The opinion of the court was delivered by: MOTLEY
These actions are now before the court on a joint application made by all attorneys representing plaintiffs and their accountants for fees totaling one million five hundred thousand dollars ($1,500,000) out of a settlement fund of five million dollars ($5,000,000).
The request also seeks disbursements in the amount of $71,798.05.The settlement fund of $5,000,000 was established in November 1976 and since that time has been drawing interest which now amounts to approximately $290,000.
The joint fee application is supported by a detailed affidavit from each of the four law firms representing plaintiffs and their accountants setting forth the following: 1) particulars of the services rendered; 2) the hours expended by partners and associates; 3) the usual hourly rates for partners and associates in noncontingent complex cases; and 4) a separate schedule of disbursements for each firm and for the accountants.
The joint application is supported by a memorandum of law setting forth the various factors to be weighed by the court in arriving at a fee determination and supporting the amount requested by specific reference to fees awarded by the courts in similar litigation.
A supplemental affidavit has been filed by lead counsel for the plaintiffs detailing additional services rendered and disbursements made since the filing of the original fee application in October 1976. The amount requested additionally is $73,500.00 for legal services and $302.33 for disbursements.
The fee of $1,500,000 originally requested was set forth in the Notice of Class Action Settlement, which went to members of the three classes involved, advising them of the terms of the settlement and the amount of the requested fee. The court finds, after a hearing on the proposed plan and a separate hearing on the proposed fee that there have been no objections to the fee requested from any class member.The fee and disbursements originally requested and the supplemental fee and disbursements are awarded. The total awarded is $1,645,600.38.
In making this award the court has taken into consideration the following factors: 1) the legal services actually rendered; 2) the number of hours spent by partners and associates; 3) the hourly rates normally charged by the partners and paid to associates for non-contingent complex litigation; 4) the complexity of the issues involved; 5) the quality of the legal work; 6) the competence and skill of plaintiffs counsel; 7) the contingent nature of the compensation and the risks assumed; 8) the length of time the cases have been in litigation; 9) the amount recovered for the class; 10) the proportion of the fee award to the settlement fund; and 11) the amount and proportion of fees awarded in similar cases. City of Detroit v. Grinnell Corp., 495 F.2d 448 (2d Cir. 1974).
The first of these five actions was filed on October 4, 1966 and the last in 1968. Even before the actions were certified as class actions, there was a motion to transfer these 5 cases and 8 other cases to California. Thereafter the instant 5 actions were declared maintainable as class actions and the other 8 actions stayed, pending the outcome of these 5 cases.
Three classes arising out of these 5 cases were delineated: One class consisted of those who purchased Douglas stock from January 19 to September 29, 1966; another class consisted of those who held 4% Douglas debentures worth about $300,000.00 and who converted them into common stock between April 13, 1966 and May 3, 1966; and a class consisting of the purchasers of $75,000,000 4 3/4% debentures issued on July 12, 1966, divided in three subclasses.
There were numerous claims of false and misleading statements and omissions made by the plaintiff classes against defendant Douglas Aircraft, later McDonald-Douglas.Among these were alleged inflated annual and interim income statements, manipulative dividend increase, falsely optimistic predictions, a false prediction that Douglas would break-even in 1966, misleading statements about use of proceeds of $75,000,000 debenture sale, and failure to disclose pretax loss of more than $7,500,000. All of these, it was alleged, improperly increased the trading price of Douglas' stock and misled the purchasers of the debentures and those who converted their debentures into stock. These claims were asserted under both Section 11 of the Securities Act of 1933 and Section 10b-(5) of the Securities Exchange Act of 1934.
There were three trials. The first trial involved Douglas' liability under the Section 11 claim of 4 3/4% debenture holders in which plaintiffs prevailed. The second trial related to the amount of damages to be awarded under the Section 11 claim. The third trial related to Douglas' liabilities under Section 10b. This third trial was based upon the evidence adduced at the first trial. Shortly before proceeding to a trial of the damages to be awarded with respect to the Section 10b-(5) action, these cases were settled.
Most of the legal services were rendered by lead counsel for the plaintiffs.
As set forth above, those legal services are detailed in the affidavits of two lawyers from the lead counsel firm of Pomerantz Levy Haudek & Block, one from Mr. Abraham L. Pomerantz and the other from Robert B. Block.These services were rendered over a period of more than 10 years. In addition to the transfer motion made by Douglas, the motion for class certification, the motions for discovery and inspection, and the three trials, there was extensive discovery in the form of numerous depositions of the officers of Douglas, written interrogatories, production of hundreds of documents, and numerous pretrial conferences. There was also an appeal from the court's original order regarding the size of the notice to the class. There was a hearing on the fairness of the settlement and two hearings on motions to compel payments of the settlement fund and its reallocation and a motion to reform or rescind the settlement agreement and return part of the $5,000,000 to Douglas because of the paucity of claimants.
Once the case was settled and notice was given to class members to file their claim forms, it became the task of plaintiffs' counsel to supervise the processing of these claims by a firm hired for this purpose.The court ordered, as a result of the Douglas motion to reform or rescind the settlement amount, further publication of the notice of settlement in an effort to ...