-fire insurers attempt to downplay the district          court's finding and the  statistics that support it on  the basis          that they eventually  succeeded in obtaining judgment as a matter          of law.   In  their view, this  outcome signifies  that they  had          little need  to rely on  the JDD.   In an allied  vein, they note          that they did not refer to any documents contained in  the JDD in          their summary judgment motions.  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  than  to guard  against the          possible denial  of their Rule 56  motions), and it was  to their          advantage  that  the  materials were  pre-assembled,  catalogued,          cross-indexed, and readily  accessible.  In  a similar vein,  the          compilation  of  those  materials  necessarily  assisted  in  the          processing of their motions.                    Furthermore,  as the district court explained, previous          litigation  of  other  issues  earlier in  the  trial  (including          extensive discovery) had framed  the issues, thereby enabling the          court to resolve  the claims against  the pre-fire insurers  with          relative ease.   The pre-fire  insurers (who have  the burden  to          prove  they are  entitled  to reallocation)  offer no  convincing          answer  to  this  observation  in their  appellate  briefs,  but,          rather,  ask  us to  accept on  faith  their assumption  that the          district court did not  rely on its knowledge of  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:  The pre-fire insurers refuse to recognize                         Fourth:                         ______          the extent to  which the  size and complexity  of the  underlying          litigation  affected  the  district  court's  evaluation  of  the          relative benefits  and  burdens imposed  by  the  case-management          system.   In our judgment,  it is this  blind spot that  explains                                          12          their  contention that  the district  court failed  adequately to          compare  relative  costs  and  benefits  between  and  among  the          parties.                    To be sure, we stated in Two Appeals that the principle                                             ___________          which  "dominates the  constellation  of factors  bearing on  the          decision to  reallocate" is that a district court should consider          reallocating   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  orders entered  earlier in  the litigation,  or has          derived  those  benefits to  a  significantly  greater or  lesser          extent than other similarly situated parties."  Two  Appeals, 994                                                          ____________          F.2d at  966.   But  at the  same time  we  emphasized that  "the          relative weight  and impact of relevant  considerations will vary          from  situation  to  situation."    Id.  at  967.    Even  though                                              ___          comparative  benefits   are  always  a  salient   aspect  of  the          reallocation  calculus, see id. at 966, district courts cannot be                                  ___ ___          expected  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)   which involves upwards of 2,000 plaintiffs          whose claims have  run the gamut  of imaginable and  unimaginable          theories of  liability    illustrates  the  need for  a  flexible          standard.  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  significant disparities in the  distribution of          benefits and  burdens demand  readjustment of a  generic formula.          See id. at 966.  This is precisely the approach that the district          ___ ___          court took on remand.          III.  CONCLUSION          III.  CONCLUSION                    We need go no  further.4  Based on its  experience with          this  convoluted case,  its  familiarity with  the evidence,  its          knowledge  of  the issues,  and  its  awareness  of the  parties'          strategies,  the  trial court  is in  the  best position  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.,  862 F.2d 910, 923 (1st Cir.  1988), we are not             _____________          at  liberty to  second-guess  it.   Though we,  if  writing on  a          pristine  page,   might  have   balanced  some  of   the  factors                                        ____________________               4The  pre-fire   insurers  harp   on  what  they   term  the          "frivolousness" of the  claims against them.   While the strength          or  weakness  of  the claims  is  one of  many  factors  that may          influence  the outcome  of  a  quest  for reallocation,  see  Two                                                                   ___  ___          Appeals,  994 F.2d  at  967,  that  factor  does  not  carry  the          _______          decretory significance  that the pre-fire insurers  attach to it.          Reallocating cost-sharing  assessments is a matter  of equity; it          is  not a  substitute for, and  should not  be confused  with, an          award of  sanctions for  filing groundless claims  under Fed.  R.          Civ. P. 11.                                          14          differently  or taken a divergent  view of the  importance of the          systemic  benefits received  by  the pre-fire  insurers, we  made          clear in Two Appeals that the call is not ours to make.                   ___________          Affirmed.          Affirmed.          ________                                          15
