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A federal appeals court has reversed a fee award to Debevoise & Plimpton, saying a district judge abused his discretion when he found that a suit against Metropolitan Life Insurance Co. was frivolous. A unanimous panel of the 2nd U.S. Circuit Court of Appeals said in an opinion by Judge Joseph M. McLaughlin that the suit, brought by two policyholders, was “indeed meritless” but not frivolous. The ruling canceled a fee award of $30,000, reduced from Debevoise’s application for $260,000 by Southern District Judge Lewis A. Kaplan. Perhaps more importantly, the ruling in Tancredi v. Metropolitan Life Insurance Co., 03-9296, clarified the rules on timeliness of fee requests, although that issue did not affect the outcome. The plaintiffs, Stephen Tancredi and Ronald Speidel, sued MetLife over its conversion from a mutual to a stock life insurance company. They claimed the conversion, executed under New York Insurance Law �7312, violated their constitutional rights under the Takings, Contracts, Due Process and Commerce clauses. The reorganization occurred in April 2000. It converted policyholders’ interests into cash, policy credits or stock in the new publicly traded MetLife Inc. The move was initiated by MetLife’s board and was approved by 93 percent of voting policyholders. The New York superintendent of insurance approved the reorganization after holding a hearing. The plaintiffs alleged that MetLife acted under color of state law by receiving the official sanction of the superintendent. Judge Kaplan dismissed the matter, ruling that the plaintiffs had failed to allege state action and that their constitutional claims lacked merit. The 2nd Circuit affirmed that ruling last year in Tancredi v. Metropolitan Life Insurance Co., 316 F.3d 308. Kaplan’s ruling was handed down July 12, 2001. MetLife moved for attorney’s fees on Aug. 2, seven days beyond the 14-day deadline under Fed. R. Civ. P. 54(d)(2)(B). TIMELINESS ISSUE The judge conceded that the fee application was untimely but ordered that any renewed motions should be filed within 14 days of a ruling on the plaintiffs’ appeal. MetLife complied with that order, and Kaplan rejected arguments that MetLife did not qualify for an extension of time. He held that under Rule 54, “district courts have discretion to fix the timing of attorneys’ fees motions, before or after the fourteen day period expires, without regard to Rule 6(b)(2).” That rule requires parties filing untimely fee requests to demonstrate excusable neglect. Some federal jurisdictions have rules that preempt Rule 54 and allow 30 or more days to file fee motions after a judgment, the circuit wrote this week. The Southern District of New York, however, is not one of them, and the appeals court rejected MetLife’s contention that Southern District judges should have wide latitude to extend the deadline. “We hold that absent a statute or order of the court such as a local rule, the district court was required to find ‘excusable neglect’ under Rule 6(b)(2) to extend the time to move for attorneys’ fees,” McLaughlin wrote. The appeals court said it was unable to review whether there was excusable neglect because of the “paucity of the record.” It noted, however, that MetLife would face a “great hurdle” based on these facts. “Absent a sufficient reason for its delay, the fact that the delay and prejudice were minimal would not excuse MetLife’s mere inadvertence,” McLaughlin wrote. In the end, the discussion of neglect played no role in the final ruling, as the appeals court found that Kaplan should not have ruled that the plaintiffs’ suit was frivolous. “Hindsight proves that plaintiffs’ allegation of state action was very weak, but it was not completely without foundation,” the court said. Judge Jose A. Cabranes and 9th Circuit Judge J. Clifford Wallace, sitting by designation, concurred. James M. Pietz of Malakoff Doyle & Finberg in Pittsburgh represented the plaintiffs. Daniel J. Spillane was the lead attorney for Debevoise.

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