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Dryer v. National Football League

United States District Court, D. Minnesota

November 7, 2016

John Frederick Dryer, James Lawrence Marshall, Joseph Michael Senser, Elvin Lamont Bethea, Dante Anthony Pastorini, Edward Alvin White, Fred Lee Barnett, Tracy Anthony Simien, Darrell Alexander Thompson, Jim Ray Smith, Irvin Acie Cross, Bruce Allan Laird, Brian Duncan, Reginald Joseph Rucker, Billy Joe Dupree, Mark Gregory Clayton, Preston Pearson, Reginald McKenzie, Joseph Barney Lemuel, Jackie Larue Smith, Paul James Krause, James Nathaniel Brown, and Michael James Haynes, on behalf of themselves and all others similarly situated, Plaintiffs,
v.
National Football League, Defendant.

          MEMORANDUM AND ORDER

          Paul A. Magnuson United States District Court Judge

         This matter is before the Court on Hausfeld LLP's Motion for Permanent Injunction. Hausfeld, one of Plaintiffs' law firms, seeks to enjoin a Minnesota state-court lawsuit initiated by Bob Stein LLC and Ward & Ward PLLC, two other Plaintiffs' law firms. Stein and Ward's state-court lawsuit alleges that Hausfeld breached a fee-sharing agreement between the law firms and now owes Stein and Ward 10% of the attorneys' fees awarded in this case. Hausfeld claims that Stein and Ward are attempting to relitigate the Court's allocation of attorneys' fees in state court and seeks to enjoin those proceedings. For the following reasons, Hausfeld's Motion is denied.

         BACKGROUND

         “[A]fter months of negotiations, and due to the yeoman's efforts of a group of Plaintiffs, their counsel, the NFL, and the Magistrate Judge, ” Plaintiffs and the NFL reached a settlement in April 2013. (Mem. and Order (Docket No. 270) at 2.) Following preliminary approval of the settlement, Plaintiffs' attorneys moved for fees. The Court instructed Plaintiffs' Lead Settlement Counsel to review each application for attorneys' fees and recommend specific fee amounts that should be awarded to each law firm. (Id. at 15.) Plaintiffs' Lead Settlement Counsel provided a detailed summary and recommendation. (Rec. on Fees (Docket No. 293) at 1.) Stein and Ward objected to the recommendation. (Objs. (Docket Nos. 350, 354) at 1.) After granting final approval of the settlement, the Court referred the motions for attorneys' fees to then-Chief Magistrate Judge Boylan. (Mem. and Order (Docket No. 431) at 19.)

         After a hearing on the motions for attorneys' fees in November 2013, Magistrate Judge Boylan awarded a total of $6, 200, 000 in attorneys' fees to seven different law firms.[1] (Order on Att'y Fees (Docket No. 458) at 8.) Stein received $445, 000, Ward received $525, 000, and Hausfeld received $650, 000. (Id. at 10.) Stein objected to Magistrate Judge Boylan's Order arguing that the fees allocated to Stein and Ward were too low. (Stein's Obj. (Docket No. 492) at 4.) The Court overruled those objections and affirmed Magistrate Judge Boylan's Order. (Order (Docket No. 499) at 3.)

         In May 2015, the Eighth Circuit Court of Appeals affirmed the approval of the final settlement. Marshall v. Nat'l Football League, 787 F.3d 502 (8th Cir. 2015). The Supreme Court denied certiorari in February 2016. Marshall v. Nat'l Football League, 136 S.Ct. 1166 (2016) (mem.). In March 2016, the Court ordered the attorneys' fees be distributed. (Order (Docket No. 645) at 1.)

         On August 25, 2016, Ward and Stein filed their lawsuit against Hausfeld in Minnesota state court. The complaint alleges that Stein and Ward entered into an agreement with Hausfeld to jointly represent Plaintiffs. (Atmore Aff. (Docket No. 665) Ex. A. at ¶ VI.) It further alleges that the agreement required Hausfeld to pay Stein and Ward 10% of the attorneys' fees awarded in this case, and that Hausfeld has failed to pay that amount. (Id. at ¶¶ XIX, XXIII.) Along with the breach-of-contract claim, Stein and Ward's other claims include promissory estoppel, unjust enrichment, quantum meruit, breach of fiduciary duty, conversion, civil theft, and fraudulent misrepresentation. (Id. at ¶¶ XXVII-LXXXVI.)

         On September 16, 2016, Hausfeld filed this Motion for Permanent Injunction. Hausfeld argues that Stein and Ward are attempting to relitigate in state court the Court's allocation of attorneys' fees, and that the Court may properly enjoin that proceeding under the “necessary in aid of its jurisdiction” and “relitigation” exceptions to the Anti-Injunction Act, 28 U.S.C. § 2283. (Hausfeld's Mem. in Supp. (Docket No. 664) at 7-13.)

         DISCUSSION

         The Anti-Injunction Act provides that “[a] court of the United States may not grant an injunction to stay proceedings in a State court except as expressly authorized by Act of Congress, or where necessary in aid of its jurisdiction, or to protect or effectuate its judgments.” 28 U.S.C. § 2283. The Act “is a necessary concomitant of the Framers' decision to authorize, and Congress' decision to implement, a dual system of federal and state courts.” Chick Kam Choo v. Exxon Corp., 486 U.S. 140, 146 (1988). Preventing federal courts from intervening in state court proceedings “is important to make the dual system work effectively.” Id. The three exceptions to the Anti-Injunction Act are “narrow and are not to be enlarged by loose statutory construction.” Smith v. Bayer Corp., 564 U.S. 299, 318 (2011) (quotation and citation omitted). In close cases, any doubts about whether a federal court should enjoin a state-court action “should be resolved in favor of permitting the state courts to proceed.” Id. (quotation and citation omitted).

         A. The “Necessary In Aid of its Jurisdiction” Exception

         The “necessary in aid of its jurisdiction” exception to the Anti-Injunction Act applies when it may be “necessary to prevent a state court from so interfering with a federal court's consideration or disposition of a case as to seriously impair the federal court's flexibility and authority to decide that case.” Atlantic Coast Line R. Co. v. Bhd of Locomotive Eng'rs, 398 U.S. 281, 295 (1970). The Eighth Circuit limits this exception to in rem claims. Versacold USA, Inc. v. Inland Am. Brooklyn Park Atlas, L.L.C., No. 09cv2669, 2009 WL 3617544, at *2 (D. Minn. Oct. 29, 2009) (Doty, J.) (citing In re Fed. Skywalk Cases, 680 F.2d 1175, 1182-83 (8th Cir. 1982)); see also 17A Charles Alan Wright & Arthur R. Miller, Federal Practice & Procedure § 4225 (3d Ed. 2016) (“The second exception to the 1948 revision of the statute may be fairly read as incorporating this historical in rem exception.”).

         Hausfeld does not-and could not-argue that this case is an in rem action. Instead, Hausfeld argues that because the Court has exercised jurisdiction over this litigation for the past seven years, the Court retains ancillary jurisdiction to effectuate its decrees, including jurisdiction over attorneys' fee disputes. (Hausfeld's Mem. in Supp. at 9-10.) Hausfeld cites Marino v. Pioneer Edsel Sales, Inc., 349 F.3d 746 (4th Cir. 2003), and In re Coordinated Pretrial Proceedings in Antibiotic Antitrust Actions, 520 F.Supp. 635 (D. Minn. 1981), to support its argument.

         The fee disputes in both of those cases, however, were between attorneys and their clients who allegedly owed them fees. See Marino, 349 F.3d at 753; In re Antibiotic Antitrust Actions, 520 F.Supp. at 650. Stein and Ward's claims are with co-counsel, not Plaintiffs or the NFL. If Stein and Ward brought a state-court lawsuit seeking more attorneys' fees against either of those parties, the Court would retain jurisdiction over that dispute, because that lawsuit would directly implicate the award of attorneys' fees. But that is not what Stein and Ward have done. They have merely sued their co-counsel for allegedly breaching a ...


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