Arenson v. Board of Trade of City of Chicago

• Decision Date: 11 February 1974
• Docket Number: 72 C 1612.,No. 71 C 855,72 Civ. 1341,72 C 1633,72 Civ. 1443,71 C 854,72 C 747,72 C 750,71 C 855
• Citation: 372 F. Supp. 1349
• Court: U.S. District Court — Northern District of Illinois
• Parties: ARENSON et al., Plaintiffs, v. BOARD OF TRADE OF the CITY OF CHICAGO et al., Defendants. SAVETT, Plaintiff, v. BOARD OF TRADE OF the CITY OF CHICAGO et al., Defendants. FULLER et al., Plaintiffs, v. BOARD OF TRADE OF the CITY OF CHICAGO et al., Defendants. WENGERT, Plaintiff, v. BOARD OF TRADE OF the CITY OF CHICAGO et al., Defendants. ARENSON et al., Plaintiffs, v. CHICAGO MERCANTILE EXCHANGE et al., Defendants. RYAN et al., Plaintiffs, v. REYNOLDS SECURITIES, INC., et al., Defendants. RYAN et al., Plaintiffs, v. MERRILL LYNCH, PIERCE, FENNER & SMITH, INC., et al., Defendants. RYAN et al., Plaintiffs, v. F. I. DuPONT et al., Defendants.

372 F. Supp. 1349

ARENSON et al., Plaintiffs, v. BOARD OF TRADE OF the CITY OF CHICAGO et al., Defendants.

SAVETT, Plaintiff, v. BOARD OF TRADE OF the CITY OF CHICAGO et al., Defendants.

FULLER et al., Plaintiffs, v. BOARD OF TRADE OF the CITY OF CHICAGO et al., Defendants.

WENGERT, Plaintiff, v. BOARD OF TRADE OF the CITY OF CHICAGO et al., Defendants.

ARENSON et al., Plaintiffs, v. CHICAGO MERCANTILE EXCHANGE et al., Defendants.

RYAN et al., Plaintiffs, v. REYNOLDS SECURITIES, INC., et al., Defendants.

RYAN et al., Plaintiffs, v. MERRILL LYNCH, PIERCE, FENNER & SMITH, INC., et al., Defendants.

RYAN et al., Plaintiffs, v. F. I. DuPONT et al., Defendants.

Nos. 71 C 855, 72 C 1633, 72 C 747, 72 C 750, 71 C 854, 72 Civ. 1341, 72 Civ. 1443, 72 C 1612.

United States District Court, N. D. Illinois.

February 11, 1974.

Pressman & Hartunian, Specks & Goldberg, Ltd., Schein, Askounis, Stavins & Wald, Schlifkin & Berman, Lawrence Walner, Perlman, Rubin & Schulman, Chicago, Ill., and Harold E. Kohn, Philadelphia, Pa., Pomerantz, Levy, Haudek & Block, New York City, for plaintiffs.

William R. Jentes and Jeffrey J. Kennedy, Kirkland & Ellis, Lee A. Freeman, Freeman, Freeman & Salzman, Chicago, Ill., for defendants.

MEMORANDUM OPINION AND ORDER

BAUER, District Judge.

This cause comes on an application for the fixing of counsel fees and for reimbursement of out-of-pocket costs.

This application is submitted on behalf of all counsel for the class representatives in the above-captioned consolidated actions. The Settlement Agreement which this Court approved on June 4, 1973, after a full hearing and appropriate notice to the members of the class, specifically provided that applicants were to receive from defendant exchanges their counsel fees and reimbursement of out-of-pocket costs and expenses, all as determined by this Court.

The applicants contend that since the time for appeal from the order approving the settlement has expired and the order has become final, they are entitled to receive such counsel fees and reimbursement of costs and expenses. The applicants request that this Court fix their counsel fees and allow reimbursement of their out-of-pocket costs and expenses as follows:

                  Counsel Fees ......... $2,250,000.00
                  Out-of-Pocket Costs
                  and Expenses ............ $14,486.25
                

The applicants and defendants have submitted memoranda and affidavits in support of their respective positions. On December 7, 1973 a hearing was held on this matter and pursuant to this Court's request at that hearing the applicants have filed more detailed affidavits and memoranda in support of their application. This Court has seriously examined the memoranda and affidavits submitted by the parties in support of their respective positions and carefully weighed the testimony and arguments made at the hearing on December 7, 1973.

ATTORNEYS' FEES

It is within the exercise of this Court's informed discretion to decide upon the amount of reasonable attorneys' fees and out-of-pocket expenses. Tranberg v. Tranberg, 456 F.2d 173 (3rd Cir. 1972); Cappel v. Adams, 434 F.2d 1278 (5th Cir. 1970).

Various objective "checklists" have been devised as guidelines for determining a fair award of attorneys' fees. See Hanover Shoe, Inc. v. United Shoe Machine Corporation, 245 F.Supp. 258 (M.D.Pa.1965), vacated on other grounds, 377 F.2d 776 (3rd Cir. 1967), affirmed in part on other grounds, 392 U.S. 481, 88 S.Ct. 2224, 20 L.Ed.2d 1231 (1968); Colson v. Hilton Hotels Corporation, 59 F.R.D. 324 (N.D.Ill.1972); Trans World Airlines, Inc. v. Hughes et al., 312 F.Supp. 478 (S.D.N.Y.1970); In re Osofsky, 50 F.2d 925 (S.D.N.Y.1931). It is the opinion of this Court that the following factors are important to the proper determination of the amount of reasonable attorneys' fees:

I. The Magnitude and Complexity of the Litigation.

A. The number of parties to the action.

B. The complexity of the issues contained in the action.

C. The social effect of litigation.

D. Whether plaintiffs' or defendants' counsel had the benefit of a prior judgment or decree in a similar or identical case brought by the Government or a private party.

E. The significance of the litigation and the responsibilities undertaken.

II. The Quality of the Services Provided.

A. The eminence of the attorneys at the bar and in the specialty in which they are practicing.

B. The value of the attorneys' work in the instant case as demonstrated by skill involved in drafting the pleadings and memoranda, and the quality of the arguments before the bench and the performance in the courtroom.

III. Time and Labor Spent.

A. The time which has fairly and properly been used in dealing with the case.

IV. The Beneficial Result Achieved.

A. The amount in damages recovered, if any.

B. Whether the result of the case is a real benefit to the client and whether that result was possible without the instant litigation.

C. What it would be reasonable for counsel to charge a victorious plaintiff.

I. The Magnitude and Complexity of the Instant Litigation

As far as the social effect of this litigation, it is clear that this litigation is one of the most significant pieces of litigation pending in the Northern District of Illinois, if not the United States.¹ An entire industry has been restructured, an industry which is now one of the most important in the world. Until the time of the approval of the settlement in this case, fixed commission rates were the norm in all exchanges in the United States.² This is no longer the case. Further, the applicants contend that it may be expected that no exchange in the United States, whether commodities or securities, will escape the effects of this settlement.

Given the number of litigants involved, the number and skill of their attorneys, and the complexity of the issues involved, it is clear that these actions represent a proceeding of the first magnitude. On the plaintiffs' side, the approximately 400,000 class members were represented at various points in these proceedings by more than twenty individual lawyers from eight separate law firms. On the defense side, there were innumerable individual lawyers and separate law firms representing the more than 2,000 members of the defendants' class.

It would be difficult to imagine litigation presenting issues of greater sublety and complexity. All issues were fought out at a legal frontier where no lawyer knew all the answers. The legal posture of all litigants made necessary analysis and arguments of extreme importance to the emerging case law with little guidance from prior court decisions.³

This case is unique in that counsel for plaintiffs not only did not have the benefit of a prior government judgment or decree but there was no government litigation pending or even filed at the time this litigation was commenced. It was not until December 1971, some eight months following the filing of the first of these civil suits, that the anti-trust division became prepared to undertake this type of litigation. The applicants allege that it would be more appropriate to assert that in this case the federal government had the benefit of the plaintiffs' case and not the other way around.⁴ Regardless of the rectitude of the applicants' contention, it appears certain that they were blazing new legal trails in instituting this litigation.

Plaintiffs undertook to assert the illegality of the long established business practice of fixing commission rates in commodities exchanges on behalf of a class consisting of approximately 400,000 members. The responsibility went beyond the mere representation of clients. At stake was the manner in which billions of dollars of business would continue to be done in the United States. As the parties gradually came closer to a settlement the responsibility of the plaintiffs' counsel for a just result increased. No longer was there to be a trial of issues to be interpreted solely by the Court. Instead, the attorneys representing the plaintiffs and defendants would make recommendations to this Court based upon an assessment of their respective legal positions, the welfare of their clients and the necessities of business practice. At the same time each side was aware that the decisions which they were making would affect the future operation of all exchanges.

An examination of the Master Settlement Agreement discloses the intricacy and subtlety of the decision-making process involved in the instant litigation.⁵ Negotiation of the Master Settlement Agreement called forth the utmost in legal care, talent and learning. Had plaintiffs' counsel not assumed the responsibility of agreeing to the fundamental settlement embodied in the Master Settlement Agreement, it is quite possible that the plaintiffs' class would not have been certified, causing the death of this broad sweeping litigation and that the institutions and business practices which the complaint attacked would have remained unchanged.

II. The Quality of Services Provided

This Court is hard pressed to find another case in its history which had such a glittering array of legal talent on the sides of both the plaintiffs and defendants. Certainly the attorneys for the plaintiffs as well as the attorneys for the defendants represent the cream of the Anti-trust bar in the United States. Plaintiffs' attorneys are well-known in the anti-trust and securities fields, and have litigated some of the most significant cases to come before the bench in the past decade. Plaintiffs' attorneys include counsel who tried the first of the electrical equipment anti-trust cases resulting in an award after a jury verdict of $29,000,000, Philadelphia Electric Co. v. Westinghouse Electric Corp. 1964 Trade Case, Para. 11, 123 (E.D.Pa. 1964); counsel who accomplished the $29,000,000 settlement in City of Philadelphia v. American Oil Co., Civ. No. 647-68 (D.N.J.1973); Philadelphia Electric Company v. Anaconda American Brass Co., 47 F.R.D. 557 (E.D.Pa.1969), and the...