R.M. Perez & Associates, Inc. v. Welch

UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT

NO. 90-3815

R. M. PEREZ & ASSOCIATES, INC.,

Plaintiff,

versus

JAMES WELCH, ET AL.,

Defendants.

********************************************

VICTORIA A. CARLETON JOLLEY,
Plaintiff-Appellant,
versus

PAINE WEBBER JACKSON & CURTIS, INC., ET AL.,
Defendants-Appellees.

********************************************

HENRY FRY,
Plaintiff-Appellant
versus

PAINE WEBBER JACKSON & CURTIS, INC., ET AL.,
Defendants-Appellees.
*******************************************

HUEY CLEMONS,
Plaintiff-Appellant,
versus

PAINE, WEBBER JACKSON & CURTIS, INC., ET AL.,
Defendants-Appellees.

*********************************************

VALERIE W. MILLS,
Plaintiff-Appellant,
versus

PAINE WEBBER, JACKSON & CURTIS, INC., ET AL.,
Defendants-Appellees.
 ******************************************

CHARLES S. PENDLETON,
Plaintiff-Appellant,
versus

PAINE WEBBER JACKSON & CURTIS, INC., ET AL.,
Defendants-Appellees.

********************************************

EUGENE J. YOUNG,
Plaintiff-Appellant,
versus

PAINE WEBBER JACKSON & CURTIS, INC., ET AL.,
Defendants-Appellees.
********************************************

STANLEY J. GARDEMAL,
Plaintiff-Appellant,

versus

PAINE WEBBER JACKSON & CURTIS, INC., ET AL.,
Defendants-Appellees.
******************************************

GILBERT DISOTELL,
Plaintiff-Appellant,

versus

PAINE WEBBER JACKSON & CURTIS, INC., ET AL.,
Defendants-Appellees.

NO. 91-3119

VICTORIA A. CARLETON JOLLEY, ET AL.,

Plaintiffs-Appellants,

versus

PAINE WEBBER JACKSON & CURTIS, INC.
and JAMES WELCH,

Defendants-Appellees,

*********************************************

2
 NO. 91-3191

VICTORIA A. CARLETON JOLLEY, ET AL.,

Plaintiffs-Appellees
Cross-Appellants,

versus

PAINE WEBBER JACKSON & CURTIS, INC.,

Defendant-Appellant
Cross-Apellee.

Appeals from the United States District Court
for the Eastern District of Louisiana

Before THORNBERRY, KING, and DEMOSS, Circuit Judges.

THORNBERRY, Circuit Judge:

This is an appeal from the final disposition of several

consolidated securities fraud cases. The cases against Welch and

Paine Webber have been percolating in the federal court system for

seven years; only a few isolated issues are presented here for

review. We affirm on all issues except the district court's award

of attorneys' fees.

I. Background

The plaintiffs are eight customers of James Welch, a former

Paine Webber stockbroker. The eight plaintiffs--Huey Clemons,

Gilbert Disotell, Henry Fry, Stanley Gardeman, Victoria Carleton

Jolley, Valerie Mills, Charles Pendleton, and Eugene Young--sued

James Welch and Paine Webber for violations of RICO and federal and

state securities laws. After the plaintiffs filed suit, Paine

3
Webber moved to compel arbitration of the claims against it. Welch

did not seek arbitration of the claims against him. The court

referred Paine Webber's motion to a magistrate, who recommended

that the motion be denied. The district court disregarded the

magistrate's recommendation and granted Paine Webber's motion to

compel arbitration as to seven of the eight plaintiffs, leaving one

suit by Plaintiff Mills pending in the district court against Paine

Webber in addition to the eight against Welch. The plaintiffs

appealed this ruling to a prior panel of the Fifth Circuit, which

found that it lacked jurisdiction to hear the appeal. Jolley v.

Paine Webbber Jackson & Curtis, 864 F.2d 402 (5th Cir.), opinion

supplemented, 867 F.2d 891 (5th Cir. 1989). In this appeal,

however, we will consider the district court's ruling on Paine

Webber's motion to compel arbitration.

All claims against Welch and Mills' claims against Paine

Webber were tried to a jury in the summer of 1988. The jury found

in favor of the plaintiffs on the securities claims, but rejected

the plaintiffs' RICO claims. The district court entered the jury's

award of damages in the amount of $274,610.88, and the Fifth

Circuit affirmed. Jolley v. Paine Webber Jackson & Curtis, 904

F.2d 988 (5th Cir. 1990), cert. denied, 111 S. Ct. 762 (1991). The

district court subsequently awarded attorneys' fees to the

plaintiffs: $193,149.50 for all plaintiffs against Welch and Paine

Webber jointly, and $57,264.12 against Welch only. The district

court later reduced the fee award against Paine Webber and Welch

jointly from $193,149.50 to $168,639.37. The district court also

4
denied an award of costs for the plaintiffs because they failed to

submit a detail of costs along with their application for fees and

costs. In this appeal, the parties challenge the district court's

rulings on fees and costs.

The plaintiffs also appeal the disposition of the claims that

were sent to arbitration. The arbitrators awarded $146,425.61 in

damages for the plaintiffs. The arbitrators also denied fees

because they found that both parties had a legitimate claim to

fees, and their fee awards were offsetting. Paine Webber moved to

confirm the arbitrators' award; the plaintiffs sought to vacate or

modify the award. The district court granted Paine Webber's

motion, confirming the arbitrators' award in its entirety. The

plaintiffs challenge the district court's confirmation of the

award, and both sides seek attorneys' fees in connection with the

arbitration proceedings.

II. The Arbitration Proceedings

A. Paine Webber's Motion to Compel Arbitration

The plaintiffs contend that the district court erred by

rejecting the magistrate's Report and Recommendation and compelling

seven of the eight plaintiffs to submit their claims against Paine

Webber to arbitration. The magistrate that conducted an

evidentiary hearing on the issue of arbitrability recommended that

none of the eight plaintiffs' claims against Paine Webber were

subject to arbitration. Regarding one plaintiff, Mills, the

magistrate found that Paine Webber failed to introduce any

documents proving that she had agreed to arbitrate any claims and

5
that she was therefore entitled to pursue her claims against Paine

Webber in front of a jury. The magistrate also found, as a matter

of law, that three plaintiffs had established a prima facie case of

fraud in the factum, rendering their arbitration agreements void.

Furthermore, the magistrate found that the unauthorized

transactions that all eight plaintiffs complained of could not have

been within the scope of the agreements and therefore, that none of

the eight plaintiffs' claims were subject to arbitration.

The district court partially rejected the Magistrate's Report

and Recommendation, finding that seven of the eight plaintiffs were

required to submit their claims against Paine Webber to

arbitration, while the remaining plaintiff, Mills, was entitled to

assert her claims in district court. The district court's

interpretation of the documents containing the arbitration

agreements is a question of law subject to de novo review. Webb v.

Carter Constr. Co. v. Louisiana Central Bank, 922 F.2d 1197, 1199

(5th Cir. 1991). After a thorough review of the record, we find

that the district court did not err in compelling seven of the

eight plaintiffs to submit their claims against Paine Webber to

arbitration.

Courts perform a two-step inquiry to determine whether parties

should be compelled to arbitrate a dispute. First, the court must

determine whether the parties agreed to arbitrate the dispute.

Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth, 105 S.Ct. 3346,

3353 (1985). Once the court finds that the parties agreed to

arbitrate, it must consider whether any federal statute or policy

6
renders the claims nonarbitrable. Id. at 3355. We first consider

whether, by signing the various documents containing arbitration

agreements, the plaintiffs agreed to arbitrate the claims that they

assert against Paine Webber.

Seven of the eight plaintiffs agree that each signed at least

one document (a Client Agreement, Customer Agreement, or Option

Agreement) containing an arbitration clause. Some plaintiffs

contend, however, that their respective signatures were obtained by

fraud, and all assert that the transactions complained of are

outside the scope of the arbitration agreement. Those plaintiffs

alleging fraud insist that the fraud constitutes fraud in the

factum rather than fraud in the inducement. They argue that the

distinction between fraud in the factum and fraud in the inducement

is determinative of whether they can be compelled to arbitrate.

We disagree that the type of fraud alleged is determinative of

arbitrability. Under Prima Paint Corp. v. Flood and Conklin Mfg.

Co., 388 U.S. 395, 404, 87 S.Ct. 1801, 1806 (1967), and its

progeny, the central issue in a case like this is whether the

plaintiffs' claim of fraud relates to the making of the arbitration

agreement itself or to the contract as a whole. See C.B.S. Emp.

Fed. Cr. Union v. Donaldson, Et Al., 912 F.2d 1563 (6th Cir. 1990);

Bhatia v. Johnson, 818 F.2d 418 (5th Cir. 1987) ("We must determine

whether Bhatia's complaint is directed at the entire contract or

only the arbitration clause."). If the fraud relates to the

arbitration clause itself, the court should adjudicate the fraud

claim. If it relates to the entire agreement, then the Federal

7
Arbitration Act requires that the fraud claim be decided by an

arbitrator. C.B.S. Emp. Fed. Cr. Union v. Donaldson, Et Al., 912

F.2d 1563, 1566 (6th Cir. 1990).

We find that the fraud alleged by the plaintiffs relates to

the Agreements as a whole and not to the arbitration clauses

themselves. Only three of the plaintiffs put forth evidence

regarding the circumstances surrounding the signing of the various

agreements. Victoria Carlton Jolley testified that she signed the

documents before reading them because she trusted Welch and he was

in a hurry to get back to his office. She testified that he never

mentioned margin, options, or arbitration. Plaintiff Stanley

Gardemal testified that he signed the documents because Welch

caught him at a weak moment. Welch had called him repeatedly to

say that if Gardemal signed the agreements, Welch could transfer

some money he had made on a transaction into Gardemal's account.

Gardemal agreed to sign the papers but thought that they pertained

only to the transaction that had already been completed. Gardemal

stated that he never knew he was agreeing to an arbitration clause.

Plaintiff Gilbert Disotell testified that although he signed the

option agreement, he did not know about any risks involved in

signing the agreement and that Welch did not tell him that the

agreement contained an arbitration clause. He signed the agreement

because he trusted Welch.

The testimony of the plaintiffs clearly indicates that the

fraud they complain of goes to the Client Agreements and Option

Agreements in their entirety and not to the arbitration clauses

8
themselves. The plaintiffs' allegations that they did not read or

understand the documents and that Welch did not explain the

documents to them does not allege fraud in the making of the

arbitration agreements, but goes to the formation of the entire

contracts. Therefore, the allegations are arbitrable.

Each of the plaintiffs also argue that their claims against

Paine Webber are outside the scope of the arbitration clauses. The

clauses are found in paragraph 14 of the Customer Agreement,

paragraph 15 of the Client Agreement or paragraph 18 of the Option

Agreement. The Customer Agreement and the Client Agreement contain

identical arbitration clauses providing that "[a]ny controversy

between us arising out of or relating to this contract or the

breach thereof, shall be settled by arbitration, . . . ." The

Option Agreement contains a slightly different arbitration clause

that states, "[a]ny controversy arising out of the handling of any

of the transactions referred to in this Agreement shall be settled

by arbitration . . . ." This court has found unauthorized trading

claims under § 10(b) of the 1934 Act and RICO claims to be within

the scope of similar arbitration agreements. See Mayaja v. Bodkin,

803 F.2d 157, 161 (5th Cir. 1986). Therefore, we find the

plaintiffs' claims to be within the scope of the arbitration

agreements at issue here.

Finally, plaintiff Henry Fry argues that although he signed

the Client Agreement, he did not sign it until after the

transactions he complains of had taken place, and therefore, his

claims are not subject to arbitration. This argument ignores the

9
language of the Agreement that provides: "In consideration of your

. . . continuing an account or accounts in my name or for me for

the purchase or sale of property, I agree with you . . . [that] all

my relations and dealings with [you] are subject to this agreement

. . . ." Fry's argument that his claims are outside the scope of

the agreement is without merit. See Shotto v. Laub, 632 F.Supp.

516, 522 (D.Md. 1986) ("[W]hether plaintiffs signed the agreements

before or after opening their accounts, or even before the claim

arose, does not change the fact that they signed written agreements

to arbitrate claims arising out of their account.").

B. Review of the Arbitrators' Award

The plaintiffs challenge the arbitrators' application of

collateral estoppel and respondeat superior to the issues presented

in the arbitration proceedings. Acknowledging the limited nature

of judicial review of arbitration awards, the plaintiffs contend

that the arbitrators "manifestly disregarded" both of these legal

doctrines in reaching its decision. We find that the plaintiffs

have failed to show the extreme deficiency in the arbitrators'

decisionmaking process necessary for a federal court to overturn

the arbitrators' award.

The "manifest disregard" doctrine originated in the Supreme

Court's decision in Wilko v. Swan, 74 S.Ct. 182 (1953). The

Supreme Court there stated that "interpretations of the law" by

arbitrators were not subject "to judicial review for error in

interpretation." Id. at 187-88. A legal error would present

grounds for vacating an arbitrator's award only when the

10
arbitrator's failure to decide in accordance with the law was

clearly apparent, constituting "manifest disregard" as opposed to

mere misinterpretation. Id. at 187. A leading circuit court

decision applying the manifest disregard doctrine, Merrill Lynch,

Pierce, Fenner & Smith v. Bobker, 808 F.2d 930 (2d Cir. 1986),

explained the doctrine as follows:

"Manifest disregard of the law" by arbitrators is a
judicially-created ground for vacating their arbitration
award, which was introduced by the Supreme Court in Wilko
v. Swan. It is not to be found in the federal
arbitration law. 9 U.S.C. § 10. Although the bounds of
this ground have never been defined, it clearly means
more than error or misunderstanding with respect to the
law. The error must have been obvious and capable of
being readily and instantly perceived by the average
person qualified to serve as an arbitrator. Moreover,
the term "disregard" implies that the arbitrator
appreciates the existence of a clearly governing legal
principle but decides to ignore or pay no attention to
it. To adopt a less strict standard of judicial review
would be to undermine our well established deference to
arbitration as a favored method of settling disputes when
agreed to by the parties. Judicial inquiry under the
"manifest disregard" standard is therefore extremely
limited. The governing law alleged to have been ignored
by the arbitrators must be well defined, explicit, and
clearly applicable. We are not at liberty to set aside
an arbitration panel's award because of an arguable
difference regarding the meaning or applicability of laws
urged upon it.

Bobker, 808 F.2d at 933-34 (citations omitted). Applying this

standard of review, we agree with the district court that the

arbitrators did not manifestly disregard the doctrines of

collateral estoppel or respondeat superior.

The plaintiffs argued before the arbitrators that collateral

estoppel barred reconsideration of the fact issues regarding

Welch's fraud and the amount of the plaintiffs' damages, which were

determined by the jury in the federal district court proceedings.

11
The plaintiffs' related respondeat superior argument sought to have

liability imposed upon Paine Webber for the amount of the district

court judgments against Welch. Both sides briefed these issues

extensively prior to the arbitration hearing. The arbitrators

found that Paine Webber was vicariously liable for Welch's culpable

acts; however, they rejected the plaintiffs' argument that

collateral estoppel barred reconsideration of the plaintiffs'

claims against Welch. The arbitrators' findings of culpability by

Welch were much more favorable to Welch and Paine Webber than the

jury's findings in the district court. Thus, Paine Webber was held

vicariously liable for Welch's acts, but the arbitrators' damage

award was much lower than the jury's award in the district court.

The plaintiffs argued in the district court that the

arbitrators manifestly disregarded the law of collateral estoppel.

The district court found not only that the arbitrator had not

manifestly disregarded the law, but also that the arbitrators'

interpretation of collateral estoppel doctrine was correct.

Because we feel that such an inquiry is beyond the scope of the

courts' review, we do not address the latter findings of the

district court. We uphold the district court's affirmance of the

arbitrators' award, however, because the application of collateral

estoppel to Paine Webber, who was a non-party to the district court

proceedings as to the seven plaintiffs present in the arbitration

proceedings, is by no means the type of well-settled legal

principle that the arbitrators could be said to have "disregarded".

See Freeman v. Lester Coggins Trucking, Inc., 771 F.2d 860 (5th

12
Cir. 1985); Hardy v. Johns-Manville Sales Corp., 681 F.2d 334, 339

(5th Cir. 1982). The application of collateral estoppel is largely

within the discretion of the tribunal considering the issue.

Parklane Hosiery Co. v. Shore, 99 S.Ct. 645, 652 (1979). Because

the plaintiffs have not sustained their burden of showing that the

arbitrators willfully ignored a clearly governing legal principle,

the district court was correct in confirming the arbitrators'

award. See Jenkins v. Prudential-Bache Securities, Inc., 847 F.2d

631, 634 (10th Cir. 1988).1

C. The Award of Offsetting Fees

Both sides sought attorneys' fees in the arbitration

proceedings. The arbitrators found merit in both sides' arguments

for fees, and without determining the appropriate amount of fees to

which each side was entitled, found that the fees were offsetting.

The arbitrators therefore awarded no fees to either party. The

plaintiffs appeal the district court's confirmance of the

arbitrators' decision regarding fees.

We agree with the arbitration panel that the plaintiffs were

entitled to attorneys' fees for violations of Louisiana Securities

Law. La. R. S. 51:714A (1987). With regard to the defendant's

claim for attorneys' fees, the arbitration panel found merit in the

defendant's argument that the plaintiffs litigated the issue of the

1
Plaintiffs' complaint about the application of vicarious
liability does not stand once the collateral estoppel issue is
decided. The arbitrators held Paine Webber vicariously liable
for Welch's culpable acts; they just found fewer culpable acts
and a smaller amount of damages than the jury found in the
district court proceedings.

13
arbitrability of the agreements without a reasonable basis, and the

panel recognized an award of attorneys' fees for the defendants for

defending against this issue. Again, we cannot agree with the

plaintiffs that the arbitrators "manifestly disregarded" the law

with regard to this issue. See Washington Hospital Center v.

Service Employees International Union, Local 722, AFL-CIO, 746 F.2d

1503, 1509-13 (5th Cir. 1984).

Likewise, we cannot agree with the plaintiffs that the

arbitrators erred in finding that the parties' entitlement to

attorneys' fees offset.2 A determination of the amount of

attorneys' fees is a finding of fact. See Stelly v. Commissioner,

761 F.2d 1113, 1116 (5th Cir.), cert. denied, 471 U.S. 851 (1988);

Seamon v. Vaughn, 921 F.2d 1217, 1218 (11th Cir. 1991). This court

must accept findings of fact made by the arbitration panel.

International Union of Elec., Radio & Mach. Workers, Local 1013 v.

Ingram Mfg. Co., 715 F.2d 886, 890 (5th Cir. 1983), cert. denied,

466 U.S. 928 (1984); Todd Shipyards Corp. v. Cunard Line, Ltd., 943

F.2d 1056, 1058 (9th Cir. 1991); The Lattimer-Stevens Co. v. United

Steel Workers of America, 913 F.2d 1166, 1168 (6th Cir. 1990)

(citing International Brotherhood of Elec. Workers, Local 429 v.

Toshiba American, Inc., 879 F.2d 208 (6th Cir. 1989).

2
The plaintiffs contend that they were denied attorneys'
fees contrary to the requirements of the Louisiana statute. This
is incorrect. The offsetting award suggests that they were
awarded fees equal to those awarded to the defendants. The
plantiffs' contention may therefore be characterized more
properly as a quarrel with the amount of fees granted.

14
 Moreover, as a matter of general principles, arbitrators may

render an award without disclosing their rationale for doing so,

"and when they do, courts will not inquire into the basis of the

award unless they believe that the arbitrators rendered it in

'manifest disregard' of the law or unless the facts of the case

fail to support it." Koch Oil, S.A. v. Transocean Gulf Oil Co.,

751 F.2d 551, 554 (2d Cir. 1985); cf. Delaware Dep't of Health and

Social Services v. United States Dep't of Education, 772 F.2d 1123,

1138 (3d Cir. 1985) ("[I]f an award of attorneys' fees was legally

permissible, on any basis, for the services performed . . . we

could not find arbitrary or capricious action or an abuse of

discretion."). Indeed, the arbitrators recognized that the

plaintiffs were entitled to attorneys' fees pursuant to Louisiana

Revised Statute 51:714A. The plaintiffs have not shown that the

amount awarded to them was rendered in manifest disregard of the

Louisiana statute or other law, or that it lacked a factual basis.

Accordingly, we affirm the district court's confirmation of the

arbitrators' fee award.

III. Costs and Fees in the District Court Proceedings

Subsequent to the jury trial in the district court, the

district judge entered an order awarding attorneys' fees for all

eight plaintiffs in the total amount of $250,413.62 for reasonable

expenses incurred in the district court proceedings. Of that

amount, Paine Webber and Welch were jointly liable for $193,149.50,

and Welch was individually liable for $57,264.12. After further

briefing, the district court reduced the amount of joint liability

15
to $168,639.37. The plaintiffs appeal the district court's award,

claiming that the district court improperly applied the Johnson

factors when it reduced the plaintiffs' requested fee award. Paine

Webber also appeals the district court's determination of fees,

contending that the fee award should be proportionate to damages

recovered. Paine Webber further contends that the fee award should

be apportioned among the plaintiffs, and because Paine Webber

defended only against Plaintiff Mills, Paine Webber claims it

should be liable only for fees attributable to the prosecution of

Mills's claims. We review the district court's determination of

attorneys' fees for abuse of discretion; we review any factfindings

supporting its award only for clear error. See Von Clark v.

Butler, 916 F.2d 255, 258 (5th Cir. 1990).

The district court, in a 37-page opinion followed by 4

appendices totalling an additional 40 pages, analyzed the

plaintiffs' fee request under the factors recognized by the

Louisiana Supreme Court in Leenerts Farms, Inc. v. Rogers, 421

So.2d 216, 219 (La. 1982) and the Fifth Circuit in Johnson v.

Georgia Highway Express, Inc., 488 F.2d 714 (5th Cir. 1974). The

district court reduced the number of hours reasonably billed for

some of the time devoted to litigating the arbitrability of the

plaintiffs' state law claims. After reviewing the record on this

issue, we cannot say that the district court clearly erred in its

finding that the plaintiffs were unreasonable in their continued

litigation of this issue. Furthermore, the district court did not

clearly err in its finding that certain identified billing entries

16
were overly vague. We find no abuse of discretion in the district

court's determination of the "lodestar" (reasonable hours expended

multiplied by a reasonable hourly rate).

The plaintiffs also object to the district court's reduction

of the lodestar based on the plaintiffs' limited success and on a

comparison of awards in similar cases. We take note that "[t]here

is a 'strong presumption' that the lodestar figure . . . represents

a 'reasonable' attorney's fee," D'Emanuele v. Montgomery Ward &

Co., Inc., 904 F.2d 1379, 1384 (9th Cir. 1990), and that "upward

adjustments of the lodestar are appropriate only in certain 'rare'

and 'exceptional' cases." Alberti v. Klevenhagen, 896 F.2d 927,

930 (5th Cir. 1990). The district court reduced the lodestar for

Paine Webber by 60%, and the lodestar for Welch by 45%, the

difference explained by the differing number of plaintiffs pursuing

claims against the two defendants. However, the district court

failed to take into consideration the substantial number of hours

reasonably devoted to issues concerning only Paine Webber, such as

arbitrability and vicarious liability. Furthermore, the magnitude

of the reduction for limited success overstates the limited nature

of the plaintiffs' recovery. The plaintiffs prevailed on the

securities claims; the issues they lost on were peripheral to the

securities claims. Finally, we note that a number of issues

presented by the plaintiffs as a justification for an upward

adjustment of the lodestar were rejected by the district court

without appropriate factual support. We find that the district

17
court abused its discretion in reducing the plaintiffs' lodestar.

See Cobb v. Miller, 818 F.2d 1227, 1235 (5th Cir. 1987).

Paine Webber also appeals the district court's decision on

attorneys' fees by, first, claiming that a rule of proportionality

prevents the district court from awarding fees so far in excess of

damages recovered.3 Paine Webber bases this argument on the

Supreme Court's decision in City of Riverside v. Rivera, 106 S.Ct.

2686 (1986). However, we rejected this interpretation of Rivera in

our 1987 opinion in Cobb v. Miller, 818 F.2d 1227, 1234 (5th Cir.

1987). Furthermore, we agree with other circuits addressing the

issue that Rivera provides no support for a rule of proportionality

in cases outside of the civil rights context. See Northeast

Women's Center v. McMonagle, 889 F.2d 466, 472-73 (3d Cir. 1989).

Paine Webber also argues that the district court should have

apportioned the fee award between it and Welch based on a pro rata

division of the fees among the plaintiffs. Under this theory,

Paine Webber would be liable for only one-eighth of all of the fees

awarded because only one of the eight plaintiffs pursued claims

against Paine Webber. The district court rejected this argument

based on our decision in Abell v. Potomac Insurance Co., 858 F.2d

1104 (5th Cir. 1988). We agree with the district court that Abell

is applicable, and we find Paine Webber's arguments to the contrary

unpersuasive.

3
Paine Webber makes the comparison between the damages
recovered against it by Mrs. Mills, approximately $23,000, and
the fees assessed against Paine Webber, which were $168,639.37.

18
 Based on the foregoing, we find that the district court abused

its discretion by reducing the plaintiffs' lodestar by the

percentages noted above. We therefore vacate the district court's

judgments regarding attorneys' fees and remand with instructions to

enter an award of attorneys' fees for the full amount of the

lodestar as determined by the district court in its Minute Entry

dated February 22, 1991.

As a final matter, the plaintiffs contest the district court's

refusal to reconsider its decision denying costs. The district

court initially denied costs to the plaintiffs when they failed to

submit documentation of their costs after they were notified that

their application omitted any substantiation of costs. Upon a

motion to reconsider this decision, the district court found that

the plaintiffs had failed to show good cause for their failure to

document their claim for costs, and refused to allow plaintiffs to

supplement their application with the appropriate accounting of

costs. We cannot assess error in the district court's refusal to

reconsider the issue of costs. See Nelson v. James, 722 F.2d 207,

208 (5th Cir. 1984); Copper Liquor, Inc. v. Adolph Coors Co., 684

F.2d 1087 (5th Cir. 1982).

For all of the foregoing reasons, we remand to the district

court for the entry of judgment for attorneys' fees in the district

court proceedings based on the lodestar calculation.

AFFIRMED in part; REMANDED in part.

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