The opinion of the court was delivered by: Lawrence M. McKenna, Usdj
Chimicles & Tikellis LLP ("C&T") a law firm which commenced two of the actions included in this multidistrict litigation -- Victor v. Rigas (03 Civ. 5787), and Huhn v. Rigas (03 Civ. 5790), on June 7 and 28, 2002, respectively, in the United States District Court for the Eastern District of Pennsylvania*fn1 --seeks an award of attorneys' fees although it is not among class counsel appointed pursuant to the Private Securities Litigation Reform Act ("PSLRA"). C&T recognizes that the award it seeks must be paid out of the award made by the Court to lead counsel from the relevant segment of the fund created by settlements in the consolidated class action within the multidistrict litigation.*fn2
On or about December 5, 2003, a number of plaintiffs in putative class actions included in the above multidistrict litigation (but not those in the actions filed by C&T) were appointed as lead plaintiffs under the PSLRA, and the law firms Abbey Gardy LLP (now Abbey Spanier Rodd Abrams & Paradis, LLP) and Kirby McInerney & Squire were appointed as lead counsel. The plaintiffs in the cases filed by C&T did not seek appointment as lead plaintiffs nor did C&T seek appointment as lead counsel.
On or about December 22, 2003, lead counsel filed a consolidated class action complaint ("CCAC"). The Victor action, filed by C&T, had included claims under Sections 11 and 12(a)(2) of the Securities Act of 1933 against, inter alia, Salomon Smith Barney, Inc. ("SSB") and Banc of America Securities LLC ("BAS").*fn3 The CCAC included claims under Sections 11 and 12(a)(2) against the same defendants.
There followed motion practice, some discovery, and extensive settlement discussions under the guidance of an experienced mediator, and, in June of 2006, the Court preliminarily approved a settlement in the consolidated class action between the class action plaintiffs and a number of banks, including SSB and BAS.*fn4 Prior to a fairness hearing scheduled for November 10, 2006, C&T filed a Petition for an Award of Attorneys' Fees and Reimbursement of Litigation Expenses and its Objection to the Banks Settlement, and Memorandum of Law in Support Thereof, dated September 28, 2006 (Chimicles Aff., July 15, 2008, Ex. I), in which it argued its entitlement for a fee award and objected to the settlement to the extent that it provided that fee and expense awards were to be allocated at the discretion of lead counsel. On November 7, 2006, C&T submitted a Supplemental Memorandum in Support of its Petition for an Award of Attorneys' Fees and Reimbursement of Litigation Expenses and its Objection to the Banks Settlement (id. Ex. J), in which it specified its fee request at one-third of the aggregate fee award to lead counsel.
On November 10, 2006, at the fairness hearing, the Court approved the settlement with the banks. On November 16, 2006, in a written Memorandum and Order (id. Ex. L), the Court awarded to lead counsel a fee of 21.4 per cent. of the total of the settlements with the banks and Deloitte, to be taken from the settlements proportionately.*fn5 On December 4, 2006, the Court heard C&T and lead counsel on the issues relating to C&T's claim, and on December 15, 2006, in a written Memorandum and Order (id. Ex. N), acknowledged that it had jurisdiction to resolve fee allocation disputes but did not decide what the appropriate standard of review was.
Upon the decision of all appeals from the approval of the class action settlement (and the expiration of all times to petition for certiorari), lead counsel have advised C&T of their allocation of fees to C&T: $155,610, representing C&T's "lodestar," hours of work performed, prior to the appointment of lead counsel, at C&T's usual rates.
C&T seeks review by this Court, and contends that it should be awarded fees in the range of $14.85 to $17.14 million. (Id. ¶ 10.)
C&T's reason for claiming entitlement to such a fee is most directly and clearly stated in its September 28, 2006 Petition:
The Victor Action provided an independent and substantial benefit for the Class that no other plaintiff, including the Lead Plaintiffs provided: The Victor Action initiated and preserved all Section 11 claims that ultimately were asserted against SSB and BAS in the [CCAC] filed in this Action on December 22, 2003. . . . The CCAC includes the Victor Action plaintiffs as named plaintiffs and class representatives, and it includes as defendants 38 financial institutions comprised of 18 financial institutions, including lead underwriters SSB and BAS, in their capacity as Adelphia's underwriters ("Underwriters") and 20 financial institutions in their capacity as Adelphia's lending banks ("Lending Banks").
In March 2004, the Underwriters and Lending Banks moved to dismiss the CCAC asserting that the claims against them were time-barred. This Court granted, in its May 31, 2005 opinion the Underwriters' and Lending Banks' motions to dismiss the CCAC on statute of limitations grounds, holding that such claims were untimely under the one-year and three-year statute of limitations periods, except for the claims against SSB and BAS which were contained in the Victor Action or related back to claims asserted in the Victor Action. (Petition (Chimicles Aff., July 15, 2008, Ex. I) at ...