Lindy Bros. Bldrs., Inc. of Phila. v. AMERICAN R. & S. SAN. C.

• Decision Date: 25 September 1974
• Docket Number: Civ. A. No. 41774.
• Citation: 382 F. Supp. 999
• Parties: LINDY BROS. BUILDERS, INC. OF PHILADELPHIA, et al., Plaintiffs, v. AMERICAN RADIATOR & STANDARD SANITARY CORP. et al., Defendants.
• Court: U.S. District Court — Eastern District of Pennsylvania

382 F. Supp. 999

LINDY BROS. BUILDERS, INC. OF PHILADELPHIA, et al., Plaintiffs, v. AMERICAN RADIATOR & STANDARD SANITARY CORP. et al., Defendants.

Civ. A. No. 41774.

United States District Court, E. D. Pennsylvania.

September 25, 1974.

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Harold E. Kohn, David Berger, Aaron M. Fine, H. Laddie Montague, Jr. and Harold E. Kohn, P.A. and David Berger, P.A., Philadelphia, Pa., for petitioners.

William Simon, G. Joseph King and Howrey, Simon, Baker & Murchison, Washington, D. C., for claimants Humble Oil & Refining Co. and Friendswood Development Co.

ALEXANDER HARVEY, II, District Judge:

In Lindy Bros. Builders, Inc. of Phila. v. American Radiator & Standard Sanitary Corp., 487 F.2d 161 (3d Cir. 1973), the United States Court of Appeals for the Third Circuit remanded certain matters in this multidistrict antitrust litigation to this Court for further proceedings. That opinion dealt with two separate appeals relating to the award of attorneys' fees by this Court following the final approval of a settlement of the claims of members of a national class of builder-owners against manufacturers of plumbing fixtures. Friendswood Development Company (Friendswood) and Humble Oil & Refining Company (Humble) appealed from the award by this Court of fees to attorneys Harold E. Kohn and David Berger and their law firms¹, and attorneys of the firm of Thoma, Schoenthal, Davis, Hockenberg & Wine appealed from this Court's refusal to award any fees to them. The orders awarding fees to attorneys Kohn and Berger and denying fees to the Thoma attorneys were vacated by the Third Circuit, and it is these matters which have been remanded for further proceedings consistent with that Court's opinion.

The original opinion of this Court is reported in Lindy Bros. Builders, Inc. of Phila. v. American Radiator & Standard Corp., 341 F.Supp. 1077 (E.D.Pa.1972). That opinion was concerned with various applications for attorneys' fees and expenses. No appeals were taken from the rulings of this Court which awarded expenses to the Settlement Committee, which, inter alia, allowed reimbursement from the settlement fund of expenses incurred by Mr. Kohn and eleven other attorneys or firms who had filed suits in this litigation and which denied in toto ten other petitions, besides that of the Thoma firm, also seeking the award of attorneys' fees from the settlement fund.

In its opinion, the Third Circuit first rejected the contention advanced by Friendswood and Humble that this Court lacked authority to award any fees at all to petitioners Kohn and Berger from that portion of the settlement fund to be distributed to claimants who would receive distributions from the fund but who either did not file suit or were not included as settling parties. In approving an award payable directly to attorneys for services to unrepresented claimants, the Third Circuit recognized that a district judge is empowered to exercise his informed discretion in awarding such fees and that any successful challenge to his determination must show that he abused that discretion. 487 F.2d at 166. However, the Third Circuit further held that in making an award to petitioners Kohn and Berger, this Court had not followed proper standards and directed that an evidentiary hearing should be held on remand so that there might be an evidentiary basis for applying such standards.

In discussing the proper standards which would govern the award of fees in a case of this sort, the Third Circuit said that the first inquiry of the Court should be into the hours spent by the attorneys, including how many hours were spent in what manner by which attorneys. 487 F.2d at 167. After determining the time spent, the district court should then undertake to fix an hourly rate of compensation to be applied to the hours worked. While the amount thus found to constitute reasonable compensation should be the "lodestar" of the Court's fee determination, at least two other factors should be taken into account in computing the value of attorneys' services, namely the contingent nature of success and the extent, if any, to which the quality of an attorney's work mandates either increasing or decreasing the amount to which the Court has found the attorney reasonably entitled. 487 F.2d at 168. Finally, after determining the total reasonable value of an attorney's services in securing recovery of a fund for the class, the Court should determine what portion of that amount should be paid by the unrepresented claimants. 487 F.2d at 169.

Following remand, the relatively small claim of the Thoma firm was settled. Thus, the sole remaining question before the Court is the amount of the award to be made to petitioners Harold E. Kohn and David Berger as reasonable attorneys' fees, pursuant to the detailed standards and guidelines now established by the Third Circuit. In their original petition, these petitioners had sought fees from the total fund in the amount of some $3,037,000. For the reasons set forth in this Court's earlier opinion, an award approximating $1,375,000 had been previously made, representing 20% of the portion of the fund to be paid to unrepresented claimants.² 341 F.Supp. at 1090.

Following remand of this matter, this Court permitted further discovery to be undertaken in light of the new standards established by the Third Circuit. Interrogatories were served and answered, and depositions of petitioner Berger and of various members of the Kohn firm and of the Berger firm were taken. Several formal pre-trial conferences were held in open court, and a detailed Pre-trial Order has been approved and filed. At the evidentiary hearing, numerous documents were admitted in evidence, and petitioner Kohn was the only witness called by either side to testify.³ However, by agreement, all the depositions were made a part of the record.

As noted in this Court's original opinion, the settlement previously approved by the Court covered the claims of a nation-wide class of builder-owners asserted against the so-called short-line defendants and against the so-called full-line defendants except for Briggs Manufacturing Company. 341 F.Supp. at 1079-1080. When these matters were previously before the Court, the aggregate amount of the settlement fund was approximately $26,000,000.

Following final approval of this settlement on April 7, 1972, petitioner Kohn undertook steps to press the claims of the builder-owner class against the one remaining full-line defendant. As a result of a corporate merger, the Celotex Corporation was at or about this time the successor to Briggs Manufacturing Company and was substituted for Briggs in those actions in this litigation in which Briggs had been named as a defendant.

On June 27, 1972, this Court designated petitioner Kohn and his associate Aaron M. Fine as lead counsel in the litigation against Celotex. Various discussions were thereafter held between counsel for Celotex and petitioner Kohn in an attempt to settle the outstanding builder-owner claims against this one remaining full-line defendant. These negotiations eventually led to a settlement with Celotex in the amount of $1,150,000. A settlement agreement dated November 27, 1972 was executed by counsel for Celotex and by Messrs. Kohn and Fine on behalf of a proposed national class of builder-owner claimants.

Following a hearing on February 16, 1973, this Court entered Settlement Order No. 74 on February 23, 1973, which gave preliminary approval to the proposed builder-owner settlement and appointed the plaintiffs in Civil No. 41,774 as the class representatives. Following due notice to the class, a hearing was held on August 3, 1973 to consider whether this settlement with Celotex should be finally approved. There was no opposition, and the Court indicated that it would give final approval to the settlement as submitted. Findings of Fact, Conclusions of Law, a Judgment and Settlement Order No. 77, formally approving the Celotex settlement, were entered on October 9, 1973.

At the time of the hearing held on August 3, 1973 to consider final approval of the Celotex settlement, the Court also had before it an application by petitioner Kohn for the award of attorneys' fees and expenses from the Celotex settlement fund. As a decision had not by that date been handed down by the Third Circuit in the Lindy Bros. appeal and as Friendswood and Humble were objecting to the award of fees in connection with the Celotex settlement on the same grounds as they were asserting in the appeal, this Court determined that no award of fees would be made from the Celotex fund until the appeal had been decided.

At the evidentiary hearing held following remand, counsel agreed that the original fund and the Celotex fund should be treated, for purposes of deciding the questions before the Court, as a single fund and that the total time spent by petitioners should be aggregated. Thus, although there are separate petitions before the Court (one filed pursuant to Settlement Order No. 21 and one filed pursuant to Settlement Order No. 74), only one award will be made.⁴ The combined fund produced by the efforts of the petitioners, including interest, is now approximately $29,300,000, and the total time expended by the petitioners in producing such combined fund through March 24, 1974 is 6,487 hours of attorneys' time and 1,235 hours of paraprofessional and law students' time.

I THE TIME FACTOR

In detailing in its Lindy Bros. opinion the standards that should guide the trial judge in awarding fees to attorneys successfully concluding class suits, the Third Circuit has directed that the first inquiry of the court should be into the hours spent by the attorneys. Not only should the court inquire as to the number of hours spent, but it should also determine in what manner the time was expended and by which attorneys.

From the evidence, this Court finds that the total time spent by the Kohn firm...