In re Bankamerica Corp. Securities Litigation

• Decision Date: 15 October 2002
• Docket Number: No. MDL 1264.,MDL 1264.
• Parties: In re BANKAMERICA CORP. SECURITIES LITIGATION
• Court: U.S. District Court — Eastern District of Missouri

228 F.Supp.2d 1061

In re BANKAMERICA CORP. SECURITIES LITIGATION

No. MDL 1264.

United States District Court, E.D. Missouri, Eastern Division.

October 15, 2002.

Brian E. McGovern, McCarthy and Leonard, Chesterfield, MO, Marie Seth Weiner, Cotchett and Pitre, Burlingame, CA, Stuart M. Grant, Richard M. Donaldson, Grant and Eisenhofer, P.A., Wilmington, DE, for BankAmerica Corp.

Donald H. Clooney, Clooney and Anderson, St. Louis, MO, Mitchell A. Margo, Curtis and Oetting, St. Louis, MO, Martin M. Green, Joe D. Jacobson, Jonathan F. Andres, Green and Schaaf, St. Louis, MO, Jules Brody, Aaron L. Brody, Stull and Stull, New York, NY, Daniel W. Krasner, Robert Abrams, Wolf and Haldenstein, New York City, Martin D. Chitwood, Edward H. Nicholson, Jr., Chitwood and Harley, Atlanta, GA, Vincent R. Cappucci, Andrew J. Entwistle, Entwistle and Cappucci, New York City, Neal S. Berinhout, Edward H. Nicholson, Jr., Jeffrey H. Konis, Chitwood and Harley, Atlanta, GA, for Kevin Kloster, Joseph Hempen, John M. Koehler, David P. Oetting.

Arthur N. Abbey, James S. Notis, Stephen T. Rodd, Abbey and Gardy, New York City, Daniel W. Krasner, Clinton A. Krislov, Robert J. Stein, III, Michael R. Karnuth, Krislov and Associates, Ltd., Chicago, IL, for Selma Kaiser, Brian Markee, Walter E. Ryan, Jr.

Reed R. Kathrein, John K. Grant, Christopher P. Seefer, Milberg and Weiss, San Francisco, CA, for Ernesto Gumapas, Sydney Sorkin, Herman Shyken.

Jeffrey S. Kessinger, St. Louis, MO, for Carol MacKay.

John Michael Clear, Jeffrey S. Russell, Bryan Cave LLP, St. Louis, MO, Warren R. Stern, Robert B. Mazur, Jonathan M. Moses, Wachtell and Lipton, New York City, NY, for Hugh L. McColl, Jr., James H. Hance, Jr., Marc D. Oken, Bank of America.

Barry A. Short, Lewis and Rice, St. Louis, MO, John Michael Clear, Jeffrey S Russell, Bryan Cave LLP, St. Louis, MO, Warren R. Stern, Robert B. Mazur, Jonathan M. Moses, Wachtell and Lipton, New York City, NY, Mark H. Epstein, Ronald L. Olson, Munger and Tolles, Los Angeles, CA, David H. Fry, Munger and Tolles, San Francisco, CA, for David A. Coulter, Michael E. O'Neill, John J. Higgins.

Vincent R. Cappucci, Andrew J. Entwistle, Entwistle and Cappucci, New York, NY, for JAS Securities, LLC.

Reed R. Kathrein, John K. Grant, Christopher P. Seefer, Milberg and Weiss, San Francisco, CA, for Milberg, Weiss, Bershad, Hynes & Lerach, LLP.

Mark H. Levison, Lathrop And Gage, St. Louis, MO, for Wachovia Bank, Nat. Ass'n.

Reed R. Kathrein, Milberg and Weiss, San Francisco, CA, for Alison Desmond.

ORDER

NANGLE, District Judge.

In an Order dated July 8, 2002, (Doc. 553), the Court set forth the background of this multi-district litigation securities class action case and held that a $490 million settlement providing $156.8 million to the BankAmerica plaintiff classes and $333.2 million to the NationsBank plaintiff classes was fair, reasonable and adequate. In a subsequent Order dated September 30, 2002 (Doc. 571), the Court approved the proposed settlement and revised plan of allocation.¹ The Court assumes the reader's familiarity with both of these Orders.

Presently before the Court are a number of applications for attorneys' fees, costs and expenses. Counsel for BankAmerica plaintiffs seek attorneys' fees amounting to 25% of their clients' $156.8 million settlement fund recovery, plus an additional $1,745,569.46 in costs and expenses.² See Doc. 574. Counsel for NationsBank plaintiffs seek attorneys' fees amounting to 25% of their clients' $333.2 million recovery, plus $3,702,961.50 in costs and expenses.³ See Doc. 573. Counsel for FSBA seek 5% of any attorneys' fees awarded to counsel for the NationsBank plaintiffs. See Doc. 503. Named plaintiffs seek to be reimbursed for their costs and expenses. See Docs. 548, 551, 555. Finally, several lead NationsBank class plaintiffs who have objected to the settlement seek attorneys' fees, costs and expenses relating to their objections. See Docs. 519, 551.

I. Lead Counsel's Applications for Fees

"A litigant or a lawyer who recovers a common fund for the benefit of persons other than himself or his client is entitled to a reasonable attorney's fee from the fund as a whole." Boeing Co. v. Van Gemert, 444 U.S. 472, 478, 100 S.Ct. 745, 62 L.Ed.2d 676 (1980). When attorneys make a claim for fees from a common fund, however, their interest is "adverse to the interest of the class in obtaining recovery because the fees come out of the common fund set up for the benefit of the class." Rawlings v. Prudential-Bache Props., Inc., 9 F.3d 513, 516 (6th Cir.1993). This divergence of interests requires a court to assume a fiduciary role in reviewing fee applications because "there is often no one to argue for the interests of the class (that their recovery should not be unfairly reduced), since it is to be expected that class members with small individual stakes in the outcome will not file objections, and the defendant who contributed to the fund will usually have scant interest in how the fund is divided between the plaintiffs and class counsel." Rawlings, 9 F.3d at 516. (footnote omitted).

Courts employ two approaches when analyzing requests for attorneys' fees. Under the "lodestar" method, the hours expended by an attorney are multiplied by a reasonable hourly rate to produce a fee amount which can be adjusted to reflect the characteristics of a given action. Johnston v. Comerica Mortgage Corp., 83 F.3d 241, 244 (8th Cir.1996). Alternatively, under the "percentage of the recovery" approach, a court may award a percentage of the common fund that the attorneys obtained for their clients during the course of the litigation. Johnston, 83 F.3d at 245. The Court has the discretion to choose which approach to apply. Id. at 246.

Having presided over this case for nearly four years, the Court finds the percentage of recovery method to be equitable and appropriate. Specifically, the Court finds that an 18% award from the net common fund⁴ of each class is appropriate and reasonable, considering the actual amount of time devoted to this case by plaintiffs' counsel, the complexity and duration of this litigation, the experience and ability of the attorneys involved, and awards in similar cases.⁵ Class members were well served by experienced attorneys who, through considerable time and effort, obtained a significant recovery for their clients.

Counsel for both classes undertook this complex litigation on a contingent basis and advanced considerable funds with no assurance of a recovery. They actively litigated this case for more than three years before reaching a settlement. They engaged in substantial discovery, including taking more than 75 depositions of fact and expert opinion witnesses, reviewing more than 1.5 million pages of documents, and consulting with numerous experts in the fields of accounting, economics, banking regulatory compliance and valuation. As was made clear to the Court in many hearings and conferences, class counsel thoroughly analyzed the relevant state and federal laws and the facts relevant to their respective clients' claims. At the time of settlement, the case had been set for trial and the Court and all parties were deeply involved in trial preparation. Class counsel expended much time and effort to negotiate and effectuate the final terms of the settlement agreement. As discussed in the Court's July 8 Order (Doc. 553), the class members' response to the settlement has been overwhelmingly favorable. Similarly, the Court has received only a minuscule number of objections to class counsel's attorney fee requests.⁶

In support of their applications for attorneys' fees, class counsel have submitted affidavits from all counsel detailing the fees incurred in furtherance of this litigation. These affidavits set forth the number of hours expended by each individual involved and the relevant hourly rates. Collectively, class counsel have spent more than 81,000 hours in as yet uncompensated legal work including: factual investigation; document review; legal research; preparation of legal briefs, memoranda and other documents; preparation for, taking and defending depositions; working closely with expert witnesses; and other tasks.

While the Court has determined that attorneys' fees of 18% of the respective net common funds are reasonable, the Court nevertheless verifies the reasonableness of such fee awards by calculating the fees submitted by lead counsel under a lodestar approach. See Petrovic v. Amoco Oil Co., 200 F.3d 1140, 1157 (8th Cir.1999).

A. Counsel for BankAmerica Plaintiffs

Lead counsel for BankAmerica plaintiffs have reported a "lodestar" of $8,617,645.00. Accordingly, their lodestar represents approximately 5.6% of their net recovery.⁷ While the total number of hours reported, 22,393.40, is quite large, it nonetheless appears reasonable in light of the difficulty in prosecuting this complicated case against expert and experienced defense counsel. Similarly, while the hourly rates ranging up to $695 are high for the Eastern District of Missouri, they are nonetheless within the range of reasonableness in the realm of nationwide securities class actions.

Counsel for BankAmerica plaintiffs have requested an award of attorneys' fees equal to 25% of the recovery of their plaintiff class. This is more than four times their reported lodestar. Such an award would overcompensate counsel at the expense of the BankAmerica plaintiffs. See Paul, Johnson, Alston & Hunt v. Graulty, 886 F.2d 268, 271 (9th Cir.1989) (while it is well settled that the lawyer who creates a common fund is allowed an extra reward so that he might share the wealth of those upon whom he has conferred a benefit, the amount of such reward must be reasonable under the circumstances.) It is the judgment of the Court that a reasonable fee award in this case is 18% of the net recovery of the BankAmerica plaintiffs. An 18% fee, approximately $27,584,660.76 plus interest, compensates...