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IN RE PRUDENTIAL SECS. INC. LTD.

January 22, 1996

In re: PRUDENTIAL SECURITIES INCORPORATED LIMITED PARTNERSHIPS LITIGATION


The opinion of the court was delivered by: POLLACK

 This matter is before the Court on the Application by Miller Milove & Kob (the "Miller Firm") for Attorneys' Fees, Costs and Expenses, dated November 7, 1995 (the "Miller Firm Application"). The Court has received and considered the Miller Firm Application, together with supporting documents, as well as Class Plaintiffs' Memorandum in Opposition to Application by Miller Milove & Kob for Attorneys' Fees, Costs and Expenses, together with supporting documents, including the Joint Declaration of Joel H. Bernstein and H. Sullivan Bunch In Opposition To Applications Of Miller Milove & Kob [and others] For Attorneys' Fees, Costs and Expenses dated November 15, 1995, and, on November 17, 1995 heard Miller Milove & Kob in support of the Miller Firm Application and the Class Plaintiffs in opposition thereto. In addition, the Court has received and considered proposed findings of fact and conclusions of law submitted by Class Plaintiffs' Counsel, the Miller Firm's Objections to such proposed findings and Class Plaintiffs' Counsel's reply thereto. Under all the facts and circumstances, the Miller Firm Application is DENIED.

 The Miller Firm, at the Court hearing on their application for an allowance of fees, based its claim for compensation on "the benefits conferred upon the entire class while representing the certified class and initiating the First certified class action which became discovery in this MDL proceeding pursuant to your Honor's request."

 A brief review of the Miller Firm's relation to the present proceeding is in order. The Miller Firm commenced First v. Prudential-Bache Securities Inc. on January 14, 1991 in the United States District Court for the Southern District of California as a putative class action against Prudential-Bache Securities, Inc., which later became "PSI," on behalf of investors in the Madison Plaza Associates Limited Partnership and the Madison Avenue Limited Partnership. The First claim alleged securities fraud in connection with the sale of interests in Madison Plaza to these investors. The class was certified on July 29, 1992 and class members were given an opportunity to opt out of the class until October 1, 1992. The First action was transferred to this Court by the Judicial Panel on Multidistrict Litigation for purposes of "inclusion in the centralized pretrial proceedings occurring there in this docket" on August 3, 1994. In re Prudential Securities, Inc. Transfer Order dated August 3, 1994.

 On October 21, 1993, before transfer of the First action to this Court, and simultaneously with the filing of the Securities and Exchange Commission ("SEC") of a complaint against PSI in the United States District Court for the District of Columbia, PSI consented to the entry of a Final Order by the District Court for the District of Columbia that required PSI to pay compensatory damages for all valid claims presented through a court-supervised Claims Resolution Process. PSI consented among other things to pay $ 330 million to establish a fund ("the SEC Fund") for the benefit of defrauded investors and to pay all additional valid claims in excess of the $ 330 million in the SEC Fund. The SEC Fund was placed under the general supervision of the District Court to be administered by a court-approved Claims Administrator.

 On November 16, 1994 this Court denied the Miller Firm's motion, but, at the Miller Firm's request, decertified the First class pursuant to Fed. R. Civ. P. 23(c)(1). 158 F.R.D. 301 (1994). That ruling enabled each member of the previously certified First action to file a claim with PSI pursuant to the Claims Resolution Process or to pursue their claims against PSI in any other forum, subject to PSI's defenses. By order of March 17, 1995 this Court, at the Miller Firm's instance, subsequently dismissed the First action as against all defendants with prejudice.

 Following the decertification, most of the Miller Firm's clients in the First class suit, at the Miller Firm's solicitation, employed the Miller Firm on contingent retainers to proceed privately against Prudential on the same claims. Using the preparations of the claims in the First action, the Miller Firm successfully negotiated private settlements with Prudential on behalf of these clients apparently totaling in excess of $ 19 million from which the Miller Firm obtained a fee of approximately $ 5.25 million. *fn1" The requested dismissal of the First action by this Court subsequently terminated the Miller Firm's right to any class compensation, and did not confer upon the Miller Firm a right to a share of the fees awarded in the present proceeding.

 FINDINGS OF FACT

 1. The Miller Firm served as plaintiff class counsel in the action entitled First v. Prudential-Bache Securities, Inc., 91-0047-IEG (BTM), which was commenced in 1991 in the United States District Court for the Southern District of California (the "First Action"). The First Action was certified by the United States District Court for the Southern District of California as a class action on behalf of purchasers of limited partnership units in Madison Plaza Associates Limited Partnership ("Madison Plaza"), and the Miller Firm was designated as class counsel.

 2. Madison Plaza is only one of more than 700 limited partnerships which are the subject of MDL 1005 and the Consolidated Complaint herein.

 3. The Miller Firm prosecuted the First Action on behalf of the certified class identified therein, undertaking discovery relating to the specific issues and claims asserted in the First Action, including deposition and document discovery.

 4. The discovery in the First Action was directed at identifying specific fraudulent misrepresentations and omissions in the Madison Plaza investment memorandum and supplements, and at establishing a nexus between the alleged misrepresentations and omissions and the cause of the investors' losses. (See Letter of the Miller Firm to members of the Class in the First Action dated October 10, 1994.)

 5. On May 4, 1994, the Judicial Panel on Multidistrict Litigation ("JPMDL") issued a conditional transfer order, transferring the First Action to this Court as a tag-along action to MDL 1005. The Miller Firm sought to vacate the JPMDL's conditional transfer order citing, inter alia, purported differences between the broad claims in MDL 1005 and the more limited claims asserted in the First Action.

 6. In support of their motion to vacate the conditional transfer order the Miller Firm stated that:

 
"The legal and factual contentions of the First Plaintiffs and the consolidated plaintiffs [in MDL 1005] are incompatible."

 7. On or about August 3, 1994 the JPMDL, over the Miller Firm's objection, issued an Order transferring the First Action to this Court for consolidated ...


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