Coordinated Pretrial Proceedings in Petroleum Products Antitrust Litigation, In re, s. 93-56675

• Decision Date: 24 March 1997
• Docket Number: 93-56676,94-56695,Nos. 93-56675,s. 93-56675
• Citation: 109 F.3d 602
• Parties: 1997-1 Trade Cases P 71,755, 97 Cal. Daily Op. Serv. 2082, 97 Daily Journal D.A.R. 3864 In re COORDINATED PRETRIAL PROCEEDINGS IN PETROLEUM PRODUCTS ANTITRUST LITIGATION. STATE OF FLORIDA, ex rel. Robert A. BUTTERWORTH, Attorney General, * Plaintiff-Appellee-Cross-Appellant, v. EXXON CORPORATION, Defendant, and Stephen L. Dunne, Appellant-Cross-Appellee. In re COORDINATED PRETRIAL PROCEEDINGS IN PETROLEUM PRODUCTS ANTITRUST LITIGATION. Stephen L. DUNNE, Appellant, v. STATE OF CALIFORNIA; State of Arizona; State of Oregon; State of Washington, Plaintiffs-Appellees, and Exxon Corporation, Defendant.
• Court: U.S. Court of Appeals — Ninth Circuit

Page 602

109 F.3d 602

1997-1 Trade Cases P 71,755, 97 Cal. Daily

Op. Serv. 2082,

97 Daily Journal D.A.R. 3864

In re COORDINATED PRETRIAL PROCEEDINGS IN PETROLEUM PRODUCTS

ANTITRUST LITIGATION.

STATE OF FLORIDA, ex rel. Robert A. BUTTERWORTH, Attorney General, ^* Plaintiff-Appellee-Cross-Appellant, v. EXXON CORPORATION, Defendant, and Stephen L. Dunne, Appellant-Cross-Appellee.

In re COORDINATED PRETRIAL PROCEEDINGS IN PETROLEUM PRODUCTS

ANTITRUST LITIGATION.

Stephen L. DUNNE, Appellant, v. STATE OF CALIFORNIA; State of Arizona; State of Oregon;

State of Washington, Plaintiffs-Appellees,

and

Exxon Corporation, Defendant.

Nos. 93-56675, 93-56676, 94-56695.

United States Court of Appeals,

Ninth Circuit.

Argued and Submitted Sept. 12, 1995.

Decided March 24, 1997.

Patricia A. Conners, Assistant Attorney General, Tallahassee, Florida, for the State of Florida, plaintiff-appellee-cross-appellant.

Stephanie L. Striffler, Assistant Attorney General, Salem, Oregon, for the States of Arizona, California, Oregon, and Washington, appellees.

Mary G. Swift, Hackett & Associates, New Orleans, Louisiana, for Stephen L. Dunne, appellant-cross-appellee.

Appeals from the United States District Court for the Central District of California, A. Wallace Tashima, District Judge, Presiding. D.C. Nos. CV-76-02839-AWT, CV-76-02840-AWT.

Before: T.G. NELSON and KLEINFELD, Circuit Judges, and LEGGE, District Judge. ^**

KLEINFELD, Circuit Judge:

These two appeals raise a number of questions regarding attorneys' fees in two common fund cases.

FACTS

Dunne began practicing law in 1970 as an Assistant United States Attorney in the Eastern District of Louisiana. He worked there on some antitrust cases for the United States Department of Justice in 1971. Then he transferred to the Department of Justice antitrust division in Washington, D.C., and worked there for a year and a half. In 1974, Dunne became chief counsel of the antitrust division of the Attorney General's Office in the State of Oregon. He left that position in 1979, and commenced a law practice from an address in California.

In 1973, before any association with Dunne, Florida sued seventeen oil companies for antitrust violations in the United States District Court for the Northern District of Florida. Six years later, in 1979, Florida retained Dunne, then in private practice in California, to assist in this ongoing litigation. As amended, the contract provided for a 15% contingent fee, with $40 per hour guaranteed whether anything was recovered or not. The hourly rate was to be credited against any contingent fee which might ultimately be paid. If a judgment was obtained against the oil companies, then Dunne promised either to seek a judicial award of attorneys' fees and credit whatever was obtained against the contractual fee, or else to accept the judicial award in lieu of his contractual fee.

Meanwhile, several western states were suing the same oil companies on the same theories. While Dunne had been an Assistant Attorney General in Oregon in 1977, he had filed one of the cases that became the consolidated western states' cases. The western states lost their case on summary judgment in the district court, in November 1986. See In re Coordinated Pretrial Proceedings in Petroleum Products Antitrust Litigation, 656 F.Supp. 1296 (C.D.Cal.1986).

Florida had already settled with some of the defendants in its case. Shortly after the summary judgment in the western states' cases it settled with the rest. The settlements produced a common fund of $5,120,000 for the people of Florida.

Subsequently, we reversed the summary judgment in the western states' case. In re Coordinated Pretrial Proceedings in Petroleum Products Antitrust Litigation, 906 F.2d 432 (9th Cir.1990). That case then settled, producing a common fund of $140 million for the people of the western states.

Dunne had continued working on the western states' case for several years after leaving his employment there in 1979. The attorney general retained him for six months in 1979, for $60 per hour, not to exceed 425 hours ($25,500):

In consideration of the performance of these services, the Department will pay you the rate of $60.00 per attorney hour, not to exceed four hundred twenty-five (425) hours during the term of this contract, and not to exceed two hundred fifty-five (255) hours for the first three (3) months of the contract.... Moneys paid under other terms of this contract will be deemed to be total payment for all services and expenses.... The Department will make available reasonable paralegal/investigative services at no cost to you.... You will not enter into any subcontracts for any work or services scheduled under this contract without obtaining prior written approval from the Department, and will not be compensated for work or services performed under the contract from any other department of the State of Oregon.

Dunne's retainer was extended several times, but his hourly rate was eventually cut to $40.

The relationship was not entirely happy. Dunne's payment approvals included such remarks as "begrudgingly approved to Contract limit of $6,000" and regarding an air fare reimbursement request, "query this, Dunne drove up, he didn't fly." In 1981, a new Attorney General took office and terminated Dunne's contract. The new Attorney General claimed that "there was nothing to substantiate that he was making a substantive contribution ... that was not already There was no evidence that Dunne's work on the Oregon and Florida cases precluded other employment. The magistrate judge found that "Dunne failed the California Bar Examination and spent a considerable amount of time studying for the examination during the MDL litigation." Dunne's law office was in California, and the magistrate found that he was not admitted to the California bar during most of the time the litigation was going on, so the opportunities lost on account of the time he devoted to the Florida and western states litigation were necessarily limited.

                being made by the Department's career professionals."   He also said that Dunne's bills "struck me as extraordinarily excessive.  I recall in one instance it appeared he billed all or nearly 24 hours in a calendar day."
                

This case involves claims for attorneys' fees by Dunne in both cases, the Florida case and the western states case. After the settlements, Dunne made quantum meruit claims against the common funds in both cases. In the western states case, Oregon sought to hold him to his contract and prevailed. The district court awarded Dunne no fees whatsoever from the western states common fund, and Dunne appeals.

In the Florida case, Dunne waived his right to a contingent fee and sought quantum meruit from the common fund instead. Florida did not contest his right to that remedy, just the amount. The district court awarded him $1,950,000 in attorney's fees and expenses, subject to a deduction of $841,480 he had already been paid on an hourly basis. The Florida Attorney General's office also sought fees from the common fund. We vacated Dunne's award, because the district court had not yet adjudicated Florida's award, and consideration of the share of the common fund left to the people of Florida after attorneys' fees was essential to determining the reasonableness of Dunne's award. State of Florida v. Dunne, 915 F.2d 542 (9th Cir.1990) (Dunne I ).

On remand of the Florida fee award, Magistrate Judge Venetta S. Tassopulos did an extremely careful review of all the records and recommended that the district judge award Dunne $2,104,333 and Florida $509,311 in fees. She determined that the accumulated principal and interest of the Florida common fund was by then $10,548,152.20, so the combined fees amounted to slightly less than 25% of the common fund. She found that Dunne reasonably worked 10,931.6 hours that benefitted the class, and that his reasonable rates were $200 per hour for most of his hours and $100 for hours spent in "low productivity work" such as document review and travel. For the most part, the district judge adopted the magistrate's recommendations. After crediting the $40 per hour paid under the contract and a previous award of interim fees, the district court ordered that the common fund pay Dunne an additional $43,946.24 in fees, pay Florida $1,500,992.99 total in fees and costs, and that the fund reimburse Florida for the $863,944.15, without interest, which Florida previously paid Dunne. Dunne appeals and the State of Florida cross-appeals.

ANALYSIS

A. Dunne's claims--Florida case.

The State of Florida has not attempted to hold Dunne to his contract or disputed his claim of entitlement to a quantum meruit fee from the common fund. A 15% contingent fee contract applied to the common fund of $5,120,000 would have yielded a fee of $768,000, less than the $40 per hour compensation Dunne had already received. Because Florida has not put Dunne's right to a quantum meruit recovery at issue, we assume without deciding that he is entitled to it.

1. The 25% cap.

Dunne argues that the district court should have chosen between the "lodestar" method of multiplying reasonable hours times an hourly compensation rate or the percentage of the fund method, but erred in using both, with the percentage of the fund as a cap on the lodestar amount. He argues that the magistrate judge considered his claims of hours spent in light of the relationship between the product of hours times rate and 25% of the common fund. The district court, not the magistrate judge, made the award, but the district judge's order indicates When Dunne's earlier fee award was appealed, we vacated and remanded because the district court had not considered the burden to the common fund of the other pending fee applications. State of Florida v. Dunne, 915 F.2d 542, 546 (9th Cir.1990). "The fact that seventy-two percent of the common fund could be distributed in attorney's fees and costs in this case is...