12-2750-cv
Scarangella & Sons, Inc. v. Group Health, Inc.

                           UNITED STATES COURT OF APPEALS
                               FOR THE SECOND CIRCUIT
                                    _____________

                                      August Term, 2012

        (Argued: April 12, 2013                             Decided: September 10, 2013)

                                    Docket No. 12-2750-cv

                                        _____________

                                   NICHOLAS SCARANGELLA,

                                                                  Plaintiff - Counter Defendant,

                                                 and

    SCARANGELLA & SONS, INC., AS ADMINISTRATOR OF THE VILLAGE FUEL EMPLOYEE BENEFITS
                                 PLAN, D/B/A VILLAGE FUEL,

                                     Defendant - Cross Defendant - Cross Claimant - Appellant,

                                                 v.

                                     GROUP HEALTH, INC.,

                                    Defendant - Counter Claimant - Cross Defendant - Appellee.

                                        _____________

Before:

        HALL and DRONEY, Circuit Judges, and RESTANI, Judge.*

                                        _____________

     Appeal from the judgment of the United States District Court for the Southern District of
New York (Sullivan, Judge) finding Defendant - Cross Defendant - Cross Claimant - Appellant

*
  The Honorable Jane A. Restani, of the United States Court of International Trade, sitting by
designation.
Scarangella & Sons, Inc., as Administrator of the Village Fuel Employee Benefits Plan d/b/a
Village Fuel (“Village Fuel”) ineligible for an award of attorney’s fees. We hold that the district
court erred in applying the standard for a party to be eligible for attorney’s fees in an action
pursuant to the Employment Retirement Income Security Act of 1974 (“ERISA”), 29 U.S.C.
§ 1001 et seq. (2009). Accordingly, the order of the district court is VACATED, and the case is
REMANDED for the district court to determine the amount, if any, of an award of reasonable
attorney’s fees.
                                          _____________

                                                      RICHARD J. QUADRINO, Quadrino Schwartz,
                                                      P.C., Garden City, New York, for Defendant
                                                      - Cross Defendant - Cross Claimant -
                                                      Appellant.

                                                   MICHAEL H. BERNSTEIN (JOHN T. SEYBERT,
                                                   on the brief), Sedgwick LLP, New York,
                                                   New York, for Defendant - Counter
                                                   Claimant - Cross Defendant - Appellee.
                                          _____________

RESTANI, Judge:

       Appellant Village Fuel appeals the district court’s denial of attorney’s fees in this ERISA

action. The district court held that Village Fuel was ineligible for attorney’s fees because it “was

not the ‘prevailing party,’ and . . . it did not obtain any success on the merits.” Although the

district court appeared to rely upon the Supreme Court’s standard for determining eligibility for

an award of attorney’s fees, as set out in Hardt v. Reliance Std. Life Ins. Co., 130 S. Ct. 2149

(2010), it erred in interpreting that standard and applying it in this case. As a result, we vacate

the court’s decision and remand for the district court to apply the appropriate standard and to

exercise its discretion in determining to what extent, if any, Village Fuel is entitled to an award

of reasonable attorney’s fees.

                                         BACKGROUND

       This long, contentious litigation stems from a benefits dispute under an employee

benefits plan (the “Plan”) insured by Defendant - Counter Claimant - Cross Defendant -

                                                  2
Appellee Group Health Insurance, Inc. (“GHI”) and administered by Village Fuel. Plaintiff

Nicholas Scarangella (“Scarangella”) was provided insurance under the Plan as an employee of

Village Fuel. The Plan provided family coverage, which applied to Scarangella’s wife. After

Scarangella’s wife incurred substantial medical expenses, GHI initiated an investigation into

whether Scarangella was an eligible employee under the Plan.1 Based on its investigation, GHI

determined that Scarangella was not an eligible employee.2 As a result, GHI purported to

retroactively rescind the entire insurance policy issued to Village Fuel and denied reimbursement

for medical expenses claimed by Scarangella’s wife. GHI then brought suit in New York state

court seeking rescission and restitution from Village Fuel under state-law-based contract claims.

Prior to trial, Village Fuel removed the case to federal court, claiming GHI’s causes of action

were preempted under ERISA. GHI moved to remand the case to state court, but while the

motion was pending, Scarangella filed an action against GHI and Village Fuel under ERISA,

alleging that his wife was wrongfully denied benefits under the terms of the Plan. The parties

eventually agreed to voluntarily dismiss the state action and instead assert cross-claims as

defendants in Scarangella’s federal action.

       In response to Scarangella’s complaint, GHI asserted three counterclaims seeking

rescission and/or reformation of the Plan so as to exclude Scarangella and his dependents from

coverage in addition to restitution of previously conferred benefits. GHI also cross-claimed

1
  The Plan defined eligible employees as those employed “Full-Time” for at least three months
prior to enrollment. GHI became suspicious of expenses incurred by Scarangella’s wife because
Village Fuel is a Long Island, New York-based company and her high medical expenses were
incurred in Florida.
2
  GHI took action based on what it claimed were fraudulent certifications by Village Fuel that
Scarangella was an eligible employee. It grounded its conclusion on differing versions of
inaccurate state payroll tax documents as well as the amount of wages paid to Scarangella.

                                                 3
against Village Fuel for rescission/reformation of its policy to exclude Scarangella from the Plan

as well as restitution for previously conferred benefits.3 Finally, Village Fuel cross-claimed

against GHI for restitution in the event that Village Fuel was required to pay any damages to

Scarangella.4 Both GHI and Village Fuel filed cross-motions for summary judgment. In a

detailed opinion, the district court dismissed both GHI’s and Village Fuel’s claims for

restitution, holding that the money damages sought were not equitable remedies and therefore

not permitted under ERISA. It also noted concern with some of GHI’s remaining claims to the

extent that they sought the same relief of money damages, a form of relief the district court

found likely not permitted under ERISA, even when equitable rescission or reformation might be

allowed. In particular, the district court found that no court within the Southern District of New

York had equitably reformed an insurance plan contract so that an insurance company could then

recover benefits via restitution, calling GHI’s claim to recover benefits paid to providers “even

more dubious.” It also noted, with respect to GHI’s rescission claim, that courts rarely permit

equitable rescission where the court cannot easily restore the pre-agreement status quo. Because

the court found that material facts related to GHI’s rescission and reformation claims remained

in dispute,5 however, it denied Village Fuel’s motion for summary judgment as to these claims.

3
  These cross-claims differed from GHI’s claims in the state action. In the state case, GHI sued
to rescind the entire insurance policy, covering all employees of Village Fuel, and sought
restitution for claims paid on behalf of all of Village Fuel’s employees, less premiums. In the
federal case, GHI sought to rescind or reform only the coverage extended to Scarangella and his
dependents and sought restitution for claims paid on their behalf.
4
 This claim was akin to an indemnification claim that never materialized, as Village Fuel was
never found liable to Scarangella for any damages.
5
 Disputed material facts included whether Scarangella was an eligible employee under the Plan
and whether accurate employment information was provided by Village Fuel to GHI.

                                                 4
       Following summary judgment, GHI continued settlement negotiations with Scarangella.

After briefing and a hearing addressing which remaining issues would be tried, GHI and

Scarangella settled their respective claims. The settlement paid a confidential sum to resolve the

claims brought by Scarangella in his complaint. As a result, GHI and Scarangella voluntarily

dismissed with prejudice their remaining claims against each other, and Scarangella dismissed its

outstanding claims against Village Fuel. GHI also dismissed its remaining claims against

Village Fuel, and the district court entered an order dismissing the action with prejudice but

without costs. Subsequently, Village Fuel moved for attorney’s fees, and the matter was

assigned to a magistrate judge for a report and recommendation.

       In its application for attorney’s fees from GHI, Village Fuel contended that it was entitled

to fees as a “prevailing party,” although it claimed that a lower standard applied in ERISA cases.

GHI contended that Village Fuel was not a prevailing party, both because Village Fuel had lost

its own cross-claim on summary judgment and also because Village Fuel could not claim success

based on the settlement between GHI and Scarangella, to which Village Fuel was not a party.

The magistrate judge found that under Hardt,6 Village Fuel had achieved some degree of success

on the merits, and applying the factors set out in Chambless,7 recommended a partial award of

6
 Hardt was decided after initial briefing on the attorney’s fee issue, but the magistrate judge
relied upon it in his report and recommendation.
7
 Chambless sets out five factors to guide district courts in exercising their discretion in awarding
a reasonable attorney’s fee. They are:

       (1) the degree of the offending party’s culpability or bad faith, (2) the ability of
       the offending party to satisfy an award of attorney’s fees, (3) whether an award of
       fees would deter other persons from acting similarly under like circumstances, (4)
       the relative merits of the parties’ positions, and (5) whether the action conferred a
       common benefit on a group of pension plan participants.
                                                                                (continued...)

                                                 5
attorney’s fees.8 Both parties objected to aspects of the magistrate judge’s report and

recommendation. Upon review, the district court determined that Village Fuel was ineligible for

attorney’s fees under ERISA.9 First, the district court held that Village Fuel could not claim the

dismissal of GHI’s restitution claim as success on the merits, because the dismissal was

procedural in nature and both parties had failed on their respective restitution claims. Second,

the district court found that the voluntary dismissal of the remaining claims lacked the judicial

imprimatur necessary to qualify as litigation success, emphasizing that neither party won on

summary judgment. As a result, without reaching the magistrate judge’s discussion of the

Chambless factors, the district court found Village Fuel statutorily ineligible for an award of

attorney’s fees and denied its application.

       Village Fuel appealed, contending that the district court erred in its interpretation of the

appropriate standard for an award of attorney’s fees in ERISA cases. It urges us to reverse the

district court and award it attorney’s fees, and to adopt the analysis of the Chambless factors as

set forth in the report and recommendation of the magistrate judge. GHI argues that the district

court properly determined that Village Fuel had not achieved any success on the merits and

7
(...continued)
Chambless v. Masters, Mates & Pilots Pension Plan, 815 F.2d 869, 871 (2d Cir. 1987).
8
 The magistrate judge found that Village Fuel had not prevailed on GHI’s claims of restitution
or rescission. His decision was based on Village Fuel’s loss on its own restitution claim and his
characterization of the district court’s disposition of the rescission claim as a procedural victory.
In the eyes of the magistrate judge, Village Fuel’s degree of success was based on the district
court’s characterization of GHI’s reformation claim as “dubious” in the district court’s order
denying summary judgment.
9
 As explained below, the district court mentioned the Hardt standard when arriving at this
conclusion, but it also referred several times to the prevailing party standard and case law
associated with this standard.

                                                  6
therefore correctly denied attorney’s fees. It further contends that a proper application of the

Chambless factors results in no fee award, especially when combined with other claimed

deficiencies in Village Fuel’s fee request. Because the district court did not rely entirely on the

correct legal standard in evaluating Village Fuel’s eligibility for attorney’s fees post-Hardt, we

vacate and remand to the district court.

                      JURISDICTION AND STANDARD OF REVIEW

       The district court had jurisdiction over this ERISA-matter pursuant to 29 U.S.C.

§ 1132(e). We have jurisdiction over this appeal under 28 U.S.C. § 1291, because it is an appeal

from a final order of the district court. See Farbotko v. Clinton Cnty., 433 F.3d 204, 205 (2d Cir.

2005). In reviewing the district court’s denial of an application for attorney’s fees, our review is

for abuse of discretion. Id. at 208. A court necessarily abuses its discretion when it applies an

incorrect legal standard. Sims v. Blot, 534 F.3d 117, 132 (2d Cir. 2008). We review questions

of law regarding the appropriate legal standard in granting or denying attorney’s fees de novo.

See Perez v. Westchester Cnty. Dep’t of Corr., 587 F.3d 143, 149 (2d Cir. 2009) (reviewing legal

question of prevailing party status de novo).

                                            ANALYSIS

       Under ERISA, “[i]n any action under this title . . . 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.” 29 U.S.C. § 1132(g)(1). The Supreme Court recently resolved a conflict among

the Circuit Courts of Appeal interpreting this broad clause. See Hardt, 130 S. Ct. at 2156 n.2

(collecting conflicting cases from the Circuit Courts of Appeal). Prior to Hardt, some circuits

permitted only “prevailing parties” to recover attorney’s fees. Id. Other circuits, including ours,

recognized that ERISA does not contain a prevailing party standard and instead provides district

                                                 7
courts with broader discretion in determining when and to whom attorney’s fees should be

awarded. See id. (citing Miller v. United Welfare Fund, 72 F.3d 1066 (2d Cir. 1995)). In Hardt,

the Supreme Court ultimately agreed with our interpretation of the threshold legal standard for

determining whether a party is eligible for attorney’s fees in an ERISA case. See id. at 2157–58.

       In Hardt, the plaintiff sued the benefit administrator and underwriter of her long-term

disability insurance plan to recover benefits that she claimed were wrongly denied. Id. at

2152–54. In evaluating cross-motions for summary judgment, the district court found that the

insurance company had failed to comply with the requirements of ERISA in evaluating Hardt’s

claim, such that its determination was unreasonable as a matter of law, in the light of compelling

evidence of Hardt’s disability. Id. at 2154. Instead of awarding Hardt the benefits she claimed,

however, the district court employed the often-used procedural remedy of a remand to the

insurance company for it to reevaluate Hardt’s claim in compliance with ERISA. Id. In its

remand order, the court highlighted the merits of Hardt’s claim, warning the insurance company

that judgment would be entered in favor of Hardt if it failed to properly consider all record

evidence on remand. Id. After reevaluating Hardt’s application for benefits, the insurance

company paid all of Hardt’s claimed expenses, and Hardt moved for attorney’s fees. Id. The

district court granted Hardt’s motion, finding that she was a prevailing party and eligible for fees

under the Fourth Circuit’s five-factor test for exercising discretion in awarding a reasonable fee.

Id. at 2155. The Fourth Circuit reversed on the grounds that Hardt was not a prevailing party

because she lacked a court order conferring the sought-after benefits. Id. (noting the Fourth

Circuit’s reliance on Buckhannon Bd. & Care Home, Inc. v. W. Va. Dep’t of Health and Human

Res., 532 U.S. 598 (2001)).

                                                 8
       On appeal, the Supreme Court reversed the Fourth Circuit, finding that it had improperly

applied a prevailing party standard that was not contained within the text of the statute. Id. at

2156. In particular, the Supreme Court rejected the Fourth Circuit’s reliance on Buckhannon,

noting that the statutes analyzed in that case—the Americans with Disabilities Act (“ADA”) and

the Fair Housing Amendments Act (“FHAA”)—had provisions awarding attorney’s fees to

prevailing parties only. See id. at 2157. As a result, the Court held that the proper standard for

finding a party eligible for attorney’s fees in ERISA cases is “some degree of success on the

merits.” Id. at 2158 (quoting Ruckelshaus v. Sierra Club, 463 U.S. 680, 694 (1983)). A party

does not meet this standard “by achieving trivial success on the merits or a purely procedural

victory,” but it does meet the standard “if the court can fairly call the outcome of the litigation

some success on the merits without conducting a lengthy inquiry into the question whether a

particular party’s success was substantial or occurred on a central issue.” Id. (internal quotation

marks and brackets omitted). The Court ultimately decided that Hardt had “achieved far more

than ‘trivial success on the merits’ or a ‘purely procedural victory’” and therefore was eligible

for attorney’s fees. Id. at 2159 (quoting Ruckelshaus, 463 U.S. at 688 n.9). Notably, the Court

did not reach the question of whether a remand order, without more, is sufficient to show some

degree of success on the merits. Id. at 2159 (explaining that the district court’s remand order

made clear findings that the insurance company had failed to comply with ERISA and that Hardt

was likely totally disabled based on compelling evidence). Hardt also permitted the use of the

five-factor tests adopted by most Circuit Courts of Appeals to channel discretion in awarding

reasonable fees to eligible parties, but held that courts were not required to use them. Id. at 2158

n.8.

                                                  9
       The present case raises the question, in part, that the Supreme Court did not resolve in

Hardt: what must a party achieve or obtain to show some degree of success on the merits. GHI

argues that the Court’s standard in Hardt merely requires less of a showing of success by a party,

i.e. a party may prevail only partially on its claims and yet be eligible for fees, but Hardt does not

alter the substance of what a party must achieve: favorable judicial action on the merits. Village

Fuel contends that Hardt rejected the application of Buckhannon in its entirety with respect to

ERISA cases. Accordingly, Village Fuel argues that neither Buckhannon’s prevailing party

requirement nor its judicial imprimatur requirement are applicable here, and success on the

merits may come in a variety of forms, including some instances of voluntary dismissal. The

Supreme Court in Hardt appears to have left room for many factual scenarios to satisfy the

standard of some success on the merits. We agree that here Village Fuel has demonstrated some

degree of success on the merits as the result of court action, and the district court applied the

statutory threshold inconsistently with Hardt and Ruckelshaus.

       A. Village Fuel Obtained Some Degree of Success on the Merits in Defeating GHI’s
          Restitution Claim

       Turning to the present case, one of GHI’s three cross-claims against Village Fuel was

dismissed on Village Fuel’s motion for summary judgment. The other two claims survived

summary judgment but were voluntarily dismissed following a settlement agreement with

Scarangella, an agreement to which Village Fuel was not a party. Beginning with the claim

dismissed on summary judgment, it appears clear that Village Fuel obtained at least “some

degree of success on the merits” through the dismissal of GHI’s restitution claim, and the district

court erred in classifying this success as merely a procedural victory.

                                                 10
       The Supreme Court has held previously that a dismissal for failing to state a legally

cognizable claim is a “judgment on the merits.” See Federated Dep’t Stores, Inc. v. Moitie, 452

U.S. 394, 399 n.3 (1981); see also Semtek Int’l Inc. v. Lockheed Martin Corp., 531 U.S. 497,

501–02 (2001) (“The original connotation of an ‘on the merits’ adjudication is one that actually

‘passes directly on the substance of [a particular] claim’ before the court.” (quoting Restatement

(Second) of Judgments § 19, Comment a, at 161) (alterations in original)). In the context of

ERISA, the Seventh Circuit held that defendants had “met their initial burden of establishing

‘some degree of success on the merits’” under Hardt when the district court dismissed some of

plaintiff’s claims for failure to state a claim. Kolbe & Kolbe Health & Welfare Benefit Plan v.

Medical Coll. of Wisc., 657 F.3d 496, 501, 506 (7th Cir. 2011). We find this conclusion

consistent with traditional notions of adjudication on the merits.

       In its summary judgment order, the district court found that GHI’s restitution claim

against Village Fuel sought legal money damages that were not available under ERISA as a

matter of law. As a result, the district court dismissed the cause of action because GHI had

failed to state a legally cognizable claim. This is analogous to the dismissal of an action for

failure to state a claim upon which relief may be granted under Fed. R. Civ. P. 12(b)(6). While

the district court suggested that this dismissal was merely procedural in nature, we find that

conclusion difficult to square with case law distinguishing a decision on the merits from a

procedural decision.

       Additionally, the district court’s consideration of Village Fuel’s defeat on its own

restitution claim at this stage was erroneous. First, Village Fuel’s claim was essentially one for

indemnification, and it was likely to be mooted given the district court’s skepticism of GHI’s

ability to recover money damages from Scarangella under any legal theory. Second, application

                                                 11
of the “some degree of success on the merits” standard indicates that both GHI and Village Fuel

obtained some degree of success by defeating the other’s claim, not that neither party did. This

conclusion is consistent with the Supreme Court’s direction to engage in a limited review at this

threshold stage in the attorney’s fees analysis, examining only whether a party obtained some

success on some issue, independent of other claims in the case.10 See Hardt, 130 S. Ct. at 2158

(warning courts not to conduct “a lengthy inquiry into the question [of] whether a particular

party’s success was substantial or occurred on a central issue” (internal quotation marks and

brackets omitted)). Accordingly, based on Village Fuel’s success in defeating GHI’s restitution

claim, we vacate the district court’s finding that Village Fuel was ineligible for a fee award.

       B. Under ERISA, a Favorable Court Judgment is Not Required to Satisfy the
       Threshold for Awarding Attorney’s Fees.

       As to the two remaining GHI claims against Village Fuel that were voluntarily dismissed

with prejudice by GHI after its settlement with Scarangella, we hold that the district court again

improperly relied upon pre-Hardt jurisprudence in requiring Village Fuel to show that the relief

it obtained was the result of a court judgment or consent decree.

       Hardt established that the lead case for ERISA attorney’s fee applications is Ruckelshaus,

not Buckhannon. Hardt, 130 S. Ct. at 2157. Albeit in dicta, the Supreme Court in Ruckelshaus

noted that Congress intended the broader attorney’s fees provision in the analogous Clean Air

Act to permit an award of attorney’s fees even in “suits that forced defendants to abandon illegal

conduct, although without a formal court order.” Ruckelshaus, 463 U.S. at 687 n.8.

10
  This is not to say, however, that the court cannot consider Village Fuel’s loss on its own claim
when the court exercises its discretion, especially when weighing the relative merits of the
parties’ positions. See Chambless, 815 F.2d at 871 (identifying factor four as “the relative merits
of the parties’ positions”).

                                                 12
Additionally, the Court explained that the more expansive provision within the Clean Air Act

was intended “to eliminate both the restrictive readings of ‘prevailing party’ adopted in some

[cases] . . . and the necessity for case-by-case scrutiny by federal courts into whether plaintiffs

prevailed ‘essentially’ on ‘central issues.’” Id. at 688 (referring in part to the “minority” of courts

that had “denied fees to plaintiffs who lacked a formal court order granting relief”). By contrast

in Buckhannon, the Supreme Court restricted the ability of a party to obtain prevailing party

status, where the statute mandates such status, by requiring a party to demonstrate that its

success bore judicial imprimatur, such as through a final judgment or consent decree. 532 U.S.

at 604 (“These decisions, taken together, establish that enforceable judgments on the merits and

court-ordered consent decrees create the ‘material alteration of the legal relationship of the

parties’ necessary to permit an award of attorney’s fees.”).

       Even after Buckhannon, however, we have permitted a party to meet the higher

prevailing party standard even when success did not come in the form of a court judgment, but

rather through an out of court agreement, even one disclaiming liability, caused in some way by

court action. See Perez, 587 F.3d at 150–51 (noting that although Buckhannon rejected the

“catalyst theory”11 generally for prevailing party statutes, the Supreme Court “did not suggest

that one of these two conditions [(a merits decision or consent decree)] was necessary for a party

to prevail”). Additionally, the Supreme Court’s narrowing of the application of this theory in

Buckhannon was within the context of statutes imposing the stricter prevailing party standard.

See Buckhannon, 532 U.S. at 609 (interpreting attorney’s fee provisions within the ADA and

11
  “Under the catalyst theory, a plaintiff prevailed for the purpose of fee-shifting provisions
whenever her lawsuit ‘had sufficient merit to withstand a motion to dismiss’ and ‘brought about
a voluntary change in the defendant's conduct.’” Perez, 587 F.3d at 150 (quoting Buckhannon,
532 U.S. at 601, 605).

                                                  13
FHAA); see also N.Y. State Fed’n of Taxi Drivers, Inc. v. Westchester Cnty. Taxi & Limousine

Comm’n, 272 F.3d 154, 158–59 (2d Cir. 2001) (applying judicial imprimatur requirement to

§ 1988 cases). After Buckhannon, there is a split of authority within the federal courts as to the

application of the catalyst theory in cases brought under statutes not requiring parties to

demonstrate prevailing party status, although in many cases the courts have resolved the question

easily on the facts of the case because the involvement of the court prior to settlement was

minimal. See, e.g., Tyler v. Salazar, 2012 U.S. Dist. LEXIS 108510, at *18–20 (D. Minn. June

27, 2012) (collecting cases); see also Simonia v. Glendale Nissan/Infiniti Disability Plan, 608

F.3d 1118, 1121 n.1 (9th Cir. 2010) (assuming without deciding that catalyst theory is still

viable); Loggerhead Turtle v. County Council, 307 F.3d 1318, 1325 (11th Cir. 2002)

(“Buckhannon does not invalidate use of the catalyst test as a basis for awarding attorney’s fees

under the [Endangered Species Act] . . . .”). We recognize that in the light of the Supreme

Court’s adoption of the Ruckelshaus standard, as opposed to the Buckhannon standard, in

evaluating ERISA fee applications, the catalyst theory remains a viable means of showing that

judicial action in some way spurred one party to provide another party with relief, potentially

amounting to success on the merits.

       Certainly, a party that obtains relief due to the voluntary conduct of another party after

minimal litigation in the district court is unlikely to succeed in demonstrating that the impetus

for the relief was some action by the court related to the merits of the case. Where, however, the

parties already have received a tentative analysis of their legal claims within the context of

summary judgment, a party may be able to show that the court’s discussion of the pending

claims resulted in the party obtaining relief. This is in line with the underlying policy

considerations of ERISA that we are to construe broadly. Slupinski v. First Unum Life Ins. Co.,

                                                 14
554 F.3d 38, 47 (2d Cir. 2009) (“‘ERISA’s attorney’s fee provisions must be liberally construed

to protect the statutory purpose of vindicating’ employee benefits rights . . . .” (quoting

Chambless, 815 F.2d at 872)). This also appears compelled by the facts and holding in Hardt,

which although reserving judgment on whether a remand order without more amounts to success

on the merits, clearly held that a remand order opining positively on the merits of the plaintiff’s

claim was sufficient. 130 S. Ct. at 2159. Further, while we are mindful of the Supreme Court’s

admonition that we should avoid a “lengthy inquir[y] into the question [of] whether a particular

party’s success was ‘substantial’ or occurred on a ‘central issue,’” id. at 2158 (alterations in

original), we are also hesitant to create an extra-statutory rule requiring success be obtained only

by court order. See also id. at 2156 (critiquing the Court of Appeals for the Fourth Circuit

because its “decision adding that term of art[, prevailing party,] to a fee-shifting statute from

which it is conspicuously absent more closely resembles ‘invent[ing] a statute rather than

interpret[ing] one.’” (quoting Pasquantino v. United States, 544 U.S. 349, 359 (2005)). Doing so

also could have the adverse impact of discouraging settlement where a plan beneficiary is forced

to bring potentially expensive litigation in order to obtain the benefits or process rightfully owed

to them, only to be denied the right to seek attorney’s fees.12

       Applying this standard to the present case,13 a question of fact exists as to the reason for

GHI’s dismissal of the remaining causes of action against Village Fuel. On the one hand, GHI

12
  Of course, settling parties could agree by contract to waive the ability to seek attorney’s fees as
consideration for any settlement.
13
  We note that the catalyst theory has been applied traditionally in the context of a plaintiff
obtaining out-of-court relief through settlement, resulting in dismissal of the case. See, e.g.,
Buckhannon, 532 U.S. at 627–28 (Ginsburg, J., dissenting) (summarizing applications of the
catalyst theory). We see no reason for refusing to extend the same analysis to the facts of the
present case where the standard calls for consideration of the context and motives underlying the
relief obtained by Village Fuel.

                                                 15
asserts that the dismissals resulted from its determination that success on its claims would

amount to only a pyrrhic victory in the light of its belief that Village Fuel had become a

judgment-proof entity. On the other hand, Village Fuel argues that the dismissals were spurred

by the summary judgment order that was skeptical of both of GHI’s remaining claims, or at a

minimum, of GHI’s requested relief to the extent that it was similar to the money damages

sought and denied under GHI’s restitution claim. Because the district court is in the best

position to decide this factual question of causation, we remand it to the district court to decide

in the first instance, in the light of the standard enunciated above.14

        C. Chambless Factors

        Village Fuel argues that should we agree with its arguments that it achieved some degree

of success on the merits, we need not remand because the record already contains an analysis of

the Chambless factors within the report and recommendation of the magistrate judge. Because

we remand to the district court, which did not previously review this aspect of the magistrate

judge’s report and recommendation, we believe the more prudent route is to remand for the

district court to consider these factors in the first instance.15

14
  In remanding, we recognize that even if the two claims that were voluntarily abandoned by
GHI were not dismissed in part as a result of the court’s summary judgment order and post-
summary judgment comments, Village Fuel would remain eligible for attorney’s fees under
ERISA based on GHI’s failed restitution claim. We also note that our case law allows
reductions in attorney’s fees based on partial success, so long as the reduction is not
mathematically based solely on the number of claims won or lost. Hensley v. Eckerhart, 461
U.S. 424, 435 n.11 (1983) (rejecting strict mathematical reduction based on number of claims
won or lost); Kassim v. City of Schenectady, 415 F.3d 246, 255–56 (2d Cir. 2005) (permitting
partial reduction based on partial success). Because, however, a determination of this issue may
impact the analysis of the district court in setting the amount of a reasonable fee, we remand it to
the district court.
15
  Similarly, because the calculation of attorney’s fees may change, we need not address at this
juncture other issues related to alleged deficiencies in their calculation.

                                                   16
                                         CONCLUSION

       For the reasons discussed above, the decision of the district court is VACATED, and this

matter is REMANDED to the district court for further proceedings to determine a reasonable

amount of attorney’s fees, if any, to be awarded to Village Fuel. The clerk is directed to refer

any further appeal following remand to this panel.

                                                17


128 S.E.2d 758 (1963)
258 N.C. 482
WACHOVIA BANK AND TRUST COMPANY, Trustee Under the Will of W. C. Beavans,
v.
W. R. BRYANT, Ancillary Administrator d.b.n. of J. Russell Beavans, Raymond T. Beavans, Walter Andrew Beavans, Elizabeth Beavans Sheppard, Eugene Beavans, W. Cary Beavans, Annette Beavans Hardison, John D. Beavans, Samuel C. Beavans and Walter Travis, Guardian ad litem for other heirs of W. C. Beavans in posse or in esse, and any other person claiming interest in the property or estate of W. C. Beavans, and W. B. Voliva, Assignee.
No. 599.
Supreme Court of North Carolina.
January 11, 1963.
*760 Roberson, Haworth & Reese, High Point, for plaintiff appellee.
Branch & Hux, Enfield, for Samuel C. Beavans, John D. Beavans, Mrs. Annette Beavans Hardison, W. Cary Beavans, Eugene Beavans, and Mrs. Elizabeth Beavans Sheppard, defendant appellants.
John A. Wilkinson, Washington, for W. B. Voliva, defendant appellee.
SHARP, Justice.
The basic rule of construction, and the refrain of every opinion which seeks to comprehend a testamentary plan, is that "[t]he intent of the testator is the polar star that must guide the courts in the interpretation of a will." Coppedge v. Coppedge, 234 N.C. 173, 66 S.E.2d 777. Courts have had considerable difficulty in determining whether a testator meant his beneficiaries to take per capita or per stirpes but, out of judicial experience, certain rules have devolved to help solve this perplexity. Burton v. Cahill, 192 N.C. 505, 135 S.E. 332.
The general rule, which has been stated and restated innumerable times, is that where the devise or bequest is to a class, such as nephews and nieces, the devisees take share and share alike unless it clearly appears that the testator intended a different division. In re Battle, 227 N.C. 672, 44 S.E.2d 212. In an annotation in 16 *761 A.L.R., WillsPer Stirpes or Per Capita, we find the following statement on page 55: "The decisions warrant the generalization that under a bequest to `nephews and nieces,' as such, no implication arises from the nature of the relationship that they are to take by families." Subsequent annotations will be found at 78 A.L.R. 1403; 126 A.L.R. 174; 13 A.L.R.2d 1052.
However, appellant Voliva contends that in this case rules of punctuation should override general rules of testamentary construction. The bequest which we construe here is "to my nephews and nieces, the child or children of any deceased nephew and niece to receive the share the parent would have taken, the said distribution to be per stirpes and not per capita." Voliva argues that the last clause modifies nephews and nieces rather than the immediately preceding clause "the child or children of any deceased nephew and niece to receive the share the parent would have taken"; that the quoted clause, set off by commas, is a parenthetical expression which adds nothing to the provisions since the child or children of a deceased legatee would have taken his share without its inclusion. With this contention or construction we do not agree. Where it is necessary to effectuate the intention of a testator the court may disregard or supply punctuation, Coppedge v. Coppedge, supra, but we think the testamentary intent emerges here with the punctuation left as it is.
When a personal pronoun appears in a written passage the identity of the person to whom it refers must often be ascertained by referring back to its antecedent. The rules of English grammar proscribe the use of a pronoun if there can be any doubt about its antecedent. If there is doubt, and no antecedent is mentioned in the passage, it is obvious that evidence aliunde would have to be obtained to identify the person represented by the pronoun. In this case, if we were to hold that the nephews and nieces themselves take per stirpes, we would find ourselves looking for the antecedents (the stirpes) outside the will. Stirp or Stirps means the root or trunk, a person from whom a branch of a family is descended. The term "per stirpes" denotes the division of an estate by representation, a class taking the share to which the deceased whom they represent would have been entitled had he been living. Walsh v. Friedman, 219 N.C. 151, 13 S.E.2d 250.
We think the last clause in the provision under consideration modifies the one immediately preceding it and that the testator intended a per capita distribution among the nephews and nieces, the child or children of any deceased nephew or niece to take per stirpes. The testator's gift was to a class, nephews and nieces. He made them the primary legatees after the life estate of his wifenot because they represented a particular brother of his but because they were his nephews and nieces. Not once did he refer to them as children of his deceased brothers nor did he mention his brothers anywhere in the will. No suggestion that they were to take according to stock or root immediately followed the designation of the nephews and nieces as beneficiaries. That direction followed the designation of those who would take if a nephew or niece died before the date for distribution. Testator recognized the nephews and nieces as the stirpes and not their fathers. The names of the fathers, the testator's deceased brothers, and their children first appeared in paragraph five of the plaintiff's petition or instrument. Interpreting this will from its four corners the only person who could take by representation would be "the child or children of any deceased nephew or niece."
We think the intent of the testator is clear from the will itself but, if resort to canons of construction is required, one rule says that distribution should be per capita unless the entire will discloses a contrary intent. Burton v. Cahill, supra.
Punctuation and sentence structure are as individual as the writer himself. Formal *762 writers are likely to follow the tradition of "close" punctuation while the general preference of today is for "open" punctuation in which fewer commas are used. The draftsman of this will, writing a formal document, was undoubtedly following the tradition of "close" puctuation. It would have saved litigation had he written "to my nephews and nieces share and share alike (per capita), the child or children of any deceased nephew or niece to receive his share (per stirpes)"; nevertheless, we think that is what the testator intended.
In the instant case, as stated by Clark, C. J., in Leggett v. Simpson, 176 N.C. 3, 96 S.E. 638, and quoted by Stacy, C. J., in Tillman v. O'Briant, 220 N.C. 714, 18 S.E.2d 131: "There is nothing in the will which impairs the usual rule of construction that where a devise is to a class collectively, and not by name to various devisees in the class, all the members of the class take per capita and not per stirpes".
The appeal of the plaintiff is dismissed under the authority of Ferrell v. Basnight, 257 N.C. 643, 127 S.E.2d 219.
That portion of the judgment of the lower court directing that distribution among the nephews and nieces of W. C. Beavans shall be per stirpes is reversed. The case is remanded with directions to the Superior Court to enter an order requiring distribution among the nephews and nieces per capita.
Reversed.
RODMAN, Justice (dissenting)
As I read the will, testator intended to provide for a distribution of the trust at his wife's death among his nephews and nieces. By express language he directed "said distribution to be per stirpes and not per capita." The conclusion reached by the majority is, I think, contrary to the testator's intent. Hence my vote is to affirm.
HIGGINS, J., joins in this dissent.


676 F.2d 701
U. S.v.Moss
80-1997
UNITED STATES COURT OF APPEALS Seventh Circuit
2/22/82

1
S.D.Ill.

AFFIRMED


450 F.Supp. 1349 (1978)
Eli RAITPORT
v.
GENERAL MOTORS CORPORATION, Chrysler Corporation, Ford Motor Company and American Motors Corporation.
No. 73-2847.
United States District Court, E. D. Pennsylvania.
May 18, 1978.
*1350 *1351 Eli Raitport, pro se.
W. Bradley Ward, Schnader, Harrison, Segal & Lewis, Philadelphia, Pa., for General Motors.
Edward J. McIntyre, Dechert, Price & Rhoads, Philadelphia, Pa., for Ford Motor.
Ward T. Williams, Drinker, Biddle & Reath, Philadelphia, Pa., for Chrysler & American Motors.

MEMORANDUM
RAYMOND J. BRODERICK, District Judge.
In November, 1973, plaintiff, pro se, filed a "Petition" with the United States District Court for the District of Columbia seeking to enjoin defendants, General Motors Corporation ("GM"), Chrysler Corporation ("Chrysler"), Ford Motor Company ("Ford") and American Motors Corporation ("American Motors") from (1) refusing to deal with new companies and consequently restraining new companies from entering the automotive components market; (2) raising prices on cars (and other products) without having exhausted opportunities to decrease manufacturing costs; and (3) considering issues other than merits of quality, price, capability and citizenship in selecting suppliers.
On November 30, 1973, Judge Hart transferred this case to the Eastern District of Pennsylvania. On February 13, 1974, plaintiff filed an "Application to Amend the Complaint" in which he alleged that the defendants restricted him from entering into the automotive engineering field, and from freely enjoying and practicing his trade. All defendants have answered the amended complaint.
Plaintiff has alleged violations of the Civil Rights Act, 42 U.S.C. § 1985(3) and the Sherman Act, 15 U.S.C. §§ 1, 2 and 3. He contends that he is entitled to relief because: (1) the defendants received and defrauded him and induced him to spend his time and resources in developing products and endeavoring to sell them; (2) he exhibited prototypes showing that his products were safer and considerably less costly than those presently used by the defendants, which would result in a saving to each defendant of several million dollars per year; and (3) since February, 1973, he has suffered $90,000,000 per year in lost profits due to defendants' refusal to deal. At a hearing in connection with this matter the parties agreed to accept testimony presented by the plaintiff before Judge Van Artsdalen in Raitport v. General Motors, No. 73-2054 (E.D.Pa., filed May 28, 1975), in which plaintiff alleged inter alia that two of the four defendants in this case (GM and Chrysler) refusal to deal violated §§ 1983 and 1985(3) of the Civil Rights Act and §§ 1, 2 and 3 of the Sherman Act.

Res Judicata
In memoranda and orders dated May 28, 1975 and November 12, 1975, Judge Van Artsdalen granted defendants' motions for summary judgment on the ground that plaintiff had failed to state a valid claim for relief under either the Sherman or Civil Rights Acts. Thus, with respect to plaintiff's claims against GM and Chrysler, he is estopped from relitigating these same claims under the doctrine of res judicata. Accordingly, summary judgment will be entered in favor of these defendants on this ground.
The doctrine of res judicata is intended as a bar to repetitious litigation. *1352 Cramer v. General Telephone & Electronics, 443 F.Supp. 516 (E.D.Pa.1977). Res judicata is based on the proposition that a party who has had one fair and full opportunity to prove a claim and has failed in that effort, should not be permitted to go to trial on the merits of that claim a second time. Bruszewski v. United States, 181 F.2d 419, 421 (3d Cir. 1950). As the Third Circuit stated in Hubicki v. ACF Industries, Inc., 484 F.2d 519, 524 (3d Cir. 1973):
The rule provides that when a court of competent jurisdiction has entered a final judgment on the merits of a cause of action, the parties to the suit and their privies are thereafter bound "not only as to every matter which was offered and received to sustain or defeat the claim or demand, but as to any other admissible matter which might have been offered for that purpose."[1]
See also, Gulf Oil Corp. v. Federal Power Commission, 563 F.2d 588, 602 (3d Cir. 1977); Donegal Steel Foundry Co. v. Accurate Products Co., 516 F.2d 583, 587 (3d Cir. 1977); Sworob v. Harris, 450 F.Supp. 96 (E.D.Pa.1978).
Plaintiff has had a full and fair opportunity to litigate these same claims with respect to GM and Chrysler before Judge Van Artsdalen.[2] In fact, "possibly in an overabundance of caution", Judge Van Artsdalen withheld entering summary judgment on plaintiff's antitrust allegations for over six months to allow the plaintiff an additional opportunity to develop and present competent and credible factual evidence in support of his claims. Raitport v. General Motors Corporation, No. 73-2054 at 13 (E.D.Pa., filed May 28, 1975). Only after plaintiff failed to present any such evidence did Judge Van Artsdalen grant defendants' motions for summary judgment. We hold that plaintiff is barred from relitigating these claims, or any claims which he should have raised in that action, against GM and Chrysler in this proceeding. He is bound by the judgment of the earlier case. 1B Moore's Federal Practice ¶ 0.405.

Failure to State A Claim
In connection with defendants' motion for summary judgment, it is clear that the moving party has the burden of demonstrating that there is no genuine issue of material fact. Fairbanks, Morse & Co. v. Consolidated Fisheries Co., 190 F.2d 817, 824 (3d Cir. 1951), quoted with approval in Ettinger v. Johnson, 556 F.2d 692, 696 (3d Cir. 1977). Moreover, in considering the motion for summary judgment, the Court must view the evidence in a light most favorable to the party opposing the motion. Goodman v. Mead Johnson & Co., 534 F.2d 566, 573 (3d Cir. 1976), cert. denied, 429 U.S. 1038, 97 S.Ct. 732, 50 L.Ed.2d 748 (1977).

A. 42 U.S.C. § 1983

Although plaintiff has not alleged a violation of 42 U.S.C. § 1983, inasmuch as this is a pro se complaint, we have considered whether he has stated a cause of action pursuant to this section. 42 U.S.C. § 1983 provides:
Every person who, under color of any statute, ordinance, regulation, custom, or usage, of any State or Territory, subjects, or causes to be subjected, any citizen of the United States or other person within the jurisdiction thereof to the deprivation of any rights, privileges, or immunities secured by the Constitution and laws, shall be liable to the party injured in an action at law, suit in equity, or other proper proceeding for redress.
The Supreme Court has repeatedly held that the Fourteenth Amendment applies only to governmental and not private action. As stated by the Court in District of Columbia v. Carter, 409 U.S. 418, 424-25, 93 S.Ct. 602, 606, 34 L.Ed.2d 613 (1973):
Like the Amendment upon which it is based, § 1983 is of only limited scope. *1353 The statute deals only with those deprivations of rights that are accomplished under the color of the law of "any State or Territory." It does not reach purely private conduct . . .."
See also Moose Lodge No. 107 v. Irvis, 407 U.S. 163, 172, 92 S.Ct. 1965, 32 L.Ed.2d 627 (1972); Adickes v. S. H. Kress & Co., 398 U.S. 144, 169, 90 S.Ct. 1598, 26 L.Ed.2d 142 (1970); Gibbs v. Titelman, 502 F.2d 1107, 1110 (3d Cir. 1974), cert. denied, 419 U.S. 1039, 42 L.Ed.2d 316. It is not alleged that the actions of either defendant were performed under color of state law, and therefore plaintiff has failed to state a cause of action under 42 U.S.C. § 1983.

B. 42 U.S.C. § 1985(3)

42 U.S.C. § 1985(3) provides in pertinent part:
If two or more persons in any State or Territory conspire to go in disguise on the highway or on the premises of another, for the purpose of depriving, either directly or indirectly, any person or class of persons of the equal protection of the laws, or of equal privileges and immunities under the laws . . . [and] one or more persons engaged therein do, or cause to be done, any act in furtherance of the object of such conspiracy, whereby another is injured in his person or property, or deprived of having and exercising any right or privilege of a citizen of the United States, the party so injured or deprived may have an action for the recovery of damages, occasioned by such injury or deprivation, against any one or more of the conspirators.
Although § 1985(3) does encompass purely private action, Griffin v. Breckenridge, 403 U.S. 88, 96-102, 91 S.Ct. 1790, 29 L.Ed.2d 338 (1971), the Supreme Court has made it clear that
[t]he language [in § 1985(3)] requiring intent to deprive of equal protection, or equal privileges and immunities, means that there must be some racial, or perhaps otherwise class-based, invidiously discriminatory animus behind the conspirators' action. The conspiracy, in other words, must aim at a deprivation of the equal enjoyment of rights secured by the law to all.
Id. at 102, 91 S.Ct. at 1798 (footnotes omitted); Bethel v. Jendoco Construction Corp., 570 F.2d 1168 (3d Cir. 1978); Kunda v. Muhlenberg College, No. 77-1955 at 3 (E.D. Pa., filed April 20, 1978).
As our learned colleague, Judge Van Artsdalen, stated:
Although a conspiratorial allegation is presented, plaintiff has not alleged that defendants' actions were generated by some racial or otherwise class-based animus within the meaning of Griffin v. Breckenridge. More importantly, though, plaintiff has not alleged the deprivation of any right, privilege or immunity to which Section 1985(3) affords protection. Neither plaintiff nor any other automotive component "inventor-entrepreneur" has a federally guaranteed right to have his business proposals accepted and financed by private automotive companies. To the contrary, the Supreme Court has long recognized the right of private companies, in the absence of any purpose to create or maintain a monopoly, to freely choose the parties with whom they will deal. United States v. Colgate & Company, 250 U.S. 300, 307, 39 S.Ct. 465, 63 L.Ed. 992 (1919). The claim under Section 1985(3) will therefore be dismissed.
Raitport v. General Motors, No. 73-2054 at 5 (E.D.Pa.1975); aff'd, 547 F.2d 1163 (3d Cir. 1976), cert. denied, 431 U.S. 932, 97 S.Ct. 2639, 53 L.Ed.2d 248 (1977). See Flesch v. Eastern Pennsylvania Psychiatric Institute, 434 F.Supp. 963, 979-980 (E.D.Pa. 1977); Everett v. City of Chester, 391 F.Supp. 26, 29 (E.D.Pa.1975); Droysen v. Hansen, 59 F.R.D. 483, 484 (E.D.Wis.1973). Plaintiff has not alleged the deprivation of a right, privilege or immunity to which § 1985(3) affords protection. Accordingly, he has failed to state a cause of action under 42 U.S.C. § 1985(3).

C. 15 U.S.C. §§ 1, 2 and 3

Plaintiff's antitrust complaints boiled down to the fact that defendants have acted unlawfully in refusing to accept plaintiff's *1354 proposal for a new switch. Plaintiff contends that his proposed switch is better and more economical than the switches currently used by defendants, and that defendants have refused to deal with him because they are trying to discourage new entries into the field of automotive engineering to eliminate potential competition.
A private manufacturer has the right to select those customers with whom it will deal so long as its choice not to deal with a particular party is not used as a means of suppressing competition. United States v. Arnold, Schwinn & Co., 388 U.S. 365, 376, 87 S.Ct. 1856, 18 L.Ed.2d 1249 (1967); United States v. Parke, Davis & Co., 362 U.S. 29, 37, 80 S.Ct. 503, 4 L.Ed.2d 505 (1960); United States v. Colgate & Co., 250 U.S. 300, 307, 39 S.Ct. 465, 63 L.Ed. 992 (1919); Dillon Materials Handling, Inc. v. Albion Industries, 567 F.2d 1299, 1306 (5th Cir. 1978). This is true even if that supplier offers the best or most economical components available. See United States v. Colgate & Co., 250 U.S. at 307, 39 S.Ct. 465. Thus, even if plaintiff could establish that his proposed switch was in fact the best and most economical switch available to the defendants, this fact alone would not render defendants' refusal to deal unlawful. Raitport v. General Motors, No. 73-2054 at 10 (E.D.Pa., filed May 28, 1975), aff'd, 547 F.2d 1163 (3d Cir. 1976), cert. denied, 431 U.S. 932, 97 S.Ct. 2639, 53 L.Ed.2d 248 (1977). Plaintiff has alleged two separate legal grounds for relief based upon the antitrust laws: (1) Conspiracy and (2) Monopoly.

(1) Conspiracy Theory

To recover on his theory of a concerted refusal to deal, plaintiff must prove that a conspiracy in fact existed between the defendants to refuse plaintiff's proposal. Although evidence of a formal agreement is not required to prove a Sherman Act conspiracy, Interstate Circuit, Inc. v. United States, 306 U.S. 208, 226-27, 59 S.Ct. 467, 83 L.Ed. 610 (1939), plaintiff must show more than mere conscious parallel action between the defendants. Theatre Enterprises, Inc. v. Para-Mount Film Distributing Corp., 346 U.S. 537, 540-541, 74 S.Ct. 257, 98 L.Ed. 273 (1952); Bogosian v. Gulf Oil Corp., 561 F.2d 434, 446 (3d Cir. 1977); Venzie Corp. v. United States Mineral Prod. Co., Inc., 521 F.2d 1309, 1314 (3d Cir. 1975); Klein v. American Luggage Works, Inc., 323 F.2d 787, 791 (3d Cir. 1963); Delaware Valley Marine Supply Company v. American Tobacco Company, 297 F.2d 199, 202-203 (3d Cir. 1961), cert. denied, 369 U.S. 839, 82 S.Ct. 867, 7 L.Ed.2d 843 (1962); Raitport v. General Motors, No. 73-2054 at 11 (E.D. Pa., filed May 28, 1975), aff'd, 547 F.2d 1163 (3d Cir. 1976), cert. denied, 431 U.S. 932, 97 S.Ct. 2639, 53 L.Ed.2d 248 (1977).
Plaintiff has alleged by affidavit that his business proposal was similarly rejected by both American Motors and Ford. There is nothing to indicate that his parallel business behavior was the product of any agreement, tacit or express, between the defendants to refuse to deal with the plaintiff other than plaintiff's affidavit in which he states his basic theory that the automotive companies are engaged in a conscious conspiracy to prevent new competitors from entering the field of automotive component manufacture and that his proposal was rejected in accordance with this conspiratorial policy. Plaintiff offers no further explanation of the details of this conspiracy other than the assertion that the conspiracy is formulated and executed at the management level by the heads of Ford and American Motors.
In the affidavits submitted on behalf of Ford, the affiants attest that the decision to reject the plaintiff's proposal was made unilaterally by them, and that in making the decision, they did not communicate with any person in the employ of or acting for GM, Chrysler or American Motors, or any other person employed outside Ford, nor did anyone from this group have any communication or discussion with Ford concerning Mr. Raitport or any of his inventions. The affiants further state that the plaintiff's proposals were rejected on the basis of their own business judgment. The affidavits submitted on behalf of American Motors (as do the affidavits submitted on behalf of GM and Chrysler) attest to the same facts.
*1355 Plaintiff has had more than ample opportunity to conduct discovery in this action. In addition, he has had the unusual benefit of testing the sufficiency of his legal theories before both Judge Van Artsdalen and our Third Circuit in the previous litigation; and yet, plaintiff has offered only unsubstantiated conspiratorial allegations in support of his claims. We find that plaintiff's unsubstantiated conspiratorial allegations are insufficient to withstand a motion for summary judgment at this stage of the litigation. First Nat'l Bank of Arizona v. Cities Service Co., 391 U.S. 253, 288-90, 88 S.Ct. 1575, 20 L.Ed.2d 569 (1968); Proctor v. State Farm Mutual Automobile Ins. Co., 561 F.2d 262, 275 (D.C.Cir.1977); Solomon v. Houston Corrogated Box Co., 526 F.2d 389, 393-94 (5th Cir. 1976); Rodrigue v. Chrysler Corp., 421 F.Supp. 903, 906 (E.D. La.1976); Raitport v. General Motors, No. 73-2054 (E.D.Pa., filed November 12, 1975), aff'd, 547 F.2d 1163 (3d Cir. 1976); cert. denied, 431 U.S. 932, 97 S.Ct. 2639, 53 L.Ed.2d 248 (1977). As stated by the Supreme Court in First Nat'l Bank of Arizona v. Cities Service Co., 391 U.S. at 288-90, 88 S.Ct. at 1592-1593:
It is true that the issue of material fact required by Rule 56(c) to be present to entitle a party to proceed to trial is not required to be resolved conclusively in favor of the party asserting its existence; rather, all that is required is that sufficient evidence supporting the claimed factual dispute be shown to require a jury or judge to resolve the parties' differing versions of the truth at trial. The case at hand presents peculiar difficulties because the issue of fact crucial to petitioner's case is also an issue of law, namely the existence of a conspiracy. What Rule 56(e) does make clear is that a party cannot rest on the allegations contained in his complaint in opposition to a properly supported summary judgment motion made against him. Yet the analysis of the facts undertaken above demonstrates that, due to the absence of probative forces of Cities' failure to deal with Waldron as being in itself evidence of conspiracy, petitioner's position is, in effect, that he is entitled to rest on the allegations of conspiracy contained in his pleadings. Thus petitioner repeatedly states that Cities has never disproved its participation in the alleged conspiracy, despite the fact that the only evidence of such participation is his allegation that the failure to deal resulted from conspiracy. . . . While we recognize the importance of preserving litigants' rights to a trial on their claims, we are not prepared to extend those rights to the point of requiring that anyone who files an antitrust complaint setting forth a valid cause of action be entitled to a full-dress trial notwithstanding the absence of any significant probative evidence tending to support the complaint. (footnote omitted).

(2) Monopoly Theory

With respect to plaintiff's allegations that defendants refused to deal in order to promote their monopolistic positions, plaintiff must establish that such a monopolistic purpose in fact existed. Coleman Motor Co. v. Chrysler Corp., 525 F.2d 1338, 1348 (3d Cir. 1975); Raitport v. General Motors Corp., No. 73-2054 (E.D.Pa., filed May 28, 1975), aff'd, 547 F.2d 1163 (3d Cir. 1976), cert. denied, 431 U.S. 932, 97 S.Ct. 2639, 53 L.Ed.2d 248 (1977).
The affidavits submitted on behalf of Ford and American Motors (as do those submitted on behalf of GM and Chrysler) state that plaintiff's proposal was refused because the switch did not satisfy production requirements, and that their decision not to deal with the plaintiff was the product of their independent business judgment. Plaintiff's affidavits assert that his proposed switch is superior in quality and cost to the switches currently used by defendants and that defendants refused his proposal in furtherance of their policy to monopolize the automotive component market. As the Court heretofore found in connection with plaintiff's affidavits concerning conspiracy, plaintiff has had more than ample opportunity to conduct discovery in this action and has had the unusual benefit of testing the sufficiency of his legal theories *1356 before both Judge Van Artsdalen and our Third Circuit. The plaintiff's affidavits concerning monopoly are likewise no more than conclusory and unsubstantiated allegations in support of his claim and are insufficient to raise a genuine issue of material fact such as would require a court to deny a motion for summary judgment.
The Court finds that this case presents no genuine issue of material fact, and for the reasons heretofore set forth, summary judgment will be granted in favor of Ford and American Motors on plaintiff's antitrust claims. As stated earlier in this memorandum, summary judgment will likewise be entered in favor of General Motors and Chrysler on the ground of res judicata. Accordingly, this Court will enter an Order granting summary judgment in favor of all defendants and against the plaintiff.
NOTES
[1]  Quoting Commissioner v. Sunnen, 333 U.S. 591, 597, 68 S.Ct. 715, 92 L.Ed. 898 (1948).
[2]  The law is clear that summary judgment is a final judgment on the merits sufficient to raise the defense of res judicata in a subsequent action. Hubicki v. ACF Industries, Inc., 484 F.2d at 524.


738 F.2d 418
Garayv.Scully
84-2028
United States Court of Appeals,Second Circuit.
5/7/84

1
S.D.N.Y.

AFFIRMED


220 U.S. 321 (1911)
UNITED STATES
v.
O'BRIEN, INDIVIDUALLY AND AS A MEMBER OF THE FIRM OF PERKINS & O'BRIEN.
No. 108.
Supreme Court of United States.
Argued March 17, 1911.
Decided April 3, 1911.
ERROR TO THE UNITED STATES CIRCUIT COURT OF APPEALS FOR THE SECOND CIRCUIT.
The Solicitor General, with whom Mr. Assistant Attorney General Denison was on the brief, for the United States.
Mr. Frederic J. Swift and Mr. George A. King, with whom Mr. William R. Conklin was on the brief, for defendants in error.
*324 MR. JUSTICE HOLMES delivered the opinion of the court.
This is a suit brought by the United States to recover the extra expense incurred to complete some dredging in Rhode Island, by reason of the failure of the defendants Perkins and O'Brien diligently and faithfully to prosecute the work. The complaint was dismissed by the Circuit Court in accordance with the decision of the Circuit Court of Appeals upon a previous trial, 159 Fed. Rep. *325 671; 86 C.C.A. 539, and the judgment was affirmed by the Circuit Court of Appeals. 163 Fed. Rep. 1022; 89 C.C.A. 664.
Perkins and O'Brien made a contract with the United States to do the dredging required in improving Providence River and Narragansett Bay between certain points, to begin work on or before March 1, 1899, and to complete it on or before July 1, 1902. One term of the contract was that if they should fail to begin on time or should, "in the judgment of the engineer in charge, fail to prosecute faithfully and diligently the work in accordance with the specifications and requirements of this contract, then, in either case, the party of the first part, or his successor legally appointed, shall have power, with the sanction of the Chief of Engineers, to annul this contract by giving notice in writing to that effect, . . . and, upon the giving of such notice all money or reserved percentage due or to become due to the party or parties of the second part by reason of this contract shall be and become forfeited to the United States; and the party of the first part shall be thereupon authorized, if an immediate performance of the work or delivery of the materials be, in his opinion, required by the public exigency, to proceed to provide for the same by open purchase or contract, as prescribed in § 3709 of the Revised Statutes of the United States:" with a proviso that if the contractors should be prevented by violence of the elements from beginning or completing the work as agreed such additional time might be allowed them as in the judgment of the party of the first part should be just.
Toward the end of the contract, four paragraphs further on than the last, was the further agreement: "In case of failure on the part of the party of the second part to complete this contract as specified and agreed upon, that all sums due and percentage retained shall thereby be forfeited to the United States, and that the said United *326 States shall also have the right to recover any or all damages due to such failure in excess of the sums so forfeited, and also to recover from the party of the second part, as part of said damages, whatever sums may be expended by the party of the first part in completing the said contract, in excess of the price herein stipulated to be paid to the party of the second part for completing the same."
The work was begun but did not go on satisfactorily. On December 4, 1900, the major of engineers in charge wrote from Newport to the contractors and their surety, now represented by the other defendant, "that from present appearances it does not seem to be possible for the contractors to put on other dredges than the one now supposed to be at work," stating what had been done and what would have to be done before the time allowed expired, and that to do the work, it would need three dredges upon it continuously. The letter proceeded to give the authorized warning that "unless the contractors have on work by January 1st, 1901, a sufficient plant to dredge at least 100,000 cubic yards per month the contract will be annulled." On December 13 the contractors answered from New York, stating that they expected to make an arrangement to put on two more dredges within a few days. On December 29, 1900, the contractors telegraphed that their representative would call upon the major in charge on Tuesday morning, i.e., January 1. On December 31 he replied that the representative could accomplish nothing by coming, and on the same day wrote to the defendants informing them that the contract was annulled. The work afterwards was finished by other parties, at much increased cost. There was no substantial ground in the evidence to attribute the Government's course to anything but the fault of the contractors, which was very plain, and the only question is what liability they incurred.
*327 The sole material express promise of the contractors was to complete the work by July 1, 1902. If the work was done at that date that promise was performed, no matter how irregularly or with what delays in the earlier months. Under its terms the United States was not concerned with the stages of performance, but only with the completed result. See Bacon v. Parker, 137 Massachusetts, 309, 311. Its interest in the result, however, made it reasonable to reserve the right to employ some one else if, when time enough had gone by to show what was likely to happen, it saw that it probably would not get what it bargained for from the present hands. But it would be a very severe construction of the contract, a contract, too, framed by the United States, to read the reservation of a right to annul, for want of a diligence not otherwise promised, as importing a promise to use such diligence as should satisfy the judgment of the engineer in charge. It is one thing to make the right to continue work under the contract depend upon his approval, another to make his dissatisfaction with progress conclusive of a breach. In this case it was admitted that there was time enough left to finish the work under the contract when the defendants were turned off. It would be a very harsh measure to pronounce the contract broken when but for the prohibition of the United States the defendants might have done the work in time. The right to terminate the employment of the defendants coupled with a provision for monthly payments based upon the amount of material removed, and therefore of course giving little pay for little work, is the protection expressly stipulated by the United States.
Again, the later paragraph that we have quoted, giving the right to recover expense of completing the work in excess of the original price, gives that right only "in case of failure . . . to complete this contract as specified and agreed upon." On their face these words mean failure *328 to complete by July 1, 1902, not failure to complete because turned off by the engineer in charge, a year and six months before that time arrived, when competent persons still might do the job. The earlier clause under which the so-called annulment took place provides for no such consequence, but only for a forfeiture of reserved percentages and money due. It is true that the expression of the right to proceed to provide for the completion of the contract and the reference to Rev. Stat., § 3709, hardly belong in that part of the contract unless the defendants are liable for the expense, but the contract does not show technical accuracy enough to give this consideration great weight. If the United States wants more it must say so in plainer words.
If the proviso for annulment be not construed to import a promise on the defendants' part, we are of opinion that there is no ground to charge them with a breach of contract. There were suggestions on the Government's part of anticipatory breach, etc., that do not seem to us to need discussion.
We may add one further observation, although it hardly is material, in the view that we take. The ill chosen word `annul' in the contract, repeated in the notice to the contractors and in the complaint, cannot be taken literally in any of them. It means refuse to perform further, not rescind or avoid. Philadelphia, Wilmington & Baltimore R.R. Co. v. Howard, 13 How. 307, 340. For, if the contract were made naught by the Government's election and notice, all rights under it would be at an end, whereas it provides in terms that rights shall arise upon annulment, which but for this provision in the contract the Government would not have. The suit is upon the contract, but the United States asks more than in our opinion the contract gives.
Judgment affirmed.


85 F.3d 628
NOTICE: Sixth Circuit Rule 24(c) states that citation of unpublished dispositions is disfavored except for establishing res judicata, estoppel, or the law of the case and requires service of copies of cited unpublished dispositions of the Sixth Circuit.Eric ADAMS, by his next friend, Anne ADAMS, Plaintiff-Appellant,v.TOWNSHIP OF REDFORD, et al., Defendants,andSouth Redford School District;  Mary Brun, individually andin her official capacity as principal of Thomas JeffersonElementary School;  Jan W. Jacobs, individually and in hisofficial capacity as superintendent of South Redford SchoolDistrict, Defendants-Appellees.
No. 95-1279.
United States Court of Appeals, Sixth Circuit.
May 10, 1996.

Before:  CONTIE, SUHRHEINRICH and COLE, Circuit Judges.
PER CURIAM.

1
Plaintiff Anne Adams, on behalf of her son, Eric Adams ("Eric"), appeals the district court's grant of summary judgment to defendants in this action alleging violation of Eric's First and Fourteenth Amendment rights by their refusal to allow and their policy against wearing of his White Sox jacket because of its alleged association with gang activity.   We find the facts before us insufficiently developed to rule on the parties' arguments, and therefore VACATE the district court's order and REMAND for further factual development.

I.

2
This case involves the promulgation of two disciplinary codes, one oral and one written, by school officials in the South Redford School District ("District").   Eric Adams was an eleven-year-old fifth grader at Jefferson Elementary School in the fall of 1993.   That fall, District officials grew concerned about gang activity.   Assaults occurred on students inadvertently wearing gang colors.   Police, nearby schools, and other communities reported increased frequency of gang graffiti, clothing, hand signals and other gang activity and disruptions.

3
Defendant school officials made an effort to better understand gang culture and activity and explored potential methods of combatting its influence.   They learned that a gang's "colors" are an integral part of its identity.   They also learned that a local gang, known as the "Square Boys," was identified by the colors black and white, especially in the form of the Chicago White Sox emblem.   On October 7, 1993, defendant Mary Brun, principal of Jefferson School, attended a panel discussion presented by a local community group at which area school and law enforcement officials spoke on gang activity in the area.

4
On October 11, 1993, Brun saw Eric and another youth playing in White Sox jerseys, and asked them not to wear White Sox clothing to school again.   Brun repeated her request to not wear White Sox clothing to both of the school's fifth grade classes.   This was the orally promulgated rule under which Eric was eventually disciplined.

5
On October 12, 1993, Eric wore a White Sox jacket to school, and allegedly disrupted another class by waving it to students in the classroom while standing in the hall.   Brun observed Eric's actions and confiscated the jacket.   Eric received one day of in school suspension as a result of the incident.

6
On October 18, 1993, defendant Jan Jacobs, District superintendent, announced additions to the District dress code in a letter to parents which banned:

7
1.  The wearing of clothing or altering one's appearance, to indicate gang membership.

8
2. The wearing of beads, earrings, or jewelry that denotes gang colors or symbols.

9
3. The use of hand signs that communicate gang activity.

10
4. Any other symbols, items, or activities that the Superintendent of Schools may deem disruptive.

11
Also enclosed and cross-referenced in the October 18, 1993 letter was a "gang awareness" pamphlet.   The pamphlet pointed out that "articles of clothing that are conspicuously black and white ... belts, ball caps, jackets, (particularly White Sox clothing) and beads" were ways to identify gang members.   The letter and enclosed pamphlet constitute the written rule prohibiting Eric from wearing his jacket.   He was never disciplined pursuant to this code, but claims that the presence of the rule violates his First Amendment rights.

12
Plaintiff brought suit against the District, Brun, Jacobs, and the Township of South Redford, alleging denial of Eric's First Amendment right to free speech, denial of equal protection, and invasion of privacy.   Plaintiff sought declaratory relief holding the written code unconstitutional, injunctive relief prohibiting defendants from enforcing the code, and monetary damages.

13
The district court held that school officials acted permissibly in refusing to allow Eric to wear his jacket because they had a reasonable forecast of substantial disruption.  See Tinker v. Des Moines Indep.  School Dist., 393 U.S. 503 (1969).   The district court also held that the policy set forth in the October 18, 1993 letter was not void for vagueness because, together with the enclosed pamphlet, it was sufficiently clear to give notice to students of what conduct would subject them to discipline.   This appeal followed, challenging only the order granting summary judgment to the District, Brun, and Jacobs.

II.

14
Plaintiff contends that the oral code's prohibition on Eric's speech was not justified by a reasonable "forecast of substantial disruption or material interference with school activities...."  Tinker, 393 U.S. at 513-14.   Defendants argue that the oral code was justified by events which occurred prior to Brun's promulgation of the code on October 11, 1993.   Although the record establishes that certain events occurred, it is not clear what events prompted Brun to enact the code.   For example, defendants assert that Brun had encountered gang graffiti on a school wall.   In her deposition, however, Brun stated that she was unsure whether this event occurred before or after she promulgated the oral code.   Brun also stated that she had no idea whether Jefferson students were responsible for the graffiti.

15
Defendants also assert that Brun had notice of gang activity from other school officials.   For example, Lorraine Yadach, principal of another middle school in the District, averred that she observed gang graffiti and hand signals as early as March 1993, and that White Sox apparel was a common identifier of gang members.   It is not clear, however, that Brun knew of or relied upon Yadach's observations in enacting the oral code.   It is also unclear what information Brun received at the October 7 panel discussion about specific gang activity threatening Jefferson or the surrounding area.   Without a clearer picture of the facts of which Brun was aware when she promulgated the written code, we are unable at this juncture to either affirm or reverse the district court's order granting summary judgment.

16
Plaintiff also challenges the written code as vague and overbroad.   Although the written code was never enforced against Eric, plaintiff apparently claims standing because Eric's First Amendment rights are implicated.  See Greater Cincinnati Coalition for the Homeless v. City of Cincinnati, 56 F.3d 710, 715-16 (6th Cir.1995) (litigant need not actually undergo prosecution to challenge allegedly unconstitutional enactment when First Amendment rights are involved).   The district court did not address plaintiff's standing to challenge the written code.   The record suggests, however, that neither Eric nor his mother have any real objection to the substance of the written code, only to the fact that its purpose was not adequately explained to them.   This raises the question of whether Eric alleged a "real and immediate" threat of injury sufficient to warrant standing.   Id.  On remand, the district court should ensure plaintiff has standing to challenge the written code.  United States v. Van, 931 F.2d 384, 387 (6th Cir.1991) (appellate court may raise standing issue on its own motion).

III.

17
For the foregoing reasons, the order of the district court is VACATED and REMANDED for proceedings not inconsistent with this opinion.