The opinion of the court was delivered by: MOERDLER
This report is submitted pursuant to the April 1, 1997 order of United States District Judge Charles L. Brieant appointing the undersigned as Special Master, pursuant to FRCP Rule 53, to hear and report upon
(1) the application of plaintiffs' counsel for legal fees for services
(a) rendered in the prosecution of the action to the entry of the Judgment, filed March 21, 1997, and
(b) to be rendered on behalf of plaintiffs during the Administration of the Task Force created under the Judgment; and
(2) the individual plaintiffs' application for incentive awards.
This action was commenced on March 23, 1994. The putative plaintiff Class then was represented solely by plaintiffs Roberts and Chambers. The complaint alleged that Texaco had engaged in a pattern and practice of discrimination against the individual plaintiffs and the Class in violation of Section 1981 of the Civil Rights Act of 1971, as amended in 1991 (42 U.S.C. § 1981) ("Section 1981"), and Section 296 of the New York Human Rights Law (N.Y. Exec. Law § 296).
On June 30, 1994, a first Amended Complaint was filed, adding claims on behalf of plaintiffs Williams, Harris, Hester and Shinault, and asserting that, as to all plaintiffs and the putative Class, Texaco had violated Title VII of the Civil Rights Act of 1964, as amended in 1991 (42 U.S.C. §§ 2000e, et seq.), ("Title VII").
Concisely put, the Amended Complaint charged that, beginning no later than March 23, 1991, Texaco had, by certain employment policies and practices, engaged in conduct that had a disparate impact upon and abridged the rights of salaried African-American employees of Texaco in promotions, compensation, and the terms and conditions of their employment, including training and job assignments.
Texaco answered on July 15, 1994, denying all claims of wrongdoing and liability.
Mediation, under the auspices of the Community Relations Service of the United States Department of Justice, commenced in or about October 1994. Some twenty-five separate mediation sessions were held, but it was concluded that the parties' positions were too far apart, and litigation resumed in or about February 1995.
Plaintiffs moved for Class certification on May 15, 1995. Texaco opposed, and discovery ensued. In August 1996, plaintiffs moved to add Title VII claims to the Class motion. A right-to-sue letter, containing class allegations, was received from the United States Equal Employment Opportunity Commission ("EEOC"). Relying thereon, plaintiffs' counsel sought to expand the class beyond the scope of the right-to-sue letter. Texaco opposed, noting that it was seeking reconsideration before the EEOC. On September 27, 1996, Judge Brieant heard counsel and, pursuant to agreement of the parties, then scheduled a hearing for December 6, 1996 on the Class certification motions.
Richard A. Lundwall was a fairly senior staffer in Texaco's headquarters' Finance Department, located in Harrison, New York. It appears that in August 1996, Lundwall approached plaintiff Roberts, who worked in the same Texaco Department, and offered her information that he claimed could materially aid plaintiffs in this litigation.
Ms. Roberts referred Mr. Lundwall to one of her counsel, rather than pursuing the subject directly with him. Mr. Lundwall thereupon contacted Cyrus Mehri, an associate at Cohen, Milstein, Hausfeld & Toll, one of plaintiffs' counsel. Mr. Lundwall reportedly then told Mr. Mehri that, at age 55 and after a lifelong career with Texaco entities, his employment had been terminated. He felt betrayed and asked if Mr. Mehri could represent him in a suit against Texaco. Mr. Mehri declined, on conflict grounds. Mr. Lundwall thereupon repeated the assertion, previously made to plaintiff Roberts, that he had important information that would aid plaintiffs' cause in this litigation, disclosing that he had surreptitiously made microcassette recording tapes of certain Texaco business meetings. Later, copies of those tapes were made available to Mr. Mehri, and were then enhanced and transcribed at the instance of plaintiffs' counsel.
At the April 30, 1997 conference before the Special Master, a copy of that transcript of plaintiffs' version of the Lundwall tapes was marked as an Exhibit. It has been reviewed and contains statements that evidence racial bias by senior officials of Texaco.
Additionally, the transcript reflects statements that can fairly be interpreted as evidencing an attempt to impede discovery by, among other things, concealing, withholding or destroying information that might be germane to pending discovery requests in this litigation.
On October 29, 1996, Judge Brieant, at the request of plaintiffs' counsel, signed an order directing Texaco to show cause why sanctions should not issue predicated upon the Lundwall tapes' disclosures respecting the impeding of discovery. The proceedings and excerpts from plaintiffs' version of the transcript of the Lundwall tapes were soon thereafter disclosed to the press and received wide publications.
On November 15, 1996, counsel for the parties entered into the Agreement in Principle to settle the litigation. Several days later, Texaco's Chairman and Chief Executive Officer, Peter Bijur, in an address to the Westchester County Association, acknowledged:
On March 18, 1997, following notice, Judge Brieant conducted a hearing as to (a) the fairness of the proposed settlement of this action, in accordance with the Agreement which had been reduced to writing under date of January 23, 1997, and (b) the applications, at issue here, seeking attorneys' fees and incentive compensation for the individual plaintiffs. The only opposition, relating solely to the applications for attorneys' fees and incentive compensation, came by way of several, essentially form, letters that were submitted to the Court.
By order dated March 21, 1997, Judge Brieant concluded that the settlement had been arrived at by arms' length negotiations between equally informed parties, that it is fair and reasonable, is highly beneficial to the Class and should be approved. Judgment thereon was entered that day.
The approved settlement, as relevant here, provided as follows:
(a) On November 22, 1996, Texaco created a Settlement Fund by depositing $ 115 million in cash with a designated escrow agent. The Settlement Fund, together with earned interest, would pay (i) monetary claims arising out of the settlement; (ii) costs, including reasonable attorneys' fees for plaintiffs counsel, the expenses of plaintiffs experts, and consultants, (iii) the cost of administration of the Plan of Allocation as among the litigant Class, (iii) any other obligations that Texaco might have in connection with payments or distributions from the Settlement Fund, and (iv) any other purpose the Court might order. The $ 115 million thus deposited would fully discharge Texaco's economic obligations under the settlement, including awards to the plaintiff class, administrative costs attendant to the settlement and its effectuation, and attorneys' fees
(c) Texaco affirmed its commitment to provide, to the fullest extent possible, an environment of inclusion and the eradication of prejudice within the company. An entity, later reconstituted by the Court, with the assent of the parties, as the Task Force on Equality and Fairness (the "Task Force") would be created and charged during its five-year term with initiating and determining the effectiveness of improvements and additions to Texaco's human resources programs and helping to monitor the progress made in such programs toward creating opportunity for African-Americans, diversity in the Texaco workforce and equal opportunity for all Texaco employees. The Task Force would be composed of three designees by each of Texaco and plaintiffs, with one independent person to be agreed to by the parties to serve as Chair. The Task Force would provide to the Court, Texaco's Chairman and its Board of Directors a report every six months for a term of five years setting forth information relevant to the impact of the settlement, plus a detailed annual report to the Court, and Texaco's Chairman and Board of Directors concerning the impact of its actions. Texaco agreed to fund the reasonable compensation of the Task Force, and the reasonable cost of its staff, consultants, statisticians and other appropriate experts.
(d) Determinations of the Task Force would apply to all salaried non-officer job positions at all grade levels, in all departments, divisions and subsidiaries nationwide. In the event Texaco objected to any final determination of the Task Force with respect to the actions it was authorized to recommend or implement under the Agreement, such objection would be made to the Court. Should such objection eventuate, counsel for plaintiffs would participate in the proceedings before the Court in support of the Task Force determination thus challenged. Importantly, in terms of this application, "all reasonable fees and expenses of Plaintiffs' counsel, including reasonable expert fees and expenses, in so doing will be paid by Texaco."
(e) Texaco will have no obligation to pay "any money" other than as explicated in the Settlement Agreement, including plaintiffs' attorneys fees, or the costs of plaintiffs or the Class. Such reasonable attorneys' fees, costs and expenses as plaintiffs or their counsel may establish and the Court may approve, shall be payable out of the Settlement Fund created by Texaco's initial $ 115 million deposit and the accrued interest thereon.
Plaintiffs' application for counsel fees and expenses would be submitted to the Court for approval, following Court approval of the Settlement. Texaco agreed that it would not oppose that application. Plaintiffs' costs, attorneys' fees, and related awards approved by the Court shall be paid from the Settlement Fund.
By order entered April 1, 1997, the undersigned was appointed Special Master to hear and report upon the pending applications of plaintiffs' counsel for attorneys' fees, and the application of plaintiffs for incentive awards.
Notice of an April 30, 1997 Conference of all counsel and affected parties before the Special Master was sent by U.S. mail to all interested parties under date of April 6, 1997. Among those to whom notice was sent were those members of the Settlement Class who had previously objected in writing to the awards (see fn. 5, supra). None of the objectants chose to appear or submit any additional matter.
Under the Stipulation and Settlement Agreement, as approved, Texaco, having deposited the $ 115 million in escrow, no longer had any further role, nor any responsibility for additional payment obligations with respect to the attorneys' fees and incentive awards issues. It was, therefore, without standing before the Special Master and, accordingly, was not given notice of these proceedings and did not participate therein.
Prior to the Conference, plaintiffs' counsel made documentary submissions in support of their application and that of the applicant-plaintiffs.
The Conference was transcribed, and the transcript will be submitted to the Court herewith, together with the exhibits then marked.
Responding to questions posed by the Special Master at the Conference and thereafter, counsel for plaintiffs made several additional submissions, which to the extent ...