The opinion of the court was delivered by: BRIEANT
By order dated April 23, 1998, this Court appointed Charles G. Moerdler, Esq. as a Special Master, pursuant to Fed. R. Civ. Pro. 53, to hear the application of plaintiffs' counsel for reasonable legal fees for services rendered in the prosecution and settlement of this shareholder derivative action. By Report, dated June 26, 1998, and filed July 6, 1998, the Special Master recommended that plaintiffs counsel's request for $ 1.4 million dollars in fees and costs be reduced to $ 1 million dollars and allowed in that amount. Familiarity of the reader with all prior proceedings in this case is assumed, including familiarity with the Report itself and the documents therein referred to.
Presently before the Court for resolution are plaintiffs' counsel's objections to the Report, and the objections of various Texaco shareholders. This Court in reviewing objections to the Report of a Special Master does not substitute its own judgment and discretion for that of the Special Master. The only issue is that set forth in Rule 53(e)(2) F. R. Civ. P.: Are the Special Master's findings clearly erroneous? This Court concludes that they are not. Our Court of Appeals has held that a district judge "must accept the Master's findings of fact unless they are clearly erroneous." Collins v. Foreman, 729 F.2d 108, 118 (2d Cir. 1984). For the reasons set forth below, this Court concludes that the resolution of the amount of fees and costs to be awarded to plaintiff's counsel was valid in light of all of the relevant circumstances.
A. The Benefits Conferred by the Settlement Agreement
The Settlement Agreement in this case provided: (1) that shareholders may request and receive a copy of the public portion of the Task Force's Annual Report to the Court prepared pursuant to the settlement of the Roberts Action, by writing to, sending an e-mail to, or calling a toll free number at Texaco; and (2) that Texaco would incorporate the terms of its "Statement of Equality and Fairness Objectives" -- initially applicable only to certain employees -- into any new contracts Texaco enters into with outside vendors. After examining the quality of the benefit achieved by the Settlement Agreement, the Special Master concluded that while plaintiff's request of $ 1.4 million reflecting a contingency risk multiplier of 2.15 of the lodestar of $ 667,736.55 was not justified, the settlement's benefits were sufficiently "substantial for the stockholders" to justify a multiplier of approximately 1.5 and an aggregate award of $ 1 million. See Report at 31.
B. Shareholder Objections
Elizabeth McLaughlin, who owns 200 shares of Texaco stock, filed an objection to the Report of the Special Master, through her attorney, Joseph McLaughlin, Esq., on July 15, 1998. Essentially, Ms. McLaughlin protests that the emperor's splendid new clothes are in fact no clothes at all.
She claims that the substantive benefits created by the Settlement Agreement are "illusory," that the Special Master's award of $ 1 million in fees and costs was inappropriate, and that such fees and costs should be reduced to an amount "substantially below plaintiff's counsel's claimed 'lodestar' of $ 667,736.55 (including expenses)." See Doc. No 78 at 3-4. With respect to the increased access to the Task Force Report provided by the Settlement Agreement, Ms. McLaughlin complains that that Annual Report is widely available over the internet anyway, and that many interested persons can obtain a copy of it "at a few keystrokes." See Doc. 78 at 2. Yet, even in this "wired" age, many interested persons do not have access to the internet, and are therefore beneficiaries of Texaco's commitment to make available -- through telephone or correspondence contact -- the Task Force's Annual Report. As the Special Master found, by increasing the availability of the Task Force Report, the Settlement Agreement has further advanced "the underlying purposes sought to be achieved in the seminal Roberts Settlement Agreement -- i.e. to advance the proper interests of the company and its shareholders, as well as sound public policy." See Report at 29. The Court finds no basis to reject this finding.
Ms. McLaughlin also argues that "it defies imagination that the proposed statement in the vendor contracts would influence Texaco's future behavior to any material extent when one considers the much more potent incentives furnished by Texaco's experiences with adverse publicity and discrimination litigation." See Doc. 78 at 3. She challenges the Special Master's conclusion that through the Settlement Agreement, Texaco has obliged itself to police its vendors' compliance with Texaco's equality objectives, and states that "if there is any doubt on this score, I suggest that the Court invite Texaco to state whether it agrees with the Report's characterization of its undertaking." Id.
Ms. McLaughlin apparently overlooks the fact that the Special Master extended precisely such an invitation to Texaco by asking Dennis J. Block, Esq., Texaco's counsel, whether the corporation's directors and officers could be subject to a shareholder derivative suit should the corporation fail to live up to its obligation to police its vendors. See Doc. No. 70, Letter from Dennis J. Block, Esq. to Special Master Charles G. Moerdler, dated May 19, 1998. Mr. Block responded with an unambiguous "yes." Id. In light of this fact, the Special Master concluded that by incorporating the statement into its vendors' contracts, and conceding the power of shareholders to seek its vindication by means of a derivative claim, the Settlement Agreement "added another dimension to Texaco's committed efforts to provide the fullest possible environment of inclusion both directly, and, insofar as relations with affected vendors are concerned, indirectly." See Report at 30. This Court agrees, and concludes that the Special Master was not clearly erroneous in determining that the Settlement Agreement provided a real benefit and that for the reasons stated in the Report a multiplier of 1.5 was appropriate in light of that real benefit.
An objection to the Report was also filed by Glendora. A frequent pro se litigant in this Court and elsewhere, Glendora owns one (1) share of stock of Texaco, Inc.
She attended the hearing before the Special Master and made written submissions, which are part of the record. Her objection consists of fifty-two pages of handwritten comments interspersed with copies of pages of other documents upon which Glendora has written comments as interlineations or in the margin. See Doc. 70 passim. Essentially, this document expresses Glendora's belief that the fee should be zero, and announces her intention to appeal the award of any fee. See Doc. 70 at 45, 49. Glendora objects to the fact that Texaco -- having previously stipulated to a maximum fee exposure in the case -- did not appear at the hearing before the Special Master, and that no persons were placed under oath at the hearing. She also makes the disassociated contention that after committing to adhere strictly to the letter and spirit of the anti-discriminations laws, Texaco's executives "then . . . go and bust NYS BCL [inter alia] § 624 [and] § 718." Id. at 21. This grievance refers to Texaco's obligations under sections 624 and 718 of the New York Business Corporation Law ("BCL"), which confer upon shareholders, including Glendora, the qualified right to inspect a corporation's books, and to obtain a list of a corporation's officers and directors and their home addresses. N.Y. Bus. Corp. Law §§ 624, 718 (McKinney 1997).
The remainder of Glendora's contentions are just her usual chaff of the sort asserted in many other cases, which the Court declines to discuss. See Slip Opinion at 1, Doc. No. 198 in Glendora v. Cablevision et al., 93 Civ. 8344 (June 26, 1998) (finding that Glendora has become "a litigation abuser"). The Court finds nothing in Glendora's submission which would cause it to reject the Report of the Special Master.
In sum, the Court has considered the shareholder objections to the Report and has concluded that none articulate a justification for ...