Jezarian v. Csapo

MEMORANDUM BONSAL, District Judge. Following a hearing on September 20, 1979, this Court, on October 29, 1979, approved the partial settlement of these actions 1 entered into between the class plaintiffs and three of the defendants, Merrill Lynch, Pierce, Fenner & Smith, Inc.; Peat, Marwick, Mitchell & Co.; and Harris, Kerr, Forster & Co. (“the settling defendants”) and the Plan for Distribution. Pursuant to the stipulation of settlement, the settling defendants have deposited $10,525,000 (“the settlement fund”) in escrow, where it is drawing interest in excess of ten percent, the interest to be added to the settlement fund. 2 Applications for attorneys’ fees and disbursements and accountant’s fees to be deducted from the settlement fund, notice of which was sent to the class, were considered at the September 20 hearing and reserved for later disposition. These applications are: Close to 25,000 notices of these applications were sent to the class members at least 47 days prior to the September 20 hearing advising that the applications would be considered at the hearing. 3 See Rule 11B of the Local Rules of the Southern District of New York; City of Detroit *387 v. Grinnell Corporation, 495 F.2d 448, 471-72 (2d Cir. 1974) (Grinnell I). No objections to the applications have been asserted. ATTORNEYS’ FEES AND DISBURSEMENTS In considering the applications for attorneys’ fees, the Court will first determine the base fees by multiplying “the number of hours that each lawyer worked on the case by the hourly amount to which attorneys of like skill . . . would typically be entitled.” Grinnell I, supra at 471. Since the services were rendered on a contingent basis, the base fees may be increased, if warranted. See City of Detroit v. Grinnell Corp., 560 F.2d 1093, 1098 (2d Cir. 1977) (Grinnell II); Grinnell I, supra at 471. Here, the base fees of the applicants may be calculated by multiplying their normal or non-contingent billing rates by the number of hours spent performing services that benefitted the class. See Grinnell I, supra at 473. The applicants have provided detailed information as to the number of hours spent, the normal billing rates and the base fees they seek: The Joint Application This litigation commenced on April 24, 1972, when Pomerantz Levy Haudek & Block (“Pomerantz Levy”) filed the complaint in Jezarian v. Csapo 72 Civ. 1671. Pomerantz Levy represented the class plaintiffs throughout the litigation. Robert B. Block was the chairman of the committee of plaintiffs’ counsel, a three-member committee formed on March 12, 1974 to coordinate pretrial discovery. 4 The activities performed by, and the normal billing rates of, the lawyers of Pomerantz Levy are set forth in detail in the affidavit sworn to on August 29, 1979 by Robert B. Block (“affidavit of Robert B. Block”), which states that Pomerantz Levy spent 6,212.50 hours on this action. Upon reviewing the joint application and the record herein, the Court finds that the services rendered by Pomerantz Levy, which include investigation, extensive discovery, motions, conferences, drafting and amending the complaint, identifying class members, communicating with class members and negotiating and drafting the settlement, were necessary for proper representation of their clients. Accordingly, the base fee of $846,768 is a reasonable starting point for determining the fee award for Pomerantz Levy. See Grinnell I, supra at 471. The activities performed by, and the normal billing rates of, the other lawyers in the joint application are described in the affidavits of each of the joint applicants (which affidavits are included in the joint application) and in the affidavit of Robert B. Block. The number of hours spent by these lawyers breaks down as follows: Martin S. Handelman, 57 hours; Milberg Weiss Bershad & Specthrie, 439.50 hours; Richard D. Greenfield, 189.50 hours; and Gene Mesh Co., L.P.A., 52 hours. Upon reviewing the joint application and the record herein, the Court finds that the services rendered by the other lawyers in the joint application, which include discovery, motions and conferences, were necessary to the furtherance of the class action. Accordingly, the base fee of $104,587 for these lawyers is a reasonable starting point for determining their fee award. The fee of $1,997,000 sought by the joint applicants is approximately 2.1 times *388 their base fee. In determining whether this increase is warranted, the Court must consider the risk of litigation, the complexity of the litigation, including any benefit of a prior judgment or decree in a case brought by the Government, the responsibility undertaken, the amount recovered and the standing of counsel at bar. Grinnell I, supra at 470-71. It was pointed out in the Court’s opinion approving the partial settlement and Plan for Distribution that, if the partial settlement had not been approved, plaintiffs would have been confronted with significant obstacles in establishing the claims asserted against the settling defendants. In addition, this case was complex, as it involved a new industry, novel accounting concepts and numerous allegedly illegal transactions; plaintiffs did not have the benefit of a prior Government action until more than four years after these actions were instituted, so that plaintiffs were required to engage in substantial discovery; 5 the amount of the settlement fund is substantial; and the attorneys for both plaintiffs and the settling defendants are highly competent and zealously represented their clients. Therefore, in rendering their services on a contingent fee basis, plaintiffs’ attorneys undertook a substantial risk. See Grinnell I, supra at 470—71. The multipliers used by courts in this district to determine fee awards vary considerably. See, e. g., Weiss v. Drew National Corp., 465 F.Supp. 548 (S.D.N.Y.1979) (multiplier of 1.15 reflecting “the court’s belief that the . . . case falls somewhere inbetween [a high risk case] and [a] minimized risks [case]”); Kane v. Martin Paint Stores, Inc., 439 F.Supp. 1054, 1058 (S.D.N.Y.1977) (no multiplier since case was not complicated and the probability of success was “exceptionally high”); City of New York v. Darling-Delaware, 440 F.Supp. 1132, 1136 (S.D.N.Y.1977) (no multiplier for lawyers not involved in litigating complex or novel aspects of case; multiplier of 2 for counsel with primary responsibility; multiplier of 1.6 for pre-settlement hours and 2 for hours spent on settlement negotiation for counsel with high “risk factor” but “not as extensively involved in litigating the difficult class issues [as counsel with primary responsibility]”); Blank v. Talley Industries, Inc., 390 F.Supp. 1 (S.D.N.Y.1975) (multiplier of 1.5); Barnett v. Pritzker, 73 F.R.D. 430, 434 (S.D.N.Y.1977) (multiplier of 1.33); Dorey Corp. v. E. I. duPont de Nemours and Co., 74 Civ. 3826 (S.D.N.Y. Jan. 24, 1977) (multiplier of approximately 1.63); Burger v. CPC International, 76 F.R.D. 183 (S.D.N.Y.1977) (multiplier of 1.3); City of Detroit v. Grinnell Corp., 68 Civ. 4026 (S.D.N.Y. April 21, 1976) (multiplier of 2). See also Valente v. Pepsico, Inc., 454 F.Supp. 1228 (D.Del.1979) (multiplier of approximately 2.1); In Re Equity Funding Corporation of America Securities Litigation, 438 F.Supp. 1303, 1337-38 (C.D.Calif. 1977) (multiplier of 3 for counsel with primary responsibility; 2 for members of plaintiffs’ steering committee; IV2 for associates in law firms of counsel with primary responsibility; 1 for counsel without major responsibility). Having considered the Grinnell factors and the fact that some of the lawyers in the joint application performed a lesser role than Pomerantz Levy, 6 and mindful that fee awards must be “ ‘made with moderation and a jealous regard to the rights of those who are interested in the [settlement] fund,’ ” Grinnell I, supra at 469 (quoting Trustees v. Greenough, 105 U.S. 527, 536, 26 L.Ed. 1157 (1881)), the Court finds that a multiplier of 2 is reasonable, and awards $1,902,710 to the lawyers in the joint application for their legal fees. *389 The lawyers in the joint application seek reimbursement of disbursements in the amount of $53,829.25. This figure is broken down as follows: Pomerantz Levy, $52,-636.25; Milberg Weiss Bershad & Specthrie, $901; and Richard D. Greenfield, $292. These applicants have attached to the joint application itemized lists of their disbursements, which include filing fees, duplicating costs, toll calls, deposition transcripts, postage, airfreight and messenger services, travel expenses and fees for deposition witnesses. Upon reviewing the joint application and the record herein, the Court will allow reimbursement of disbursements of the joint applicants in the following amounts: $50,000 for Pomerantz Levy, that being the amount stated in the notice sent to the class; 7 $901 for Milberg Weiss Bershad & Specthrie; and $292 for Richard D. Greenfield. Application of Finley, Kumble, Wagner, Heine & Underberg The application of Finley, Kumble, Wagner, Heine & Underberg (“Finley, Kumble”) includes an affidavit sworn to on August 31,1979 by Jeffrey A. Fillman (“affidavit of Jeffrey A. Fillman”) and is made on behalf of Finley, Kumble, Mr. Fillman’s law firm since March 1973; Eaton VanWinkle & Greenspoon, Mr. Fillman’s law firm from the inception of this action until March 1973; and Lovitt & Hannan, the San Francisco law firm retained by the plaintiff in the Aguirre action. Lovitt & Hannan referred the Aguirre action to Mr. Fillman in November 1972, when it became apparent that Aguirre’s claims were typical of those of other investors. Mr. Fillman was a member of the committee of plaintiffs’ counsel formed on March 12,1974 to coordinate pretrial discovery. The activities performed by, and the normal billing rates of, the lawyers of Finley, Kumble; Eaton Van-Winkle & Greenspoon and Lovitt & Hannan are set forth in detail in the affidavit of Jeffrey A. Fillman, which states that these lawyers spent 1,377 hours on these actions, including 55 hours preparing the fee application. These 55 hours are not compensable, since an attorney may not be compensated for efforts to obtain a fee. Grinnell II, supra at 1102. Upon reviewing the affidavit of Jeffrey A. Fillman and the record herein, the Court finds that, with the exception of the 55 hours spent preparing the fee application, the services rendered by Finley, Kumble; Eaton VanWinkle & Greenspoon; and Lovitt & Hannan, which include motions, discovery and conferences, were necessary to the furtherance of the class action. Accordingly, the base fee of $136,780 sought in the application of Finley, Kumble is reduced to $128,530, after deducting the amount that would be charged based on the normal billing rates for preparing the fee application. The fee of $210,000 sought by Finley, Kumble is approximately 1.63 times the base fee. Having considered the Grinnell factors set forth above and the fact that some of the lawyers in the application of Finley, Kumble performed a lesser role than Mr. Fillman, 8 and mindful that fee awards must be moderate, the Court finds that a multiplier of 1.5 is reasonable, and awards $192,795 to the lawyers in the application of Finley, Kumble for legal fees. Finley, Kumble seeks reimbursement of disbursements in the amount of $15,882.70. The affidavit of Jeffrey A. Fillman includes an itemized list of disbursements, which include duplicating costs, toll calls, deposition costs, postage, messenger services, travel expenses and overtime payments. Upon reviewing the affidavit of Jeffrey A. Fillman and the record herein, the Court will allow reimbursement of disbursements of Finley, Kumble in the amount of $15,-882.70. ACCOUNTANT FEES Eric J. Klinger, accountant for class plaintiffs, also rendered his services on a contingent basis. The activities performed by Mr. Klinger are described in the *390 affidavit sworn to on August 29, 1979 by Eric J. Klinger, which is included in the joint application, and in the affidavit of Robert B. Block. The joint application states that Mr. Klinger spent 3,989 hours analyzing and evaluating complex accounting policies and procedures. Upon reviewing the joint application and the record herein, the Court finds that these services were necessary, since the claims against the settling defendants involved complex accounting issues. According to the affidavit of Robert B. Block, the fee that Mr. Klinger would charge for these services based on his normal or non-contingent billing rate is $300,000. The $450,000 fee sought by Mr. Klinger reflects such factors as the risks of litigation and the complexity of the accounting issues. In view of these factors and upon reviewing the joint application and the record herein, the Court finds that a multiplier of 1.5 is reasonable, and awards $450,000 to Mr. Klinger for his accounting fees. CONCLUSION Therefore, the fees and disbursements for plaintiffs’ attorneys and accountant are allowed as follows: Settle order on notice. Footnotes [1] These actions were consolidated by orders of the Judicial Panel on Multidistrict Litigation under the caption In re Stirling Homex Securities Litigation, 442 F.Supp. 547. [2] As of November 2, 1979, the settlement fund was $11,045,108.03, after adding interest and deducting expenses. [3] These notices stated that it was anticipated that the following applications for fees and disbursements would be made: The lawyers in the joint application have work/fee sharing arrangements. These lawyers seek a joint award of legal fees in the *387 amount of $1,997,000. The joint application, unlike the notice sent to class members, does not specify what fees each would request as separate applicants. The joint application does, however, specify the fee sought by Eric J. Klinger, accountant for class plaintiffs, and the awards for disbursements sought by the joint applicants. [4] The other two members of this committee were: Jeffrey A. Fillman of Finley, Kumble, Wagner, Heine & Underberg and Bernard Feuerstein, who was later replaced by Melvyn I. Weiss, a member of Milberg Weiss Bershad & Specthrie, the firm with which Mr. Feuerstein was associated. [5] The Securities and Exchange Commission began investigating Stirling Homex Corporation after the Company filed a petition in bankruptcy, which was on July 10, 1972. The findings of this investigation were furnished to plaintiffs’ attorneys more than four years after the action was instituted. [6] Pomerantz Levy represented the class and Robert B. Block was the chairman of the committee of plaintiffs’ counsel. Milberg Weiss Bershad & Specthrie were the only other lawyers in the joint application represented on this committee. [7] See note 3 supra. [8] Jeffrey A. Fillman was the only lawyer in the application of Finley, Kumble who was a member of the committee of plaintiffs’ counsel.