The opinion of the court was delivered by: LEONARD D. WEXLER
In the above-referenced action, here on remand from the Court of Appeals, plaintiff class' counsel ("counsel") seeks attorney's fees and expenses from the equitable fund created by the approximately $ 31 million settlement
of the above-referenced action. This Court initially granted a $ 1,465,809.00 lodestar award, multiplied by a risk enhancement factor of 1.6, for a total of $ 2,351,694.40, plus $ 299,672.98 in expenses. (Orders dated November 26, 1991.) After an appeal of the Fee Order by objector, Myron C. Gackenbach ("Gackenbach"), the Court of Appeals remanded the risk multiplier issue to this Court for further analysis. In light of the Supreme Court's recent decision in City of Burlington v. Dague, 120 L. Ed. 2d 449, 112 S. Ct. 2638 (1992), this Court now decides to rescind its award of a 1.6 risk enhancement factor, and the unmodified lodestar figure will stand as counsel's fee award.
Plaintiffs (the "class") commenced the underlying class action pursuant to §§ 10(b) and 20 of the Securities Act of 1933, §§ 11 and 15 of the Securities Exchange Act, and the Racketeer Influenced and Corrupt Organizations Act, 18 U.S.C. § 1962(b), against Bolar Pharmaceutical Company ("Bolar") in August 1989. The class alleged that Bolar and certain of its officers and directors fraudulently obtained United States Food and Drug Administration approval to manufacture and market particular generic drugs. Familiarity with the underlying facts of the case is assumed.
During the October 3, 1991 settlement hearing, counsel applied, on behalf of the twenty-four firms who represented the class, for an award of attorney's fees and reimbursement of litigation expenses. Their request for a fee award of twenty-five per cent of the settlement fund was subsequently rejected, and the Court granted attorney's fees using the "lodestar" method.
Attorneys were paid at a maximum rate of $ 300 per hour, and paralegals at a maximum rate of $ 60 per hour, which when multiplied by the combined attorney/paralegal hour total of 7,846.30, dictated an award of $ 1,465,809.00.
The Court then awarded a risk multiplier of 1.6, enhancing the fee to $ 2,351,694.40, a figure representing approximately 8.5 per cent of the total settlement fund as of the hearing date. The request for $ 299,672.98 in expenses was granted, along with interest on the amount awarded to run from the date of the Fee Order at the same rate as interest earned by the settlement fund.
A. This Court's Basis for the Risk Multiplier, Before Foreclosure by Burlington v. Dague
This Court, following standard practice in the Second Circuit, awarded a 1.6 risk enhancement factor to counsel. Counsel had requested a risk enhancement factor that would have raised the fee award to twenty-five per cent of the approximately $ 31 million common fund. The request was made on the ground that the case was taken on a contingency basis, and, as a result, counsel bore the risk of losing the suit, as well as incurring some financial loss due to the inevitable delay in the payment of fees.
The Second Circuit has historically awarded risk multipliers in common fund cases handled on a contingency basis. In order to ensure adequate representation to plaintiffs bringing suits that promote a desirable public policy, yet do not offer a promise of great financial gain, risk multipliers were granted to "reward[ ] counsel for those successful cases in which the probability of success was slight, and yet the time invested in the case was substantial." In re "Agent Orange" Prod. Liab. Litig., 818 F.2d 226, 236 (2d Cir. 1987) ("Agent Orange II") (citing City of Detroit v. Grinnell Corp., 495 F.2d 448, 471 (2d Cir. 1974)).
In the instant action, although this Court acknowledges that there was some risk involved in taking the case on a contingency basis, the risk of failure was not great given the nature and extent of defendants' wrongdoings, and there was no difficulty in finding adequate counsel to represent the class. Thus, counsel was awarded a risk multiplier substantially lower than requested, and lower than that frequently given by courts in this circuit. See, e.g., Rabin v. Concord Assets Group, Inc., No. 89-613, 1991 U.S. Dist. LEXIS 18273 (S.D.N.Y. Dec. 19, 1991) (multiplier of over 4); County of Suffolk v. Long Island Lighting Co., 710 F. Supp. 1477, 1480 (E.D.N.Y. 1989) (multiplier of 2), affirmed in part, reversed in part, 907 F.2d 1295 (2d Cir. 1990); In re Union Carbide Corp. Consumer Prods. Business Sec. Litig., 724 F. Supp. 160, 170 (S.D.N.Y. 1989) (multiplier of 2.3); Weseley v. Spear, Leeds and Kellogg, 711 F. Supp. 713 (E.D.N.Y. 1989) (multiplier of 2.3); Rievman v. Burlington N. R. Co., 118 F.R.D. 29, 35 (S.D.N.Y. 1987) (multiplier of 3.26).
Further, although the Supreme Court, in the fee-shifting context, has stated that a multiplier could be awarded as an appropriate adjustment for delay in payment, Missouri v. Jenkins, 491 U.S. 274, 283, 105 L. Ed. 2d 229, 109 S. Ct. 2463 (1989), such delay was minimal in the case at bar where ...