Muehler v. Land O'Lakes, Inc.

• Decision Date: 10 September 1985
• Docket Number: No. 4-83 Civil 600.,4-83 Civil 600.
• Parties: Elroy MUEHLER, Richard A. Price, Alvin Jochim, Terry Luehring, Edgar Luehring, Russell Kolberg, Don Helfter, Michael L. Huisman and Doolittle Turkey Farm, Inc., on behalf of themselves and all others similarly situated, Plaintiffs, v. LAND O'LAKES, INC., a Minnesota corporation, Defendant.
• Court: U.S. District Court — District of Minnesota

617 F. Supp. 1370

Elroy MUEHLER, Richard A. Price, Alvin Jochim, Terry Luehring, Edgar Luehring, Russell Kolberg, Don Helfter, Michael L. Huisman and Doolittle Turkey Farm, Inc., on behalf of themselves and all others similarly situated, Plaintiffs, v. LAND O'LAKES, INC., a Minnesota corporation, Defendant.

No. 4-83 Civil 600.

United States District Court, D. Minnesota, Fourth Division.

September 10, 1985.

Robins, Zelle, Larson & Kaplan, Stanford Robins and Brent L. Reichert, Minneapolis, Minn., Meyer, Meyer & Pottratz, Mark H. Meyer, Melrose, Minn., for plaintiffs; Letnes, Marshall, Fiedler & Clapp, Jay H. Fiedler, Grand Forks, N.D., of counsel.

Doherty, Rumble & Butler, Frank Claybourne and Thomas A. Connop, St. Paul, Minn., for defendant.

Bottorff & Van Doren, Kieth Van Doren, Webster City, Iowa, for Webster City Production Credit Assn.

MEMORANDUM DECISION AND ORDER

MILES W. LORD, District Judge.

Plaintiffs' attorneys have appealed pursuant to 28 U.S.C. § 636(c)(4), and Local Rule 14 G(5)(b), from a United States Magistrate's Memorandum Decision and Order dated August 16, 1985, awarding attorneys' fees, costs and expenses in the above-entitled matter.

This action was originally commenced in the United States District Court, District of North Dakota, in April, 1982, by ten turkey growers, on behalf of themselves and others similarly situated. Prior to 1980, defendant Land O'Lakes, Inc. had purchased turkeys outright from its cooperative members at the current market rate, and had processed and marketed the turkeys as an independent operation. For the 1980 processing season, Land O'Lakes had instituted a marketing arrangement whereby turkeys received from its grower-members were "pooled" for marketing. Under the pool arrangement, Land O'Lakes processed and marketed the turkeys, and the producers were paid a pro rata share of the proceeds received by Land O'Lakes, less administrative and marketing costs. The claim for relief is essentially based upon allegations that Land O'Lakes breached the marketing agreement with the growers that established the pool arrangement, breached a fiduciary duty owed to the growers, and violated a state statute relating to cooperative marketing agreements.

On July 11, 1983, the North Dakota District Court entered an order certifying the case as a class action to be maintained on behalf of a class composed of all turkey growers who sold turkeys to defendant and received payment through the 1980 Cooperative Marketing Pool, with the exception of growers who furnished turkeys for processing from breeder flocks, and growers who participated in a certain Land O'Lakes "contract grow-out program." The certification order also changed the venue, transferring the case to the District of Minnesota.

The parties engaged in extensive and exhaustive discovery, pre-trial proceedings, and settlement negotiations during the following two and one-half years. In December, 1984, in an attempt to avoid a protracted trial, this Court convened a "mini-trial" (a summary trial to an advisory jury). A 12 person jury was formally impaneled, and over the course of several days, counsel informally presented the case by proffer of evidence, examination and cross-examination of witnesses, and introduction of exhibits. Counsel formally presented closing arguments, the Court delivered an abbreviated charge, and the panel was split into two six-person juries to deliberate and render a verdict on special interrogatories. Plaintiffs had argued for $4,802,604.00 in damages. Most of the damage claim ($2,800,000.00) depended upon the jurors' responses to sharply conflicting opinions of expert accounting witnesses. Of the remaining request, $1,580,000.00 was subject to the risk of being denied as a matter of law prior to an actual trial.

The results of the mini-trial were ambiguous. One jury panel found no liability, which would mandate a defendant's verdict. The other panel returned a verdict for plaintiffs in the amount of $2,292,000.00. Three jurors on this panel also assessed an additional $210,000.00 as punitive damages.

Potential class member growers, accounting for 13% of the total liveweight of turkeys that had been contributed to the Pool, had opted-out of the class action. Since the verdicts in the mini-trial were based on the damages to the entire marketing pool, an adjustment would have to be made for the volume represented by the opt-outs. Adjusting for the volume represented by the opt-outs yields a potential range of net verdicts from zero to $1,994,258.00 for the class members.

Following the return of these verdicts, the Court and counsel took the opportunity to review with the jury their impressions of the case as presented in the mini-trial format. Thereafter, the case was assigned to a United States Magistrate pursuant to the provisions of Title 28 U.S.C. § 636(c), and a number of motions were filed or renewed. Both sides obviously recognized that considerable work and expense would be necessary to obtain further discovery, bolster positions, and to muster new arguments in preparation for further pre-trial proceedings and for trial. During the ensuing six months, earnest settlement negotiations were conducted. Ultimately, a settlement agreement was signed on June 18, 1985.

The proposed settlement requires defendant to pay $1,550,000.00 in full settlement of all class claims, from which will be deducted fees for attorneys for the class, litigation expenses, and interest on out-of-pocket expenses contributed by certain members of the class to form a litigation fund. The balance of the payment will be paid to members of the class pro rata, based upon the liveweight pounds of turkeys delivered to the 1980 Pool, and subject to the right of set-off by Land O'Lakes against proceeds payable to any individual class member arising from advances made or delinquent trade accounts.

Based upon the risk factors, a reasonable estimate of maximum recovery, the novel theories advanced by plaintiffs to support the cause of action, and other relevant factors, the Magistrate ruled that the proposed settlement and the compromise payment of $1,550,000.00 was fair, reasonable and in the best interests of all of the growers affected by the settlement and by dismissal of this action. Because no one has (1) requested a review of this portion of the Magistrate's Order and (2) because it is based upon sound rationale and reasoning, the ruling that the settlement be approved is adopted.

ATTORNEYS' FEES

The attorneys for the plaintiff class have requested review and modification of the Magistrate's Decision and Order awarding attorneys' fees, costs and expenses. Because the class representatives and their attorneys successfully recovered a fund for the benefit of all class members, an award of fees to counsel for the class from that fund is appropriate. See, Boeing Co. v. Van Gemert, 444 U.S. 472, 481-82, 100 S.Ct. 745, 750-51, 62 L.Ed.2d 676 (1980).

In support of the fee application the three law firms representing the class originally submitted a great deal of documentation to the Court including a Joint Fee Petition, supporting affidavits of the attorneys, daily time records, affidavits of the class representatives expressly ratifying the proposed settlement, and a report from Weinberg & Associates, Ltd., certified public accountants, showing the allocation of out-of-pocket costs and expenses. Additional material has been submitted pursuant to this proceeding.¹

In their Joint Petition, the three firms requested the following fees:

                Robins, Zelle, Larson & Kaplan
                a. Number of attorney hours - 3,921.40
                b. Number of para-professional hours - 1,691.80
                   Total Fees Pursuant to Current Hourly
                   Billing Rates                              $508,091.00
                   Fees Requested                             $460,850.00
                Meyer, Meyer & Pottratz
                Number of attorney hours - 608.80
                    Total Fees Pursuant to Current Hourly
                    Billing Rates                             $ 54,792.00
                    Fees Requested                            $ 54,792.00
                Letness, Marshall, Fiedler & Clapp, Ltd
                    Number of attorney hours - 326.20
                    Total Fees Pursuant to Current Hourly
                    Billing Rates                             $ 29,358.00
                    Fees Requested                            $ 29,358.00
                

The firms also sought reimbursement of litigation costs and expenses in the amount of $79,342.09. This amount was compiled by Weinberg and Associates, Ltd., certified public accountants. Certain class members also requested interest on the funds they had contributed prior to the commencement of the litigation. The total interest payment requested was $23,276.19, calculated at a rate of 11% per annum to be paid pro rata to the thirty-one contributing class members.

The attorneys for the class did not seek a multiplier on their time although they were entitled to receive a multiplier under applicable federal law. City of Detroit v. Grinnell Corp., 560 F.2d 1093 (2d Cir.1977); Lindy Brothers Builders, Inc. v. American Radiator and Standard Sanitary Corp., 540 F.2d 102 (3d Cir.1976); Lindy Brothers Builders Inc. v. American Radiator and Standard Sanitary Corp., 487 F.2d 161 (3d Cir.1973). Counsel only sought compensation figured at their current hourly billing rates. In fact, in order to remain within the 35.5% limit set forth in the notice to the class, the lead counsel law firm (Robins) actually discounted the lodestar value of its time by $47,241.00.

Letnes, Marshall, Fiedler & Clapp, Ltd. were awarded compensation for only 205.4 hours at $90.00 per hour and for three hours at $60.00 per hour, a total of $18,666.00. Meyer, Meyer & Pottratz were awarded compensation for only 251.6 hours at $90.00 per hour, and for 110.5 hours at $60.00 per hour, a total of $29,274.00. The Magistrate awarded Robins, Zelle, Larson & Kaplan $449,611.00 in attorneys' fees but noted that the discount of $11,239.00 might be an error, and suggested a motion to reconsider this...