Foster v. Boise-Cascade, Inc.

• Citation: 420 F. Supp. 674
• Decision Date: 27 August 1976
• Docket Number: Civ. A. No. 74-H-89.
• Parties: Janet FOSTER, Individually and on behalf of all others similarly situated, Plaintiffs, v. BOISE-CASCADE, INC., Defendant.
• Court: U.S. District Court — Southern District of Texas

420 F. Supp. 674

Janet FOSTER, Individually and on behalf of all others similarly situated, Plaintiffs, v. BOISE-CASCADE, INC., Defendant.

Civ. A. No. 74-H-89.

United States District Court, S. D. Texas, Houston Division.

August 27, 1976.

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Carol C. Nelkin, Nelkin & Nelkin, Houston, Tex., for plaintiffs.

John H. Smither, Vinson, Elkins, Searls, Connally & Smith, Houston, Tex., for defendant.

MEMORANDUM AND OPINION

CARL O. BUE, Jr., District Judge.

In this class action brought pursuant to Title VII of the Civil Rights Act of 1964, 42 U.S.C.A. § 2000e, and the Equal Pay Act, 29 U.S.C.A. § 206(d)(1), the parties have agreed to a settlement of plaintiffs' claim of sex discrimination and have, in accordance with Rule 23(e), Fed.R.Civ.P., presented a settlement package to this Court for approval. The defendant, in addition to agreeing to make back pay awards to the named plaintiff and seven of the class members¹ totalling $13,188.00, and to abide by the terms of an injunction prohibiting any discrimination on the basis of sex, has assented to pay attorneys' fees of $12,000.00 over and above the $13,188.00 back pay award.

Plaintiffs' request for a court award of attorneys' fees, statutorily authorized in this sex discrimination action by section 706(k) of Title VII, 42 U.S.C.A. § 2000e-5(k), poses two questions for the Court's resolution: (1) what role should the district court play in the award of attorneys' fees in a Title VII class action settlement, particularly where (a) the fee award is set aside as an additional monetary element rather than deducted from the class recovery, and (b) the award is agreed to by both parties; and (2) assuming that this Court is obligated to review an attorneys' fees award under the circumstances delineated above, is the proposed fee of $12,000.00 a "reasonable" attorneys' fee?

I. BACKGROUND OF THIS LITIGATION

Janet Foster filed suit on January 16, 1974, on behalf of herself and all other potential or actual female employees at defendant's Houston, Texas, facility, alleging that the facility maintains a policy of discrimination against women with respect to the terms, conditions and privileges of employment, a violation of Title VII of the 1964 Civil Rights Act, 42 U.S.C.A. § 2000e, and the Equal Pay Act, 29 U.S.C.A. § 206(d)(1). Plaintiff sought a declaratory judgment with respect to such unlawful employment practices, both affirmative and negative injunctive relief, and recovery of back pay for herself and class members.

Following a dispute between the parties as to the proper scope of discovery in this asserted class action, and the issuance of a discovery order by this Court on May 29, 1975, which ordered the defendant to answer completely 82 written interrogatories propounded by plaintiffs, the parties engaged in settlement negotiations culminating in a joint motion to enter a Consent Decree.² A two-step settlement procedure using guidelines set forth in Section 1.46 of the Manual for Complex Litigation was adopted.

As an initial step, the Court, on December 16, 1975, entered an Order of Provisional Entry of Consent Decree ("Order of Provisional Entry") tentatively approving the terms of the compromise agreement. Defendant was instructed to notify class members of the impending action, the terms and conditions of the proposed Consent Decree, and the right of each class member to voice to the Court any objections or suggestions with regard to the proposed settlement by no later than March 1, 1976.³ Upon expiration of the March 1, 1976, deadline, and in accordance with the Order of Provisional Entry, counsel submitted a joint report on the results of notice to the class. The report indicated that four of the eleven class members to whom defendant had agreed to make a back pay award could not be located and thus, pursuant to the Order of Provisional Entry, these potential claimants would be deemed to have opted out of the class.

With the procedure for class notification having been completed, the parties sought entry of the Consent Decree. However, in reviewing the recommended compromise, this Court was unable to ascertain the amount in attorneys' fees which had been agreed to by counsel. Accordingly, in order to discharge fully its obligation under Rule 23(e) to scrutinize any proposed settlement of a class action so as to protect the interests of absent class members, and cognizant of its discretionary power under section 706(k) of Title VII, 42 U.S.C.A. § 2000e-5(k), to award a reasonable attorneys' fee to the prevailing party, this Court requested counsel for the plaintiffs to submit a report indicating the amount and method of calculating the fee.

Counsel for the plaintiffs responded by letter of March 17, 1976, indicating a fee of $12,000.00, and a total time investment of 121½ hours. Two preliminary comparisons were disturbing to this Court. First, on an hourly fee basis, the proposed award approximates $100.00 per hour. Second, the fee award of $12,000.00 approaches the $13,188.00 total monetary award flowing to the named plaintiff and seven of the class members. Accordingly, the Court ordered an evidentiary hearing to explore more fully the proposed fee and to determine whether it comports with the legal requirements of Title VII and Fed.R.Civ.P. 23.

At the hearing conducted on April 9, 1976 ("April 9 hearing"), this Court heard the testimony of three Houston attorneys experienced in Title VII litigation who testified as to the hourly rates for legal services of the type provided in this case, and the reasonableness of the proposed fee. Because defendant does not contest the proposed fee award, no cross-examination was conducted. Upon inquiry by the Court, the witnesses further expressed their views as to the proper role to be played by the Court in evaluating the reasonableness of the instant settlement proposal, including attorneys' fees. Additionally, the Court heard the non-testimonial views of counsel for the defendant and of co-counsel for the plaintiffs. An Itemization of Services was also submitted by counsel for the plaintiffs, as was a Memorandum on Attorneys' Fees.

II. JUDICIAL REVIEW OF ATTORNEYS' FEES PROPOSED IN SETTLEMENT OF TITLE VII CLASS ACTIONS

A. Attitude of Counsel Towards This Court's Active Role

In addition to justifying the size of the agreed-to attorneys' fee, the legal memorandum submitted by plaintiffs' counsel questions the propriety of this Court's consideration of the size of the stipulated fee. However, aside from presenting legal and pragmatic arguments in support of counsel's position that the Court should not modify an award of fees which is both uncontested and over and above the monetary amount going to the named plaintiff and class members, the tenor of the brief also reveals counsel's strong distaste for the interest displayed by this Court in its efforts to define and fulfill properly its Rule 23 and Title VII duties in this embryonic area of the law. The attitude of counsel towards any judicial "interference" is unmistakably clear, as the following passage from the legal memorandum demonstrates:

"A threshold question, of course, is whether the amount of fees agreed upon is a relevant inquiry by the Court. However, the real issue is not whether the Court should inquire as to the amount of attorneys' fees, but why the Court should inquire.

"This procedural development wherein the Court has examined the proposed decree and found it to be fair, just and equitable to the named Plaintiff as well as to the class members, but where the Court nonetheless believes it to be the Court's duty to further scrutinize the amount of attorneys' fees agreed upon by the parties, gives rise to the issue of whether or not Defendant should have the assistance of the United States District Court in determining after the fact whether a settlement as to Plaintiff's claim for attorneys' fees entered into by Defendant on the advice of the distinguished law firm of Vinson, Elkins, Searls, Connally & Smith was the best possible settlement Defendant could have made. In response to the Court's suggestion contained in its order of March 23, 1976, Plaintiff submits this memorandum which will address what, in Plaintiff's view, are the relevant legal precedents as well as the practical effects of the procedure established by the Court. Additionally, with great reluctance, the memorandum will present a factual and legal justification for the particular figure agreed upon by the parties in full and final settlement of Plaintiff's claim for attorneys' fees."

Memorandum on Attorneys' Fees, at 1, 2 & 3.

"The reluctance is not based upon any apprehension that the agreed upon amount is not reasonable; rather, it is based upon the fact that in Plaintiff's view, . . . the procedure adopted by the Court may well signal the death knell of Title VII settlements."

Memorandum on Attorneys' Fees, Footnote 1.

Separate and apart from this dramatic forecast, the fact remains that counsel's memorandum is completely devoid of any case authorities which support the view that the amount of stipulated attorneys' fees in this case is beyond the pale of judicial scrutiny. The Court would simply note that the procedure utilized in this case is one mandated by local rule in the Southern District of New York. Local Rule 11B of the Local Rules of the Southern District of New York provides that:

"Fees for attorneys or others shall not be paid upon the recovery or compromise in a derivative or class action on behalf of a corporation or class except as allowed by the court after a hearing upon such notice as the court may direct."

As is evident, this local rule does not except certain types of fee arrangements, such as the one proposed in the instant case, from the hearing requirement.

B. Quasi-Jurisdictional Bases for Judicial Review of Attorneys' Fees

Two regulations, operating independently or in tandem, can supply...