The opinion of the court was delivered by: WEINSTEIN
MEMORANDUM AND ORDER ON ATTORNEY FEES AS MODIFIED AND FINAL JUDGMENT
Counsel seek attorney fees and expenses from a settlement fund in this class action by Vietnam veterans and members of their families for injuries said to be caused by the veterans' exposure to herbicides in Vietnam. See In re "Agent Orange" Product Liability Litigation, 597 F. Supp. 740 (E.D.N.Y. 1984). A final decision on fairness of the settlement was subject to a satisfactory resolution of the attorney fees issue and to the conclusion that a feasible distribution plan was possible. Id. at 862.
As indicated infra Part VIII, total fees allowed and expenses are on the order of $10,000,000. Interest earned from the date of the settlement is over $15,000,000 so that the settlement fund, now amounting to considerably more than the original $180,000,000, is unimpaired.
A number of attorneys who expended time and money in the course of work related to the "Agent Orange" litigation waived any right to court-awarded fees and reimbursement of expenses. The court appreciates their generosity.
Preliminary discussions with various interested parties and the Special Masters have established that, although none of a series of alternatives have been selected, a viable plan for distribution of the fund is possible. Accordingly, the settlement is approved now. This action will permit prompt appeals from this judgment while a final plan for distribution, after hearings, is developed.
Because this is a multidistrict litigation, materials developed during discovery are intended to be used by any present or future litigants in related cases. See In re "Agent Orange" Product Liability Litigation, 597 F. Supp. 740, 751-52, 770 (E.D.N.Y. 1984). The court will require, as a condition to receipt of payment pursuant to this judgment, that an attorney filed with the court all originals or copies of discovery materials in his or her possession obtained during the litigation and not subject to a protective order unless the Magistrate on application directs otherwise. First Amendment and other considerations such as the concern expressed by many class members that the materials be available for historical and scientific study support his condition. See generally Cohen, Access to Pretrial Documents Under the First Amendment, 84 Colum. L. Rev. 1813 (1984).
This multidistrict litigation began as a series of individual cases in the Eastern District of New York, Southern District of New York and Northern District of Illinois. The first case in this district was Dowd v. Dow Chemical Co., 79-C-467, filed on February 23, 1979 by a local attorney, Victor Yannacone, Jr. Another complaint was filed in this district on March 20, 1979 in Ryan v. Dow Chemical Co., 79-C-747, the docket number under which the case ultimately was to proceed as a class action. On May 14, 1979, the Judicial Panel for Multidistrict Litigation transferred the Illinois and other New York cases to this district for consolidation of pretrial proceedings. Some 600 additional tag-a-long cases were subsequently transferred under M.D.L. No. 381.
Mr. Yannacone organized a consortium of local lawyers, known variously as the "Long Island Consortium" or "Yannacone and Associates," for the purpose of handling the multidistrict litigation as lead counsel for the plaintiffs. Consortium members were to contribute funding, participate in prosecution of the "Agent Orange" litigation, and share in the proceeds of any resulting fees. In Pretrial Order No. 26, the court on December 26, 1980 tentatively ruled that the litigation would proceed as a class action. See In re "Agent Orange" Product Liability Litigation, 506 F. Supp. 762, 787-92 (E.D.N.Y. 1980). At the same time, Yannacone and Associates were designated attorneys for the plaintiff class.
Mr. Yannacone also made case management arrangements with regional counsel representing individual Vietnam veterans and their family members throughout the country. Under these agreements, the "associated" attorneys were to share with Mr. Yannacone's firm any contingent fees recovered under their retainer agreements. In return the Yannacone firm was to act as lead counsel in the multidistrict litigation on behalf of those plaintiffs. These agreements were made both before and after provisional class certification in December 1980.
The associated counsel in general contributed nothing of substance to prosecution of the class action. They served primarily as a conduit for information between the class attorneys and some members of the class. Some associated counsel represented plaintiffs in individual lawsuits that were transferred to this court as part of the multidistrict litigation. To the extent that those plaintiffs did not opt-out of the class action their individual cases have been dismissed as duplicative of the class action.
As early as 1980 Yannacone and Associates experienced internal dissension. By the summer of 1983 management problems had become serious, in part because of the great difficulty of funding such a massive litigation. At least one law firm, Ashcraft & Gerel of Washington, D.C., and several individual lawyers were consulted about the possibility of restructuring the membership of the consortium. By notice of motion dated September 19, 1983, Yannacone and Associates asked to be replaced as lead counsel. Plaintiff counsel cited inability to bear the financial expense of continued litigation as the grounds for their motion. By undated notice of motion received September 23, 1983, Stephen J. Schlegel of Chicago, Illinois, Benton Musslewhite of Houston, Texas, and Thomas W. Henderson of Pittsburgh, Pennsylvania, jointly moved for an order designating their respective law firms as the new Agent Orange Plaintiffs' Management Committee ("PMC"). Both applications were granted in Pretrial Order No. 60 on September 26, 1983. See In re "Agent Orange" Product Liability Litigation, 571 F. Supp. 481 (E.D.N.Y. 1983). The members of the original plaintiffs' management committee were directed to cooperate with the new committee. One member of the original committee, David Dean of Carle Place, New York, remained directly associated with the new committee. Others continued to assist in various capacities.
At pretrial conferences after October 1983, the court, indicated that it would hold Mr. Dean directly responsible for taking the lead in preparing and trying the case. Mr. Schlegel assumed the responsibility of "managing partner" of the PMC. On motion of the PMC, by Pretrial Order No. 89 the court on February 2, 1984 approved the expansion of the plaintiffs' management committee to its current membership of nine lawyers who had worked informally as a management group since October 1983. The PMC includes lawyers from Long Island, Philadelphia, Pittsburgh, Cincinnati, Chicago, Houston and San Francisco. it set up a central headquarters two blocks from the courthouse. Monetary contributions of PMC members were used to run this office.
On October 21, 1983, a trial date of May 7, 1984 was set. Between October 1983 and May 1984, the PMC undertook a vast amount of necessary discovery and other trial preparation, laying much of the groundwork essential to prosecution of the case. Settlement negotiations also were commenced between plaintiffs and the defendant chemical companies. On the eve of trial the parties agreed to a $180 million settlement of the plaintiffs' claims against the chemical companies.
Pursuant to the court's direction, on July 23, 1984 the Magistrate issued an order that set forth the procedure for submission of requests for payment of attorney fees and expenses. All fee applications were to be submitted by August 31, 1984 on a form available from the Clerk of the Court. Subsequent fee petitions were accepted by the court if the circumstances excused their lateness. Hearings on attorney fee applications were held on September 26 and October 1, 1984.
More than 100 attorneys have submitted petitions for fees and expenses. Most of them were neither present nor past members of the PMC. A few did not serve as counsel of record, but assisted in the litigation at the request of the management committee. Fee requests have also been received from lawyers who filed individual lawsuits that were transferred tot his court as part of the multidistrict litigation, but who did not work on the class action and did no work at the management committee's request. Still other attorneys seek fee awards who neither assisted in the class action nor filed suit, but who undertook such tasks for their individual clients as monitoring the litigation's progress, assembling medical records, pressing claims for benefits before the Veterans Administration and submitting claim forms in the class action settlement. Many lawyers, both class and nonclass counsel, have previously made private fee arrangements with individual class members.
II. LEGAL STANDARDS FOR AWARDING ATTORNEY FEES
An informed assessment of the fee petitions requires consideration of the system of toxic tort litigation as well as of the unique circumstances of this case. Private enforcement of tort law is at best only a third line of defense against the hazards of toxic substances. Cf. Injuries and Damages from Hazardous Wastes--Analysis and Improvement of Legal Remedies, A Report to Congress in Compliance with section 301(e) of the Comprehensive Environmental Response, Compensation and Liability Act of 1980 (P.L. 96-510) by the "Superfund Section 301(e) Study Group," 97th Cong., 2d Sess. (Comm. Print 1982). The first and most important protection is government and private testing, control and regulation to prevent harm while affording society the benefits of modern chemical products. A second safeguard is compensation and treatment through government mandated or privately arranged compensation schemes. The third shield is private suits against manufacturers and others.
This last alternative of private tort remedies is necessarily inefficient in several respects: its high ratio of transaction costs to recovery; its hit or miss characteristics, in that some receive very high amounts and some nothing; and its questionable deterrent value in preventing the harm in the first place. Nevertheless, the private tort suit has substantial utility as a backup compensation system with limited value as a deterrent against human exposure to unreasonable hazards when (1) the first two defense fail through government and private neglect or (2) strict liability is the basis of recovery and the failure occurs through ignorance of the effects of actions taken by manufacturers and others in reasonable reliance on then current knowledge.
In general, the desirable prophylactic and cost shifting effects of privately prosecuted individual and class actions probably outweigh the costs to defendants, the court system and society generally. See, e.g., Dolgow v. Anderson, 43 F.R.D. 472, 487 (E.D.N.Y. 1968), remanded on other grounds, 438 F.2d 825 (1971); Some Reflections on the "Abusiveness" of Class Actions, 58 F.R.D. 299 (1972). Given the extensive financing and large numbers of skilled lawyer needed to bring a complex class action and prosecute it to a successful conclusion, and the large risk of no recovery--or of a limited one--even when a case appears to have merit, substantial legal fees must be provided when a substantial fund is created if attorneys are to be induced to prosecute these actions. Nevertheless, the potential for abuse of the class action device exists. Overly generous fee awards may encourage cases without merit to be brought and pressed beyond reasonable limits. forcing defendants to settle to avoid burdersome litigation in terms of increased insurance burdensome and legal expenses may keep useful products out of the marketplace to the detriment of the general public. As the Supreme Court remarked in a related context, "'a reasonable attorney's fee' is one that is 'adequate to attract competent counsel, but . . . [that does] not produce windfalls to attorneys.'" Blum v. Stenson, 465 U.S. 886, 104 S. Ct. 1541, 1548, 79 L. Ed. 2d 891 (1984) (42 U.S.C. § 1988 case, quoting S. Rep. No. 1011, 94th Cong., 2d Sess. (1976), reprinted in 1976 U.S. Code Cong. & Ad. News 5908, 5913); see also Laffey v. Northwest Airlines, Inc., 241 U.S. App. D.C. 11, 746 F.2d 4, 16 (D.C. Cir. 1984).
One potential check on abuse is Rule 11 of the Federal Rules of Civil Procedure. It requires belief in the merits of the case. A party or his attorney must sign each pleading, motion, or other paper, thus certifying that
he has read the pleading, motion, or other paper; that to the best of his knowledge, information, and belief formed after reasonable inquiry it is well grounded in fact and is warranted by existing law or a good faith argument for the extension, modification, or reversal of existing law, that it is not interposed for any improper purpose, such as to harass or to cause unnecessary delay or needless increase in the cost of litigation.
The threshold level of egregiousness required to make out a case under Rule 11 is so high, and the probability of successful motions for improper certification so low, that the Rule in general provides little protection for prospective defendants, the public and the courts.
It is in light of these realities that the court must approach the problem of attorney fees and expenses. At the outset of this litigation it appeared that there might be some basis for believing that the herbicide known as "Agent Orange" had caused widespread damage to Vietnam veterans and, perhaps, to their families. The lawyers who originally brought this suit skillfully used publicity together with legal theory and discovery procedures to mobilize potential class members and carry the case forward through the early pleading and motion stages. The attorneys constituting the PMC, who replaced the original committee in September of 1983, acted with professional skill to conduct discovery and prepare the case for trial. Their work revealed a lack of sufficient factual support at this time in plaintiffs' claims, but did result in a significant benefit to the class by way of settlement. Under the circumstances. suggestions made at the settlement hearings by some veterans that lawyers are entitled to no fees or reimbursement of expenses are untenable.
Generally speaking the federal courts have no power to award attorney fees to a prevailing party absent statutory authorization. See Alyeska Pipeline Service Co. v. Wilderness Society, 421 U.S. 240, 44 L. Ed. 2d 141, 95 S. Ct. 1612 (1975). A well-established exception to this rule applies when a common fund has been created in a class action. See generally Boeing Co. v. Van Gemert, 444 U.S. 472, 478-79, 62 L. Ed. 2d 676, 100 S. Ct. 745 (1980); 1 M. Derfner & A. Wolf, Court Awarded Attorney Fees ch. 2 (1983). The common fund doctrine, "part of the historic equity jurisdiction of the federal courts," Sprague v. Ticonic National Bank, 307 U.S. 161, 164, 83 L. Ed. 1184, 59 S. Ct. 777 (1939), contemplates "fair and just allowances for expenses and counsel fees." Trustees v. Greenough, 105 U.S. 527, 536, 26 L. Ed. 1157 (1881).
This equitable doctrine covers claims "filed not only by a party to the litigation, but also by an attorney whose actions conferred a benefit upon a given group or class of litigants." City of Detroit v. Grinnell Corp. (Grinnell I), 495 F.2d 448, 469 (2d Cir. 1974). In addition, the equitable supervisory authority that Rule 23 of the Federal Rules of Civil Procedure grants federal courts in class actions extends to attorney fee questions and itself provides a quasi-substantive predicate for fee allowances. See, e.g., Vincent v. Hughes Air West, Inc., 557 F.2d 759, 768 (9th Cir. 1977); 7A C. Wright & A. Miller, Federal Practice and Procedure § 1803 (1972 & Supp. 1984). The Rule recognizes applicability of the common fund doctrine to class action cases.
Compensation must motivate representation in worthy cases and reflect benefits to the class arising from the attorney's work. As one formulation of the purposes behind a fee award in class actions puts it,
the guiding principles should be to provide compensation sufficient to stimulate the motive for representation of classes and to ensure that the fees awarded are consistent with the benefits bestowed upon the class, insofar as the bestowing of those benefits can be shown to be the pro- duct of the lawyer's work.
Manual for Complex Litigation § 1.47 at 67 (5th ed. 1982).
The Court of Appeals for the Second Circuit has pointed out thatthe existence of a benefit to the class is central to the common fund theory:
[I]ntrinsic in every case is the requirement that benefits must accrue to those against whom expenses are assessed. [Alyeska, 421 U.S. at 264 n.39.] "The award of fees under the equitable fund doc- trine is analogous to an action in quantum meruit: the individual seeking compensation has, by his actions, benefited another and seeks payment for the value of the service performed." Lindy Bros. Builders v. American Radiator & Standard Sanitary Corp. [(Lindy I)], 487 F.2d 161, 165 (3d Cir. 1973). Those who receive no benefit from the lawyer's work should not be required to pay for it.
Van Gemert v. Boeing Co., 573 F.2 733, 736 (2d Cir.) (footnote and some citations omitted), vacated on reh'g on other grounds, 590 F.2d 433 (1978) (en banc), aff'd, 44 U.S. 47 (1980). In assessing the attorney fee applications in this case, therefore, it is necessary to focus upon the benefit to the class alleged to have resulted from each applicant's efforts.
The current "lodestar" approach to attorney free awards followed in this and other circuits emphasizes the need to examine the award's fairness to both the attorney and the common fund beneficiaries. As long ago as 1881, the Supreme Court admonished that "fee awards under the equitable fund doctrine were proper only 'if made with moderation and a jealous regard to the rights of those who are interested in the fund.'" Grinnell I, 495 F.2d at 469 (quoting Greenough, 105 U.S. at 536). The Grinnell opinions, which adopted the lodestar framework for the Second Circuit, require a district court to undertake a factually based analysis. The "touchstone" for the fee award is "the actual effort made by the attorney to benefit the class." City of Detroit v. Grinnell Corp. (Grinnell II), 560 F.2d 1093, 1099 (2d Cir. 1977). Moreover, the district court in making its decision must "act 'as a fiduciary who must serve as a guardian of the rights of absent class members.'" Id. (quoting Grunin v. International House of Pancakes, 513 F.2d 114, 123 (8th Cir.), cert. denied, 423 U.S. 864, 46 L. Ed. 2d 93, 96 S. Ct. 124 (1975)). "The numerous exacting standards that have been set down by the courts should be strictly applied to ensure that [the fee award] aspect of the class action is not subjected to abuse." Manual for Complex Litigation, supra, § 1.47 at 67. Care must be exercised to ensure that counsel is compensated only for the benefit received by the class; to protect members of the class a philosophy of adequacy rather than generosity must be followed. See Grinnell Ii, 560 F.2d at 1098. Even the appearance of a windfall to the attorney receiving a fee award must be avoided. Grinnel I, 495 F.2d at 469.
The lodestar analysis is divided into two steps, the first theoretically objective, the second more subjective. See generally 2 M. Derfner & A. Wolf, supra, ch. 16. First, "attorney's fees are calculated by multiplying the number of billable hours that the prevailing party's attorneys spend on the case by 'the hourly rate normally charged for similar work by attorneys of like skill in the area.'" New York State Ass'n for Retarded Children, Inc. v. Carey, 711 F.2d 1136, 1140 (2d Cir. 1983) (quoting Grinnell II, 560 F.2d at 1098). What is appropriately deemed billable and what are normal hourly rates are issues subject to dispute requiring the exercise of some judicial judgment. Second, once the base fee is calculated the district court within fairly broad parameters of discretion may adjust the time-rate figure upward or downward on the basis of other factors reflecting considerations such as risk of litigation and quality of representation.
The lodestar approach was developed by appellate courts in the 1970's to limit the almost unreviewable judgment previously exercised by district courts, supplant the percentage-of-recovery method of awarding fees, and increase the small hourly rate fees than being award under fee-shifting statutes. See, e.g., the debate between the majority and dissenter in Laffey v. Northwest Airlines, Inc., 241 U.S. App. D.C. 11, 746 F.2d 4 (D.C. Cir. 1984); see also 2 M. Derfner 7 A. Wolf, supra, § 15.01. The lodestar method, however, has significant disadvantages. Because the first step in the process calls for a calculation based on hours worked, counsel has an incentive to expend time and expand effort in order to increase the lodestar figure. But cf. In re Equity Funding Corp. of America Securities Litigation, 438 F. Supp. 1303, 1328 (C.D. Cal. 1977) ("counsel will not expend exorbitant amounts of time, for which there is no guarantee of reimbursement in litigation of a substantially risky nature"). The current lodestar approach thus ends to encourage excess discovery, delays and late settlement, while it discourages rapid, efficient and cheaper resolution or litigation. Not only does lodestar analysis tend to enhance plaintiffs' attorney fees, but it tends to increase enormously the cost of the litigation to the defense in fees and to the court in hours it must spend on supervision.
To some extent excessive claims of hours worked can be offset by disallowing hours that produce no benefit for the class or that exceed the limits of reasonableness for a given task. The lodestar figure, moreover, can be decreased for inefficiency in representation. See infra part II.B.1.c.iii.
Courts are reluctant to cut fee requests on the basis of useful hours worked to the degree required for effective general deterrence of inefficiency because of the penal nature of such measures, th need to highlight an attorney's failings in justifying a lodestar decrease and the difficulty of deciding after the event what might have been a more sensible course. Legal research and litigation are to a large degree arts. Like any creative artist, the good litigator may pursue many blind alleys and revise many drafts before producing the convincing brief or argument. In the end, close scrutiny of the work may ameliorate but cannot eliminate the problem of unnecessary work and undue delay under lodestar.
Because the Court of Appeals for the Second Circuit has not yet modified its fee award approach, district courts in this circuit must follow the lodestar analysis. In any event, the result under lodestar in the instant case is consistent with an appropriate award under prior and alternative theories of fee recovery.
(a) Billable Hours and Time Records
Attorneys seeking a fee award must submit detailed records. The Second Circuit requires submission of contemporaneous records for work performed after June 15, 1983. New York State Ass'n for Retarded Children, 711 F.2d at 1147-48; Birmingham v. Sogen-Swiss International Corp. Retirement Plan, 718 F.2d 515, 523-24 (2d Cir. 1983). For work prior to that date, reconstructed records are acceptable, "although the absence of contemporanceous records is to be considered in determining the actual time spent in the rendition of services." Id. (citing, inter alia, Grinnell I).
A lodestar calculation does not contemplate that a court blindly accept counsel's records. "The calculations made by petitioners are, of course, subject to our own determination of reasonableness." Van Gemert v. Boeing Co., 516 F. Supp. 412, 414 (S.D.N.Y. 1981) (citing Seigal v. Merrick, 619 F.2d 160, 164 & n.9 (2d Cir. 1980); Steinberg v. Carey, 470 F. Supp. 471, 479 (S.D.N.Y. 1979)).
The district court must review the activities for which time is claimed to ascertain whether they resulted in some compensable benefit to the class. For example, an attorney's work on a fee application is not to be counted when "the fee will reduce the fund obtained in a class action." Seigal, 619 F.2d at 165. See also Grinnell II, 560 F.2d at 1102 (a firm is not "entitled to compensation from the fund for its efforts in preparing and supporting its fee application in the district court and on appeal"). Fee application efforts are compensable in statutory fee cases. Gagne v. Maher, 594 F.2d 336, 344 (2d Cir. 1979), aff'd, 448 U.S. 122, 65 L. Ed. 2d 653, 100 S. Ct. 2570 (1980).
Class actions "doubtless present many instances of duplicative including the overstaffing of conferences and court appearances." Seigal, 619 F.2d at 165. Such duplication is an inherent danger in any litigation run by committee. The problem is especially acute when the case involves an enormous plaintiff class and a turnover in management committee membership. See Sun Publishing Co., Inc. v. Mecklenburg News, Inc., 594 F. Supp. 1512, 1517-18 (E.D. Va. 1984) (holding in statutory fee context that no fees would be awarded for duplicative work occasioned by midstream change in counsel and disallowing time expended by previous counsel). "Ample authority supports reduction in the lodestar figure for overstaffing as well as for other forms of duplicative or inefficient work." Id. at 165 n.9. Moreover, "[i]n assessing the extent of staffing and background research appropriate for a given case, a district court must be accorded ample discretion." New York State Ass'n for Retarded Children, 711 F.2d at 1146.
One instance of duplicative work arising from the nature of a class action, but having little or nothing to do with the committee structure of class representation, concerns the filling of individual lawsuits by class members. Attorneys who file individual suits on the same claims involved in the class action do not substantially aid the prosecution of the class action. These collateral cases ultimately are dismissed as duplicative. An award of fees for such "me too" litigation would encourage fruitless and unnecessary work:
While there is no first-in-time rule governing the award of counsel fees where multiple litigation is brought, a duplicative action which contributes virtually nothing to the ultimate result cannot justify an award of counsel fees . . . . Where [the] goal [of the litigation] is fully achieved by a single well-managed action, an award of compen- sation to latecomers who add nothing of value would encourage the bringing of superfluous litigation solely for an award of fees.
Gerena-Valentin v. Koch, 739 F.2d 755, 759 (2d Cir. 1984). See also Lewis v. Teleprompter Corp., 88 F.R.D. 11, 22-23 (S.D.N.Y. 1980; In re Master Key Antitrust Litigation, 1978-1 Trade Cas. (CCH) P61,887 at 73,728 (D. Conn. 1977); Crasto v. Estate of Kaskel, 63 F.R.D. 25, 27 (S.D.N.Y. 1974).
Finally, as part of its assessment of the billable hours claimed, a court has
a duty to analyze the tasks performed, to assure the class that the various tasks are being performed by individuals with the appropriate skills. For example, paralegal tasks should not be undertaken by senior partners who seek compensation for their time at premium rates.
In re Equity Funding Corp. of America Securities Litigation, 438 F. Supp. 1303, 1330 (C.D. Cal. 1977). Tasks appropriate for paralegals would include substantial time spent in photocopying, making prints of microfilmed documents, organizing files, and other activities of a routine clerical nature. Work accomplished primarily by associates should not be billed at senior partners' rates. The particular task undertaken, hours expended, and number and training of the legal personnel involved are all appropriate subjects of a court's scrutiny in determining the base time-rate figure under the lodestar approach.
Determining the applicable hourly rate often presents difficult questions. Under the standard formulation, a district court is to look to "the hourly rate normally charged for similar work by attorneys of like skill in the area." Grinnell II, 560 F.2d at 1098, quoted in New York State Ass'n for Retarded Children, 711 F.2d at 1140. See also Blum v. Stenson, 465 U.S. 886, 104 S. Ct. 1541, 1547, 79 L. Ed. 2d 891 (1984) (in seeing statutory fees under 42 U.S.C. § 1988, courts are to look to "the prevailing market rates in the relevant community"). Problems arise in applying this general standard in a complex multidistrict litigation that is national in scope, involves counsel from all over the country and extends over many years during which the rates for particular lawyers and classes of lawyers are changing.
In a recent case involving nonlocal counsel, the Second Circuit stated that "[n]ormally, a district court . . . will consider the prevailing rates in the district in which the court sits." Polk v. New York State Dept. of Correctional Services, 722 F.2d 23, 25 (2d Cir. 1983) (arising under 42 U.S.C. § 1988, the civil rights fee award statute). See also Donnell v. United states, 220 U.S. App. D.C. 405, 682 F.2d 240, 251-52 (D.C. Cir. 1982) (elaborating on the general rule), cert. denied, 459 U.S. 1204, 103 S. Ct. 1190, 75 L. Ed. 2d 436 (1983). Thus the normal guideline looks to a uniform rate based on the hourly rate prevailing in a district court's local community. Obviously such a simple parochial rule is inappropriate in a multidistrict litigation requiring participation of attorneys from many districts.
Courts in civil right cases have developed several exceptions to the locality rule. First, when a need for "the special expertise of counsel from a distant district" is shown, the appropriate hourly rate is that of the attorney's own community. Polk, 722 F.2d at 25 (citing cases). The same broader view is applied when local counsel are unwilling to handle the case. See Avalon Cinema Corp. v. Thompson, 689 F.2d 137, 140-41 (8th Cir. 1982) (en banc) (stating principle but applying forum rates after finding that competent local counsel were available for less). Second, when a lawyer files a suit in his or her home district that is properly maintainable there, and the case is transferred to the forum district, the attorney should receive fees at the prevailing home rate, "at least in the absence of any indication that the suit was filed in the high-rate district with little prospect of litigation but in the hope of securing a high fee." Polk, 722 F.2d at 25.
Assuming that this statutory decisional law serves as precedent for common fund cases, its application to cases involving large numbers of nonlocal counsel is far from clear. On the one hand, the general rule's utility is called into question when few of the many attorneys for whom a rate must be determined come from the forum. On the other hand, the alternative of looking to each attorney's local rates has serious drawbacks when large numbers of nonlocal counsel are involved. First, it would minimize the forum court's presumed familiarity with hourly rates, which forms the basis for the forum rate rule. See Donnell, 682 F.2d at 251. Second, it would require an intensive case-by-case inquiry that would be nearly unworkable; ease of administration is a basic reason for the general rule. See id. Simplicity becomes an especially important goal in complex case involving a hundred or more fee applications and tens of thousands of pages of supporting documentation and requiring a number of years for prosecution during which rates for particular attorneys and geographic location change in different ways. Third, use of individualized rates would negate in large part the neutrality of the forum rate rule, see id., in that it would consistently favor fee applicants at the expense of the fund: nonlocal attorneys with high individual rates would receive those rates; those with lower individual rates would receive the forum rate.
A workable and fair compromise may well be to apply a uniform, nationally prevailing rate when such a rate can be developed. This solution has been adopted by courts faced with complex attorney fee distributions of large magnitude. See, e.g., In re Fine Paper Antitrust Litigation, 98 F.R.D. 48, 83 (E.D. Pa. 1983) (setting uniform rates that were "in conformity with the regular hourly rates billed to noncontingent clients by private law firms in major metropolitan areas"), rev'd, 751 F.2d 562, 590-91 (3d Cir. 1984) (objecting to the failure of the trial court to determine that national rate through an examination of available data); 3 H. Newberg, Newberg on Class Actions § 6924e (1977).
A national rate approach in special instances recognizes the national character of the lawsuit and of class counsel while retaining a vitally important administrative simplicity together with an essential neutrality of result as between fee applicants and fund beneficiaries. Fortunately too, for purposes of fee determination, a national bar has developed in this country; no longer are the highest paid and most skillful attorneys limited to one or a few great legal centers. For example, there are specialists commanding substantial fees in each of the cities from which lead counsel come--and they earn high fees for work all over the country.
In litigation stretching over a number of years, a question arises about whether current or historical rates should be used to calculate attorney fees. In a recent decision involving a civil rights fee award under section 1988 of title 42 of the United States Code, the Second Circuit held that historical rates should be considered in multi-year cases:
If the services were rendered over two or three years, relevant figures for the current year will normally still be appropriate. Even in protracted cases, it will be sufficient to divide the litigation into just two phases and use one rate for the early phase and a current rate for the later phase.
New York State Ass'n for Retarded Children, 711 F.2d at 1153. The Second Circuit has permitted the application of a single rate for as long a period as seven years. See United States v. Bosurgi, 750 F.2d 216. 218-20 (2d Cir. 1984) ($125 for partners and $75 for associates during the period from 1965 to 1971).
Lower court decisions have applied historical rates in common fund cases as well. See, e.g., Desimone v. Industrial Bio-Test Laboratories, Inc., 83 F.R.D. 615, 621 (S.D.N.Y. 1979); Weiss v. Drew National Corp., 465 F. Supp. 548, 552-53 (S.D.N.Y. 1979); cf. Kane v. Martin Paint Stores, Inc., 439 F. Supp. 1054, 1056-57 (S.D.N.Y. 1977) (historical rates used for fee award charged to defendants in antitrust case under 15 U.S.C. § 15), aff'd mem., 578 F.2d 1368 (2d Cir. 1978). But see Copper Liquor, Inc. v. Adolph Coors Co., 684 F.2d 1087, 1096 n.26 (5th Cir. 1982) (15 U.S.C. § 15 case stating in dicta that prevalent practice of federal courts today is to use current rates "to compensate counsel for inflation and delay in receipt of payment"), modified on other grounds, 701 F.2d 542 (5th Cir. 1983) (en banc)' City of New York v. Darling-Delaware, 440 F. Supp. 1132, 1134 (S.D.N.Y. 1977) (applying present rates for seven years of litigation "to compensate for lost interest and inflation").
As the Second Circuit has noted, "[n]either historic nor current rates are ideal. Historic rates have the advantage of precision . . . [but] do not reflect inflation or the cost of foregone interest . . . ." New York State Ass'n for Retarded Children, 711 F.2d at 1152. The Court of Appeals settled on an historical rate approach because it "at least conforms to Congress' instruction to avoid windfall awards through use of higher current rates" under 42 U.S.C. § 1988; although current rates incorporate inflation into fee awards, the incorporation is imprecise and may overcompensate a fee applicant. 711 F.2d at 1152-53. In Darling-Delaware, by way of contrast, the district court justified a current rate calculation in part on the grounds that it would cost more to award separate compensation for delay. 440 F. Supp. at 1134.
The Second Circuit's concern with avoiding windfall fee awards through use of higher current rates applies with equal force in common fund cases. See, e.g., Grinnell I, 495 F.2d at 469. Nevertheless, the court in New York States Ass'n for Retarded Children, disapproving application of a flat current rate, made an assumption not generally applicable to fund cases. It assumed no cost in waiting for a fee, writing:
the premise underlying use of current rates--that the firm would have billed and collected from the client during the litigation and there- fore had the use of the money--is not true for non-profit law offices and frequently not true for private firms, especially in civil rights litigation.
711 F.2d at 1153. The court's assumption, whatever its soundness in civil rights cases, does not apply in commercial or tort actions. Tort cases normally are prosecuted by private firms for profit on a contingent fee rather than an hourly rate basis. if a fee award in a tort case is to be calculated by use of an hourly rate that in reality is never charged in tort actions, then the fact that tort lawyers usually do not bill and collect fees during litigation has little relevance. Contingent fees often reach one-third to one-half of the recovery; they usually are significantly higher than would be fee awards based on an hourly rate. Contingent fees take into account not only the risk of nonrecovery, but the fact that the lawyer must wait for years before collecting a fee to cover long-paid out-of-pocket expenses, overhead costs and living costs. A lawyer who borrows to pay these advances pays interest; a lawyer who uses her or his own capital loses interest that would have been earned. The premise underlying use of current rates, which holds true for most commercial litigation, remains valid for tort cases in a period of inflation during which the cost of money is closely tied to the rate of inflation.
The delay or opportunity cost factor, of course, could be considered in determining whether to award a multiplier. Weiss, 465 F. Supp. at 551; see also Lindy II, 540 F.2d at 117. Nevertheless, so long as the rate of increase in the applicable hourly rate does not significantly differ from the costs of delay in payment, it does not make an appreciable difference whether the opportunity cost factor is taken into account at the lodestar or the multiplier stage of analysis. Moreover, ease of administration, an ever-present concern in the fee award process in a large, complex case, favors the application of a uniform rate throughout based on present hourly rates if the result is reasonable. Courts must recognize that the entire process of fee fixing is so imprecise and has so many arbitrary and subjective aspects that pretensions of exactitude about any element leads to illusory accuracy. Ultimately the good sense and experience of the trial bench and bar must be relied upon for a reasonably acceptable result.
(c) Discretionary Multiplier
After the time-rate figure has been calculated, the district court in its discretion may adjust it upward or downward on the basis of frankly subjective factors. Such considerations include "the risk of litigation, the complexity of the issues, and the skill of the attorneys." New York State Ass'n for Retarded Children, 711 F.2d at 1140 (citing Grinnell II, 560 F.2d at 1098). The court must set forth specific facts supporting such an increase or decrease in an attorney's compensation. Gagne v. Maher, 594 F.2d 336, 345 (2d Cir. 1979), aff'd, 448 U.S. 122, 65 L. Ed. 2d 653, 100 S. Ct. 2570 (1980); Grinnell II, 560 F.2d at 1098; Grinnell I, 495 F.2d at 473. Applying a multiplier that increases the lodestar is not mandatory. See Zeffiro v. First Pennsylvania Bank, N.A., 581 F. Supp. 811, 813 (E.D. Pa. 1983). Such adjustments will not be made without good reason. Generally, an "attorney will receive an otherwise reasonable compensation for his time from the lodestar figure alone." Grinnell II, 560 F.2d at 1099. Accord, Lindy I, 487 F.2d at 168.
Precedent indicates that in general, the greater the contingent nature of success--that is, the rish of failure--the more weight that a district court may place upon this factor in increasing the lodestar figure. See, e.g., Grinnell I, 495 F.2d at 471. In general, the court is sympathetic to the use of a risk multiplier. Yet, as indicated in the discussion that follows, the present law on the subject is far from settled. Thus, in the instant case a risk multiplier has not been granted. Instead, for reasons suggested infra Part II.B.1.c.ii and iii, a multiplier for demonstrated skill has been granted.
As a preliminary matter, application of the general rule depends on how "success" is defined. In assessing the risk of accomplishment, a court may look to the probability of a partial recovery by compromise rather than the probability of a complete recovery upon the eventual conclusion of the case. "The greater the probability of success, of either ultimate victory on the merits or of settlement, the less this consideration should serve to amplify the basic hourly fee." Grinnell I, 495 F.2d at 471. Judge Gibbons has pointed out "that in a case where some recovery is virtually certain, the fact that the total recovery may be uncertain cannot, consistent with the spirit of Lindy Brothers I, justify a substantial departure from the lodestar of reasonable value of services computed on a time basis." Lindy Bros. Builders, Inc. American Radiator & Standard Sanitary Corp. (Lindy II), 540 F.2d 102, 128 (3d Cir. 1976) (Gibbons, J., concurring in part and dissenting in part). Certainly a case may involve a high level of contingency, in the sense that the chances of complete triumph--a finding of one-hundred percent liability on all claims at the end of a trial--are remote. Yet the result in fact obtained--for example, a comparatively modest compromise settlement before trial that takes into account the numerous unresolved hurdles to full recovery--may be much less unlikely: that defendants would consider settlement to avoid the further burden of litigation and to improve their respective financial pictures might fairly be anticipated. From this perspective, the risk of triumph may not have been so high at the beginning of a lawsuit that it necessarily warrants a contingency or risk-of-litigation multiplier.
Looking beyond this preliminary point, a blind application of the contingency multiplier doctrine in high-risk cases might raise serious problems. First, it might lead to a sharp, troublesome disparity of treatment for cases at the highest level of the risk spectrum: an attorney who brought an extremely high-risk lawsuit that was not quite frivolous under Rule 11 of the Federal Rules of Civil Procedure would be rewarded with a very high contingency multiplier, perhaps as much as four or more times the base lodestar figure. Cf. Fried v. Utilities Leasing Corp., [1976-1977 Transfer Binder]Fed. Sec. L. Rep. (CCH) P95,695 (E.D. Pa. 1976) (quadrupling thought to be warranted by contingency and by quality of counsel's work). Yet an attorney who prosecuted a similarly high-risk case that fell on the other side of the Rule 11 threshold would not only receive no fee award, but might face an assessment of defendant's own legal expenses as a penalty.
Second, as noted above, a case involving dim prospects for ultimate victory on the merits nevertheless may hold out a significant possibility of settlement. Rewarding the filing a prosecution of large, complex lawsuits with poor prospects for success arguably risks fueling the growth of "nuisance" or "strike" litigation, in which settlement becomes the main object and attorney fee awards an overpowering motivating force. See Laffey v. Northwest Airlines, Inc., 241 U.S. App. D.C. 11, 746 F.2d, 4, 27 (D.C. Cir. 1984); Leubsdorf, The Contingency Factor in Attorney Fee Awards, 90 Yale L.J. 473, 491-97, 499 (1981); cf. 7A C. Wright, A. Miller & M. Kane, Federal Practice and Procedure § 1803 at 270-71 (Supp. 1984) ("the class action device must be protected against the taint that it is a source of strike suits promoted by attorneys who simply are seeking fat fees" even in the absence of significant empirical evidence of such behavior).
To avoid these two problems, in marginal cases--particularly those in which a comparatively modest compromise settlement has been reached--many courts would probably conclude today that the base lodestar fee should not be increased to account for the contingent nature of success. Instead, unless other multiplier factors such as quality of representation are relevant, they would probably conclude that the fee award should be based on the straight time-rate figure. See Tornabene v. General Development Corp., 88 F.R.D. 53, 61-64 (E.D.N.Y. 1980) (noting "substantial obstacles" to proof of plaintiff's case and relatively small size of class settlement, and holding that "the results achieved do not warrant approval of the fees sought," notwithstanding the risk of success, magnitude and complexity of the litigation, and quality of representation), aff'd mem., 657 F.2d 265 (2d Cir. 1981); cf. Blum v. Stenson, 465 U.S. 886, 104 S. Ct. 1541, 1550, 79 L. Ed. 2d 891 n.17 (1984) (open question under § 1988 whether an increase for risk of litigation is ever warranted); Hensley v. Eckerhart, 461 U.S. 424, 103 S. Ct. 1933, 1940-41, 1943, 76 L. Ed. 2d 40 (1983) (limited success in relation to scope of litigation in civil rights case requires reduction in lodestar award under 42 U.S.C. § 1988); Selzer V. Fleisher, 629 F.2d 809, 814 (2d Cir. 1980) ("any award must be proportionate to the result achieved"), cert. denied sub nom. Berkowitz v. Selzer, 451 U.S. 970, 68 L. Ed. 2d 348, 101 S. Ct. 2046 (1981); Jones v. Amalgamated Warbasse Houses, Inc., 97 F.R.D. 355, 364 (E.D.N.Y.) denying adjustment in lodestar figure, bacause, inter alia, "the settlement represents a compromise--plaintiffs did not 'win'" a final verdict on the merits), aff'd, 721 F.2d 881 (2d Cir. 1983), cert. denied, 466 U.S. 944, 104 S. Ct. 1929, 80 L. Ed. 2d 474 (1984). See also Laffey, 746 F.2d at 26-27 (criticizing the contingency multiplier doctrine); Leubedorf, supra, at 485-88 (same).
It might be claimed that failure to grant a contingency multiplier to an attorney who brought suit on, and successfully settled, a high-risk clam would undercut the economic motivation to accept meritorious cases despite their limited chances of success. But other considerations reduce the persuasive power of this contention. First, a refusal to grant contingency multipliers in high-risk cases merely increases the contingent nature of the multiplier, not that of the fee award itself; it does not affect an attorney's entitlement to compensation based on time expended at the allowed hourly rate, a payment that constitutes "otherwise reasonable" compensation. No empirical evidence suggests that this approach will so discourage the legal profession's efforts on behalf of common fund plaintiffs that it should not be entertained.
Second, and more fundamentally, the contingency multiplier serves in part to regulate the volume of litigation; it presents the question of the extent to which society should encourage litigation of claims the merits of which are obscure. Concededly, an increase in the lodestar award to reflect the "risk of litigation" does make some sense on a policy basis; counsel has an incentive to pursue meritorious claims despite factual and legal obstacles. See Leubsdorf, supra, at 480-82. Nevertheless, this rationale must be balanced against the overall public interest in efficient judicial administration, if not in legal morality. At some point, the latter considerations suggest that the legal profession should be encouraged to think at least twice before initiating sprawling, complicated cases of highly questionable merit will consume time, expense and effort on the part of all concerned, including the courts, in a degree vastly disproportionate to the results eventually obtainable.
At the very least, then, in borderline cases a rule is supportable providing that counsel's activities should neither be rewarded with a contingency multiplier nor be penalized by Rule 11 sanctions. It is not necessary to decide this issue in the context of the instant litigation since a skill rather than a contingency multiplier is being awarded.
(ii) Complexity of Issues
Complexity is not an independent consideration in the multiplier calculus. It simply represents an aspect of each of the risk and quality factors. The more novel and complex the issues, the greater the risk of litigation, and "for counsel to benefit in their fee request by the existence of novel questions of law, it should appear that counsel's treatment of these issues materially assisted the Court in resolving them." Pollard v. United States, 69 F.R.D. 646, 648-49 (M.D. Ala. 1976). Cf. Grendel's Den, Inc. v. Larkin, 749 F.2d 945, 954-55 (1st Cir. 1984). In this sense, therefore, the novelty and complexity of the issues are taken into account in deciding whether counsel "demonstrated a high level of skill and expertise throughout the pendency of th[e] lawsuit." Pollard, 69 F.R.D. at 649. See also Blum v. Stenson, 465 U.S. 886, 104 S. Ct. 1541, 1548-49, 79 L. Ed. 2d 891 (1984) (stating in statutory fee context that complexity of issues presumably is fully reflected in number of billable hours and therefore no upward adjustment can be awarded on this basis, absent unusually efficient and skilled efforts by counsel).
(iii) Demonstrated Skill of Attorneys
The "quality of representation" factor is intended to permit a district court either to reward "particularly resourceful" legal work that "secures a substantial benefit . . . with a minimum of time invested," or to decrease "the objectively determined fee where the benefit produced does not warrant awarding the full value of the time expended." Merola v. Atlantic Richfield Co., 515 F.2d 165, 168-69 (3d Cir. 1975), quoted in Lindy II, 540 F.2d at 112. "Any increase or decrease in fees to adjust for the quality of work is designed to take account of an unusual degree of skill, be it unusually poor or unusually good." lindy I, 487 F.2d at 168. See also Grinnell II, 560 F.2d at 1100. A quality multiplier in general should not be awarded for the level of skill normally expected of counsel, because it will have been accounted for already in the computation of the hourly rate usual for such a lawyer. See Manual for Complex Litigation § 1.47 at 71 (5th ed. 1982); supra Part II.B.1.b; cf. Blum v. Stenson, 465 U.S. 886, 104 S. Ct. 1541, 1549, 79 L. Ed. 2d 891 (1984) (statutory fee applicant must show that quality of services rendered was superior to that reasonably to be expected given the hourly rate allowed).
In considering whether to adjust the lodestar figure, a court may look to, among other things, (1) the result contained, evaluated in terms of (a) the extent of possible recovery compared with the amount of actual verdict or settlement, and (b) the benefit conferred on the class, as well as (2) the efficiency of "the professional methods utilized in processing the case." Lindy II, 540 F.2d at 118.
Although not generally considered an aspect of proficiency, related criteria such as tenacity, demonstrated ability to bear strains attendant upon preparation of difficult case for trial under the pressure of short time schedules, and skill shown in coordinating the work of many attorneys also may be taken into account. These qualities of character and administrative skill often make the difference between success and failure in a lawsuit. They are properly considered lawyer's skills.
Perhaps of even greater value as compensable skills are those related to settlement negotiation and settlement. Public policy clearly favors settlements at the earliest practicable stage of a dispute. Assuming, for example, that counsel was so skillful in negotiating a settlement that the case was settled after a few hundred hours of lawyer's work rather than after many thousands of hours, a multiplier of ten or more would appear to be justified. This answer would allow some escape from the present lodestar disincentive to early settlement.
That a settlement has been arrived at notwithstanding the formidable factual and legal obstacles to recovery does not, however, necessarily reflect skill by the attorneys. A case may be settled for "reasons that had little, if anything, to do with the quality of the performance of plaintiffs' counsel." Pollard, 69 F.R.D. at 649. See generally Dawson, Lawyers and Involuntary Clients in Public Interest Litigation, 88 Harv. L. Rev. 849, 858-59 (1975) ("Dawson II"). The fee applicant desiring and increase in his or her lodestar award to reflect highly skilled and efficient representation bears the "heavy burden of proving entitlement to such an adjustment." Lindy II, 540 F.2d at 118, quoted in Grinnell II, 560 F.2d at 1100.
A quality multiplier need not be granted for all counsel for for all tasks. See Donnell v. United States, 220 U.S. App. D.C. 405, 682 F.2d 240, 255 n.49 (D.C. Cir. 1982) ("The special quality of one lawyer's services provides no logical basis for granting all the lawyers a quality adjustment."), cert. denied, 459 U.S. 1204, 103 S. Ct. 1190, 75 L. Ed. 2d 436 (1983); Seigal v. Merrick, 619 F.2d 160, 165 (2d Cir. 1980) (suggesting that district court could award or withhold a multiplier based on relative productivity of legal theories [rp[pimded); In re Equity Funding Corp. of America Securities Litigation, 438 F. Supp. 1303, 1337-38 (C.D. Cal. 1977) (awarding different multipliers to different attorneys based on the quality of their work and its importance to the case); cf. In re Fine Paper Antitrust Litigation, 98 F.R.D. 48, 83 (E.D. Pa. 1983) (setting different rates for lead and nonlead counsel), rev'd on other grounds, 751 F.2d 562, 590-91 (3d Cir. 1984).
Quality of representation can justify a decrease as well as an increase in the lodestar figure. See In re Fine Paper Antitrust Litigation, 98 F.R.D. at 84-85, rev'd on other grounds, 751 F.2d 562, 600-01 (3d Cir. 1984). Cf. Arizona v. Maricopa County Medical Society, 578 F. Supp. 1262, 1278 (D. Ariz. 1984) (disallowing time in lodestar calculation in lieu of "a substantial negative multiplier").
Delay in payment may be considered by a court in awarding a multiplier. In re Fine Paper Antitrust Litigation, 751 F.2d 562, 588-89, 601-02 (3d Cir. 1984); Lindy II, 540 F.2d at 117; Weiss v. Drew National Corp., 465 F. Supp. 548, 552 (S.D.N.Y. 1979). Under certain circumstances, delay in payment instead may be taken into account in determining the appropriate hourly rate. See supra Part II.B.1.b. and infra Part IV.B.2. The court's task is not necessarily limited to "a mechanical calculation of the delay factor on the basis of interest rates"; rather, allowance for delay in payment is subject to the court's discretion. In re Fine Paper Antitrust Litigation, 751 F.2d at 601-2 (Becker, J., concurring).
Upon submission of adequate documentation, plaintiff attorneys are entitled to reimbursement of those reasonable and necessary out-of-pocket expenses incurred in the course of activities that benefited the class. See, e.g., In re THC Financial Corp. Litigation, 86 F.R.D. 721, 740 (D. Hawaii (1980); In re Armored Car Antitrust Litigation, 472 F. Supp. 1357, 1388-89 (N.D. Ga. 1979), modified and remanded on other grounds, 645 F.2d 488 (5th Cir. 1981). Expenses must be both reasonable in amount and reasonably related to the interests of the class:
As a premise the petitioners should assume their class clients have agreed to pay modest to moderate travel and per diem costs when the trip served their beneficial interests. Petitioners should not expect to recover from their involuntary clients for unnecessary or extravagant travel and related expenses. Overstaffing at meetings, conferences, or court appearance [and the consequent expense] will not be rewarded, . . . lavish dining . . . will not be underwritten. As time spent in conferences with individual clients has been reduced, so too will travel expenses to meet with these clients.
Id. at 1388-89 (citation omitted). See also In re Fine Paper Antitrust Litigation, 98 F.R.D. 48, 85 (E.D. Pa. 1983), rev'd on other grounds, 751 F.2d 562 (3d Cir. 1984). Counsel must submit detailed documentation in support of their expense reimbursement requests. In re Armored Car Antitrust Litigation, 472 F. Supp. at 1389.
C. Fee Award Allocation and its Effect on Contingent Private Fee Arrangements
Once the fee award has been determined under the lodestar analysis, its burden on the fund must be allocated among the fund beneficiaries. This normally straight-forward task becomes complicated when some class member are represented by attorneys other than class counsel. In addition, a question may arise about whether individuals who opted out of the class discovery. Finally, the court must determine the fee award's impact upon class counsel's own private fee arrangements.
1. Immunity of Represented Class Members and Opt-Outs From Fee Payments From the Fund
Courts have held that class members other than the representative plaintiffs can avoid court-awarded fee disbursements from their portion of the fund "by hiring their own attorneys and participating in the litigation." Vincent v. Hughes Air West. Inc., 557 F.2d 759, 771 (9th Cir. 1977). See Dawson, Lawyers and Involuntary Clients: Attorney Fees from Funds, 87 Harv. L. Rev. 1597, 1647-51 (1974) ("Dawson I"). According to Professor Dawson, the represented class member enjoys this immunity because a contributor to the final result, so that two essential bases of the [common fund] doctrine are eliminated." id. at 1647. See also In re Air Crash Disaster at Florida Everglades on December 29, 1972, 549 F.2d 1006, 1019 (5th Cir. 1977) (approving exclusion of active counsel from fee contributions on the basis that "[o]ne who hires and pays his own lawyer is not a free rider if the attorney is a contributor to the final results").
The Lindy district court found that some lawyers benefited the class by filing many individual suits against the defendants, which "necessarily helped bring about the settlement agreement which produced the substantial settlement fund." Lindy Bros. Builders, Inc. v. American Radiator & Standard Sanitary Corp., 341 F. Supp. 1077, 1085-86 (E.D. Pa. 1972), rev'd on other grounds, 487 F.2d 161 (3d Cir. 1973. The decision on this point was not reviewed on appeal. See Lindy I, 487 F.2d at 164; Lindy II, 540 F.2d at 121. It has, however, been rejected in this circuit. See, e.g., Gerena-Valentin v. Koch, 739 F.2d 755, 750, 759 (2d Cir. 1984); see also 3 H. Newberg, Newberg on Class Actions § 6980f at 1282-83 (1977); cf. In re Fine Paper Antitrust Litigation, 98 F.D.R. 48, 234-35 (E.D. Pa. 1983) (immunity rule applies only to those class members "who had filed suit and participated in the litigation"' emphasis added), rev'd on other grounds, 751 F.2d 562 (3d Cir. 1984).
According to the Ninth Circuit in Vicent, courts have created an exception to the general rule of immunity from fee assessment that applies when the individual client's counsel makes a relatively small contribution to the litigation so that
the contributions of the original or lead attorneys and the attorneys hired by the "stranger" beneficiaries are unequal. . . . The purpose of this exception is of course identical to the purpose of the broader common fund doctrine itself: avoidance of unjust enrichment, or as it has been referred to in this litigation, "coattailing."
Vicent, 557 F.2d at 772 (citations omitted). See also In re Air Crash Disaster at Florida Everglades, 549 F.2d at 1019-21 (inactive counsel must contribute from their fee receipts); Doherty v. Bress, 104 U.S. App. D.C. 308, 262 F.2d 20, 22 (D.C. Cir. 1958) (same), cert. denied, 359 U.S. 934, 3 L. Ed. 2d 636, 79 S. Ct. 649 (1959); Alpine Pharmacy, Inc. v. Chas. Pfizer & Co., Inc., 1973-1 Trade Cas. (CCH) P74,350 at 93,641 (S.D.N.Y. 1972) (entry of appearance by class members through their own counsel does not negate obligation to contribute through settlement fund to class members through settlement fund to class counsel's fee award); 3 H. Newberg, supra, §§ 6960a, 6980d, 6980g (courts have required litigations to contribute when no significant independent benefit was conferred on the class); cf. Grinnell I, 495 F.2d at 470 (quoting Lindy I on the purpose of fee award as being compensation for legal services benefiting a claimant but deleting restriction to unrepresented claimants).
One way of dealing with the problem is to allow reasonable out-of-pocket expenses to those attorneys for independent class member claimants whose contribution to the class result was inchoate and indirect. Cf. Dawson I, supra, 87 Harv. L. Rev. at 1649 (suggesting that a court could "undertake to apportion fees according to the relative contributions of active and less active counsel"). See infra Part IV.A.
The exception to the general rule of immunity from the assessment clearly applies in the instant case. The contributions of class counsel--including those lawyers who assisted in the class action at the management committee's request--dwarf the contributions, if any, made by associated and forwarding attorneys--who, as noted supra Part II.B.1.a. did not substantially benefit the class by efforts on behalf of individual clients. That "the disparity in effort between lead counsel and non-lead counsel" may have arisen from the structure of the litigation rather than voluntary choice is immaterial. Vicent, 557 F.2d at 772. Accordingly, a class member represented by an associated or forwarding attorney or by any other lawyer who did relatively little for the class, remains subject to a pro rata assessment of the overall fee award against his share of the class settlement.
To the extent that the class member has an enforceable private fee arrangement with the attorney for benefits arising from the attorney's efforts, the sums "owed to" the attorney may in some litigations be decreased by that fee toward assessment. See In re Air Crash Disaster at Florida Everglades, 549 F.2d at 1019-21; Doherty v. Bress, 262 F.2d at 22. In the instant litigation, it is clear that any benefit received by a class member resulting from the creation and distribution of the settlement fund arises from efforts by the relatively few attorneys receiving fees for time spent in prosecuting the class action. See Table of Allowed Fees and Expenses, infra Part VI. The efforts of any other lawyer on behalf of an individual class member client at best contributed less than marginally toward any recovery ultimately to be received by that class member from the fund.
Some attorneys filed individual lawsuits on behalf of their clients, but hose cases have been dismissed as duplicative of the class action to the extent that those plaintiffs did not opt out of the class. These actions resulted in neither a benefit to the class for which a fee award is due, see supra Part II.B.1.a, nor an individual recovery for any plaintiff for which a private fee is payable. See, e.g., Krause v. Rhodes, 640 F.2d 214, 219-20 & n.7 (6th Cir.), cert. denied sub nom. Sindell, Lowe & Guidubaldi v. Attorney General of Ohio, 454 U.S. 836, 70 L. Ed. 2d 117, 102 S. Ct. 140 (1981); Allen v. United States, 606 F.2d 432, 435-36 & n.* (4th Cir. 1979); R. Aronson, Attorney-Client Fee Arrangements: Regulation and Review 103 (Federal Judicial Center 1980).
Some lawyers did not file individual actions. Instead, they undertook tasks such as monitoring the progress of the class action, assembling medical records, and filing claim forms on their clients' behalf--routine administrative tasks requiring little professional skill. These attorneys did not substantially benefit the class through these activities and so earned no fee award from the fund for them. Their efforts did not contribute in any meaningful way to any benefit that their class member clients may receive from the fund and so nothing can be charged as a fee approved by the court at this time. See, e.g., Allen, 606 F.2d at 436; Hoffert v. General Motors Corp., 656 F.2d 161, 165-66 (5th Cir.), reh'g denied, 660 F.2d 497 (1981), cert. denied sub nom. Cochrane & Bresnahan v. Smith, 456 U.S. 961, 102 S. Ct. 2037, 72 L. Ed. 2d 485 (1982); Dunn v. H.K. Porter Co., Inc., 602 F.2d 1105, 1109-10, 1112 & n.9 (3d Cir. 1979); ABA Code of Professional Responsibility DR 2-106(A), (B). The court notes that it has received submissions indicating a 50% contingent fee agreement in one case, and requesting $2,500.00 in another, apparently for doing nothing more than submitting a claim form--a task accomplished by tens of thousands of claimants without a lawyer's intervention.
The fee awards granted by this order represent the fair value of the legal services rendered in prosecuting the class action and creating the settlement fund. They will be paid "off the top" of the fund, see infra Part II.C.2, leaving the remainder of the settlement fund for disbursement to the class pursuant to court order. The only fee or expense award recoverable from the settlement fund or a class member's individual recovery is one awarded in this judgment or by further court order.
A problem related to the issue of how a fee award affects those class members represented by their own private attorneys concerns those putative class members who opted out of the class. If they use the product of the class representatives' discovery efforts in the subsequent prosecution of their individual opt-out lawsuits, the question arises whether they should be charged with some of the class's costs of discovery. This issue is particularly important in multidistrict litigations in which attorneys representing individual clients share in the benefits of joint discovery without participating in it. Those putative class members who opt-out and use MDL discovery materials could be assessed a reasonable fee, to be paid back into the fund as their fair share of the legal expenses assumed by th class. Cf., e.g., In re Air Crash Disaster at Florida Everglades on December 29, 1972, 549 F.2d 1006, 1019-21 (5th Cir. 1977) (requiring those who benefit from lead counsel's work in consolidated litigation to bear a portion of the fee award and reducing their contingent fee liability to their nonparticipating attorneys accordingly); Doherty v. Bress, 104 U.S. App. D.C. 308, 262 F.2d 20, 22 (D.C. Cir. 1958) (requiring inactive counsel to contribute from his fee receipts), cert. denied, 359 U.S. 934, 3 L. Ed. 2d 636, 79 S. Ct. 649 (1959); Heart Valve Cases, M.D.L. No. 367 (E.D.N.Y. 1983) (orders charging individual attorneys with costs of joint discovery).
Most if not all opt-out claimants would be represented on a contingent fee basis. One method of dealing with the problem would be to require counsel in such cases to report to the court any fee received so that an appropriate percentage could be ordered paid to the class, which bore the expense of joint discovery. Another method of allocating discovery costs would be to assess the amounts to be paid by opt-out plaintiffs at the time that they make use of MDL discovery materials, regardless of the outcome in their individual cases. This alternative seems more equitable, because the benefit to the individual plaintiffs will accrue whether or not they ultimately succeed on the merits; use of multidistrict discovery avoid discovery expense in the individual cases that otherwise would be incurred.
Any use of MDL discovery materials in an "Agent Orange" opt-out case shall be reported to the court so that an appropriate order to pay into the fund an appropriate assessment can be arranged. No final determination on this hypothetical issue needs to be made at this time.
2. Effect of a Fee Award on a Client's Private Fee Liability to a Class Attorney
A class attorney may receive fees from that share of the fund attributable to class members other than his or her own private clients, whether or not those other class members are themselves represented by counsel. Two conceptual issues are posed: first, whether class members who are class counsel's private clients can be charged with a pro rata share of the total fee award to all attorneys, and second, whether those class members have a right to contribution from the rest of the class toward payment of their own attorney fees and if so how that contribution right should be taken into account by a court. See Trustees V. Greenough, 105 U.S. 527, 532, 26 L. Ed. 1157 (1881) (recognizing that when a plaintiff wine a judgment creating a fund that benefited others as well as himself, the plaintiff is entitled to contribution from the other fund beneficiaries toward his litigation expenses including attorney fees); Central Railroad & Banking Co. v. Pettus, 113 U.S. 116, 28 L. Ed. 915, 5 S. Ct. 387 (1885) (extending the common fund doctrine to permit a plaintiff's lawyer to make a direct claim for fee, over and above the fee due from the lawyer's client, against other fund beneficiaries for the reasonable value of those services to them); Dawson II, supra, 88 Harv. L. Rev. at 849-51; Dawson I, supra, 87 Harv. L. Rev. at 1601-12; supra Part II.C.1. See also Lindy II, 540 F.2d at 120; Lindy I, 487 F.2d at 169; 3 H. Newburg, supra, § 6928b; Manual for Complex Litigation § 1.47(b)(2) at 74 & n.181 (5th ed. 1982). Cf. In re Continental Vending Machine Corp., 318 F. Supp. 421, 432-33 (E.D.N.Y. 1970) (granting a lawyer's fee award request but ordering the award paid directly to the client). See generally Wallace v. Fiske , 80 F.2d 897, 909-12 (8th Cir. 1936).
The problem of dealing with class counsel's private fee arrangements is difficult in theory. In the instant case, the Gordian knot can readily be cut because no class attorney requesting a fee award has claimed the right to a contractual fee from a client. Thus, any lawyer receiving a fee or expense award from the fund will be deemed to have waived any private contractual right to a fee from individual class members. See, e.g., Pollard v. United States, 69 F.R.D. 646, 652 (M.D. Ala. 1976); 3 H. Newberg, supra, § 6928b. Serious doubt exists in any case about whether any such fee agreement could be enforced to the extent that it provides for a fee percentage of the client's recovery that exceeds a pro rate percentage of the total fee award granted by this judgment. See, e.g., Wheatley v. Ford, 679 F.2d 1037, 1041 (2d Cir. 1982); Cooper v. Singer, 719 F.2d 1496 (10th Cir. 1983); Krause v. Rhodes, 640 F.2d 214, 218-20 (6th Cir.), cert. denied sub nom. Sindell, Lowe & Guidubaldi v. Attorney General of Ohio, 454 U.S. 836, 70 L. Ed. 2d 117, 102 S. Ct. 140 (1981); Magana v. Platzer Shipyard, Inc., 74 F.R.D. 61, 75 (S.D. Tex. 1977); Developments in the Law--Class Actions, 89 Harv. L. Rev. 1318, 1611 (1976). See generally R. Aronson, Attorney-Client Fee Arrangements: Regulation and Review 74-118 (Federal Judicial Center 1980). But see Dunn v. H.K. Porter Co., Inc., 602 F.2d 1105, 1111-12 (3d Cir. 1979).
III. GUIDELINES AND PROCEDURES
The deadline for filing petitions for attorney fees and expenses was August 31, 1984. Petitioners that were submitted after this date were originally denied on the grounds of untimeliness. Subsequently this court withdrew the denials and permitted filing of late submissions for fees and expenses incurred prior to August 31, 1984. To date all petitions received--121 in all--have been examined by the court. in some cases, supplemental or revised petitions were submitted, and those too have been reviewed.
At the request of the court, the Magistrate developed a form for submission of fees and expenses. Attorneys were directed to follow this form. A number of them ignored the direction. Although it increased the burden of review, the court nevertheless accepted fee petitions in any form submitted.
The fee and expense petitions can be broken down into three categories: (1) submissions by members of the Agent Orange Plaintiffs' Management Committee, (2) submissions by members of Yannacone and Associates, the consortium of lawyers who acted as lead counsel for the class from 1980 until resignation in September 1983, and (3) the petitions of approximately 100 individual attorneys who were never on any court-approved committee that represented the class. Many of these independent counsel filed cases on behalf of individual clients. The actions of individual class members who did not opt-out of the class were dismissed as duplicative of the class action. Some independent counsel did not file individual actions on behalf of their class member clients; some of these lawyers have submitted petitions for fees and expenses for representing class member clients who did not retain those attorneys until after the May 7, 1984 settlement.
The amount of material that the court was required to study under the lodestar approach used in this circuit was substantial. For each of the attorneys who submitted a petition, every hour claimed had to be reviewed and every task purportedly undertaken had to be evaluated in order to determine whether the time claimed was spent in activities that advanced in interests of the class as a whole.
In addition, every expense had to be evaluated under this standard. Vouchers and receipts substantiating the expenses claimed had to be examined and matched to these expenses. In some instances the vouchers and receipts had to be painstakingly put into an order corresponding to that in which expenses were listed.
To assist the court, the District Executive requested permission from the Administrative Office to hire three temporary assistant clerks. These clerks--law school graduates awaiting admission to the bar--worked full-time under the court's direction for more than three months on the fee and expense petitions. With the aid of a senior law clerk familiar with the "Agent Orange" litigation working full-time on fees, they reviewed the petitions using guidelines established by the court. Another law clerk worked full-time on legal and other research connected with the petitions. A member of the Clerk's Officer staff devoted a large part of he time during this three-month period to keeping track of fee petitions and related attorney submissions. Apart, therefore, from the substantial judicial time required to consider fee questions, thousands of court-personnel hours were required for this difficult task.
The court closely supervised and reviewed the clerks' work making numerous changes. The material was checked and rechecked repeatedly to minimize inadvertent errors in computation.
In some respects reviewing the petitions was largely a clerical exercise. Meaningful analysis, however, required a thorough knowledge of the history of this case and of the individual lawyer's work reached through direct observation and evaluation of attorneys by the court over many months. For this reason, a two-step process was used. First, a petition was reviewed by one of the assistant clerks. Following guidelines provided by the court, the clerk examined the number of hours claimed and by whom, the type of task for which time was sought and the expenses and accompanying vouchers and receipts. A recommendation was made concerning what hours and expenses were compensable. Using calculating machines furnished by the Clerk of the Court, for each petition the assistant clerks added first the number of hours recommended as compensable and next the amount of expenses recommended as compensable. Second, every petition, supporting documents and all adding machine tapes showing hours and expenses were examined by the court and revised and recomputed when the court, based on its direct involvement in the case, deemed it necessary.
The assistant clerks used two sets of guidelines, one for determining the numbers of compensable hours, the other for determining allowable expenses. Both are set out below so that the method of review can be understood. These guidelines were designed to be used by the assistant clerks only in their preliminary review. Obviously, a great deal of somewhat arbitrary discrimination was necessary. In general, however, the use of these semi-mechanical criteria resulted, in the court's judgment, in a fair and uniform evaluation of reasonable time and resources spent in aid of the class. the results obtained by the clerks were repeatedly revised during the enterprise based on the court's knowledge of the case and lawyers' work habits. As finally fixed--pursuant to individual review by the court--they are set out infra Part VI.
All fee petitions submitted to and reviewed by the court have been filed in the Clerk's Office in two filled five-drawer legal-sized file cabinets as an unpublished exhibit to this opinion. This exhibit is deemed a part of this opinion. Each attorney's fee petition has been placed in one or more file folders and loose-leaf books, together with all supplementary papers received by the court in connection with that attorney's petition. Notations on the pages of the petitions indicate which hours and expenses were allowed. Included with the petition are the original adding machine tapes that also show which hours and expenses were allowed and a cover sheet that indicates the total hours allowed, the total expenses allowed and the total fee award to that attorney. Separate filing cards summarize this information. it is thus possible to see exactly how the court computed the award for each attorney.
Fees were awarded only for that work in furtherance of the class action. No fees for the period after June 15, 1984 were granted because of the practical need for a cutoff date. There may be a valid clam for hours subsequent to this cutoff date, but since time may be claimed for work on annual distribution plan and work continues on this phase of the enterprise, it seems useful to deal with any post-June 15 applications at one time. The benefit or lack of benefit to the class of attorneys' work on the plan can be best assessed when the details of the plan are fixed.
Most of the labor by the PMC was necessarily in furtherance of the class action. Nevertheless, exercise of judgment regarding the amount of time claimed for any given activity was still necessary. In every instance counsel indicated the hours spent on a particular task (e.g., reviewing depositions--2 hours). To simplify computation, for each entry only one of five determinations was made regarding how much of the time requested to allow: none; one-quarter; one-half; three-quarters; or all. The following instructions were developed after a review by the court of the fee petitions, departures being allowed on the basis of special considerations based on the court's knowledge of the case.
Only one half of the time requested for review of court orders was allowed because most of the rulings that were the subject of court orders were made in open court after oral argument or extensive discussion as well as briefing.
All of the time claimed for telephone conferences with the court, the Magistrate or the Special Master was allowed with one general exception. many conferences with the then Special Master took place in the summer and fall of 1983. No time was allowed if the conference related to internal management committee problems. A typical entry falling into this category is "TC with SM about Management Committee Organization".
All of the time claimed for preparation and attendance at hearings was allowed. For purposes of allowing time for review of hearing transcripts by the lawyer who attended the hearing, a distinction was made between hearings held before February 1984 and those held after February 1984. For pre-February hearings, all of the time requested for review of transcripts was allowed. For post-February hearings, review of transcripts was unnecessary because the Magistrate issued detailed orders that included her rulings at hearings held before her within a few days of those hearings; only half of the review time requested was allowed. When review time was requested by attorneys who did not attend the hearing half of the time requested was allowed. Half of the time claimed for travel to and from hearings was allowed. See Society for Good Will to Retarded Children v. Cuomo, 574 F. Supp. 994, 997-98 (E.D.N.Y. 1983) (50% of hours claimed for travel time allowed), remanded on other grounds, 737 F.2d 1253 (2d Cir. 1984).
2. Management Committee Meetings
All of the time claimed was allowed for substantive meetings, at which management committee members reviewed legal issues and discussed trial strategy. An individual attorney's entry indicating attendance at a management committee meeting was compared with other committee members' entries for that day to arrive at a fair assessment of allowable time. Half of the time claimed was allowed for travel to and from committee meetings. See Society for Good Will to Retarded Children, 574 F. Supp. at 997-98. No time was allowed fr nonsubstantive meetings at which committee members aired their disputes with one another and haggled over finances. Such meetings were especially numerous from the spring through the fall of 1983. No time was allowed for attendance by associates at management committee meetings.
For telephone conferences between committee members, the same substantive-nonsubstantive distinction was made. Many telephone conferences during the spring, summer and fall of 1983 concerned the management committee's internal problems and no credit was given for these conferences.
Half of the time requested was allowed for travel to and from depositions, for attendance at depositions by nonparticipating attorneys, for summarizing depositions or reading deposition summaries, or for reading an d reviewing depositions. See New York Ass'n for Retarded Children, Inc. v. Carey, 711 F.2d 1136, 1146-47 (2d Cir. 1983). No more than 9 hours per lawyer per day were allowed for a deposition.
4. Document Review and Preparation of Legal Submissions
All of the time claimed was allowed for document review, for research, and for preparation of pleadings, briefs, and memoranda of law. No time was allowed for preparation of documents relating to the internal organization of the plaintiffs' management committee.
Some exceptionally vague entries were not credited--for example, "various conferences, 8 hrs." or "several TC, 2 hrs." Certain catch phrase entries also were too vague to credit--for example "in-office work," "review of correspondence," and "reviewed papers or pleadings." when an entry contained more than one description, each description was considered in determining how much time to allow. For example, one entry read "TC with Tom Henderson [a member of the PMC]; review correspondence--1 hr." Here, half of the time claimed was allowed because "review correspondence" was too vague.
Mail required some discrimination. If the entry indicated review of many letters and one-half hour was claimed in all, the lawyer probably was doing no more than opening his or her mail, a task that did not significantly further the class action. No credit for time was given, On the other hand, if the attorney claimed substantial time for review of one letter, the time was credited. Some of the letters in this litigation were long and were often mini-briefs that related to substantive legal issues. in general, no time was allowed for discussions among lawyers of the same firm. much of the productive discussion reappeared in other contexts as when a number lawyers attended the same deposition or court hearing. See, e.g., analysis of multiple attendances in Defendants' Memorandum Concerning Plaintiffs' Lawyers' Applications for Attorneys' Fees and for Reimbursement of Expenses, Ex. C.
B. Guidelines for Allowable Expenses
For much the same reasons as are described supra part III.A, no expenses for the period after June 15, 1984 were allowed. The PMC, however, was allowed expenses incurred up to September 3, 1984 and paid by October 2, 1984. The PMC incurred substantial post-settlement expenses for informing the class members about the settlement and making presentations at the Fairness Hearings.
This category includes expenses for transportation, lodging and meals. The reason for travel had to be determined; in some cases, time records had to be checked. For example, a requested for $150 for "travel to Washington, D.C." was not sufficiently detailed. Time records had to be consulted to determine why the lawyer went to Washington. If the purpose of the trip was to attend a deposition, for example, the expense was allowed after checking the lawyers' time records for the deposition. Travel costs for depositions, court appearances, hearings, "regional counsel" meetings, meetings with members of Yannacone and Associates or the PMC and meetings with clients were allowed.
Travel for the purpose of attending conferences required discrimination. Expenses for travel to general legal education conferences or seminars were not allowed (nor was the actual cost of the conference). In 1983-84, the PMC organized a few conferences on such matters as liability and proof. Travel costs for PMC members to attend these conferences were allowed.
Reasonable costs for meals and lodging in connection with travel were allowed; reasonable costs included a $50 per day limit for meals and a $90 limit per night for lodging. Time records were consulted to determine length of stay; if necessary, the amount was reduced to reasonable costs. Twenty cents (20 cents) per mile for car travel was deemed reasonable. Costs for parking were also granted. Some lawyers submitted a lump sum request for all expenses incurred on a single trip; this sum was allowed if the amount appeared reasonable, given the length of the trip and distance traveled. No allowance was made for incidental travel expenses.
2. Telephone, Postage, Duplicating, Photocopying and Book Purchase Charges
Costs for long distance calls to clients or lawyers, to hospitals for medical records and the like generally were allowed. Calls made for the purpose of general "Agent Orange" education were not allowed. If there was doubt about the reason for a call, it was allowed. Postage charges, including costs of express delivery and messenger services, were allowed. Duplicating photocopying costs also were allowed. No allowance was made for the purchase of books, even those related to "Agent Orange" or Vietnam.
3. Paralegals, Paraprofessionals and Clerks
Generally, this court would favor reimbursing lawyers for paralegal time at a rate that reflects the costs of salary, overhead and a profit. This would result in a rate per hour of about $40. Providing a profit for these services encourages use of the lowest paid employees for clerical and repetitive work and discourages assigning the work to more highly compensated associates and partners. In this case, this general policy could not be followed because expenses only are being allowed for most attorneys and the expense to the attorney is the out-of-pocket payment to the paralegal. The amount of paralegal work allowed for those attorneys being awarded fees was relatively small so that a single across-the-board rate for paralegals had considerable advantages in simplifying checking and computations. In addition, this circuit appears to favor limiting reimbursement for paralegal time to out-of-pocket expense. See Grinnell I, 495 F.2d at 473.
For these reasons legal assistant expenses were treated as costs. The lawyer was reimbursed for the hourly wage paid to the paralegal, not for the billing rate. A rate of $20 per hour for paralegal and law clerk time was used. According to a recent article in the American Bar Association Journal, the average paralegal billing rate now being charged is $36. See Reskin, Law Poll, 70 A.B.A.J. 52, 52 (Dec. 1984). This $20 reimbursement rate therefore appears adequate when overhead and profit are eliminated. As an expenses, paralegal personnel and law clerk hours generally were not evaluated individually; rather, for most petitions the total number of hours claimed for such time was accepted at face value, multiplied by $20 and added as an expense. Sometimes a lawyer only sought reimbursement for the actual amount paid to the paralegal. When the actual expenditure was less, that figure was used.
IV. APPLICATION OF LAW TO THE FEE PETITIONS
The legal principles applicable to fee petitions have been discussed in Part II of this opinion. This Part explains the treatment of the independent counsel fee petitioners and sets forth some general comments that apply to all the petitions.
As noted in Part I of this opinion, attorney fees and expenses may be awarded only for those activities that can be characterized as having substantially benefited the class. Unless a petition revealed that an attorney spent time on an activity that furthered the interests of the class, such as taking a deposition, or writing a brief that was submitted to the court; no fee award could be made. Not surprisingly, most of such work was done by the PMC, as lead counsel for the class in preparing for trial of all issues on a date certain, and to a lesser extent by Yannacone and Associates.
The majority of independent counsel did not perform work that benefited the class in this sense. Simply filing a suit on behalf of a class member, for example, may help to gauge the potential size of the class, but it does not substantially further the class action. Independent counsel were awarded fees only when the court found that tasks they performed contributed substantially to the prosecution of the class action.
This is not to deny that it is sometimes an important part of a lawyer's work to interpret what is happening to a client, to transmit the client's wishes to attorneys managing a litigation and even to publicize the proceedings to other members of the class and to the public generally. Some of the independent counsel undoubtedly accomplished such tasks. It may even be that their work n starting some 600 independent actions served to put pressure on the defendants to settle. In general, however, the benefit to the class from these activities was relatively negligible.
The lawyers who will not be receiving fee awards may have accomplished something of value to their individual clients, but any benefit to the class deriving from their efforts is too subtle, indirect, remote and speculative to permit quantification in the form of a fee award. The practical needs of administration, fairness to other fee applicants and to the settlement fund beneficiaries, necessitate a showing of some concrete, measurable, objective contribution to the creation of the settlement fund arising from work on the lawsuit form which a fee award can be calculated. Abandonment of this touchstone would require speculation about the nature and degree of class benefit attributable to a given attorney's efforts, to the detriment of simplicity, certainty, uniformity and fairness of result in the fee award process.
These independent lawyers, however, have labored in good faith on matters related to the "Agent Orange " litigation. Many have advanced their own money for certain expenses, such as filing fees, photocopying and long distance telephone calls, including calls to the Veterans Administration regarding a client's service history. The possibility remains that their efforts did help the class in some remote way, although not so directly and visibly that a fee can be awarded. Accordingly, reasonable expenses actually paid by independent counsel on behalf of their "Agent Orange " clients have been awarded where those expenses were substantiated by vouchers and receipts. See Baron v. Commercial & INdustrial Bank of Memphis, [1979-1980 Transfer Binder]Fed. Sec. L. Rep. (CCH) P97,132 at 96,243 n.14 (S.D.N.Y. 1979) (application for attorney fee denied because attorney was never appointed class counsel and court was "not satisfied that his efforts were of any benefit to the class members"; nevertheless, expense reimbursement "presents a different question and the Court would be inclined to grant a properly documented request for expenses incurred in litigation of the class action"); supra Part II.C.1.
As indicated supra Part III.B.3, paralegal and law clerk time was regarded as an expense, payable at $20 per hour unless the actual expenditure was less. In some cases, independent counsel sought compensation for substantial paralegal or law clerk time that was logged after the settlement. Because it is difficult to see what benefit to the class resulted from tasks performed by paralegals after the settlement, expenses for that time were not granted.
The first step in the lodestar approach requires a court to calculate attorney fees "by multiplying the number of billable hours by the 'hourly rate normally charged for similar work by attorneys of like skill in the area.'" New York State Ass'n for Retarded Children, Inc. v. Carey, 711 F.2d 1136, 1190 (2d Cir. 1983) (quoting Grinnell II, 560 F.2d at 1098). This procedure requires decisions to be made about what hours to allow and what hourly rate to use. the lodestar method's second step allows the court to adjust the lodestar figure upward or downward by use of multiplier or divisor. Finally, the question of what to allow as interest from the date of judgment must be considered.
Specific criteria used to assess time claimed have already been discussed in Part III.A of this opinion. These criteria were based on the legal standards for fee awards set forth in Part II, including whether an activity benefited the class, whether it was adequately documented, and whether the time claimed for it was reasonable. Some general legal requirements bearing on what hours to allow are now discussed.
Since June 1983, the law of this circuit has required attorneys to submit contemporaneous time records for all work performed after June 15, 1983. See New York State Ass'n for Retarded Children, Inc. v. Carey, 711 F.2d 1136, 1147-48 (2d Cir. 1983); Birmingham v. Sogen-Swiss International Corp. Retirement Plan, 718 F.2d 515, 523-24 (2d Cir. 1983). This requirement primarily affected the members of the PMC because they have done the bulk of the work since July 1983.
The PMC submitted one petition for fees and expenses on behalf of all its members. This petition consisted of twelve large three-ring notebooks containing typed, "reconstructed" time records, as well as schedules of expenses and accompanying receipts. Subsequent to the submission of this joint petition, and at the request of the Magistrate, members of the PMC individually submitted their original "contemporaneous" time records. As the work of checking progressed, further verification was requested by the court and supplied.
The court's review of hours requested was based on the typed records submitted in the PMC joint petition because they were much easier to read. in each case, a spot check of the contemporaneous records was made to assure that the reconstructed records accurately reflected the original entries. if contemporaneous time records were not submitted for work done after June 15, 1983, that fact was considered in determining compensable hours. Especially vague or repetitious entries in reconstructed records for this period were strictly scrutinized and hours claimed for such time severely limited.
Unfortunately, not all of the other attorneys seeking fee awards used the form drafted by the Magistrate which provided space for describing those activities for which time was requested. This failure made the task of reviewing and evaluating time more difficult. Since many of the attorneys who submitted fee petitions usually work on a contingent fee basis rather than charging an hourly rate and, consequently, they are not in the habit of keeping detailed time records, the court did not reject their petitions.
Several attorneys submitted only the briefest description of their activities on any given day. Entries such as "read and reviewed pleadings--8 hours" (a description that often appeared on time records for days at a time) or "set up and organized files--8 hours" did not assist the court in determining whether the time was spent in activities that furthered the interests of the class. Accordingly, such vaguely described or insufficiently documented time was not granted. See In re Fine Paper Antitrust Litigation, 98 F.R.D. 48, 81-82 (E.D. Pa. 1983) ("'[t]he burden is clearly on counsel to file adequately-documeted applications for fees and those who fail to meet that burden do so at their own risk,'" quoting In re Equity Funding Corp. of America Securities Litigation, 438 F. Supp. 1303, 1327 (C.D. Cal. 1977)), rev'd on other grounds, 751 F.2d 562, 596 (3d Cir. 1984).
When a lawyer is preparing for trial, especially when substantial discovery must be accomplished within a limited time, as in the four months preceding settlement in this case, it may be that not an hour in twenty-four passes that he or she not given thought to the case. Nevertheless, not all time spent on "Agent Orange " matters could be compensated. Judgments had to be made about how time was spent and whether a given activity furthered the interests of the class. Almost without exception time record entries that indicated hours spent researching a particular issue or writing a brief or legal memorandum were awarded in full, since it is generally not possible to say that the work could have been accomplished in less time.
Duplication of attorney work may be inevitable in any large class action run by committee. The potential for duplication and overstaffing is especially great when, as here, the case involves an enormous plaintiff class that is national, even international in scope, and a number of turnovers in management committee membership have taken place. To some extent these factors caused a lack of effective central organization in the "Agent Orange " litigation that gave rise to not infrequent repetition and duplication of effort.
To reduce the effect of this duplication of attorney work, time spent reading and reviewing specific documents or legal memoranda was awarded in full only when the review was undertaken by the lawyers who had primary responsibility for that particular set of documents or for that particular issue. See In re Equity Funding Corp. of America Securities Litigation, 438 F. Supp. at 1329 ("The 'review' work of plaintiffs' counsel should legitimately be limited and compensated for when it had a direct bearing upon the responsibility being undertaken by such counsel during the course of these proceedings."). To guard against overstaffing, time spent in conferences between partners and associates was not allowed.
Throughout the "Agent Orange" litigation, even after the PMC took over as lead counsel, organization of the management committee and financing of the litigation appear to have been constant topics of discussion and, not infrequently, sources of friction. Especially in the spring and summer of 1983 many management committee meetings were devoted to problems having more to do with the committee than with the litigation. These internal difficulties--disputes about who was running the litigation and mounting pressures in the face of financial constrictions--did not further the class action; the acrimony in fact probably hindered prosecution of the case. When time record entries revealed that management committee meetings were devoted to internal problems, time was not allowed. See supra Part III.A.2.
As a general rule, a court calculates the lodestar figure using the hourly rate "normally charged for similar work by attorneys of like skill in the area," that is, the district in which the court sits. Grinnell II, 560 F.2d at 1098; Polk v. New York State Dept. of Correctional Services, 722 F.2d 23, 25 (2d Cir. 1983). When a need for nonlocal counsel's special expertise is shown, or local counsel is unavailable, or an action properly filed and maintainable in a lawyer's home district is transferred to the forum district, courts instead may use the hourly rate prevailing in the nonlocal lawyer's own community. Polk, 722 F.2d at 25; Avalon Cinema Corp. v. Thompson, 689 F.2d 137, 140-41 (8th Cir. 1982) (en banc). In a case involving large numbers of specialized nonlocal attorneys, however, policy considerations suggest the application of a uniform hourly rate based on national legal rates if such a rate can be reasonably developed. See supra Part II.B.1.b.
The "Agent Orange " case from the beginning was handled by local attorneys from this district, and class counsel remained largely local in origin until the original plaintiffs' management committee abdicated in 1983. Thereafter, class representation took on a predominantly national look; new committee members were drawn from locations across the country, as were many of those attorneys who worked on the case at the new committee's request. A number of original committee members, local attorneys, continued to assist as well.
No showing has been made that this case required the expertise of any particular attorney, and the transfer of cases from across the nation to this court as part of the multidistrict litigation carries little weight. A lawyer receiving a fee from the fund earned it by working on the class action commenced in this district, not by litigating a transferred individual case to a successful conclusion. The use of an hourly rate prevailing in this district, however, would overlook the inability of local attorneys to continue with the case in 1983 and the concomitant need for replacement counsel, who came for the most part from other areas of the country. Use of a nationally prevailing rate strikes the best balance between competing considerations in this case.
The hourly rates generally applied to fee applications in this case were $100 and $150 per hour. Law professors were compensated at $125 per hour. In general, only rough distinctions were made between partner time and associate time, because the administrative burden involved in making a more detailed analysis would have been far too onerous for the court's limited resources and much of the underlying detailed data was unavailable or unreliable. Such an inquiry would have required, for each of the 121 petitions, separating out partner time from associate time and accounting for the changes in seniority and partnership status of each individual attorney over a number of years. Fee applications reflecting time incurred primarily by partners were compensated at $150 per hour. Fee applications reflecting time incurred primarily by associates were compensated at $100 per hour. Finer distinctions might possibly have been drawn, but these rough categories adequately reflect such factors as the work done, lawyer status and delays in receiving payment. See supra Part II.B.1.b. and infra Part IV.C.4.
Such hourly rates may seem very high even to a skilled worker earning as much as $30.00 an hour with fringe benefits. But the figure includes very substantial amounts (in the order of 50%) for overhead. Moreover, billable hours are only a percentage of a lawyer's time spent on his or her law business. Administration of the law officer, reading advance sheets, attending educational conferences and doing pro bono work, for example, cannot be billed to a client.
A national rate approach was adopted by the district court in In re Fine Paper Antitrust Litigation, 98 F.R.D. 48, 83 (E.D. Pa. 1983), rev'd, 751 F.2d 562, 590-91 (3d Cir. 1984). In reversing, the appellate court objected to the district court's failure to determine prevailing national rates through an examination of available data, rather than to the use of a national rate. 751 F.2d at 590. In contrast, in the instant case a full analysis of the substantial national and local data available was undertaken by the court.
In establishing the applicable hourly rates of $100 and $150 per hour, the court drew on a number of sources of objective information. The billing rate information provided by the lawyers seeking fees could not be accorded significant weight. Many of these attorneys customarily charge contingent fees and so do not have a "normal" billing rate. Six of the nine PMC members, for example, usually bill on a contingent fee basis; the remaining three appear to do so as well. Four members of Yannacone and Associates usually bill on a contingent fee basis; two provided no information and one did not state whether he normally charged on a contingent fee or an hourly rate basis. Little documentation in support of the claimed hourly rates was provided in any case; some appeared excessive in light of other available information. See Blum v. Stenson, 465 U.S. 886, 104 S. Ct. 1541, 1547, 79 L. Ed. 2d 891 n.11 (1984) (stating in statutory fee context that, to assist the court's determination of a reasonable hourly rate, a fee applicant must produce "satisfactory evidence" in addition to the attorney's own affidavits that the requested rate is in line with prevailing rates).
The court has studied and placed limited reliance on several sources of nationwide hourly rate data. See Fed. R. Evid. 803(18); supra Part II.B.1.b; cf. Fed. R. Evid. 201. One such data complication is the National Law Journal Directory of the Legal Profession (B. Gerson, M. Liss & P. Cunningham eds. 1984). It gives hourly rate information as of March 1983 for firms across the country, generally of 50 lawyers or more in size, and includes data on every city and region from which management committee members come. Court personnel assembled this data into a list by state, city and firm, which has been filed and docketed in this case as Document No. 4731. This source of information supports a conclusion that $100 and $150 are fair. reasonable and adequate hourly rates. In addition, the Defendants' Memorandum Concerning Plaintiffs' Lawyers' Applications for Attorneys' Fees and for Reimbursement of Expenses, Ex. D. contains data on nationwide rates. The defendants' brief sets forth data collected from "How Firms Bill," Nat'l L.J., Feb. 27, 1984, at 25-36 and from the 1980 through 1984 surveys of law firm economics by Altman & Weil, Inc., a management consultant organization. Reference to established national rates was also made by plaintiff counsel in their fee submissions and in their oral arguments at the fee hearings. This information supports the hourly rates used in this case. The court has relied on its own experience with the rates prevailing in the New york Metropolitan area gained from reviewing many applications for fee and sanction awards. See, e.g., Society for Good Will to Retarded Children, Inc. v. Cuomo, 574 F. Supp. 994, 1000-01 (E.D.N.Y. 1983), remanded on other grounds, 737 F.2d 1253, 1254 (2d Cir. 1984), on remand 103 F.R.D. 169, 171 (E.D.N.Y.). Rates used in recent fee award decisions were also considered. See, e.g., In re Fine Paper Antitrust Litigation, 751 F.2d 562, 590 n.22 (3d Cir. 1984) (citing various cases that support a rate of $150 an hour when time-lapse factors are considered); Grendel's Den, Inc. v. Larkin, 749 F.2d 945, 955-56 (1st Cir. 1984).
A single hourly rate has been applied regardless of when during the case an attorney expended the time claimed. The "Agent Orange " litigation took about five years to reach settlement; this judgment is rendered nearly six years after the first cases were filed. Under the Second Circuit's guidelines a current rate calculation would be proper for at least the last three years of that period; the Court of Appeals recently permitted the use of a single rate for a seven-year period. See United States v. Bosurgi, 750 F.2d 216, 218-20 (2d Cir. 1984) (district court used $125 partner rate and $75 associate rate for period from 1965 to 1971).
In addition, use of current rates for the first three years of this case does not overcompensate counsel for the opportunity costs of delay, given the trend in interest rates and inflation over the last several years. At the end of 1981, class counsel were primarily local attorneys' under the general rule, an hourly rate corresponding to that prevailing in the local community would be appropriate. See supra Part II.B.1.b. Based on the court's experience with fee and sanction awards in this district, a partner's normal hourly rate in 1981 would have been about $110. See, e.g., Society for Good Will to Retarded Children, Inc. v. Cuomo, 574 F. Supp. 994, 1000-01 (E.D.N.Y. 1983). remanded on other grounds, 737 F.2d 1253, 1254 (2d Cir. 1984), on remand 103 F.R.D. 169, 171 (E.D.N.Y.); cf. Defendants' Memorandum Concerning Plaintiffs' Lawyers Applications for Attorneys' Fees and for Reimbursement of Expenses, Ex. D. Interest rates during the last three years generally have exceeded 105. Fed. R. Evid. 201. $110 invested at 10% interest for three years would have grown to about $146. This analysis if anything underestimates the time value of money; in addition it does not consider other arguably relevant factors such as indirect hardships suffered because of delay in payment. A historical rate plus delay multiplier would equal or exceed a current rate.
Since no danger of overcompensation exists, use of a current rate is justified as a simpler, more practical alternative to use of a multiplier to account for delay in payment. A court in accounting for delay in payment is not required to make "a mechanical calculation of the delay factor on the basis of interest rates" and award a sum "equivalent to the prevailing or legal rate of interest for the relevant period of time"; rather, the amount of a delay multiplier is subject to the court's discretion. In re Fine Paper Antitrust Litigation, 751 F.2d 562, 601-02 (3d Cir. 1984) (Becker, J., concurring). In the instant case, the difference between a current rate and a historical rate represents a fair and reasonable allowance for delay in payment that additionally is far easier to administer.
Two categories of lawyers were awarded time at less than the $150 hourly rate. Two PMC members, and three law firms not members of the PMC or of Yannacone and Associates that did some work in furtherance of the class action, received $100 per hour for each hour allowed. See infra Part V. This lowered rate reflects the fact that virtually all of the hours submitted by them were attributable to work done by an associate. the second category--law professors--were compensated at the rate of $125 per hour. Unlike practicing attorneys, law professors are guaranteed a salary and do not have appreciable overhead expenses. See EEOC v. Strasburger, Price, Kelton, Martin and Unis, 626 F.2d 1272, 1275-76 (5th Cir. 1980). The participation of the law professors in this litigation is discussed in greater detail infra Part V.
For the reasons stated in Part I of this opinion, the facts in this case do not warrant application of a risk multiplier. In recognition of the quality of the work done in furtherance of the class action; however, a multiplier of 1.5 has been applied to the fee awards of certain attorneys. in one exceptional case, a multiplier of 1.75 was awarded because of the attorney's excellent work in his central role managing the litigation.
A quality multiplier is warranted only for exceptional or extraordinary skill. See Lindy I, 487 F.2d at 168. The court has awarded a quality multiplier where appropriate in recognition of the fact that the single hourly rate adopted here does not wholly reflect the unique skills that certain attorneys have exhibited. Some attorneys have demonstrated an unusual degree of skill in presenting complex and often novel issues to the court; others have shown a level of organization and efficiency that goes beyond what is usually expected. The reasons for giving or not giving a multiplier in an individual case are explained in the next Part. For each attorney who received a fee award, a brief summary is provided that sets forth the number of hours and types of activities and expenses that were allowed. A full detailed explication of the computations is available in the file cabinets deemed attached to this opinion.
Much of the time and money expended by the attorneys was spent a year or more before the date of this judgment, although a very large portion was spent in the critical months prior to May 1984. Interest rates were generally high during this period. It would be reasonable to allow interest for the cost of this investment. in the instant case, however, this interest factor has been taken into account by using a flat per hour rate that reflects the cost of money. See discussion supra part II.B.1.b and IV.B.2.
The hourly rate takes account of the cost of money only up to the time of judgment. Appeals may be taken from the judgment so that the attorneys will be unable to collect for some time. They are entitled to interest during the period from the time the final judgment as amended is entered to the time of payment. The fairest way of computing rate of interest is to use the rate being earned by the settlement fund during this period since the attorneys have an interest in the fund for the amount owed them. In re Fine Paper Antitrust Litigation, 751 F.2d 562, 589, 601-02 (3d Cir. 1984). Evendhandedness demands that each party having an interest in that fund receive its share of fund earnings, pending distribution, in proportion to its interest." Id. at 598. Since all of the fund is invested in United States Treasury bills and equivalent government securities, interest earned pursuant to this formula will not be substantially different from that provided for by statute. See 28 U.S.C. § 1961 ("coupon issue yield equivalent . . . of the average accepted auction price for the last auction of fifty-two week United States Treasury bills"). The Clerk shall compute interest at time of payment pursuant to the formula now adopted. He may apply to the court for further clarification at time of payment.
This Part sets forth and explains specific fee awards to those whose work benefited the class.
A. Professors Twerski, Henderson, Jr., Gillette, Arnolds, Kamp and Monaghan
Six professors of law dedicated a total of 1872.35 hours to the "Agent Orange " litigation. Three of these distinguished attorneys, Professors Aaron D. Twerski, James A. Henderson, Jr. and Clayton P. Gillette, were part of the Plaintiffs' Law Committee, which advised class counsel concerning the numerous difficult legal issues that arose during the course of this litigation. Professor Twerski first became involved in the litigation in 1980; since 1982 he and Professors Henderson and Gillette have comprised the academic team of the Plaintiffs' Law Committee. These professors were responsible for much of the formulation and development of the legal theories underlying plaintiffs' claims. As the court has noted on other occasions, this case has presented many novel and complex legal issues. Professors Twerski, Henderson and Gillette each contributed their exceptional knowledge of tort and products liability law. Over the course of the litigation, the Law Committee of which they were a part produced some 36 helpful legal briefs and memoranda.
Three other professors were consulted by the plaintiffs' management committee on specific issues over the course of this litigation. Professors Edward B. Arnolds and Allen R. Kamp of the John Marshall School of Law did legal research for the Plaintiffs' Law Committee on conflict of laws issues and on the government contractor defense. Professor Henry Paul Monaghan of Columbia University Law School advised the Law Committee on numerous issues periodically between 1982 and 1984.
All the professors who devoted time to "Agent Orange " are recognized experts in their fields. A $125 hourly rate has been used to calculate their fee awards. Cf. Grendel's Den, Inc. v. Larkin, 745 F.2d 945, 955 (1st Cir. 1984) ($125 rate for eminent Harvard law professor found to be reasonable). Each brought great skill, inventiveness and legal ability to this case. In recognition of the high quality of their work, a multiplier of 1.5 was applied to all their compensable time.
It might be argued that a professor should receive a rate at least equal to that of a practitioner. Cf. Blum v. Stenson, 465 U.S. 886, 104 S. Ct. 1541, 1547, 79 L. Ed. 2d 891 (1984) (§ 1988 fees are "to be calculated according to the prevailing market rates in the relevant community, regardless of whether plaintiff is represented by private or nonprofit counsel"). There are at least three answers to this objection.
First, if it is claimed that professors are entitled to a high rate than are the practicing lawyers because of the superior legal abilities for which they were retained, then the level of skill exercised presumably was that which would have been expected, and so no quality multiplier would be warranted. A reasonable market rate as compared to the practicing lawyers' $150 rate would be about the same as the $187.50 effective hourly rate in fact granted by the court ($125 x. 1.5). Thus, even if the court were to award fees on these grounds, the same amounts would be allowed.
Second, the Blum Court's decision was based on legislative intent, a ground that is absent in common fund cases. The $125 hourly rate reflects the practical differences between the situations of the professors and those of private attorneys. Involvement in this case from the law professors' point of view presented relatively little risk. Professors do not depend on practicing law for their livelihood. The professors who worked on "Agent Orange " did not have to give up any clients. Nor did their participation take away time from other cases. Professors do not need the kind of bread and butter work that a practicing lawyer requires. One professor alluded to this fact when he noted in his fee petition that "the factors that led to the withdrawal of the original Yannacone group as lead counsel did not diminish or affect the work of Petitioner or the Law Committee." The professors were able to work for both management committees with no disruption resulting from the change in lead counsel because they did not suffer the extreme financial pressures that led, in part, to the resignation of Yannacone and Associates. Time spent on "Agent Orange " did not hurt their practices--in fact it may have enhanced their skills as teachers. Arguably, for just those reasons professors are in a better position than practicing attorneys to devote time to a case like "Agent Orange."
Finally, the $125 hourly rate takes into account the fact that the professors, unlike the other attorneys, did not have substantial overhead costs during the five-year period of this litigation. Even though most of the expenses requested by attorneys were granted, certain costs of running a law office cannot be separated out as expenses. These must be absorbed into the lawyer's hourly rate. The $25 difference between the hourly rates of the professors and that of the practicing lawyers reflects this reality. See, e.g., EEOC v. Strasburger, Price, Kelton, Martin and Unis, 626 F.2d 1272, 1275-76 (5th Cir. 1980); Gurule v. Wilson, 525 F. Supp. 996, 997 (D. Colo. 1981), rev'd in part on other grounds, 635 F.2d 782 (10th Cir. 1981).
Each professor's fee award and the number of hours allowed is listed in the table infra Part VI. The court deeply appreciates their participation.
B. Agent Orange Plaintiffs' Management Committee
The PMC's joint fee petition contained a four volume entry for PMC expenses pertaining to expenditures made from three checking accounts that were funded by contributions from members of the PMC. Six of the nine committee members together contributed almost $1.5 million after they joined the committee. These funds were used to finance the litigation. Most of the expenses for which the PMC seeks reimbursement reflect the costs of discovery and preparation of a large class action for trial. Receipts indicating the costs of depositions and court transcripts and cancelled checks to expert witnesses and consultants have been submitted.
A portion of the expenses reflect the costs of running a separate Brooklyn office--rent paid for office space, rental of furniture and office equipment, as well as payments made to officer staff and telephone and photocopying expenses. A substantial amount of discovery was undertaken under a very tight schedule during the four months preceding the May 7, 1984 settlement. The parties were frequently before the court and the Magistrate during this time. The Brooklyn office functioned as the plaintiffs' never center. Papers were served on the office; if the court needed to contact a particular PMC member, the Brooklyn officer personnel were able to locate him. The proximity of the office to the courthouse enable plaintiff's counsel to get to court quickly when necessary. In short, the Brooklyn officer served as the home litigation officer for the geographically scattered PMC members and brought a level of efficiency to the litigation that was not present before and that was badly needed. All reasonable, verifiable expenses for running the Brooklyn officer therefore have been allowed.
Almost all of the other expense allowances requested by the PMC have been allowed if supported by adequate documentation. One type of expense that was not allowed was the cost of computer services that did not directly benefit the class. Thus, the costs of giving class notice for which the use of a computer was indispensable were allowed, whereas the $10,000 per month costs of general ongoing "data management" services were disallowed. The court recognizes that computers and other advanced business machinery are necessary for the successful practice of law; in this instance, this special expense was not allowed because it was included in the overhead component of the hourly rates.
2. Individual Awards to Committee Members
(a) Stanley Chesley, Esq., et al.
Stanley Chesley of the firm of Waite, Schneider, Bayless and Chelsey of Cincinnati, [Cincinnati] Ohio submitted his fee petition on behalf of himself and 10 other attorneys at his firm. Mr. Chesley joined the PMC in September 1983.
Mr. Chesley submitted computerized time records that were difficult to read and not particularly descriptive of his firm's activities. Many hours were submitted for microfilm reading by an associate. Nonetheless, since the bulk of the work for which Mr. Chesley submitted hours was by lawyers at a partner level, the $150 hourly rate has been applied. The total number of hours allowed is 1737.75.
the quality of the work done by Mr. Chesley's firm was uniformly exceptionally high. Mr. Allen handled discovery matters most expeditiously and Mr. Chesley's efforts relating to the settlement were especially note worthy. Accordingly, a multiplier of 1.5 is warranted. The total fee award is $390.993.75
Expenses are granted in the amount of $37,104.67, of which $4,275.00 is attributable to the cost of a law clerk, a paralegal and an administrative assistant. Mr. Chesley was one of the PMC members who contributed $250,000 to the committee for financing the litigation. Since the committee has sought reimbursement of expenditures made out of these contributions, reimbursement of this $250,000 to Mr. Chesley would charge the fund twice for the same expense. This contribution therefore has been treated as an intra-committee advance and Mr. Chesley must look to the committee for any reimbursement due him.
(b) Phillip E. Brown, Esq., et al.
Phillip E. Brown of San Francisco, California submitted a fee petition on behalf of himself and five other attorneys at his firm. Mr. Brown joined the PMC in September 1983.
Many of the hours requested for September and October 1983 relate to internal PMC organization such as drafting PMC agreements regarding fee and costs and discussing financing of the litigation. As discussed supra Part III.A.2, III.A.4 and IV.B.1, such activities may possibly have been helpful to the committee, but they were not sufficiently connected to the class action and did not demonstrably benefit the class as a whole. The total number of hours allowed is 1317.75. Mr. Brown's firm had primary responsibility for discovery relating to defendant Hercules. In light of the exceptionally high quality of this firm's work, a multiplier of 1.5 was applied to the hours allowed; the total fee award is $296,493.75.
Expenses were granted in the amount $35,280.19, which includes reimbursement for all paralegal and law clerk time requested. Mr. Brown's $250,000 contribution to the PMC is not an expense but an intra-committee advance.
(c) Benton Musslewhite, Esq., et al.
Benton Musslewhite of Houston, Texas submitted a fee petition on behalf of himself and eight associated counsel. He became involved in the "Agent Orange " litigation in 1979. Much of his early time was devoted to internal committee management and was not productive on behalf of the class. In addition, his work was often duplicative of the done by other attorneys. His attendance at many of the court hearings at which he was present was unnecessary.
The quality of the work performed fell short of the standard for a quality multiplier. For these reasons, no multiplier is warranted. The total number of hours awarded to this firm is 2,031.05. Because Mr. Musslewhite performed the majority of the work, the $150 rate has been used for a total fee award of $304,657.50.
Many of the expenses requested by Mr. Musslewhite were unnecessarily high in relation to their utility to the class. Substantiation was inadequate. The court has awarded Mr. Musslewhite expenses in the amount of $50,614.97 which includes reimbursement for 94.87 hours in paralegal time at the rate of $20 per hour. Mr. Musslewhite requested 4,956.25 hours in paralegal and law clerk time. In view of the extensive overstaffing by his officer, this has been reduced to reflect only those hours spent in furtherance of the class action.
(d) Thomas W. Henderson, Esq., et al.
Thomas W. Henderson of Pittsburgh, Pennsylvania submitted a petitioner for fees and expenses on behalf of himself, another attorney and four paralegals from his firm, henderson & Goldberg.
When Mr. Henderson first became involved in the "Agent Orange " litigation in July 1983, he was a member of the firm of Baskin & Sears. He separated from this firm, now know as Baskin & Steingut, on January 31, 1984. Mr. Henderson has submitted time records for his work on this case from February 1, 1984 onward. He submitted no records for time spent on this case prior to February 1, 1984. Baskin & Steigut has submitted a petition for an award of fees for Mr. Henderson's work while he was a member of the firm.
For the post-February 1984 period, 1966.90 hours were awarded to Mr. Henderson. Since most of these hours represent partner work, the $150 hourly rate was applied.
Mr. Henderson was responsible for taking numerous depositions and for preparing the plaintiffs' case on medical causation. In view of the consistently outstanding quality of his work, a multiplier of 1.5 is warranted. His fee award is $442,552.50.
Mr. Henderson was allowed those expenses incurred after January 31, 1984 and also those predating February 1, 1984 that he actually paid as evidenced by credit card receipts. The total expense award to Mr. Henderson is $57,216.65 which includes the time submitted for paralegal hours requested at the $20 pre hour reimbursement rate.
The portion of Mr. Henderson's hours allocable to Baskin & Steingut amounts to 732.90. With the 1.5 multiplier, the total fee award attributable to Mr. Henderson's work prior to February 1, 1984 totals $164,902.50. Expenses allowed for this period total $42,068,87. Mr. Henderson's contribution of $200,000 was an intra-committee advance not separately reimbursable as a class expense.
(e) Newton B. Schwartz, Esq., et al.
Newton B. Schwartz of Houston, Texas submitted a fee petition on behalf of himself and two associated counsel. He began working with the PMC in July 1984. His involvement with the litigation was never particularly active. Much of his firm's work did not aid the class. Mr. Schwartz's firm has been allowed 291.45 hours. At least 75% of that time is attributable to associate work. For this reason, the $100 hourly rate was applied, resulting in a fee award of $29,145.00. The quality of the work performed was not sufficiently high to justify application of multiplier.
The expenses allowed to Mr. Schwartz total $13,698.18. Mr. Schwartz's contribution of $250,000 was an intra-committee advance and is not separately reimbursable.
(f) John O'Quinn, Esq., et al.
The firm of O'Quinn and Hagans of Houston, Texas submitted a fee petition on behalf of John O'Quinn and two associates. This firm became involved in the "Agent Orange " litigation in September 1983, but was never an active participant. 883.05 hours have been allowed. The bulk of this time consisted of work done by associates; accordingly, the award has been calculated at the $100 hourly rate, resulting in a total of $88,305.00. The work of this firm was not so exceptional that it warrants a quality multiplier.
Allowed expenses for Mr. O'Quinn total $26,559.43. The $250,000 contribution made by Mr. O'Quinn is an intra-committee advance and is not separately reimbursable.
(g) Gene Locks, Esq., et al.
Gen Locks of Philadelphia, Pennsylvania submitted a fee petition for his firm Greitzer & Locks for work done by himself, and Neil Peterson, Esq. Mr. Locks and Mr. Peterson joined the PMC in late December 1983.
Mr. Locks and Mr. Peterson were both responsible for preparing the medical causation part of plaintiffs' case. All time spent in preparing for a taking depositions and review of medical records was allowed.
Two entries on Mr. Peterson's time records were not allowed. Hours for "Lit. Reading" were not compensated. Beginning in late April 1984, this former United States Attorney sometimes charged as many as none hours per day for "Federal Rules of Evidence Review." Since he was not lead trial counsel and the accumulated Federal Rules of Evidence review time did not benefit the class, this time was not allowed. an additional reason for not compensating time reading the rules of evidence is that Mr. Locks himself is an accomplished student of the law of evidence, having distinguished himself in this subject at law school and in practice. The Greitzer & Locks firm was allowed 1476.75 hours. The $150 hourly rate was used because all the time requested was for partner work. The work of this firm was of exceptional quality and is entitled to a 1.5 multiplier. The resulting fee award totals $332,268.75.
The expenses allowed amount to $32,702.08. Mr. Locks contributed $250,000 to the PMC, an intra-committee advance that is not separately reimbursable.
(h) Dean, Falange and Rose
The film of Dean, Falanga and Rose of Carle Place, New York has submitted a fee petition on behalf of David J. Dean, Esq., an associate and a paralegal. participation of this group in the "Agent Orange " litigation began in September 1979, when it joined Yannacone and Associates, and continued after the PMC took over the case. Mr. Dean was appointed lead trial counsel for the PMC.
The court has allowed 5,957.50 hours to this firm at the rate of $150 per hour. The work performed demonstrated an extraordinary level of skill and excellence meriting a quality multiplier of 1.5. The resulting fee award amounts to $1,340,437.50. The majority of this work was performed by Mr. Dean, who was particularly diligent in preparing this complex case for the trial that had been scheduled for May 7, 1984.
Expenses to be reimbursed to this firm total $128,893.74. This figure includes 240.25 hours of paralegal hours, compensated at $20 per hour. Of the total expense reimbursement, $54,212.00 represents contributions made to Yannacone and Associates.
(i) Schlegel & Trafelet, Ltd.
The firm of Schlegel & Trafelet, Ltd. of Chicago, Illinois submitted a fee petition on behalf of Stephen A. Schlegel, Esq., 5 other attorneys and three paralegals. The firm entered the litigation in early 1979, participating first as "regional counsel" for Yannacone and Associates and later becoming a member of the PMC.
The court allowed 2909.25 of the hours requested by Schlegel & Trafelet. Most of these hours represent time expended by Mr. Schlegel, a partner is the firm. Accordingly, the firm was compensated at the $150 hourly rate. Mr. Schlegel was the PMC's primary manager. He was always available to the court and the Magistrate, and he took responsibility in the last months of the litigation for meeting the deadlines of a very demanding discovery schedule. The legal, organizational and managerial skills that he brought to the PMC significantly expedited the litigation and were so extraordinary in nature that a 1.75 multiplier is justified. The total fee award is $763,678.12.
Expenses in the amount of $132.008.01 were allowed. This figure includes 1405.46 paralegal hours at $20 per hour.
C. Yannacone and Associates
1. Burke, Curry, Hammill & O'Brien
The firm of Burke, Curry, Hammill & O'Brien of Smithtown, New York submitted a fee petition on behalf of Eugene O'Brien, Esq. Mr. O'Brien became involved in the "Agent Orange " litigation in 1979 and was chairman of the Litigation Committee of Yannacone and Associates.
Many of the hours requested by Mr. O'Brien were of limited help to the class; his suggestion that the case be litigated in a series of trials was ultimately rejected by the court. Nonetheless, 960.40 hours were determined to have been in furtherance of the class action. These have been compensated at the rate of $150 per hour for a total fee award of $144,060.00. No multiplier is warranted.
The expenses to which Burke, curry, Hammill & O'Brien are entitled amount to $54,014.88, of which $49,277.00 represent contributions made to yannacone and Associates. Unlike the PMC, Yannacone and Associates did not submit joint expenses. Thus, reimbursement of contributions will not result in double recovery.
2. Albert J. Fiorella, Esq.
Albert J. Fiorella of Mineola, New York submitted a fee petition for his participation in the "Agent Orange " litigation. He joined yannacone and Associates in 1979 and became chairman of the consortium in September 1980.
The court has awarded Mr. Fiorella fees for 1,329.07 hours at the rate of $150 per hour, for a total of $199,360.50. His work although diligent, was not so exceptional that it warrants a quality multiplier.
Mr. Fiorella is entitled to reimbursement of $51,032.31 in expenses. This figure includes 88.25 hours of clerk time, reimbursed at the rate of $20 per hour, and $47,982.00 in contributions made to Yannacone and Associates.
3. O'Hagan, Reilly & Gorman, P.C.
The Islip, New York firm of O'Hagan, Reilly & Gorman, P.C., submitted a fee petition on behalf of Edward J. Gorman, Esq., one of its partners. His participation in the "Agent Orange " litigation dates from January 1980.
The court has awarded fees to O'Hagan, Reilly & Gorman for 703.50 hours of work in furtherance of the class action. Mr. Gorman worked actively on the trial committee, primarily on depositions and discovery, in conjuction with victor Russo. This work was not of such exceptional skill that it merits a quality multiplier. The fee award totals $105.525.00.
Expenses are reimbursed to this firm in the amount of $52,613.11. $48,523.40 represents contributions made to Yannacone and Associates.
The Mineola, New York firm of Levine & Grossman has submitted a fee petition on behalf of William F. Levine, Esq. an Michael B. Grossman, Esq. Their participation in Yannacone and Associates began in the fall of 1979.
The court has awarded fees for 1,022.25 hours to this firm at the rate of $150 per hour, for a total of $153,337.50. No quality multiplier was earned.
Expenses reimbursable to the firm amount to $53,208.00. This sum is its contributions to ...