FRIENDS FOR ALL CHILDREN v. Lockheed Aircraft Corp.

• Decision Date: 16 June 1983
• Docket Number: Civ. A. No. 76-0544.
• Citation: 567 F. Supp. 790
• Parties: FRIENDS FOR ALL CHILDREN, INC., as legal guardian and next friend of the named 150 infant individuals, et al., Plaintiff, v. LOCKHEED AIRCRAFT CORPORATION, Defendant and Third-Party Plaintiff, v. The UNITED STATES of America, Third-Party Defendant.
• Court: U.S. District Court — District of Columbia

567 F. Supp. 790

FRIENDS FOR ALL CHILDREN, INC., as legal guardian and next friend of the named 150 infant individuals, et al., Plaintiff, v. LOCKHEED AIRCRAFT CORPORATION, Defendant and Third-Party Plaintiff, v. The UNITED STATES of America, Third-Party Defendant.

Civ. A. No. 76-0544.

United States District Court, District of Columbia.

June 13, 1983.

As Corrected June 16, 1983.

COPYRIGHT MATERIAL OMITTED

COPYRIGHT MATERIAL OMITTED

J. Vernon Patrick, Jr., Berkowitz, Lefkovits & Patrick, Birmingham, Ala., Oren R. Lewis, Jr., Lewis, Wilson, Lewis & Jones, Ltd., Arlington, Va., for plaintiffs.

Carroll E. Dubuc, Finley, Kumble, Wagner, Heine, Underberg & Casey, Washington, D.C., for defendant and third-party plaintiff.

Mark A. Dombroff, Director, Torts Branch, Civil Div., U.S. Dept. of Justice, Washington, D.C., for third-party defendant.

Charles R. Work, McDermott, Will & Emery, Washington, D.C., guardian ad litem.

MEMORANDUM

OBERDORFER, District Judge.

I. Introduction

On August 28, 1982, the Court approved a Stipulation of Compromise Settlement resolving the claims of 45 infant plaintiffs who alleged that they suffered compensable injury when a C-5A military transport airplane, designed and built by Lockheed Aircraft Corporation and operated by the United States Air Force, crashed near Saigon, Vietnam, on April 5, 1975. In return for the dismissal of these 45 claims and of a related motion for sanctions arising from alleged discovery abuse by defendants, defendants paid into the Registry of the Court the total sum of $13,500,000.¹ The amounts and timing of disbursements from this recovery to the individual plaintiffs and to plaintiffs' counsel and the guardian ad litem for fees and expenses were left solely to the discretion of this Court, with the proviso that

it is the intent of this agreement that the net proceeds of this compromise settlement inure solely to the benefit of the American plaintiffs participating in the settlement .... Awards, distributions, etc. to the Guardian ad litem for fees, costs or expenses (past and future) shall be limited to amounts directly related to activities performed on behalf of one or more of the American plaintiffs ... pursuant to the guidelines set forth by the Court of Appeals in Schneider v. Lockheed, 658 F.2d 835 (D.C.Cir.1981). None of these funds are to be allocated or used in any way whatsoever for litigation expenses, offsets, or advances for any other cases not covered by this Stipulation of Compromise Settlement.

On July 26, 1982, plaintiffs' counsel, in anticipation of final approval of the settlement agreement by the Deputy Attorney General and the Court, filed several motions seeking disbursement of the settlement proceeds in the following proportions:

1. 33 1/3 % directly to the guardians of the individual plaintiffs, free of trust;

2. 16 2/3 % to a central trust;

3. 33 1/3 % to attorney fees;

4. 3 1/3 % to the guardians ad litem for their fees and expenses; and

5. 13 1/3 % to litigation expenses.

This allocation of the settlement recovery was also recommended by the guardian ad litem in his Report and Recommendation filed August 25, 1982.

On February 16, 1983, the Court authorized payment of $100,000, free of trust, to each individual plaintiff who submitted to the Court a proposed order, signed by that plaintiff's locally appointed guardian and representing that the funds would be administered in accordance with local law. On May 3, 1983, the Court gave its approval to the creation of a central trust to provide additional funds to those plaintiffs who, over time, prove to be in need of greater medical assistance. The time has now come for the Court to turn its attention to final payments to plaintiffs' counsel and the guardians ad litem for their fees and expenses.² Interim payments for these items from the global settlement have been made from time to time over the last few months,³ but the Court has withheld final payment for these items pending further submissions from the guardians ad litem on the subject of their fees and expenses and the Final Report of the Special Masters appointed to examine the litigation expenses.⁴ For the reasons explained below, the Court authorizes payments for fees and expenses in the amounts described on pp. 817 and in Table 12.

II. The Litigation and Global Settlement

The original action in this litigation was filed by the firm of Lewis, Wilson, Jones and Lewis in 1975 on behalf of Friends for All Children ("FFAC") as personal representative of the 150 infants who survived the crash. The complaint sought both compensatory and punitive damages. At that time, the Lewis firm quoted to FFAC the firm's normal contingent fee of one-third of any recovery; if there were no recovery, the Lewis firm would earn no fee. The clients would be responsible for expenses.

In 1978, the Lewis firm associated the firm of Berkowitz, Lefkovits & Patrick of Birmingham, Alabama. Thereafter, in late 1978, the Court appointed Charles Work, Esq., as amicus curiae to advise about the propriety of certain communications from the Lewis firm to the parents of the children. Those communications recommended that individual parents substitute for FFAC as plaintiffs' legal representatives, while continuing to retain the Lewis firm as counsel. Thereafter, the Court appointed Mr. Work and his firm as guardian ad litem with the responsibility, among others, of establishing communications with the plaintiffs' adoptive parents, many of whom were residents of European countries. The guardian carefully drafted a letter designed to give each parent a fair description of the lawsuit brought by FFAC and the prospects and risks of participating. The letter offered further consultation with any parent who had questions not answered by the letter.

The guardian ad litem's letter to the parents included a statement that the Lewis firm had agreed to represent each plaintiff for a contingent fee not to exceed one-third of any recovery, with the understanding that each plaintiff would be responsible for any expenses incurred in the prosecution of the lawsuit. The letter explained the fee agreement in the following terms:

(c) Counsel Fees: In the United States although other fee arrangements can be made, suits for personal injury or wrongful death are typically handled by attorneys on a contingent fee basis. This means that the attorney receives no compensation for legal services rendered unless there is a recovery. If there is no recovery, the court costs and litigation expenses advanced by the attorney for that case must be borne by the client. The contingent fees charged by attorneys handling such claims typically vary from approximately 20 percent to 40 percent of the recovery. In this case, all applications for attorney fees and reimbursements of costs and expenses would be subject to court approval, after a hearing, of which you would be given notice, and at which you would have a right to be heard with respect to the reasonableness of the request for fees, expenses, and costs.

Based on their evaluation of the prospects for success in this litigation, the Lewis firm initially agreed with FFAC when this suit was filed and subsequently has agreed with me as guardian that it would prosecute this litigation seeking a recovery for the children on a contingent fee arrangement, on the understanding that the firm would not request a fee in excess of one-third of any recovery. The Lewis firm would presumably have a right to be compensated for its services to date out of any recovery, if you retain other attorneys to represent your child's interest in prosecuting your child's claim from this point forward.

Report of the Guardian ad litem, October 12, 1979; Affidavit of Oren R. Lewis, Jr., October 25, 1982, p. 2.

In 1979, when these preliminary matters were resolved and the guardian ad litem was in place, defendants entered into an agreement with plaintiffs and the guardian ad litem pursuant to which plaintiffs dismissed their claim for punitive damages in exchange for a payment by defendants to the guardian ad litem of $5,000 for each child's medical care and legal expenses⁵ and an agreement by defendants not to contest the jurisdiction of the court, to conduct discovery in the District of Columbia, and to pay 30 percent of any jury verdict without appeal.⁶ Defendants admitted liability for the crash, and the sole issue for trial, according to the agreement, was what damages, if any, were due the individual plaintiffs.

These express commitments in the 1979 agreements settling liability gave hope, if not promise, that the cases could be disposed of expeditiously. The plaintiffs were all about the same age and had shared a common experience, both before and after the crash. There was medical testimony that an unusually large number had symptoms common to a single syndrome, Minimum Brain Dysfunction ("MBD"). The Court expected that it would be a relatively simple matter to adduce expert testimony as to the cause and extent of any injury suffered in two or three typical cases. Jury verdicts on those cases should have provided parties and counsel, litigating and negotiating in good faith, an adequate basis for quick settlement of the remaining cases. Settlements had been the result in the many cases involving adult, United States citizen victims of the crash. Contrary to this expectation, however, instead of brief, administrative-like hearings to resolve what was thought to be a relatively simple medical/legal issue, there erupted one of the most protracted, costly, and unpleasant litigations in the history of this district.

In the Spring of 1980, this Court tried three bellwether cases seriatim to the same jury. Contrary to the Court's expectations, each trial consumed three full weeks, as defendants vigorously contested the plaintiffs' claim that the damages they had incurred were proximately caused by the accident. The jury awarded $500,000 to one plainti...