IN RE GYPSUM CASES
386 F.Supp. 959 (1974)
In re GYPSUM CASES.
Civ. No. 46414-A AJZ.
United States District Court, N. D. California.
August 19, 1974.
Frederick P. Furth, John H. Boone, San Francisco, Cal., liaison counsel for plaintiffs.
Samuel H. Seymour, Williams, Connolly & Califano, and Joseph D. Tydings, Danzansky, Dickey, Tydings, Quint & Gordon, Washington D.C., for first owner-builder class.
Mitchell A. Kramer, Philadelphia, Pa., and Farella, Braun & Martel, San Francisco, Cal., for dealer-wholesaler class.
Harvey S. Kronfeld, Mesirov, Gelman, Jaffe & Levin, Philadelphia, Pa., for applicator-subcontractor class.
William C. Barnard, Sommer, Tinkham, Barnard & Freiberger, Indianapolis, Ind., for general contractor class.
Lee A. Freeman, Freeman, Freeman & Salzman, Chicago, Ill., and Josef D. Cooper, San Francisco, Cal., for governmental class.
ORDER DIRECTING PAYMENT OF ATTORNEYS' FEESZIRPOLI, District Judge.
After duly noticed evidentiary hearings held on April 22, 23 and 25, 1974, the court is prepared to fix and direct the payment of attorneys' fees in this antitrust litigation, in which, probably more than in any other such litigation, the congressional objective of private antitrust enforcement was realized.1 To achieve this result it took seven years of vigorously contested litigation involving a nationwide price fixing conspiracy on the part of the major manufacturers of gypsum products — litigation initiated and prosecuted throughout all these years without benefit of any governmental assistance whatsoever.2 Under such circumstances, the attorneys for their able and arduous efforts in litigation involving complex and novel issues of substantial magnitude and doubtful success and undertaken at substantial financial risk on a contingency basis are clearly entitled to reasonable attorneys' fees commensurate with the benefits conferred upon purchasers of gypsum products. The purchasers of such products who benefited from this litigation might otherwise have been denied any protection or benefit whatsoever, since their claims individually would for the most part hardly justify the time and expense of litigation.
While counsel are entitled to adequate attorneys' fees commensurate
with the fund created and the prevention of future corporate abuse in the gypsum industry (see footnote 1, supra), they seem to have forgotten that the equity power of the court to award attorneys' fees and thus reward them as vindicators of public policy is definitely limited by the caution that such awards, though they shall not be niggardly, must be reasonable attorneys' fees, no more and no less. Otherwise the recompense would overshadow the result achieved and diminish the settlement fund to the point where the individual class member obtains only a token recovery. In the instant litigation, the applications for attorneys' fees filed by twenty-eight petitioners total in excess of $20,000,000, an exaggerated and untenable figure which only serves to make more difficult and more distasteful the exercise of the court's discretion in the evaluation of these claims. The resultant evaluations will probably prove to be totally satisfactory to no one.
Mindful that "[f]ew subjects associated with the class action device have generated as much critical commentary in recent years as the matter of attorneys' fees", Alpine Pharmacy v. Chas. Pfizer, 481 F.2d 1045, 1049 (2d Cir. 1973), the court has separately reviewed, analyzed and evaluated each of the claims. In so doing, it has reviewed the various tabulations of attorneys' fees and the guidelines suggested by counsel in their respective memoranda in support of their applications and the record made at the evidentiary hearing thereon, and indeed the record made throughout the entire history of this litigation.
1. During the eighty-three years of national antitrust policy, to this court's knowledge, there has never been a larger recovery based exclusively on private enforcement without benefit of an assist from the government. It is estimated that with earned interest as of November 1974, the initial settlement of $67,640,000 should total approximately $75,000,000. Additionally, it should be noted: (1) that in the pilot "dealer" cases, which were tried both as to liability and damages (Wall Products Co. v. National Gypsum Co., et al., 326 F.Supp. 295 and 357 F.Supp. 832), the six dealer plaintiffs were granted treble damages judgments totaling $3,171,702; and (2) that by reason of the abandonment of the conspiracy by defendants in the course of this litigation and their return to competitive pricing practices there was a resultant dramatic drop in the selling price of gypsum products. By way of illustration, after termination of the conspiracy in 1968, the basic price for ½" wallboard of $49.00 per MSF dropped to $36.00 and the basic price of 5/8 " wallboard of $71.50 per MSF dropped to $57.00. The savings to purchasers of such products during the years 1968, 1969 and 1970 alone (and at a time when prices generally were going up in the construction industry) were $86,813,265. The 1968 sales of gypsum products totaled $305,605,000 and the price went down 3.6% for a savings of $11,246,265. In 1969 the sales were $319,317,000 and the price went down 8.32% for a savings of $26,567,000. In 1970 the sales were $268,000,000 and the price went down 18.35% for a savings of $49,000,000. 2. These were multidistrict antitrust actions privately instituted without the benefit of prior convictions, pleas of guilty or nolo contendere of the defendants, civil decrees (by consent or otherwise) or other governmental action. In fact, the United States of America did not assert its claim for damages until one day before the running of the statute of limitations.
3. See Brandenburger v. Thompson, 494 F.2d 885 (9th Cir. 1974), wherein the court in remanding the case to the district court for determination of reasonable attorneys' fees to be paid counsel for plaintiff suggested that "the district judge might consider the factors referred to" in the cases of Johnson v. Georgia Highway Express, Inc., 488 F.2d 714 (5th Cir. 1974), and Lindy Bros. Bldrs., Inc. v. American R. & S. San. Corp., 487 F.2d 161 (3d Cir. 1973). See also City of Detroit v. Grinnell, 495 F.2d 448 (2d Cir. 1974); Arenson v. Board of Trade, 372 F.Supp. 1349 (N.D.Ill.1974). 4. For a compilation of cases wherein the court awarded fees as a percentage of the treble damages or settlement, see footnote 14 in Arenson v. Board of Trade, supra.
5. The only significant plaintiff who opted out of the settlement agreement was Universal Wallboard Co., an applicator, represented by the Alioto law office. The United States of America also remains as a party plaintiff in one of the cases since it was not included in the settlement agreement.
6. The attorneys in this litigation are all experienced antitrust lawyers who participated as active or lead counsel in most of the major antitrust litigation of the past twelve years, including electrical equipment, bleachers, rock salt, children's books, plumbing fixtures, concrete pipe, liquid asphalt, tetracycline, brass mill tubing, and automobile air pollution control cases.
7. All counsel of record in this litigation were required to submit to the court for in camera inspection their respective contingency fee contracts.
8. The services rendered by the offices of Seymour and Tydings, while benefiting all classes, as the services of all lawyers in this litigation did to a greater or lesser degree, were primarily for the benefit of the class they represent and properly should come from the unrepresented members of such class. The First Owner-Builder Class will share in 36.9% of the total fund available for distribution. This means that approximately $27,000,000 will be available for distribution to the members of the First Owner-Builder Class, and since about 75% of that class is unrepresented, approximately $20,400,000 will be available for distribution to unrepresented claimants.
9. The amount distributable to this class, 21.15% of the total distributable funds, should be approximately $15,600,000.
10. The administrative services required for distribution to members of this class should be less than that of any other class, since only 3,500 claims were filed in this class.
11. The services rendered by Mr. Kramer and Farella, Braun & Martel, while in a measure benefiting all classes, were primarily for the benefit of the class they represent, and their fee should come from the unrepresented members thereof. The fund distributable to the Dealer-Wholesaler Class should be approximately $15,600,000; 96% of the fund will be distributed to the unrepresented claimants and only 4% thereof will go to represented claimants.
12. This request was modified at the hearing to 15% of the fund distributable to the unrepresented members of the Applicator-Subcontractor Class. This class will share in 21.15% of the entire fund or approximately $15,600,000. The unrepresented members thereof constitute approximately 93% of the class.
13. Here too the services rendered by counsel for the Applicator-Subcontractor Class, while in a measure benefiting all classes, were primarily for the benefit of the class counsel represent and should properly come from the fund available to the unrepresented claimants in that class.
14. The amount available for distribution to this class is approximately $7,900,000, with about 90% thereof distributable to unrepresented claimants and 10% thereof distributable to represented claimants.
15. The Governmental Class will share in 10% of the settlement fund, that is to say, in excess of $7,400,000. The unrepresented members of the class constitute about 92% thereof and the represented members about 8% thereof.
16. The specifically named plaintiffs for which Lee A. Freeman acted as counsel of record in this litigation are:
State of Illinois No. 49006
(Statewide class action)
State of West Virginia No. 49019
(Statewide and national class
action)
State of Indiana No. 51004
(Statewide class action)
Chicago Housing Authority No. 51149
Board of Trustees of the No. 51715
University of Illinois
Metropolitan Government of No. 70-18
Nashville and Davidson
County
(Statewide class action)
State of Colorado No. 70-702
(Statewide class action)
State of Nevada No. 71-917
(Statewide class action)
17. In making this award the court has taken into consideration and holds the Alioto firm to its waiver in open court of any further or contingency fee from any client (plaintiff) it represents, including any interest it may have in the cases wherein Elwood S. Kendrick appears as counsel of record for plaintiffs. Further reference to this waiver as it affects any fee award to Mr. Kendrick will be hereinafter made. This award in no way affects the yet to be tried cases of Universal Wallboard v. National Gypsum Company, Civil Nos. 46756 and 71-1211, wherein plaintiff opted out of the settlement and from which, if successful, the Alioto firm should receive substantial attorneys' fees.
18. The aggregate of the fees received by Mr. Weir and his associates from his clients in the "dealer" cases was $517,410.
19. The services rendered were allocated to the respective classes in the following ratio: 12.6% to the Applicator Class and 87.4% to the First Owner-Builder Class.
20. Counsel represent more than 100 named plaintiffs with contingency contracts calling for fees ranging from 25 to 35% of the recoveries obtained (R.T. 332, hearing of Apr. 23, 1974.)
21. Illustrative of the states to which counsel fees have already been awarded are those represented by Mr. Lee A. Freeman, namely, Illinois, West Virginia, Indiana, Tennessee, Colorado and Nevada.
22. The laws of Oregon provide in part as follows:
ORS 180.095(3):
All sums of money received by the Department of Justice under a judgment, settlement or compromise, including damages, attorney fees, costs, disbursements and other recoveries, in actions and suits under the federal antitrust laws shall, upon receipt, be deposited with the State Treasurer. . . .
23. Since the attorneys' fees to be added to the recovery of the state of Kansas are based upon an hourly rate of $60, whereas its contract with Mr. Steineger calls for only $30 per hour, the state is free within its power and discretion to make any adjustment it deems fair in the premises.