State v. O'Connell
Decision Date | 13 June 1974 |
Docket Number | No. 42417,42417 |
Citation | 83 Wn.2d 797,523 P.2d 872 |
Parties | , 77 A.L.R.3d 874 The STATE of Washington et al., Appellants, v. John J. O'CONNELL et al., Respondents and Cross-Appellants. |
Court | Washington Supreme Court |
Slade Gorton, Atty. Gen., Malachy R. Murphy, Asst. Atty. Gen., Olympia Helsell, Paul, Fetterman, Todd & Hokanson, William A. Helsell, Thomas W. Huber, Seattle, for appellants.
John J. O'Connell, Tacoma Short, Cressman & Cable, Paul R. Cressman, William L. Hintze, John O. Burgess, Seattle, for respondents.
In 1960, the Attorney General of the State of Washington (the respondent John J. O'Connell) approached officers and attorneys of various public utility districts and other municipalities throughout the state advising them of the possible implications of Federal indictments and prosecutions in price-fixing conspiracies involving the electrical manufacturing industry. He gave his opinion that these public bodies, having purchased electrical equipment, might have civil antitrust causes of action arising from the price-fixing; and an exploration of that possibility was begun.
The State and some of these municipalities joined together in an organization calling itself the 'Washington Utilities Antitrust Group' (known as WUAG). A steering committee was selected from among WUAG members to coordinate the litigation, and officers were elected. A litigation fund was established, to be administered by the steering committee.
This organization functioned through both the investigative stage and the period of litigation of the antitrust suits which were subsequently instituted. The membership, the officers, and the composition of the steering committee varied as municipalities dropped out or were added.
O'Connell advised the attorneys and officers of the municipalities that he could not represent them in his official capacity and that legislative authorization should be obtained if they wished him to do so. A bill was introduced in the legislature for this purpose in 1961, designated Senate Bill 272; however, whether for lack of support on the part of the municipalities or because the legislature considered it inappropriate, it failed to pass. Nevertheless, with the acquiescence of the municipalities, O'Connell assumed the role of leader and coordinator of the antitrust litigation.
The investigative phase continued through 1961. During this period some WUAG members decided not to continue because they felt there was no cause of action, or no substantial damage, or the possibility of recovery was too risky to justify the expense. Other members of WUAG decided that litigation should be pursued, but disagreed on the manner in which it should be conducted.
Thus, Snohomish County PUD withdrew from WUAG and retained its own local counsel, Edward Novak, on a fee agreement which provided for hourly compensation and a 20 percent contingent fee with a limitation of $250,000 and 10 percent thereafter. 1 Novak had been one of the original members of the WUAG steering committee. The City of Centralia also dropped out of WUAG and retained Novak on a similar fee agreement. The City of Tacoma discussed retaining private counsel in Seattle to conduct the litigation, but then decided to passively conduct the litigation through the City Attorney.
The remander of WUAG, now consisting of the State and only five municipalities, agreed that a lawyer experienced in antitrust litigation should be retained. It was agreed that representatives of the Attorney General's office, acting on behalf of WUAG and its respective members, should seek an 'antitrust lawyer' to act as counsel for the members. Such lawyers in New York, Washington, D.C., Chicago, Philadelphia and San Francisco, including the respondent Joseph L. Alioto, were contacted.
Alioto was first contacted in the fall of 1961, but no agreement was made at that time to retain him. He was asked for advice, on an hourly fee basis, as to the form and contents of the complaints to be filed in the electrical antitrust litigation, but he was not otherwise retained until August 28, 1962. From January to August 1962, Alioto negotiated with members of the Attorney General's staff regarding the possible scope of services and compensation. At that time, Alioto was willing to undertake the litigation upon the basis of an hourly fee or a contingent fee of 25 percent of any recovery.
After litigation had been pending in Federal District Court for approximately 7 months, WUAG members decided that they should hire Alioto. A letter agreement dated August 28, 1962, was drafted and was submitted by O'Connell to Alioto. It provided that Alioto would represent the six entities named therein and included the proviso that the City of Tacoma might later obtain his legal services upon certain conditions. The six parties to this agreement were the State of Washington; the City of Seattle; Grays Harbor County PUD No. 1; Clark County PUD No. 1; Grant County PUD No. 2, and Benton County PUD No. 1.
The agreement provided that Alioto would represent the named plaintiffs and that his compensation would be the amount awarded by the court in any judgment, or a contingent fee of 15 percent of any amounts recovered by settlement, each with a $1-million ceiling. This letter, submitted over the signature of John J. O'Connell, directed Alioto as follows:
This work will not be delegated by you to any associate, without my consent. Nor shall there be any association of other attorneys, nor any substitution of attorneys, without my consent.
. . . You shall have full authority to carry out this litigation and be directly responsible to me personally. You shall consult with me periodically on all major decisions and policy matters. Any settlement with or dismissal of any defendants requires not only my consent, but that of the several participants in the group.
The agreement further provided that any of the parties had the right to request a determination by the Federal District Court as to the reasonableness of Alioto's fees on any settlement. This procedure was never utilized. Copies of this agreement signed by O'Connell and Alioto were sent to the members of WUAG.
Alioto represented the six clients pursuant to the terms of the August 28, 1962 fee agreement. However, additional municipalities requested his services in the antitrust litigation. These requests resulted in a variety of arrangements for association with WUAG and for attorneys' fees. The Port of Grays Harbor agreed that it would join WUAG but would not be responsible for the payment of any fee to Alioto if settlements were accomplished within a certain period of time. The Clallam County PUD retained Alioto on a 15 percent contingent fee without the original $1-million limitation. The City of Port Angeles and Klickitat and Skamania County PUDS joined WUAG and agreed to pay a 15 percent contingent fee to Alioto.
The respondent Faler, a young lawyer who had experience in the antitrust field, had been hired as an Assistant Attorney General in 1961 and soon was devoting most of his time to work in the antitrust litigation on behalf of the State and the municipalities. In addition to his State salary, he was paid a salary of $400 per month by Grant County PUD. He resigned from the Attorney General's staff in the spring of 1965 and entered private practice but was retained by the State as a Special Assistant Attorney General, and was also paid on an hourly basis out of the litigation fund raised by the municipalities. He continued to devote most of his time to the development of these lawsuits.
In 1965, when, after 4 years of pending litigation, Snohomish County was not able to satisfactorily prosecute its suits through its own local counsel, Novak contacted Faler and requested that he arrange for Alioto to be retained by the Snohomish County PUD. This was accomplished in 1965, with compensation to be based on 25 percent of any recovery in excess of the then existing offers. Snohomish County PUD did not rejoin WUAG.
In 1965 Tacoma formally rejoined WUAG by submitting its designated share of costs.
In 1964 Grant County PUD asserted a claim for damages resulting from the purchase of generators installed in the Wanapum Dam project. As a consequence, Alioto was required to prepare and prosecute a trial against General Electric which was not originally contemplated. This trial resulted in a settlement of $3.5 million for Grant County PUD. This settlement was in addition to $4.75 million, separately negotiated with General Electric for the other appellants.
In May 1963 generators purchased by the City of Seattle for the Ross Dam project at a cost of $6.5 million were added to the litigation. Claims not originally contemplated, covering damages resulting from purchases of voltage regulators by most of the appellants, were added in 1963.
From the inception of the antitrust litigation through the year 1964, many of the appellants' representatives had been reluctant to pursue the cases and had favored acceptance of some of the initial settlement offers. Alioto had recommended to O'Connell that these offers be rejected. O'Connell in turn successfully prevailed upon local counsel or the parties to concur in Alioto's recommendation. The result was that enormously increased settlements were obtained. For example, in February 1963, Westinghouse Corporation had offered $76,000 to Seattle, and local officials had thought the offer acceptable. In the spring of 1965, Alioto negotiated a settlement from which the City of Seattle received a net recovery of $1.5 million from Westinghouse Corporation, an increase of more than 2,000 percent.
The first settlement made was with the Westinghouse Corporation, and it resulted in a recovery of $3.25 million on behalf of all the appellants. This stimulated a much livelier interest in the antitrust suits and a desire that they be given...
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