The opinion of the court was delivered by: Milton Pollack, Senior District Judge.
Plaintiffs' counsel have petitioned for an allowance of fees
and reimbursement of their expenses incurred in this case in
connection with four settlements considered and approved at a
fairness hearing held on October 5, 1999. The fees and expenses
requested herein by Counsel were set forth in the notice of said
hearing and no objection thereto was made by any Class Member.
Petitioners have obtained for the Class a recovery of
$134,600,000 through settlements, of which by agreement with the
settling parties only $116,600,000 is fee compensable. (By reason
of accrual of interest on the funds deposited on the
settlements, they amount to in excess of $139,300,000.)
Petitioners' seek a fee of 27.5% of the $116,600,000 or
$32,065,000, plus interest earned by the funds on deposit and
reimbursement of their expenses incurred in connection with this
litigation of $1,895,802.73.
The recovery is the largest class action recovery in the 75
plus year history of the Commodity Exchange Act ("CEA"),
7 U.S.C. § 1 et seq. Petitioners undertook this complex and difficult
litigation on a contingent fee basis. Success and payment for
Petitioners' efforts were extremely uncertain from the beginning,
in circumstances of high risks and almost overwhelming magnitude
and complexity. The case involves claims of commodity price
manipulation in violation of the CEA. Such claims have been
notoriously difficult to prove, and this case was initially
greeted with widespread skepticism in the financial community.
There was no governmental assist to ease the task with which
Petitioners was confronted.
Pursuant to Pre-Trial Orders entered in this case, the firm of
Lovell & Stewart was named lead Counsel and an executive
committee was created, naming the Lovell firm as Chairman and
Lowey Dannenberg Bemporad & Selinger, and Miller Faucher Cafferty
and Wexler were designated as its other members. Additional
counsel serving the interests of plaintiffs and members of the
class numbered ten firms of attorneys.
The details of the immense task undertaken and the complexity
thereof have been carefully followed by the Court. A limited
indication of significant highlights thereof will suffice for
present purposes. The extensive services required on behalf of
the Class involved the inspection, digestion, review, and
translation of a staggering quantity of data which was entered
into document and trading databases and involved in excess of
eleven million pages of documents (millions of pages were in
Japanese and located in London, Hong Kong or Tokyo). All of the
foregoing were then analyzed and sorted out to formulate the
significant facts for the litigation. Additionally, Petitioners
were required to inspect seven million pages of documents, again
in Japanese, located in Asia. Dozens of extensive depositions
were taken, private sworn interviews were conducted and other
witness interviews and investigations were undertaken. Counsel
necessarily consulted extensively with more than ten experts to
winnow out the essentials for the lawsuit. The claims against the
Settling Defendants were strongly resisted and were proceeded
with over resistance in various forms right up to the very eve of
Petitioners had to deal with the hired experts on literally
hundreds of issues (and sub-issues) to marshal the facts and the
issues into manageable form realistically suitable for a trial,
including: an understanding of dealings in futures contracts and
physical copper, copper merchants customs and standards, Comex
trading, LME (London Metals Exchange) trading, accounting and
internal control issues, banks and brokerage firm issues,
financials and derivatives, the workings of the market in
physical copper, isolation of essential Japanese documents;
analyses of the injured business customers, the interpretation of
commodity futures documents (many in the Japanese language) and
mastery of numerous economic issues regarding price and theories
of price artificiality.
As explained in the petition, the foregoing is but a skeleton
indication of the vast scope of the services and problems
confronted by Counsel over a period in excess of three years.
Resistance was encountered from the defendants at every stage of
the fact finding process and the essential legal steps needed to
forge actionable and settleable issues.
As another indication of the immensity of the tasks confronted,
approximately $324,000 was incurred in the copying costs of lead
counsel's firm alone, and the other firms incurred significant
additional copying costs. The magnitude of the document copying
to corral the fundamental issues was unprecedented in lead
Counsel's experience. Counsel report that in order to reasonably
hold down the vast copying expenses, substantial document
inspections were made in the Defendants' premises. Prosecuting
the case and its myriad issues resulted in photocopying literally
in excess of 1,000,000 pages of documents.
Postage expense, while a minor matter, together with newspaper
advertisements and related expenses necessarily incurred involved
in excess of $176,000. The remainder of the costs of lead counsel
largely involved the essential and extensive foreign travel,
domestic travel, document storage and legal research.
The unprecedented effort of Counsel exhibited in this case led
to their successful settlement efforts and its vast results.
Settlement posed a saga in and of itself and required enormous
time, skill and persistence. Much of that phase of the case came
within the direct knowledge and appreciation of the Court itself.
Suffice it to say, the Plaintiffs' counsel did not have an easy
path and their services in this regard are best measured in the
enormous recoveries that were achieved under trying circumstances
in the face of natural, virtually overwhelming, resistance. The
negotiation of each settlement that was made was at arms length
and exhibited skill and perseverance on the part of lead counsel
and an evident attempt to gain for the Class the optimum
settlement figures that could be reached.
Turning now to the recognized methods for establishing a
suitable fee award in the circumstances of this case, two
recognized methods exist for determining an appropriate award in
a class action, namely, the "lodestar" method and the "percentage
of the recovery" method.
No one expects a lawyer whose compensation is contingent on
success of his services to charge, when successful, as little as
he would charge a client who in advance has agreed to pay for his
services, regardless of success. Nor, particularly in complicated
cases producing large recoveries, is it just to make a fee depend
solely on the reasonable amount of time expended. However, it is
the Court's duty to avoid any sense of vicarious generosity or to
permit the lodestar to be enhanced without restraint above a fair
and reasonable amount under all the facts and circumstances,
precluding any notion that there are no decent limits to
compensation for services of an attorney serving another's
It has long been recognized that a lawyer who recovers a
"common fund" is entitled to a reasonable attorney's fee from the
fund as a whole. See Boeing Co. v. Van Gemert, 444 U.S. ...