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Winterrowd v. American General Annuity Insurance Co.

February 17, 2009


Appeal from the United States District Court for the Central District of California. Christina A. Snyder, District Judge, Presiding. D.C. Nos. CV-00-00677-CAS-RC & CV-00-00677-CAS.

The opinion of the court was delivered by: Milan D. Smith, Jr., Circuit Judge


Argued and Submitted November 18, 2008 -- Pasadena, California

Before: Pamela Ann Rymer and Milan D. Smith, Jr., Circuit Judges, and Edward R. Korman,*fn1 District Judge.

Opinion by Judge Milan D. Smith, Jr.

Partial Concurrence and Partial Dissent by Judge Rymer


We consider in this appeal whether the Plaintiffs can recover attorney's fees generated by a distinguished member of the Oregon Bar who assists a member of the California Bar in litigating a case before the federal district court in the Central District of California (Central District), but who (a) is not a member of the California Bar, (b) does not physically appear before the Central District, (c) does not sign pleadings in the case before the Central District, (d) has minimal contact with his clients, and no direct contact with opposing counsel in the case, (e) is supervised by Wheatley, Jr., an attorney who is licensed to practice law in California and is the person who alone remained responsible to the Plaintiffs, and (f) is not admitted pro hac vice in connection with the case before the Central District, but no evidence in the record shows that he would not have routinely been so admitted had he applied. We hold that the Plaintiffs can recover such fees. With respect to this issue, we reverse and remand, and with respect to the other issues addressed in this opinion, we affirm in part, and remand in part.

Factual and Procedural Background

This is the third time this court has heard an appeal related to this matter in almost nine years of litigation. Appellants Neil Winterrowd, Kevin Yurkus, and Gregory Stopp (Winter-rowd plaintiffs) filed their initial and amended complaints in early 2000, asserting claims for breach of a severance contract. American General Annuity Insurance Co., et al. (AGAIC) asserted in its answer that the Winterrowd plaintiffs' contract claims were preempted by the Employment Retirement Income Security Act of 1974 (ERISA), 29 U.S.C. § 1001 et seq.

The district court granted AGAIC's motion for summary judgment, holding that the severance contract issued to the Winterrowd plaintiffs was an employee benefit plan covered under ERISA. The Winterrowd plaintiffs appealed, and on March 5, 2003, this court reversed the district court's grant of summary judgment, finding that ERISA did not apply, and remanded the case for further consideration of the Winter-rowd plaintiffs' breach of contract claims.

After remand, the Winterrowd plaintiffs moved the district court for an entry of summary judgment on their breach of contract claims. The district court denied that motion because it found that a material dispute of fact remained respecting AGAIC's unilateral mistake affirmative defense. Ten months later, the parties entered into a settlement agreement under which AGAIC agreed to pay the entire amount claimed by the Winterrowd plaintiffs, plus interest, totaling $288,240.56. The settlement agreement provided for the payment of all costs except for those incurred in connection with the appeal. With regard to attorney's fees, the settlement agreement stated:

The parties agree to preserve the issue of attorneys' fees, if any, for a noticed motion to be decided by District Court Judge Christine Snyder. . . . The Court shall decide the issue of attorney's fees based on the law, evidence submitted by affidavits (with either party reserving the right to object) and the submitted briefs. Each party retains the right to appeal the award or denial of attorneys' fees.

The Winterrowd plaintiffs also agreed "to prepare a dismissal with prejudice of the entire action and provide it to Defendants' counsel. Defendants agree not to file the Dismissal until their receipt of the Court's final decision on the issue of attorney's fees."

The Winterrowd plaintiffs next filed a motion for attorney's fees pursuant to § 218.5 of the California Labor Code, as well as a motion for sanctions against AGAIC's counsel. In an order dated October 20, 2004, the district court held that the Winterrowd plaintiffs were owed attorney's fees as a matter of law "[i]n light of the Ninth Circuit's decision that plaintiffs' original claim was not preempted by ERISA and the fact that defendant ultimately agreed to pay plaintiffs one hundred percent of their contract claims." The district court applied California law to determine a reasonable hourly rate for the Winterrowd plaintiffs' attorneys, finding that $300 per hour was an appropriate rate for their counsel of record, William Wheatley Jr., and for Robert Wheatley. The district court also granted fees for the Winterrowd plaintiffs' three unsuccessful motions for summary judgment. The district court denied the Winterrowd plaintiffs' request for sanctions against AGAIC's counsel.

The district court determined that William Wheatley, Sr., an attorney admitted to the Oregon Bar but not the California Bar, could not recover attorney's fees for the work he did while the case was before the district court. The court found that because Wheatley, Sr.'s "work on this case dealt with matters of California law for a California client's claim in the Central District of California, he is not entitled to recover for fees that were rendered in violation of the State Bar Act or the Central District Local Rules." Wheatley, Sr., was, however, admitted to the Ninth Circuit Bar, and the court granted the Winterrowd plaintiffs fees for the time Wheatley, Sr. spent on the 2002-03 appeal before this court.

On February 22, 2005, the district court granted the Winter-rowd plaintiffs' motion for an entry of judgment, "dismissing this action, pursuant to the terms of the settlement agreement, and entering judgment awarding plaintiffs attorney's fees in the amount" established in the prior order. The Winterrowd plaintiffs timely appealed from this judgment on the issues of attorney's fees and sanctions. AGAIC cross-appealed. While that appeal was pending, on April 4, 2005, the district court denied a March 8, 2005 motion for unclaimed attorney's fees (seeking attorney's fees from August 27, 2004, the date that the original fees motion was filed, until March 7, 2005) stating that it "finds that it does not have jurisdiction to award any further attorneys' fees to plaintiffs by reason of the appeal."

On January 22, 2007, the Ninth Circuit Clerk's Office remanded the case to the district court because "the district court has neither entered a final judgment disposing of plaintiffs' underlying claims, nor certified the attorneys fee issue for interlocutory review pursuant to 28 U.S.C. § 1292(b) or Fed. R. Civ. P. 54(b)." On January 25, 2007, the district court issued an order certifying the case for appeal pursuant to 28 U.S.C. § 1292(b). On April 12, 2007, this court denied the Winterrowd plaintiffs' petition for permission to appeal pursuant to 28 U.S.C. § 1292(b). In response to the dismissal by our court, the district court dismissed the Winterrowd plaintiffs' underlying claims against AGAIC with prejudice on September 27, 2007. Once more, the Winterrowd plaintiffs timely appealed and AGAIC timely cross-appealed.

While these appeals were pending, the district court issued a minute order on November 7, 2007 denying the Winterrowd plaintiffs' motion for fees for work on this case between March 8, 2005 and October 11, 2007 "without prejudice to its being renewed after the Ninth Circuit renders a decision." On December 3, 2007, the Winterrowd plaintiffs amended their notice of appeal to include an appeal from this most recent minute order.


This court has jurisdiction under 28 U.S.C. § 1291, and reviews the amount of attorney's fees awarded by the district court for abuse of discretion. Nat'l Res. Def. Council, Inc. v. Winter, 543 F.3d 1152, 1157 (9th Cir. 2008). Nevertheless "any elements of legal analysis and statutory interpretation which figure in the district court's decision are reviewable de novo." Id. (citation and internal quotation marks omitted). "We review for an abuse of discretion the district court's denial of a motion for sanctions." Avery Dennison Corp. v. Allendale Mut. Ins. Co., 310 F.3d 1114, 1117 (9th Cir. 2002).


Attorney's Fees for Wheatley, Sr.

Even at a time when the largest law firms in the United States were composed of not many more than one hundred lawyers, Judge Friendly observed that we live in an "age of increased specialization and high mobility of the bar." Spanos v. Skouras, 364 F.2d 161, 170 (2d Cir. 1966). But in 1966, there were no personal computers, no Internet, no Blackberries, no teleconferencing, no emails, and the only person who had a two-way wrist radio was cartoon character Dick Tracy. Today, largely because of the benefits of modern technology, hundreds of U.S.-based law firms are composed of many hundreds, or even thousands, of lawyers and support personnel contemporaneously doing business in many states and throughout the world. Lawyers throughout the United States regularly participate in teleconferences and group email sessions with other lawyers in other states, and lawyers and paralegals from one or more firms participate in massive discovery projects arising out of a single case concerning papers and data located in several states. In many such instances, only a small fraction of the lawyers involved in a case are members of the bar of the state where the presiding court sits. Current law does not compel us to be judicial Ludd- ites, and we may properly accommodate many of the realities of modern law practice, while still securing to federal courts the ability to control and discipline those who practice before them.

The district court's order, dated October 21, 2004, determined that the Winterrowd plaintiffs were entitled to reasonable attorneys fee's under Cal. Lab Code § 218.5 as a matter of law. However, based on its reading of Birbrower, Montalbano, Condon & Frank, P.C. v. Superior Ct. of Santa Clara County, 17 Cal. 4th 119 (1998), the court held that the Winterrowd plaintiffs could not recover fees for the work of attorney Wheatley, Sr., due to his alleged violation of the "State Bar Act or the Central District Local Rules."

[1] Admissions rules and procedure for federal court are independent of those that govern admission to practice in state courts. In re Poole, 222 F.3d 618, 620-22 (9th Cir. 2000) ("[A]s nearly a century of Supreme Court precedent makes clear, practice before federal courts is not governed by state court rules."); see also Birbrower, 17 Cal. 4th at 130 ("The [State Bar] Act does not regulate practice before United States courts."). This is true even "when admission to a federal court is predicated upon admission to the bar of the state court of last resort." In re Poole, 222 F.3d at 620.*fn1

The Central District has predicated admission to its bar on admission to the State Bar of California, except for those permitted to appear pro hac vice. C.D. Cal. L.R. 83-2.2, 93-2.3.1. As already noted, however, In re Poole makes clear that the Central District's local rule does not mean that California state court rules in any way govern practice in the federal court. In re Poole, 222 F.3d at 620. Since all litigation in this case took place in federal court, Birbrower is inapposite. The district court "inappropriate[ly] reli[ed] on state authority to impose federal discipline" on Wheatley, Sr. In re Poole, 222 F.3d at 622.*fn2

Moreover, we do not read Birbrower as precluding the Winterrowd plaintiffs from obtaining an award of fees for the services Wheatley, Sr. The law firm in that case, a New York partnership, to whom we refer as Birbrower, entered into an agreement with a client in California to provide legal services in connection with a dispute there over a contract which by its terms was governed in every respect by the "internal laws of the State of California." Birbrower, 17 Cal. 4th at 125. Birbrower attorneys made repeated trips to California where they discussed matters relating to the legal dispute, provided legal advice, and made strategy recommendations. Birbrower attorneys also made trips to California to meet with the client and its accountants for the purpose of assisting in settlement of the dispute.

While the Supreme Court of California held that the foregoing conduct constituted the practice of law in California, even though the matter for which Birbrower was retained never proceeded to litigation, it went on to address an issue of first impression, namely, the meaning of the phrase practice of law "in California" which was proscribed by § 6125 of the California Business and Professional Code. In so doing, it observed:

In our view, the practice of law "in California" entails sufficient contact with the California client to render the nature of the legal service a clear legal representation. In addition to a quantitative analysis, we must consider the nature of the unlicensed lawyer's activities in the state. Mere fortuitous or attenuated contacts will not sustain a finding that the unlicensed lawyer practiced law "in California." The primary inquiry is whether the unlicensed lawyer engaged in sufficient activities in the state, or created a continuing relationship with the California client that included legal duties and obligations.

Birbrower, 17 Cal. 4th at 128. The Birbrower Court then went on to explain that its definition "does not necessarily depend on or require the unlicensed lawyer's physical presence in the state." Id. Instead, it held that "[p]hysical presence here is one factor we may consider in deciding whether the unlicensed lawyer has violated section 6125, ...

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