Edmonds v. US, Civ. A. No. 75-1624-8

• Decision Date: 24 March 1987
• Docket Number: 78-0004-8 and 75-1857-8.,78-0053-8,Civ. A. No. 75-1624-8
• Court: U.S. District Court — District of South Carolina
• Parties: James Thomas EDMONDS, Jr., et al., Plaintiffs, v. UNITED STATES of America, Defendant. Bruce Michael SWITZER, et al., Plaintiffs, v. UNITED STATES of America, Defendant. Stephen C. WOOD, et al., Plaintiffs, v. UNITED STATES of America, Defendant. Alfred L. HEBERT, et al., Plaintiffs, v. UNITED STATES of America, Defendant.

658 F. Supp. 1126

James Thomas EDMONDS, Jr., et al., Plaintiffs, v. UNITED STATES of America, Defendant.

Bruce Michael SWITZER, et al., Plaintiffs, v. UNITED STATES of America, Defendant.

Stephen C. WOOD, et al., Plaintiffs, v. UNITED STATES of America, Defendant.

Alfred L. HEBERT, et al., Plaintiffs, v. UNITED STATES of America, Defendant.

Civ. A. Nos. 75-1624-8, 78-0053-8, 78-0004-8 and 75-1857-8.

United States District Court, D. South Carolina, Charleston Division.

March 24, 1987.

COPYRIGHT MATERIAL OMITTED

Ray P. McClain, Charleston, S.C., Douglas Nelson, Idaho Falls, Idaho, Morris D. Rosen, Charleston, S.C., C. Joseph Gould, Norfold, Va., Scott J. Tepper, Los Angeles, Cal., Larry Boyle, Idaho Falls, Idaho, Ben Margolis, Los Angeles, Cal., for plaintiffs.

Heidi Solomon, U.S. Atty., Charleston, S.C., Vincent M. Garvey, Renee M. Wohlenhaus, Civil Div., Washington, D.C., Lt. Col. Wayne Gehring, Office of the Judge Advocate General, Alexandria, Va., for defendant.

ORDER AWARDING ATTORNEYS' FEES AND COSTS

BLATT, Chief Judge.

The instant cases are four (4) class actions, initiated separately in 1975, that sought payment from the United States of military pay in the form of Variable Reenlistment Bonuses (hereinafter VRB). These class actions have been successful, and have resulted in a total recovery that already exceeds Twenty-Seven Million and NO/100 ($27,000,000.00) Dollars, and that will probably exceed Thirty Million and NO/100 ($30,000,000.00) Dollars. The matter is now before this Court on plaintiffs' Application for a Final Award of Attorneys' Fees and Costs in the amount of Five (5%) Per Cent of the judgments entered, with interest on this portion which has heretofore been set aside.¹ This amount totalled, as of February 23, 1987, One Million Six Hundred Ninety One Thousand Four Hundred Fifty One and 83/100 ($1,691,451.83) Dollars,² and is anticipated to increase to an amount between One Million Seven Hundred Thousand and NO/100 ($1,700,000.00) Dollars and One Million Eight Hundred Thousand and NO/100 ($1,800,000.00) Dollars.

The members of the plaintiff class had obligated themselves, while the program was in effect for their respective military specialities (rates), to serve sufficient time in the Navy to qualify for VRB. Thereafter, the Department of the Navy interpreted, first, its own regulations (as to the Herbert class), and subsequently, an amendment to the relevant legislation, 37 U.S.C. 308(g) (as to the Edmonds-Woods-Switzer class) to authorize the Navy to withhold VRB from the plaintiff classes.

After each of the four cases consolidated here had been filed in 1975, and vigorously pursued, the United States Supreme Court granted review of the issues here involved in another case, United States v. Larionoff, 429 U.S. 997, 97 S.Ct. 522, 50 L.Ed.2d 607 (1976). The Supreme Court held, by a five-to-four majority, that the VRB payments had been wrongfully withheld. United States v. Larionoff, 431 U.S. 864, 97 S.Ct. 2150, 53 L.Ed.2d 48 (1977).

Approximately 30,000 persons were identified as potential class members, and about 16,000 had claims processed in the instant actions. Of these, 7,671 had judgment amounts entered by the time of the hearing as to fees and costs, and administration of additional claims is expected to produce payments for about 2,400 more persons, for a total of about 10,000 class members who will recover in these cases.

The hearing in this matter took place on October 1, 1986. The parties stipulated that no live testimony would be taken, although plaintiffs' counsel have filed extensive affidavits, declarations, and exhibits, which were collected in three bound volumes for the convenience of this Court.³ The government filed no evidence, and did not seek cross-examination as to any of the witnesses or documents filed by plaintiffs' counsel, so that the evidentiary record is essentially undisputed. Pursuant to Rule 52 of the Federal Rules of Civil Procedure, the Court reaches the following Findings of Fact and Conclusions of Law on the issue of attorneys' fees and costs.

SUMMARY

This is a common fund case. Court-awarded fees have been standard in such cases in this country for more than a century, since the early cases such as Trustees v. Greenough, 105 U.S. (15 Otto) 527, 26 L.Ed. 1157 (1882), and Central Railroad & Banking Co. v. Pettus, 113 U.S. 116, 5 S.Ct. 387, 28 L.Ed. 915 (1885). As the Supreme Court summarized the doctrine five years ago:

"... this Court has recognized consistently that a litigant or lawyer who recovers a common fund for the benefit of persons other than himself or his client is entitled to a reasonable fee from the fund as a whole. The common-fund doctrine reflects the traditional practice in courts of equity, and it stands as a well-recognized exception to the general principle that requires every litigant to bear his own attorney's fees. The doctrine rests on the perception that persons who obtain the benefit of a lawsuit without contributing to its cost are unjustly enriched at the successful litigant's expense. Jurisdiction over the fund involved in the litigation allows a court to prevent this inequity by assessing attorneys' fees against the entire fund, thus spreading fees proportionately among those benefited by the suit." Boeing Co. v. Van Gemert, 444 U.S. 472, 478, 100 S.Ct. 745, 749, 62 L.Ed.2d 676 (1980) (citations omitted).

The Court finds that the percentage-of-the-fund method is the preferable approach to determine a reasonable fee in this matter. However, since the defendants contest that this is the proper method to be used here, a reasonable fee obtained under the percentage-of-the-fund method has been compared with the results that would be obtained under the "lodestar" method of calculation.⁴ Under either method, the Court has concluded that a final fee award for legal services that have been performed on behalf of the plaintiff classes thus far should be made, with stipulations to provide maximum incentive to counsel for plaintiffs to locate class members for whom judgments have been entered, but not delivered.⁵ In general, the Court finds that a reasonable fee in these cases, in comparison with similar national class action common fund cases, would be greater than the five (5%) per cent, plus interest, requested by class counsel. The Court reaches the same result, either by the percentage-of-the-fund method⁶ or by the lodestar method.⁷ Even modifying the hours claimed by class counsel, the Court finds that the entire expected fund will be exhausted for attorney's time. Projecting likely additional recoveries and costs, the aggregate effective rate for attorney's time will finally be just over Three Hundred and NO/100 ($300.00) Dollars per hour.⁸

FINDINGS OF FACT

A. History of this Litigation⁹

1. In 1965, Congress enacted legislation providing for the Variable Reenlistment Bonus (VRB) as an incentive for reenlistment of skilled military non-commissioned officers. 79 Stat. 547.

2. To qualify for a VRB, enlisted personnel were required to obligate themselves for an extension of service, or a reenlistment of at least 24 months, for a total qualifying service obligation of at least 69 months. Through most of the years of the VRB program, the additional service had to commence before the enlisted person had completed eight years of total active service. At the time the member commenced serving the additional obligation, he was required to be serving in paygrade E-3 or above, in a military specialty —(in the Navy, a "rate") that was "critical"—that is, designated as eligible for VRB—at the time of qualifying. United States v. Larionoff, 431 U.S. at 869 n. 8, 97 S.Ct. at 2154 n. 8.

3. The intent of Congress was to focus the determination of the qualifying "critical" rate on the time at which the service member obligated himself to serve the time required to qualify for the special incentive bonus. United States v. Larionoff, 431 U.S. at 876-77, 97 S.Ct. at 2157-58.

4. The Navy erroneously determined that Congress intended the qualification for VRB to hinge on service in a rate that qualified for VRB at the time the qualifying additional service began, rather than the time that the enlisted member obligated himself to serve the time required to qualify for the special incentive bonus. United States v. Larionoff, 431 U.S. at 877, 97 S.Ct. at 2158.

5. VRB was computed by a multiple of the Regular Reenlistment Bonus (RRB) for which a service member qualified. 431 U.S. at 866, 97 S.Ct. at 2152 text at note 2.

6. The Navy utilized VRB eligibility as an incentive to enlist personnel in the Navy's six-year obligor programs, particularly the Nuclear Field (NF) and the Advance Electronics Field (AEF). Personnel in these programs signed an initial Enlistment Contract for a term of four (4) years, and also signed, either on the date of enlistment, or while they were in early phases of Navy training, an Agreement to Extend Enlistment for an additional term of two (2) years. Six-year obligors, if they qualified in the Nuclear Field rates, or virtually any of the AEF rates, received RRB and VRB when they began serving the additional two-year term, or "extension of enlistment."

7. Beginning in 1971, the Navy reduced, by administrative regulation, the multiples applicable to some rates in the Advanced Electronics Field, and to many other VRB-designated rates. Many personnel thus found themselves in the position of having obligated themselves to serve two additional years when the regulations provided they would receive a substantial reenlistment bonus—(VRB of about $4,000)—yet they actually received half that amount, or even no VRB, when they began serving their extension of enlistment. Most of the persons effected by this administrative reduction are members of the class in Hebert v. United States.¹⁰

8. In 1974, Congress substantially revised the incentive structure of the Reenlistment Bonus system. By Public Law 93-277, effec...