Missouri & Northern Arkansas Railroad Company Inc v. Entergy Arkansas Inc
ORDER granting in part and denying in part 128 Motion for prejudgment interest and fees, and allowing in part and rejecting in part 127 Bill of costs. The Court will enter an Amended Judgment. Signed by Judge D. P. Marshall Jr. on 09/27/2013. (rhm)
IN THE UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF ARKANSAS
MISSOURI & NORTHERN ARKANSAS
RAILROAD COMPANY, INC.
ENTERGY ARKANSAS, INC.
The case is down to MNA' s requests for costs,
prejudgment interest, and attorney's fees.
Considering all the material
circumstances, and the governing law, the Court makes these awards:
This is less than the Railroad seeks but more than Entergy suggests. Here is
the Court's reasoning.
2. Costs. MNA prevailed. Under Rule of Civil Procedure 54(d)(1), as
Entergy recognizes, the Railroad is entitled to recover certain costs incurred
as specified by 28 U.S.C. § 1920.
The $350.00 federal filing fee is agreed and allowed. 28 U.S.C. § 1920(1).
Though more details would have been helpful, the Court allows $278.25 in
witness fees for our trial. 28 U.S. C. § 1920(3). All service fees are disallowed
because the Railroad has not shown payment to the U.S. Marshal. The statute
allows reimbursement only for service by the Marshal. 28 U.S.C. § 1920(1);
Crues v. KFC Corp., 768 F.2d 230, 234 (8th Cir. 1985).
The Court allows$ 4,621.65 for deposition-related expenses. 28 U.S.C.
§ 1920(2). Herrin-related expenses are disallowed. He did not testify at the
trial and the Court has no memory of his deposition transcript being used.
While not dispositive, that is an important circumstance. Entergy advised the
Railroad about his lack of knowledge before the deposition.
Koppinger v. Cullen-Schiltz & Associates, 513 F.2d 901, 911 (8th Cir. 1975). This
potential witness could have been handled informally without the expense of
a full-blown deposition. MNA has not established that the deposition was
reasonably necessary. The Richardson-related expenses are allowed over
Entergy' s objection- he was a key witness, and MNA needed and used these
transcripts, even though Entergy took the two depositions. All Hesse-related
deposition expenses are allowed, and Entergy's objections overruled, for
The Court agrees, mostly, with Entergy on copies and exemplification.
$1,564.84 is allowed for copies, 28 U.S.C. § 1920(4), which includes exhibit
boards but excludes copying expenses from the nonsuited case that yielded
no benefit in the federal case. (The Court applauds the Railroad's lawyers for
charging $.10 a copy, instead of the inflated amounts sometimes charged and
sought these days.) The video-service fees are disallowed. As Entergy points
out, more than $1,000.00 of this request was related to the pretermitted state
trial. The approximately $5,000.00 in services related to our trial, though
convenient for counsel and sometimes helpful to the jury, was not essential.
This slip-and-fall case was not the kind of dispute where third-party
technology services were necessary to help the jury understand the proof or
the issues. Though our Court of Appeals has not spoken directly on this
point, the weight of authority is against allowing this kind of expense as a
matter of course. Wheeler v. Carlton, 2007 WL 1020481, at *10-11 (E.D. Ark.)
(collecting cases). This Court has allowed it in an extraordinary circumstance
involving television news reports. Duren v. E.I. Dupont De Nemours and Co.,
4:09-cv-713, No. 147 (16 August 2012). No such circumstance exists here.
3. Prejudgment Interest. It is common ground that MNA is entitled to
some award as a matter of substantive Arkansas law. The Railroad prevailed
on its contractual indemnity claim, and it should be made whole for the
settlement with Leal, and his medical bills, all of which was paid some time
"Prejudgment interest is compensation for recoverable damages
wrongfully withheld from the time of the loss until judgment." Reynolds
Health Care Services, Inc. v. HMNH, Inc., 364 Ark. 168, 180, 217 S.W.3d 797, 807
(2005). There are two points of contention: first, whether the amount of
prejudgment interest should be docked because it took so long to adjudicate
this case, and in particular because MNA nonsuited instead of going to trial
in the prior state court proceeding; and second, the proper rate of interest.
The Court rejects Entergy' s argument for an across-the-board reduction
based on foot dragging. This case has taken a long time to resolve. The
Railroad's nonsuit was one reason why. As MNA notes, however, that
strategic choice worked out well for the Railroad. More importantly, the
nature of prejudgment interest cuts hard against any delay-based reduction.
The Arkansas cases make plain that it's an either/ or proposition. "Where
prejudgment interest may be collected at all, the injured party is always
entitled to it as a matter of law." Reynolds Health Care, 364 Ark. at 180, 217
S.W.3d at 807. While Entergy concedes this law, its request for an equitable
reduction in the circumstances presented -lengthy proceedings and a restart
after the nonsuit-would erode the essence of this remedy. The course of this
litigation presented risks to both sides. MNA is entitled to recover for being
out of pocket since 2005 when it paid Leal.
The proper rate is a vexed question with no clear answer. We face a
contract with no agreed rate. Entergy is correct: the constitutional source of
the 6% rate disappeared in January 2011, when Amendment 89 to the
Arkansas Constitution became effective. ARK. CONST. amend. 89, §§ 13 & 14.
This Court entered its Judgment twenty-two months later, in November 2012.
MNA urges the Court to use the 6% rate, relying on the long line of Arkansas
cases doing so. E.g., Wooten v. McClendon, 272 Ark. 61, 63, 612 S.W.2d 105, 106
(1981); Shepherd v. State Auto Property and Casualty Insurance Co., 312 Ark. 502,
516,850 S.W.2d 324,331 (1993). The few post-repeal decisions, however, have
not wrestled with the legal effect of the repeal. E.g., Razorback Concrete Co. v.
Dement Construction Co., LLC, 2012 WL 1983346, at *2 (E.D. Ark.); Terra
Renewal, LLC v. McCarthy, 2012 WL 2805035, at *4 (E.D. Ark.).
suggests applying the federal post-judgment rate. NQ 135 at 4-5. Which rate
applies makes about an $80,000.00 difference. Compare NQ 129 at 3, with NQ 135
at 2 and Exhibit B.
There has been one development since the parties briefed this issue: Act
1223 of 2013. Now by statute, instead of constitutional provision, "[t]he rate
of interest under a contract in which a rate of interest is not specified is six
percent (6%) per annum." ARK. CODE ANN.§ 4-57-101(d). The new Act is
silent about its retroactive effect. It was passed in April 2013; lacking an
emergency clause, it became effective in August 2013. Littles v. Flemings, 333
Ark. 476,484, 970 S.W.2d 259, 264 (1998). The rule is that statutes apply only
prospectively, with some exceptions. Ibid; see generally Brandon J. Harrison
and Hans J. Hacker, Arkansas's Retroactive-Legislation Doctrine, 64 ARK L. REV.
903 (2011). The new statute therefore provides no definitive answer about
Entergy' s contractual interest obligation to MNA.
For three reasons, the Court will use the 6% rate. First, courts have been
using this rate for more than a century. E.g., St. Louis, Iron Mountain, and
Southern Railway Co. v. Biggs, 50 Ark. 169, 176, 6 S.W. 724, 727 (1888). Parties
contract against the background of existing law. When MNA' sand Entergy' s
predecessors in interest made this contract in 1980, they would have known
that their silence about the interest rate for unpaid indemnity obligations
brought the 6% figure into their contract. Petty v. Missouri & Arkansas Railway
Co., 205 Ark. 990, 996, 167 S.W.2d 895, 898 (1943). Second, the new statute is
a telling development. The Court declines to enter the thicket of whether Act
1223 of 2013 was remedial, and thus applies retroactively as a matter of law.
E.g., Clevenger v. City oj Jonesboro, 2011 Ark. App. 579, at 3-4, 2011 WL 4585587,
at *1-2. At a minimum, the General Assembly's restoration of the 6% rate
reflects Arkansas's public policy on this question. Medical Liability Mutual
Insurance Co. v. Alan Curtis Enterprises, Inc., 373 Ark. 525, 529, 285 S.W.3d 233,
237 (2008). Third, any other rate would be nothing but an equitable choice.
This Court must make Erie-educated predictions about unsettled state law,
and the 6% rate is one. No principled basis exists for adopting a different
rate. Contracts are about settling expectations and providing certainties. The
rate of prejudgment interest for an unfulfilled promise needs certainty too.
This January 2011 to August 2013 gap in Arkansas law is best filled by using
the traditional6% rate.
4. Attorney's Fees. Arkansas law governs. ARK. CODE ANN.§ 16-22-308;
All-Ways Logistics, Inc. v. USA Truck, Inc., 583 F.3d 511, 520-21 (8th Cir. 2009).
The path-marking precedent is Chrisco v. Sun Industries, Inc., 304 Ark. 227,22930, 800 S.W.2d 717, 718-19 (1990). The statute says the Court "may" award a
"reasonable" attorney's fee to the prevailing party in a contract case like this
one. ARK. CODE ANN.§ 16-22-308. On all this, the parties agree.
MNA requests $296,017.75- the total amount the Railroad paid all
counsel in the indemnity litigation, state and federal, less fees related to the
unsuccessful claims for implied indemnity and contribution.
responds that, though some fee is reasonable in the circumstances, the amount
should be in the neighborhood of $88,000.00.
Applying Chrisco, and
considering all material circumstances, the Court has no difficulty concluding
that a fee is appropriate. The real question is the amount. To inform its
discretion, the Court has studied the parties' submissions, reviewed the
docket, and reflected on all counsels' work on paper and in the courtroom.
Some of the Chrisco considerations either don't apply or are at the
margin. No contingency fee was involved. Compare All-Ways, 583 F.3d at 521.
All hourly rates charged are- Entergy acknowledges and the Court agreescustomary and fair. No argument is made that MN A's counsel had to pass on
other work to handle this case. Compare Chrisco, 304 Ark. at 229, 800 S.W.2d
at 719. Neither this dispute nor the Railroad imposed extraordinary time
limitations on counsel that should be reflected in an extraordinary fee. Ibid.
The Railroad recovered $268,233.29. This is a substantial sum, though not a
wow number, like the multi-million dollar recovery in All-Ways. 583 F.3d at
Several circumstances support a healthy fee. The experience and ability
of MNA's lead co-counsel is unquestioned by Entergy. Rightly so. The case
was, for example, exceptionally well tried.
Perhaps this is because the
expertise and professionalism of Mr. Brown and Mr. Stroud on behalf of the
Railroad were equaled by Mr. Schlumberger and Mr. Falasco for Entergy.
Lead counsels' good lawyering supports a substantial fee. Chrisco, 304 Ark.
at 229, 800 S.W.2d at 718. The result does too-counsel got a complete
recovery on the contract for MNA. The Court would be remiss, however, if
it did not give a bit of weight here to the jury's verdict. The Railroad's full
recovery came on JNOV, in the old phrase, while the jury divided
responsibility 50/50. MNA paid all the bills without dispute, which also
weighs for their reasonableness.
Other Chrisco considerations weigh against awarding the Railroad
almost $300,000.00 in fees.
First, this was a "relatively simple" case. Chrisco, 304 Ark. at 230, 800
S.W.2d at 719. Leal slipped and fell in the mud while trying to close a stuck
The parties' indemnity contract was stipulated. Yes, there was
uncertainty and contention about Entergy' s property line, exactly what
happened that night, and exactly where. But there was nothing factually
complex about this case. The legal issues were mostly straightforward too,
albeit with a tangled point here and there. It took awhile for everyone,
including the Court, to get their hands around the indemnity-agreement cases,
the potential FELA complication, and the duty issues. But all of this was, at
most, moderate lifting.
Second, the nonsuit. It is not reasonable for Entergy to have to pay for
more work than was necessary- needed in an objective sense- to handle the
case well. Chrisco,304 Ark. at 229,800 S.W.2d at 718. That would be the result
if the Court did not discount for the nonsuit. Voluntarily dismissing and
refiling the case was part of the recipe for the Railroad's full recovery. No one
can know what would have happened in state court. We do know that, after
motion practice, this case looked exactly the same on the first day of the
federal trial as it did on the first day of the state trial right before the nonsuit.
The federal case was essentially a re-run.
The parties recycled
which was appropriate and
commendable. But the other work during the state proceedings did not
translate into the efficiencies in the federal case one would expect. Consider
the summary-judgment briefing. While different procedural law applied, the
substantive law about the indemnity contract and the facts remained the
same. Yet the billing shows a from-the-ground-up effort the second time
around. NQ 129-1 at 23-24. The jury instructions are another example. NQ 1291 at 27-28.
Having been done once, they needed supplementation, not
Third, the billing reflects much wheel spinning on discovery. NQ 129-1
at 10-19. The Court takes the Railroad at its word-in hindsight, Entergy
could and should have been more responsive, more promptly. Even so, this
case was factually simple.
The Court agrees with Entergy' s diagnosis:
inefficiency by inexperienced younger lawyers for the Railroad. We've all be
there when we started practicing. The largely unsuccessful discovery-related
motion practice in the state proceeding supports a reduction too. It is not
reasonable for a losing party to pay for battles it didn't lose. Evaluating the
discovery-based part of the bills in terms of the lawyers' experience, factual
complexity, and results, the Railroad's request needs reduction. Chrisco, 304
Ark. at 229-30, 800 S.W.2d at 718-19.
Fourth, too much time was spent on some projects. For example, a
memo about the clear and settled Arkansas law on attorney's fees should not
have taken eight hours. NQ 129-1 at 30. See the statute, the Chrisco factors,
and the All-Ways case on the standard of review. The Railroad covered this
ground well in two paragraphs in its brief. NQ 129 at 3 & 4-5.
Fifth, the fees incurred reflect missed opportunities for collaboration and
compromise, with some tendency toward confrontation. The approximately
$4,000.00 incurred on the Herrin deposition is one example. All the back and
forth about deposition designations before trial is another.
unsuccessful motion practice about the parties' dueling experts also comes to
mind. The Court knows it takes two to have a disagreement. Mindful that the
Court was not there, and that second-guessing is easy, the Court concludes
nonetheless that a discount is appropriate for some needless contention. This
is another aspect of how much time was appropriate over all. Chrisco, 304
Ark. at 229, 800 S.W.2d at 718.
In sum, a substantial attorney's fee is reasonable but the amount sought
is just too much considering all the material circumstances. The Court reduces
the amount requested by 50% and awards MNA a reasonable attorney's fee
Motion for prejudgment interest and fees, NQ 128, granted in part and
denied in part. Bill of costs, NQ 127, allowed in part and rejected in part. The
Court apologizes to the parties for its delay in deciding these issues. The
Court will enter an Amended Judgment covering all these awards.
D.P. Marshall Jr.
United States District Judge
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