USCA1 Opinion

July 7, 1995

UNITED STATES COURT OF APPEALS

FOR THE FIRST CIRCUIT

_________________________

Nos. 94-1156, 94-1164, 94-1409, 94-1414, 94-1422, 94-1423,

94-1426, 94-1427, 94-1430, 94-1438, 94-1439, 94-1440,
94-1442

IN RE:

THIRTEEN APPEALS ARISING OUT OF THE

SAN JUAN DUPONT PLAZA HOTEL FIRE LITIGATION.

_________________________

ERRATA SHEET

The opinion of this

Court issued May 31, 1995,

is ammended

as follows:

Delete cases #94-1430 and

and judgement

of May 31, 1995.

#94-1442 from the Court's opinion

UNITED STATES COURT OF APPEALS

FOR THE FIRST CIRCUIT

_________________________

Nos. 94-1156, 94-1164, 94-1409, 94-1414, 94-1422, 94-1423,

94-1426, 94-1427, 94-1438, 94-1439, 94-1440

IN RE:

THIRTEEN APPEALS ARISING OUT OF THE

SAN JUAN DUPONT PLAZA HOTEL FIRE LITIGATION.

_________________________

APPEALS FROM THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF PUERTO RICO

[Hon. Raymond L. Acosta, U.S. District Judge]

___________________

_________________________

Before

Selya, Circuit Judge,

_____________

Bownes, Senior Circuit Judge,

____________________

and Cyr, Circuit Judge.

_____________
_________________________

Judith Resnik,
______________

with

whom

Dennis E. Curtis,
_________________

Bieder, and Koskoff, Koskoff & Bieder, P.C., were on

______
________________________________

Richard A.
___________

brief, for

appellants Bieder, et al.

Jose E. Fernandez-Sein on brief for appellant Nachman.
______________________
Steven C. Lausell, with whom Jimenez, Graffam & Lausell
_________________
__________________________

was

on brief, for appellee Jimenez, Graffam & Lausell.

Will Kemp, with whom Stanley Chesley, Wendell Gauthier, John

_________
_______________ ________________ ____

Cummings, David Indiano and Harrison, Kemp & Jones, Chtd. were on
________ _____________
_____________________________
brief, for remaining appellees.

_________________________

May 31, 1995

_________________________

SELYA,
SELYA,

Circuit Judge.
Circuit Judge.
_____________

These appeals

require us

to

revisit the war zone where two groups of plaintiffs' lawyers have

struggled over the proposed

attorneys'

court's

fees.

One

latest formula

court's order on three

that the district

allocation of roughly $68,000,000 in

camp, dissatisfied

for distributing

fronts.

with

the fees,

the

attacks the

The disgruntled lawyers

court (1) violated

district

their due process

contend

rights,

(2)

used an

divided

the available

manner.

We

merit, but

the

improper method

to determine

monies in

find appellants'

the awards,

an arbitrary

first two

and (3)

and unreasonable

plaints to

be without

we agree with them that allocating 70% of the fees to

appellees

discretion.

constituted

And, because we

an

abuse

of

the

are reluctant to

that, like the proverbial cat, seems to have

trial

court's

prolong a matter

nine lives, we take

matters into our own hands and reconfigure the fee awards.

I.
I.

BACKGROUND
BACKGROUND

The lay of the land is familiar.

same

We

explored much the

terrain in an earlier encounter, see In re Nineteen Appeals

___ ______________________

Arising Out of San Juan Dupont Plaza Hotel Fire Litig., 982 F.2d
_______________________________________________________

603

(1st Cir. 1992), and

a plethora of

opinions describing the

details of

Federal

listing).

the underlying litigation

Reports, see,
___

e.g., id.
____ ___

pockmark the pages

at 605

n.1

of the

(offering partial

Thus, a brief overview of the litigation will suffice.

In 1987, the Judicial Panel on Multidistrict Litigation

consolidated

over

270

cases

arising

out

of

the

calamitous

conflagration that had ravaged the San Juan Dupont Plaza Hotel on

the evening of

December 31, 1986.

Dupont Plaza Hotel,

____________________

curiam).

handpicked

660

F. Supp.

The designated trial

certain

See In re Fire Disaster at

___ ________________________

982

(J.P.M.L.

judge, Hon.

attorneys, denominated

the

roles

played

by

the

Acosta,

collectively

as the

lead and liaison

In Nineteen Appeals, we
________________

PSC and

the

summarized

individually

plaintiffs' attorneys (IRPAs), respectively:

The PSC members looked after the big picture:

mapping the overarching discovery, trial, and
settlement

strategies

implementation

of

and coordinating

those

strategies.

the
The

IRPAs handled individual client communication

and

other

case-specific

answering

interrogatories

particular

plaintiffs,

attending the depositions

tasks

such

addressed
preparing
of their

(per

Raymond L.

Plaintiffs' Steering Committee (PSC), to act as

counsel for the plaintiffs.

1987)

as
to
and

clients,

retained

and taking depositions which bore on damages.

The IRPAs also worked with Judge Bechtle [the
"settlement judge"] on
in his

a case-by-case

efforts to identify

appropriate settlement
claims.
the

When

representative
facilitating

and/or negotiate

values for individual

Judge Acosta

plaintiffs

basis

determined that

should
claims

try

as

settlement,

twelve
means

of

collaborative

composed of three PSC members and

four IRPAs

bent their backs to the task.

Nineteen Appeals, 982 F.2d at 605.

________________

The

settlement

computed

combined

efforts

of

all concerned

fund approximating $220,000,000.

the

payments

agreements, deducted

due

under the

the total

(roughly

generated

The district court

various

contingent

fee

$68,000,000) from

the

overall settlement proceeds, and placed that sum in an attorneys'

fee

fund (the Fund).1

In his

initial attempt to

disburse the

Fund, Judge Acosta used an enhanced lodestar to compute the PSC's

fees,

members

and

awarded some

in their

$36,000,000 (52%

capacity as

distributed among the IRPAs.

exclusively, "non-PSC" IRPAs)2

of

such, leaving

the Fund)

to PSC

the balance

to be

A group of lawyers (mostly, but not

succeeded in vacating

this award

on the ground that the proceedings were procedurally flawed.

See
___

id. at 610-16.
___

The

district

victory proved

court

percentage of

abandoned

the

the fund (POF)

based on what it

augmenting

illusory.

On remand,

lodestar approach,

adopted

method, and recalculated

termed "the relative significance of

expended by the

or

to be

the

the

the fees

the labor

IRPAs and PSC members in instituting, advancing,

the plaintiffs'

settlement

fund."

Using

this

____________________

1In

addition to

attorneys' fees,

reimbursement of certain costs

considered
without

The district court

determination relative
that

prejudice

respect to costs.

aspect of
to

the

are seeking

and expenses from the plaintiffs'

share of the settlement proceeds.

make a final

the lawyers

to costs, and

the matter.
parties' claims

we have

Thus, our
and

has yet to

not

opinion is

objections

in

2Since each
or
the

PSC member is also an IRPA in the sense that he

she has been individually retained by one or more plaintiffs,

PSC

members

Nevertheless,

will

benefit certain

award is

in

both

capacities.

represents, a generous PSC award

PSC members

who have relatively

to disadvantage those who

See Nineteen Appeals, 982

___ ________________
PSC

payments

due to the wide disparity in the number of clients

that each PSC member

clients and

receive

even more

stands to

few individual

represent many claimants.

F.2d at 607.

Similarly,

detrimental to

an oversized

the interests

of those

IRPAs who are not members of the PSC, as each dollar that is paid
to the PSC shrinks the

pot that otherwise will be divided

the IRPAs.

See id.
___ ___

were

the lawyers

among

Due to
who

this phenomenon, some

fought

allocation.

to

among

PSC members

overturn the

original

methodology, the court awarded 70% of the Fund to PSC members

their capacity

as such,

fees

$11,000,000,

by

some

IRPAs' share

of the

thereby increasing
__________

Fund by

their share

while simultaneously

the

same amount.

of the

reducing
________

These

in

the

appeals

ensued.

II.
II.

ADEQUACY OF THE PROCEEDINGS

ADEQUACY OF THE PROCEEDINGS

In a virtual

Appeals,
_______

echo of the

appellants (all

of

claims advanced in

whom are

Nineteen
________

IRPAs) characterize

the

proceedings by which the district court determined the allocation

of

the Fund as unfair.

Specifically, appellants assert that the

revamped

procedural

framework

violated

their

rights

to

due

process, and that, in all events, the court abused its discretion

in

erecting

the framework.

We consider

these

assertions in

sequence.

A.
A.

Due Process.
Due Process.
___________

In Nineteen Appeals, 982 F.2d at

_________________

the

due

process considerations

aspect of this litigation.

implicated

610-16, we discussed

in

the fee-setting

We again use the triangular construct

of Mathews v. Eldridge, 424 U.S. 319 (1976), to determine whether

_______
________

the

district court

afforded the

IRPAs "the

opportunity to

heard `at a meaningful time and in a meaningful manner.'"

333 (quoting Armstrong v. Manzo, 380 U.S. 545, 553 (1965)).

_________
_____

be

Id. at
___

The first

"the

private interest

action . . . ."

useful

Mathews factor
_______

purpose.

that

Id. at 335.
___

will be

involves a

affected

specification of

by the

official

Rehashing this point would serve no

We conclude,

for

precisely the

same reasons

articulated in our earlier opinion, that the IRPAs have a salient

private interest in the fees due them for services rendered.

See
___

Nineteen Appeals, 982 F.2d at 612.

________________

The second

risk

Mathews factor
_______

examine the

of error presented by the district court's procedures.

Mathews, 424
_______

U.S. at 335.

The last

that the hearing format invited error.

F.2d at 612-13.

Appellants urge

on remand represented no real

intolerable

risk of error

refused

hold

to

discovery, or

an

time around

See
___

we determined

See Nineteen Appeals, 982

___ ________________

us to find that the proceedings

improvement and again presented an

this time because the district court

evidentiary hearing,

to permit cross-examination

conclude, for reasons

that

requires us to

to

allow

of PSC

free-form

members.

We

described more fully in Part II(B), infra,

_____

the format revisions cured

the infirmities that

led us to

invalidate the district court's earlier effort.

The third Mathews factor

_______

the

public

interest, including

burdens"

that

improved

Mathews,
_______

424 U.S.

necessitates an assessment of

"the fiscal

and administrative

procedural requirements

at 335.

Here,

too, past

would

entail.

is prologue:

we

studied this point in the course of the first appeal and remarked

the

"substantial

governmental

judicial resources."

recognized the

interest

in

conserving

Nineteen Appeals, 982 F.2d at 614.

________________

reasonableness of

keeping tight controls

scarce

We also

on the

fee dispute in light of the large number of lawyers involved, the

lengthy shelf life

admonition

that

of the

litigation, and

"[a] request

for

the Supreme

attorney's

Court's

fees should

not

result

in a second major litigation."

U.S. 424,

437 (1983).

This

Hensley v. Eckerhart, 461

_______
_________

important public

interest remains

intact.

To

significantly

the

IRPAs.

sum

up,

the

district court

moderating the restrictions

The court

levelled the playing

reformed

its

ways,

originally imposed on

field by permitting

the IRPAs to present their

their

litigation adversaries.

camps adequate notice

From

case in precisely the same

Moreover, the

employed

court gave

and a meaningful opportunity

procedural standpoint,

then,

the

manner as

both

to be heard.

adjudicative process

on remand met the test of fundamental fairness and gave

appellants the process that was due.

B.
B.

Abuse of Discretion.
Abuse of Discretion.
___________________

Appellants

strive

abused

his discretion

in

namely,

(1) denying

hearing

be

requests;

held;

and

examination.

(3)

to

convince us

authoring

appellants'

(2)

denying

denying

them

We are not persuaded.

Judge Acosta

three procedural

entreaty

the

that

bulk

the

that an

of

their

privilege

rulings,

evidentiary

discovery

of

cross-

1.
1.

over the

Lack of an Evidentiary Hearing.

Lack of an Evidentiary Hearing.
______________________________

supposed

hearing.3

error

district

in

court

refusing to

is

not

We need

not tarry

hold

an

evidentiary

obliged

to

convene

an

____________________

3The lower court did not make this decision casually.

reminding the protagonists of
of the

PSC

his "detailed first hand knowledge

proceedings," Judge Acosta observed

fact-finding
is

abandoned;

regarding the contemporaneous

unnecessary

because

After

the

lodestar

that "any meticulous

time records
method

has

of the

been

and both parties have been granted the opportunity to

file extensive

pleadings describing

their contributions

to the

evidentiary hearing as a means of resolving every attorneys'

dispute.

See Nineteen Appeals,

___ ________________

Great N. Nekoosa Corp.,

________________________

Because evidentiary

982 F.2d at

925 F.2d

518,

614; Weinberger v.
__________

528 (1st

hearings in fee disputes

fee

Cir.

1991).

are not mandatory,

the decision not to convene one is

reviewed deferentially, using

an

See
___

abuse-of-discretion standard.

527.

In conducting

that

review,

woodenly apply a preconceived matrix.

watchword.

range

of

fundamental

Weinberger, 925
__________

appellate tribunals

fairness to the

cannot

Rather, flexibility is the

Because a district court has available to it

procedures" through

F.2d at

which it

can

a "wide

"bring a

sense of

fee-determination hearing

while at

the

same

time

Appeals,
_______

982

discretion.

husbanding

F.2d

at

the

614,

Therefore,

court's

resources,"

flexibility

implies

when

the

court

Nineteen
________

substantial

chooses

among

the

available options, it can mix and match.

This

evidentiary

such hearings.

894 (1st

fee disputes, we

See, e.g.,
___ ____

Cir.

adequately be `heard'

approach"

evidentiary

flexibility

hearing is requested.

inviting than

890,

emphasis on

is

heightened when

papers").

We

whether, in a

required.

about mandating

Mobil Oil Corp.,

_______________

that

Id.
___

an

situations far more

have been chary

1988) (observing

to the question of

hearing

Even in

Aoude v.
_____

on the

is

862 F.2d

matters often

favor a

"can

"pragmatic

given situation, an

at

893.

The

key

____________________

litigation process."
the

fee

regarding

He

controversy

also stated that, "for the

presented "no

material

most part,"

factual

disputes

the tasks undertaken by the PSC as contrasted to those

undertaken by the IRPAs."

determinant is

the case

whether, "given

. . . the

relevant facts and

the nature and

parties [had] a fair

arguments to

circumstances of

opportunity to present

the court, and

to counter

the

opponents'

submissions."

Id. at
___

894.

Taking

this approach in

Aoude, we upheld the issuance of a preliminary injunction without

_____

an evidentiary

hearing, noting, inter

_____

"obviously familiar" with the facts and

alia, that the

____

had afforded the parties

several opportunities to make written submissions.

The Aoude model can readily

_____

hearings

anent

survive the

inside

attorneys'

fees.

resultant comparison.

and out.

He

Appellants'

Judge

gave the protagonists

protest

Acosta knew

cannot

the case

ample opportunity to

and legal arguments.

restrictions

submissions, permitting

written

Id.
___

be adapted to requests for

present both factual data

on

judge was

He set no

the

page

IRPAs to

proffer thousands of pages of documents both in opposition to the

PSC's requisitions and

in support

of their

own fee

requests.4

These filings

allowed the

IRPAs to go

into painstaking

detail

both as to their own contribution to the litigation and as to the

reasons why the PSC members deserved a relatively modest slice of

____________________

4To
that,

give the

on remand, the

1993, included a
expenses (110
the IRPAs'
his

what transpired,

IRPAs' initial submission,

pages, with a

40-page appendix), an

accountant, William Torres, detailing

analysis of

we note

filed June 10,

the PSC's claims

an overview

affidavit by

the results of

(approximately 650

of the efforts

pages), a

and contributions

by the IRPAs (33 pages), and individual IRPA assessments of

efforts

and

contributions

(approximately 2700 pages).

PSC's

taste of

memorandum of law regarding attorneys' fees and

memorandum giving
made

reader a

main submission,

made

on

behalf

of

The IRPAs also filed a reply

again

unhampered by

that totalled approximately 430 pages.

10

clients

to the

page restrictions,

the pie for their services in that capacity.

To be

fact,

court.

live

sure, this

in and of itself,

Matters

testimony.

is a

high-stakes dispute,

does not warrant

of great consequence

See,
___

evidentiary

hearing

application

for

DeCologero,
__________

821 F.2d

e.g., id.
____ ___

is

not

preliminary

39, 44

893-94 (holding

obligatory

injunction);

(1st

handcuffing the trial

are often decided

at

but that

in

respect

without

that

an

to

an

United States
______________

Cir. 1987)

v.

(same, regarding

criminal defendant's motion to reduce his sentence); Amanullah v.

_________

Nelson, 811 F.2d 1, 16-17 (1st Cir. 1987) (same, regarding habeas
______

review

of

asylum

proceedings).

at

stake,

applicant's

detention

during

exclusion

In the last analysis, what counts is not the prize

but

whether

particular

parties

fundamentally fair chance to present [their] side

received

"a

of the story."

Nineteen Appeals, 982 F.2d at 611.

________________

The controlling legal principle,

to a

then, is that parties

fee dispute do not have the right to an evidentiary hearing

on demand.

When the written record affords an adequate basis for

a reasoned determination

discretion

pellucid

may

that

forgo

the

of the

an

fee dispute, the

evidentiary hearing.

litigants'

extensive

written

court in

Here,

it

its

is

submissions

comprised

an

effective

substitute

particularly since the judge had

the

for

such

another

the court

hearing.

did not

See, e.g.,
___ ____

hearing

lived with the litigation

start and had an encyclopedic knowledge

circumstances,

err in

of it.

from

Under these

refusing to

hold yet

Norman v. Housing Auth., 836 F.2d

______
______________

11

1292,

1303 (11th

Cir.

1988) (upholding

propriety of

awarding

attorneys' fees

affidavits in

1171

not

without an evidentiary hearing

the record"); Bailey

______

(6th Cir. 1985) (explaining

required so

long

meaningful review);

as the

convene

"documentation

1979)

675 F.2d

hearing

accompanying

appropriate discovery

for

. . .

an award"); Konczak
_______

(indicating

777 F.2d

1167,

that an evidentiary hearing is

record

district court

fee

v. Heckler,
_______

is sufficient

to

permit

National Ass'n of Concerned Veterans

________________________________________

Secretary of Defense,
______________________

(holding that

"based solely on

1319,

1330

may in its

where

the

(D.C. Cir.

fee

application

provides an adequate

v. Tyrrell, 603
_______

that "depth

of

1982)

discretion decline

information

generated

and

to

by

through

factual basis

F.2d 13, 19

the briefing"

v.

can

(7th Cir.

render a

hearing on fees unnecessary), cert. denied, 444 U.S. 1016 (1980);

_____ ______

see also
___ ____

DeJesus
_______

v. Banco Popular de P.R., 951

_____________________

(finding no

error in

counsel fees absent

lack of an

F.2d 3, 7 (1st Cir. 1992)

evidentiary hearing

some "special

issue as to

regarding

which the

court

needed the assistance of counsel or witnesses").

2.
2.

Restrictions on Discovery.
Restrictions on Discovery.
_________________________

Apart from the refusal

to convene

a full-scale

hearing, appellants also

complain that

the

demonstrated

too

to

court

initiatives.

necessary

But

or even

unlimited

a usual

great

an

aversion

adversarial discovery

concomitant

National Ass'n of Concerned Veterans, 675

_____________________________________

discovery

is

not

of fee disputes,

F.2d at 1329

see
___

(noting

that,

in general, fee contests

should not involve

"the type of

12

searching discovery that

is typical where

issues on the

merits

are presented"), and, in the circumstances of this case, we think

that the court acted

well within the province of

its discretion

in refusing to allow more elaborate discovery.

The Due

Process Clause does

not require

freewheeling

adversarial discovery as standard equipment in fee contests.

See
___

Nineteen Appeals, 982

________________

F.2d at

the

wisdom of

The district

the rule.

discovery,

and

the

procedures

especially the compelled

the need for

material

PSC's

the

This

case exemplifies

court did not

that

exchange of

additional discovery

the

shut off

court

employed

documentation

by giving the

all

minimized

IRPAs the

raw

that they needed to sift through the particulars of the

fee application.

IRPAs had

formulate

614.

their

time-and-expense

access to

In

other words, the

all the

objections,5

submissions,

court ensured that

data reasonably

including all

summaries

the

necessary to

PSC

thereof,

members'

detailed

accounts of the procedures used by the PSC to gather, review, and

audit time

records, and the working

papers, correspondence, and

documentation

compilation

generated

process.

by

the

With this

PSC's

accountants

banquet of

during the

information spread

before them, appellants then partook of the court's liberality in

allowing them to formulate extensive written submissions.

Furthermore,

the

court

below

also had

right

to

____________________

5The proof

of the

initial submission
objections to

to

pudding is
the district

the PSC's fee

rejoinder, the IRPAs' reply

in the

record.

court highlighted

request, and,

13

specific

following the

took precise aim at the

the supporting materials.

The IRPAs'

PSC's

accuracy of

consider the

extent to

which appellants' request

threatened to multiply

into

litigation

characterized the

inter
_____

the proceedings and turn

of

mammoth

IRPAs'

members' firms

and

vacations,

maternity

programs)

as

details

leaves,

It

is

Judge

which

anent

and

fringe

the

surpassingly

of all PSC

benefits

provision

difficult

Acosta

encompassed,

returns for employees

"a discovery scheme of needless

proportions."

the fee dispute

proportions.

discovery foray

alia, production of tax

____

for discovery

(including

of

training

and unreasonable

to

fault

this

characterization.

The sweeping

nature

of appellants'

request,

coupled

with

the fact that

from the lodestar

the focus of

and toward a

lawyers' participation

district

court's fears

would have

started the

the hearings had

task-oriented assessment of

in the litigation, give

that

parties on

the road

can demonstrate

neither

On

the

substance to the

granting appellants'

time-consuming "satellite litigation."

appellants

shifted away

to a

supplication

wasteful and

this ramified record,

a high

level

of need

for

incremental discovery nor preponderant equities in favor of their

request.

of

Hence, we

further

cannot say that the district

discovery

considerable discretion.

constituted

See,
___

an

of

the

court's

e.g., National Ass'n of Concerned

____ ___________________________

Veterans, 675 F.2d at 1329 (holding that

________

substantial

abuse

court's denial

district court "retains

discretion based on its view of the submissions as a

whole" to limit further discovery).

3.
3.

Lack of Cross-Examination.
Lack of Cross-Examination.
_________________________

As a

subset of their

14

claims regarding

hearing

the supposed necessity for

and additional

discovery, appellants

both an evidentiary

contend that

district court should have allowed them to cross-examine

the

the PSC

members

concerning

the

hours

that

they

contribution to the creation of the Fund.

door

attempt

to

rekindle

and

their

This is merely a back-

an extinguished

appellants' thwarted desire for

logged

flame

and

satisfy

either an evidentiary hearing or

extensive depositions.

In

Chongris v.
________

Board of Appeals,
_________________

Cir.), cert. denied, 483 U.S. 1021

_____ ______

context

of an administrative

did not work a violation of due

it is here.

conclude

its

in

liberal

conjunction

documentation, obviated

F.2d 36

(1987), we held that, in

(1st

the

hearing, lack of cross-examination

process.

See id. at 41-42.

___ ___

Moreover, because the lower court

that

submissions,

811

policy

with

with

the

could reasonably

regard

IRPAs'

the need for further

So

to

access

written

to

PSC

probing via cross-

examination, pretermitting cross-questioning

an abuse

of discretion.

905 n.57 (D.C.

is

did not

constitute

Cf. Copeland v. Marshall, 641 F.2d 880,

___ ________
________

Cir. 1980) (en banc) (noting that

a live hearing

not necessary if "the adversary papers filed by plaintiff and

defendant . . . adequately illuminate the factual predicate for a

reasonable fee").

Appellants' attempt

to anchor

their claimed

right to

cross-question PSC members on language excerpted from our earlier

opinion, see, e.g.,

___ ____

them

adrift.

We

Nineteen Appeals,
________________

flatly

reject

15

the

982 F.2d

at 615,

suggestion, noting

leaves

that

appellants, to their discredit, have pieced the argument together

by

cutting

words

loose

moorings, and ignoring

from

their

logical

and

contextual

limiting language that contradicts

their

interpretation.

The

in

refusing

permit

more

examination.

mold

or

bottom line is that the district court did not err

to convene

an

wide-ranging

evidentiary

hearing, declining

discovery,

and

barring

to

cross-

Thus, whether the issue is cast in a constitutional

considered

under

an

abuse-of-discretion

rubric,

appellants'

challenge

fails.

Either

way,

the

adjudicative

process employed on remand passes muster.

III.
III.

APPROPRIATENESS OF THE METHODOLOGY

APPROPRIATENESS OF THE METHODOLOGY

Appellants

matter

of law

lodestar

whether

in

claim that

embracing the

method, during

the district

district

POF

method, rather

the fee-setting

court

may

use

court erred

pavane.

given

The

than

as a

the

issue of

methodology

in

structuring an award of attorneys' fees is one of law, and, thus,

is

subject to

de novo
__ ____

review.

See Liberty Mut. Ins. Co. v.

___ _______________________

Commercial Union Ins. Co., 978 F.2d 750, 757 (1st Cir. 1992).
_________________________

A.
A.

few

Historical Perspective.
Historical Perspective.
______________________

introductory

comments

may

lend

sense

of

perspective.

the

Traditionally, under

what has come to be

known as

"American Rule," litigants bear their own counsel fees.

See
___

Alyeska Pipeline Serv. Co. v. Wilderness Soc'y, 421 U.S. 240, 245
__________________________
________________

(1975).

This rule

statutes

comprise one

is

not without

category of

exceptions.

exceptions.

Fee-shifting

See,
___

e.g., 42
____

16

U.S.C.

1988, 2000e-5(k).

So, too, certain equitable doctrines

furnish

a basis

for

departing from

the

American Rule.

See
___

Nineteen Appeals, 982 F.2d at 606.

________________

When

statutory

exceptions pertain,

we

have directed

district courts, for the most part,

to compute fees by using the

time-and-rate-based lodestar method.

See, e.g., United States v.

___ ____ _____________

Metropolitan Dist. Comm'n, 847 F.2d 12, 15 (1st Cir. 1988); Segal
_________________________
_____

v. Gilbert Color Sys., Inc., 746

________________________

see also
___ ____

City of Burlington
___________________

F.2d 78, 85-86 (1st Cir. 1984);

v. Dague,
_____

(1992) (acknowledging, in the statutory

strong

fee")

presumption that the

112 S.

the

lodestar

lodestar represents

by determining

2641

fee-shifting context, "a

(citation and internal quotation marks

arrives at

Ct. 2638,

the

the reasonable

omitted).

number

A court

of

hours

productively spent on the

litigation and multiplying those hours

by reasonable hourly rates.

896-902

See Blum v. Stenson,

___ ____
_______

465 U.S. 886,

(1984); Hensley, 461 U.S. at 433; Lipsett v. Blanco, 975

_______
_______
______

F.2d 934, 937 (1st Cir. 1992).

Although

the

statutory fee-shifting

looked

elsewhere

in

lodestar

method

"common

fund" cases

a whole."

category

v.

that

recovers a

other than himself or his

a reasonable attorney's fee from

Boeing Co.
__________

the

of courts have

"a litigant or lawyer who

common fund for the benefit of persons

as

entrenched in

context, a growing number

encompasses cases in which

client is entitled to

is

Van Gemert,
__________

444

the fund

U.S. 472,

478

17

(1980).6

The

approach to

method

fee-setting.

name implies:

determines

POF

This

the court shapes

represents

such

alternative

method functions exactly

as the

the counsel fee based on what it

is a reasonable percentage

those benefitted by the

one

litigation.

of the fund recovered for

See, e.g., Camden I Condo.

___ ____ ________________

Ass'n, Inc. v. Dunkle, 946 F.2d 768, 771 (11th Cir. 1991).
___________
______

Contrary to popular belief,

not the POF

method, that breaks from precedent.

counsel fees in common

of

the

it is the lodestar method,

fund,

reasonableness.

Traditionally,

fund cases were computed as

subject,

of

course,

to

a percentage

considerations

of

See, e.g., Central R.R. & Banking Co. v. Pettus,

___ ____ __________________________
______

113 U.S. 116, 127-28 (1885).

It was not until the mid-1970s that

judicial infatuation with the

lodestar method started to spread.

See Swedish Hosp. Corp. v. Shalala, 1 F.3d

___ ___________________
_______

1993) (chronicling

the new approach,

Copeland,
________

history of the debate).

and a wall

641 F.2d at 890-91;

of cases soon

1261, 1266 (D.C. Cir.

Many courts embraced

arose.

Furtado v. Bishop,
_______
______

See,
___

e.g.,
____

635 F.2d 915,

919-20

F.2d

(1st Cir. 1980); City of Detroit v.

________________

Grinnell Corp., 560

______________

1093, 1098 (2d Cir. 1977); Grunin v. International House of

______
______________________

Pancakes,
________

513 F.2d 114, 128

864 (1975);

(8th Cir.), cert.

_____

Lindy Bros. Builders, Inc. v.

___________________________

denied, 423 U.S.

______

American Radiator &

____________________

____________________

6The
principle
share

common

fund

that those

its costs.

doctrine
who have

While

is founded
profited from

class actions furnish

ground for the doctrine, its reach

See
___

Sprague
_______

the

equitable

litigation should

the most fertile

is not limited to such cases.

v. Ticonic Nat'l Bank,

___________________

(holding that "the

on

307

U.S. 161,

absence of an avowed class suit

167 (1939)

. . . hardly

touch[es] the power of equity in doing justice as between a party

and the beneficiaries of his litigation").

18

Standard Sanitary Corp., 487 F.2d 161 (3d Cir. 1973).

_______________________

A crack in the

Court

wall appeared in 1984 when

took pains to distinguish the

the Supreme

calculation of counsel fees

under fee-shifting statutes from

the calculation of counsel fees

under the common fund

The court described

doctrine.

group as comprising cases in which "a reasonable fee

a percentage of the fund bestowed on the class."

at 900 n.16.

the latter

is based on

Blum, 465 U.S.

____

Since Blum involved the application of the lodestar

____

under a fee-shifting statute, footnote 16 is dictum.

Yet, it can

hardly be dismissed as a slip

emanating from

See
___

the High

Dedham Water Co. v.

________________

of the pen, and considered

Court carries great

dictum

persuasive force.7

Cumberland Farms Dairy, Inc., 972 F.2d

_____________________________

453, 459 (1st Cir. 1992) (stating general rule that courts should

give "considerable weight" to

opposed to casual"); McCoy

_____

dictum that appears "considered as

v. Massachusetts Inst. of Technology,

_________________________________

950 F.2d 13, 19 (1st Cir. 1991) (same), cert. denied,

_____ ______

112 S. Ct.

1939 (1992).

Hard on

which

had been

the heels of

in

footnote 16, the

the forefront

of

Third Circuit,

the movement

toward

the

lodestar method, see, e.g., Lindy Bros., supra, sounded a note of

___ ____ ___________ _____

caution.

Its

blue-ribbon

task

force,

although

recommending

continued use of the lodestar technique in statutory fee-shifting

____________________

7For this
have

cited

reason, we find it unsurprising that other courts

footnote

16

as

evidence

"approval of the lodestar method in

that

the

Blum
____

the fee-shifting context was

not intended to overrule prior common fund cases. . . ."

Hosp.,
_____

Court's

Swedish
_______

1 F.3d at 1268; see also Brown v. Phillips Petroleum Co.,

___ ____ _____
______________________

838 F.2d 451, 454 (10th Cir.), cert. denied, 488 U.S. 822 (1988).
_____ ______

19

cases,

be

concluded that all fee awards in common fund cases should

structured as a

percentage of the

fund.

See
___

Report of the

Third Circuit Task Force, Court Awarded Attorney Fees, 108 F.R.D.
___________________________

237, 255 (1985) (hereinafter "Third Circuit Report").

Together, footnote 16 and

to a

the Third Circuit Report led

thoroughgoing reexamination of the suitability of using the

lodestar method in

common fund

cases.

turn, led to more frequent application

cases.

This reexamination,

in

of the POF method in such

See Federal Judicial Center, Awarding Attorneys' Fees and

___
____________________________

Managing Fee Litigation

_______________________

63-64 (1994) (hereinafter "FJC

(canvassing

Today, the D.C. Circuit and the Eleventh

case law).

Circuit require the

use of the POF method

Report")

in common fund cases,

see Swedish Hosp., 1 F.3d at 1271; Camden I, 946 F.2d at 774, and
___ _____________
________

four other circuits confer discretion upon the

district court to

choose between the lodestar and POF methods in common fund cases,

see In re Washington Pub. Power Supply Sys. Sec. Litig., 19 F.3d

___ ____________________________________________________

1291, 1295 (9th Cir.

1994); Rawlings v. Prudential-Bache Props.,

________
________________________

Inc., 9 F.3d 513, 516 (6th Cir. 1993); Harman v. Lymphomed, Inc.,
____
______
_______________

945

F.2d 969, 975 (7th

Co., 838 F.2d

___

(1988).

We

Cir. 1991); Brown

_____

451, 454 (10th

have yet

to pass

v. Phillips Petroleum
__________________

Cir.), cert. denied, 488

_____ ______

upon the

legitimacy of

U.S. 822

the POF

method in common fund cases.8

____________________

8Of course, we alluded to the trend in Weinberger, stating:

__________

We

are aware

some

courts,

of the

tendency

particularly

in

exhibited by
common

fund

cases, to jettison the lodestar in favor of a

`reasonable

percent

of the

fund' approach.

Because the

absence of any true

common fund

20

B.
B.

We

case.9

Computing Fees in Common Fund Cases.

Computing Fees in Common Fund Cases.
___________________________________

have previously

Appellants do not

classified this

dispute this

as a

common fund

taxonomy, but,

rather,

they

insist

that Judge

Acosta erred

in

using the

POF method

because the lodestar technique should hold sway in all attorneys'

___

fee

determinations.10

Though

appellants

concede

that

this

____________________

renders
here,

the

percentage approach

we cannot

implied

fault the

premise that

the

inapposite

district court's
lodestar

is

the

soundest available alternative.

Weinberger,
__________
statement

925
has

F.2d at
been

526

n.10 (citations

interpreted as

conferring

district courts to use the POF method

e.g., Wells v.
____ _____

omitted).

This

discretion upon

in common fund cases, see,

___

Dartmouth Bancorp, Inc., 813 F.

________________________

Supp. 126,

(D.N.H. 1993), and, in some quarters, as indicating

129

a preference

for the use of that method, see, e.g., FJC Report, supra, at 64 &
___ ____
_____
n.305.

9We reached

this conclusion because the

Fund emanates from

"the disproportionate strivings of a few (the PSC members) to the

benefit

of

much

larger

number

(the

plaintiffs

and,

derivatively, the IRPAs)," Nineteen Appeals, 982 F.2d at 610, and

________________

possesses

each

of

the

three

distinguishing

characteristics

identified by the Boeing Court:

______

First,

the

beneficiaries

can

determined with complete assurance.

while the

extent

to which

plaintiff and each

PSC's

efforts

mathematical

Second,
individual

IRPA benefitted from

cannot

be

precision,

study the PSC's

each

the

quantified
it

be

with

is possible

contribution to the

to

overall

success of the litigation and approximate the

incremental
Finally,
Fund],

benefits

the
and,

with

district

some

court controls

therefore, possesses

ability to prorate the

accuracy.
[the

the ready

cost of achieving the

incremental benefits in an equitable manner.

Id. (citing Boeing, 444 U.S. at 478-79).

___
______

10In
display
that

a sermon
of newfound

Judge Acosta's

that

is difficult

to

reconcile with

this

religion, appellants

preach intermittently

initial suggestion

that

21

the

PSC's fees

court

has not

yet

appropriately may

that

decided

what

be invoked in

the lodestar is

method(s) of

fee

common fund cases,

a far better alternative

allocation

they assert

and that its use

should be mandated in this circuit.

We think

Thus, we hold

the exercise

fees either

that a more malleable

approach is indicated.

that in a common fund case

the district court, in

of its

informed discretion, may

calculate counsel

on a percentage of the fund basis or by fashioning a

lodestar.

use

Our decision is

of the

POF method

praxis and by

driven both by

in common

the distinct

our recognition that

fund cases is

advantages that the

the prevailing

POF method

can

bring to bear in such cases.

In

large, tend

complex litigation

to

be complex

and

the POF

burdensome to administer than

Hosp.,
_____

1 F.3d at 1269

scarce

judicial resources").

common fund cases, by and

approach is

the lodestar method.

(finding POF approach

often

See
___

Rather than forcing

the judge to

a multitude of attorneys in

determine

and

necessity

Swedish
_______

"less demanding of

review the time records of

the

less

reasonableness

of

order to

every

hour

expended, the POF method permits the judge to focus on "a showing

that

the fund conferring a

benefit on the

class resulted from"

the lawyers' efforts.

Camden I, 946 F.2d at 774.

________

While the time

____________________

would

probably be

probably

aggregate "less

enforced by us.
not

bind

computed

the

than 10%"

court to

POF
should

We have already ruled

the district

Appeals, 982 F.2d

_______

using

and

be enshrined

would

and

that this suggestion "did

ten percent

at 612, and appellants have

that prompts us to revisit this ruling.

22

method

cap," Nineteen
________

proffered nothing

logged is still relevant to the court's inquiry

POF method, time

records tend to illuminate

in

of

the creation

inquiry into

the fund,

the reasonableness

and,

even under

the

the attorneys' role

thus, inform

of a particular

the

court's

percentage11

the shift in focus lessens the possibility of collateral disputes

that

might transform

the

fee proceeding

into

a second

major

litigation.

For another

fund

thing, using

the POF method

in a

common

case enhances efficiency, or, put in the reverse, using the

lodestar method in

such a case

encourages inefficiency.

Under

the latter approach, attorneys not only have a monetary incentive

to spend as

face a

many hours as possible (and bill

strong

disincentive

to early

for them) but also

settlement.

See
___

Third

Circuit

Report, 108 F.R.D.

fund cases,

excessive

POF

(finding that,

the lodestar method "encourag[es]

hours"

settlement of

the

at 247-48

and

"creates

method

is

lawyers to expend

a disincentive

cases"); see also

___ ____

in common

for

the

FJC Report, supra, at

_____

utilized, a

lawyer

is

still

early

310.

If

free to

be

inefficient

or to drag her feet in pursuing settlement options

but, rather

than being rewarded for

this unproductive behavior,

she will likely reduce her own return on hours expended.

Another

technique is

point

is

result-oriented

worth

making:

rather than

because

the

process-oriented,

POF

it

____________________

11For this reason,

given case may

and because

eschew the POF

method, we urge attorneys

the district

method in favor

court in

of the

any

lodestar

to keep detailed, contemporaneous time

records in common fund cases.

23

better approximates the

that

Judge Posner

workings of the

captured the

essence of

wrote that "the market in fact pays not

but for

the ensemble

character."

572 (7th

marketplace.

of services

this point

In fine, the

think

when he

for the individual hours

rendered

in a

In re Continental Ill. Sec. Litig.,

___________________________________

Cir. 1992).

We

case of

this

962 F.2d 566,

market pays for

the result

achieved.

Let us be perfectly clear.

POF

approach

is

foolproof,

disadvantages.

overcompensation

resolved

resources.

904

F.2d

before

See
___

For

of

lawyers

counsel

in

has

it

1301, 1311

(9th Cir.

suffers

may

result

invested

from

in

the

where actions

significant

no

time

are

or

v. Arizona Citrus Growers,

_______________________

1990)

(counselling use

the POF method when "the

would be either too small or

Third Circuit Report,

it

situations

Six Mexican Workers

___________________

hours devoted to the

within the

that

example,

lodestar method rather than

recovery

or

We do not pretend that the

percentage

too large in light of the

case or other relevant factors");

108 F.R.D. at 242

of the

see also
___ ____

(noting "criticism from

profession" that fees under the

POF method sometimes

are

"disproportionate

attorneys").

The

commit needed

those

the

relatively

method

See
___

public

small.

efforts

resources to

benefit,

It can

may lend itself to

generally
_________

actual

converse is also true;

willing to

for

to

if

also be

expended

law firms may

the

likely

argued that

Washington Pub. Power,

_______________________

19

F.3d

the

be less

common fund cases,

arbitrary fee awards

24

by

recovery

even

is

the percentage

by some courts.

at

1294

n.2

(counselling that, to avoid arbitrary fee awards, neither the POF

nor

the lodestar

method "should

mechanical fashion"); cf. Laffey

___ ______

F.2d 4,

of

method

characteristic

methods),

cert.
_____

to

of court

denied,
______

formulaic or

(attributing widespread adoption

desire

to

awards of

472

in a

v. Northwest Airlines Inc., 746

_______________________

12-13 (D.C. Cir. 1984)

lodestar

be applied

reduce

"arbitrariness

attorneys fees"

U.S.

1021

under other

(1985).

Given

the

peculiarities of common fund cases and the fact that each method,

in

its own

approach

way, offers

we believe

the

of choice is to accord the district court discretion to

use whichever method,

case.

particular advantages,

We

so

POF or lodestar, best

hold, recognizing

that

fits the individual

the discretion

we

have

described

methods

F.2d

at

may, at

times, involve

when appropriate.

Cf.
___

15 (advocating

flexible

awards because an overly

using a

combination

of both

Metropolitan Dist. Comm'n, 847

__________________________

approach

to determining

fee

mechanical rule "sacrifice[s] substance

on the altar of form").

In

arriving at this

suggestion that Dague,

_____

of

a case in which the Court

barred the use

contingency enhancements in respect to fee-shifting statutes,

compels a different conclusion.

that

decision, we reject appellants'

Although the Dague

_____

"[t]he `lodestar' figure has,

Court stated

as its name suggests, become

the guiding light of our fee-shifting jurisprudence,"

at

2641,

and

contingent-fee

remarked that

model

which

it

had

would

"generally"

make

the

112 S. Ct.

abjured "the

fee

award

percentage

of the

value of

the relief

awarded in

the primary

25

action

[in

(citations,

favor

footnotes, and

statements were made in

fee-shifting

of]

cases.

the

lodestar

model,"

internal quotations

id.
___

Court's

reasoning

2643

omitted), these

the course of a discussion

The

at

of statutory

reflected

this

environment;

the

opinion

stressed

the

limiting

effects

of

statutory language in fee-shifting cases, see id., and set out "a
___ ___

number of reasons for

concluding that no contingency enhancement

is compatible with the fee shifting statutes at issue," id.

___

case,

unlike

Dague,
_____

involves

statutory fee-shifting

not

scheme.

require abandonment

common

fund cases, it is

Hosp., 1 F.3d at
_____

of

common

fund

rather

Since Dague, fairly

_____

the POF

method

than

read, does

typically used

not controlling here.

This

in

Accord Swedish
______ _______

1267-70 (concluding that Dague does not bar use

_____

of the POF method in common fund cases).

C.
C.

Applying the Rule.

Applying the Rule.
_________________

Having placed our imprimatur on a decisional model that

maximizes flexibility, we

and turn next to the order

rule that

fees

based

"relative

first

under review.

the court below did

on

the

POF

contribution" to

place, Judge

compensate the

supra
_____

move from the general to

PSC

note 10.

In this connection, we

not err in purposing

method,

emphasizing

the creation

Acosta had

the specific

of the

the

a percentage

attorneys'

Fund.

originally stated

members under

to allocate

an

In the

intent to

approach.

See
___

In "justifiable reliance" on this statement, see

___

Nineteen Appeals, 982 F.2d at 614 n.19, the majority of the IRPAs
________________

did

not maintain

time records.

The difficulties

26

inherent in

implementing the

favor

have

lodestar under these circumstances

of sticking to the POF method.

explained

structural

advantages in

administration,

marketplace.

above,

the

POF

Finally,

In the second place, as we

approach

common fund

efficiency, and

offers

significant

cases, including

close approximation

a further case-specific

against using the lodestar here.

militate in

ease of

of

the

factor counsels

Unlike the prototypical common

fund case, this case involves a subdivision of a fee fund amassed

___________

by the operation of

sundry contractually determined percentages.

Thus, using the POF

method to effectuate the subdivision

Fund

brings a

process.

sort of

elemental symmetry

to

of the

the fee-setting

Relatedly, because this case calls for a subdivision of

a fee fund,

rather than a

unitary award of

fees, "a trier

who

attempted punctiliously to follow

the classic lodestar

formula,

to

could

wind

the exclusion

of

all

else,

awarding the entire fee pool to

IRPAs."

Id.
___

at 614

n.20.

theoretically

up

the PSC, leaving nothing for the

Use

of the POF

method negates

any

possibility of this totally indefensible result.

IV.
IV.

APPROPRIATENESS OF THE ALLOCATION

APPROPRIATENESS OF THE ALLOCATION

In allocating counsel fees, the district court assigned

70%

of the Fund

to the PSC,

leaving 30% to be

split among the

IRPAs.12

Appellants object.

We review

this

allocation for

abuse of discretion, see, e.g., Foley v. City of Lowell, 948 F.2d

___ ____ _____
______________

10,

18 (1st Cir. 1991), mindful that,

in respect to fee awards,

____________________

12The

PSC members

will, of

course,

latter portion of the award as well.

share ratably

in the

See supra note 2.

___ _____

27

the

trial court's

latitude is

"extremely broad,"

Lipsett, 975

_______

F.2d at

this

937.

case,

weighing

After scrutinizing

we

are convinced

the Brobdingnagian

that

the

and synthesizing the factors

court

record in

below erred

in

relevant to a division of

the fees, and in settling upon so lopsided a split.

A.
A.

In

praise

Cutting the Pie.

Cutting the Pie.
_______________

the proceedings

on remand,

Judge

Acosta lavished

on all the plaintiffs' lawyers, lauding the "high caliber

legal representation" provided by both the PSC and the IRPAs.

He

then summarized the tasks undertaken by the two sets of attorneys

in the

most

course of the litigation.

significant

comprehensive

In the judge's view, the PSC's

accomplishments

on-site investigation

included

(1)

performing

of the accident

scene, (2)

"identif[ying] the

products

and

liability

manufacturers

services

against

each

pleadings, including the

several pretrial

motions

. .

and suppliers

and

develop[ing]

opponent,"

(3)

on numerous

(4) filing

topics,

. .

theories

drafting

master complaint,

memoranda,

of many

of

plethoric

weekly agendas,

"literally hundreds

including many

novel

and

of

and

creative issues," (5) orchestrating extensive pretrial discovery,

(6) conducting the nine-week Phase I trial and

Phase

II

witnesses

trial (in

and offered

the

course

1,455

of which

exhibits),

pursu[ing] settlement negotiations."

The

the fifteen-month

the

and (7)

PSC

called 313

"aggressively

court visualized

the

IRPAs' main accomplishments as comprising (1)

maintaining direct

client

and

communication,

counselling

clients,

keeping

them

28

abreast of

developments in the litigation, (2)

carrying out the

factual investigation incident to individual cases, with especial

emphasis on issues pertaining

including

physicians, economists, and

experts had

damages,

standing,

to damages, (3) retaining experts,

been located,

(4)

researching

assumption

of

actuaries, and,

collaborating with them

client-specific legal

risk),

(5)

once the

to establish

issues

representing

(e.g.,
____

individual

plaintiffs

in

connection

with

probate, inheritance, insurance,

(6)

ancillary

matters,

including

and domestic relations matters,

meeting with Judge Bechtle "as part of the settlement scheme

to negotiate

settlement values for [individual]

assisting

clients

decisions

about

settlements).

in

reaching

whether

accept

decisions

or

(including

reject

proffered

Moreover, certain selected plaintiffs were used as

exemplars for purposes of

represented

to

informed

cases," and (7)

the Phase II trial, and

those plaintiffs

actually

the IRPAs who

presented

the

evidence

pertaining to their clients' damages.

Having

then

tabulated

made these ledger

the

columns.

compensation for the work

It

entries, the

concluded

district court

that

"reasonable

undertaken requires recognition of the

massive undertaking of the PSC in terms of the organizational and

financial

requirements,

performed,

the significant

complex and novel issues

."

the

overwhelming

time constraints,

amount

of

and the

numerous

addressed during the proceedings .

work

. .

Contrasting this workload "with the IRPAs' efforts in client

communication and counseling, client preparation

29

for settlement,

and

handling of the damages

70% of the

issues," the court

fee due under each

awarded the PSC

individual contingency agreement,

thus permitting each IRPA to retain only 30%

of the fee promised

by the client.

B.
B.

Evaluating the Court's Handiwork.

Evaluating the Court's Handiwork.
________________________________

We are uneasy with the way in which the lower court cut

the fee pie, and with the size and shape of the resultant wedges,

for several reasons.

First, we are troubled by

the implications of a scheme

in which the trial judge selects

a chosen few from many

who

tasks

volunteer,

assigns

legal

to

those

dictating, albeit indirectly, the scope of the work

be

done

by

the many),

and

then,

in

few

lawyers

(thereby

remaining to

awarding fees,

heavily

penalizes

duties.

the very lawyers to whom he has relegated the "lesser"

Courts must recognize that while such an arrangement may

be a necessary

tort

suits,

concomitant to skillful

it nevertheless

case management of

significantly

interferes

mass

with an

attorney's expectations regarding the fees that his or her client

has

agreed to

pay.

volunteers, as

Conversely,

fee fund

typically

develops.

Cf.
___

day's pay for a fair

Matthew 20:1-16
_______

parable of the laborers in the vineyard).

courts should

are

in this case, and, as such, they have no right to

harbor any expectation beyond a fair

work if a

lead counsel

allocating fees.

Here, the

(recounting

We believe that

take these differing expectations

judge's rescript

day's

trial

into account in

does not

suggest

that he factored these expectations into the decisional calculus.

30

Courts must

economic

reality:

the power

trial judge an unusual

the

lawyers

appointments

who

also be

to a

to appoint lead

second facet

an

before

the

of

counsel gives the

degree of control over the

practice

are often

sensitive

livelihood of

court.

administrative necessity

Though

such

in complex

litigation, and disproportionate fees are at times an unavoidable

consequence of the classic common fund

generally
_________

(1971),

Mancur

the

favoritism.

must

attempt to

This

need

is

are minimized by

moreover,

most

of

The Logic of Collective Action

_________________________________

judge

litigation where,

claimants'

Olson, Jr.,

"free rider" problem, see

___

avoid

especially

any

acute

as this case illustrates,

perception

in

retained

attorneys.

to be done by

In

this

case,

free rider concerns are also lessened by the fact that

the

IRPAs applied

for

appointment

to

the PSC,

Nineteen Appeals, 982 F.2d at 605 (noting that over 40

________________

IRPAs volunteered

willingness to

clue

tort

free rider concerns

the important nature of the work

individually

mass

of

to serve

on the PSC),

pay full fare.

intimating that

Judge Acosta

of the 56

thus signifying

The record does

see
___

their

not contain any

considered these

factors in

ordering that 70% of the fees be paid to the PSC.

Third, and relatedly, this

case required the IRPAs not

merely to go along for a free ride but to earn their keep.

exhibited

medical

great

versatility,

histories,

injuries, preparing

extensive

work

counseling

arranging

for

the damages

with

clients,

specialists

aspect of each

physicians,

31

They

researching

to

evaluate

case (including

psychologists,

actuaries,

vocational

specialists, and other witnesses), obtaining evidence

needed

prove

to

responding

attending

to

losses

of

earnings

client-specific

clients'

and

discovery,

depositions,

earning

capacity,

preparing

for

negotiating settlement

and

values

before Judge Bechtle, assisting clients with probate,

insurance,

and

array

tax

matters,

and

handling

bewildering

idiosyncratic problems as they developed.

the paradigmatic

action

in

common

fund case

which class counsel

other counsel piggyback

This is a far cry from

say, a

securities

do virtually all the

on their efforts.

of

class

work, and

See, e.g., In re Ivan

___ ____ __________

F. Boesky Sec. Litig., 948 F.2d 1358, 1364-65 (2d Cir. 1991); see
_____________________
___

also
____

Randall S.

Thomas

& Robert

G.

Hansen, Auctioning Class

_________________

Action and Derivative Lawsuits:

A Critical Analysis, 87
_____________________________________________________

L.

Rev.

423,

counsel in

the

429

that,

class actions have "substantial

litigation,

Jonathan

(1993) (explaining

R.

even

Macey

to

&

the

exclusion

Geoffrey

P.

in

Nw. U.

general, lead

authority to conduct

of

other

Miller,

counsel");

The Plaintiffs'
________________

Attorney's Role in Class Action and Derivative Litigation:

_________________________________________________________________

Economic Analysis and Recommendations for Reform, 58

_________________________________________________

Rev.

1,

attorneys

(1991)

have

(observing

"nearly

that

plenary

plaintiffs'

control

over

U. Chi. L.

class

all

action

important

decisions in the lawsuit" because of the absence of monitoring by

clients).

We

see

no

sign

that

significant weight to this reality.

the

district

court

gave

This

leads

carefully considered

directly

to

fourth point.

the IRPAs' compendious

We

have

submissions and are

32

of the view that Judge Acosta undervalued the worth of the client

contact/counseling aspect of this

labor-intensive and

litigation.

frequently low in

visibility from the bench.

Such services are

visibility

at

least in

Thus, they are susceptible

to being

overlooked, leading to an overemphasis

the

court-related

work.

on the relative value

Despite their

lack

of

of

visibility,

however, the mundane chores incident to client representation are

particularly

critical in

mass tort

common

fund case.

We

explain briefly.

In a securities class action many of the victims do not

participate in the lawsuit, and are aware of their loss dimly, if

at all.

"[i]n the

See, e.g.,
___ ____

Macey & Miller,

large-scale, small-claim

[plaintiffs]

are typically unaware

against

defendant").

stunning

the

contrast.

In a

(whether of life, limb,

The

supra, at 30
_____

class action

(noting that

context . .

that they even

mass

tort

mass tort action,

have a claim

context

supplies a

the victims' losses

or loved ones) are almost

always keenly

felt, and are

arithmetic

usually not

formula.

typically require a

be satisfied

circumstances,

attorneys

by

an

the

becomes

enterprise.13

That

As

amenable to computation

result,

the individual

multitude of services, many

impersonal

attention

crucial

by a

plaintiffs

of which cannot

steering committee.

of

to

the

the

In

individually

success

important contribution

simple

of

the

such

retained

overall

demands appropriate

____________________

13One IRPA, now deceased, made this point in a submission to

the district court:

33

recognition.

Fifth, although we do

assessment

itself

not dispute the district court's

of the quality of the PSC's work, this factor cancels

out

to

some extent.

repeatedly commented

After

all,

upon "the excellence of

the district

court

the work performed

by all attorneys" (emphasis supplied), and left no doubt but that

___

both sets of plaintiffs'

Given these

lawyers had rendered exemplary service.

widespread plaudits,

it seems manifestly

unfair to

reward excellence on the part of one group and not the other.

Sixth,

the

district

court

failed

to

advance

any

reasoned explanation as to why it boosted

Fund

from

52%

in the

initial

the PSC's share of the

go-round

to

70% on

remand.14

____________________

In the course

of representing these clients,

the attorneys and staff did hundreds of hours

of

work that was

that is a part

not separately

of the work of competent

dedicated [IRPAs].
arrange

billed but

For example we helped

the shipping

of bodies

and
to

from Puerto

Rico to their homes, counseled families . . .

to help them function as
[hard

to

possible
heirs,
law

locate]

enforcement

legal

records,

criminal
negotiated

issues such

witnesses, obtained
investigated

activity,

searched

with creditors,
agencies,
as the

and

for

and with
researched

rights to

awards

from the State insurance fund.

14This
reminder

that,

lodestar in
arrived

discrepancy cannot
on

remand,

favor of the POF

be brushed

the district
method.

The

aside with
court

the glib

abandoned

the

court had originally

at the 52% figure through an enhancement of the lodestar

to account for

"the extraordinary results" achieved

In re San Juan Dupont Plaza Hotel Fire Litig., 768

_____ _______________________________________
932
in

(D.P.R. 1991).
large measure,

by the PSC.

F. Supp. 912,

Thus, the court premised the original award,

on its

assessment of the

role that

the PSC

played in creating the Fund.

34

Though we have great

this

subject

leaves

confidence in Judge Acosta, his

the

award

open

to

silence on

perception

that

appellants have been penalized for successfully prosecuting their

previous appeals.

(1969)

Cf. North Carolina v. Pearce,

___ _______________
______

(discussing importance

of

395 U.S.

dispelling any

711

appearance of

vindictiveness when a judge imposes a more severe sentence upon a

criminal defendant after the defendant wins a new trial).

Seventh,

compensate the

though

the

district

court

representative trial

not members

of the

called "representative" cases

erred

counsel

PSC, prepared

for

in

those

failing

to

IRPAs who,

and/or tried

the so-

their work in that capacity.

Just as the PSC members deserved compensation for their endeavors

on behalf of the

counsel

whole, the IRPAs who labored

conferred

a common

benefit,

and

as representative

must be

compensated

accordingly.

Last

but far from least

we are persuaded, on whole-

record review, that it is simply unreasonable to award 70% of the

aggregate

fees

to the

attorneys

who

managed the

leaving only 30% of the Fund to those who brought

litigation,

in the clients

and worked hand-in-hand with them throughout the pendency of this

long

safari of

a case.

apart, it is difficult

are

divided

counsel

between

Because

cases are

a breed

to envision situations in which,

if fees

lead

counsel

mass tort

and

under a POF formula, the latter

35

individually

retained

will not be entitled to

at

least

half

the

fees.15

litigation, though unique,

to

warrant

Vincent
_______

a substantially

We

do

not

so far overshoots all

larger

or approximately

20% of the

fee fund, to

See,
___

759 (9th

court's allocation of 5%

that

this

other cases as

differential.

v. Hughes Air W., Inc., 557 F.2d

_____________________

(upholding district

think

e.g.,
____

Cir. 1977)

of gross recovery,

lead counsel

in mass

tort action).

Concluding, as we do,

serious

error

of

judgment,

discretion, we vacate the award.

that the fee allocation reflects

and

therefore

an

abuse

of

V.
V.

REMEDY
REMEDY

Ordinarily, "an improper calculation of attorneys' fees

necessitates remand for reconfiguration

975 F.2d at 943.

of the award."

Lipsett,
_______

But this rule admits of exceptions, so long as

"the record is sufficiently

developed that we can apply

to the

calculate a fair and

facts before us and

without resorting to remand."

satisfied; the record

familiar

with

the

Id.
___

Here, that

is voluminous and this

particulars

Nonetheless, an appellate

of

the law

reasonable fee

qualification is

court is painfully

this

court must think long

fee

imbroglio.

and hard before

usurping the district court's usual prerogatives, and, therefore,

we doubt that this case would fall

within the narrow confines of

the

exception

under

circumstances here are

ordinary

circumstances.

But

the

extraordinary, and common sense

commands

15We have been unable to find any common fund case

___

in which

____________________

a court, using the POF

method, has allocated more than 50%

of a

fee fund to lead counsel.

36

that we not turn a blind eye to the reality of events.

This

litigation has

passed the

point of

diminishing

returns.

The

holocaust that

occurred almost

is over;

dish

a decade ago.

underlies the

The meat-and-potatoes litigation

with one small exception, see supra note 1, only a side

___ _____

attorneys' fees

time, energy and

remains on the

money already devoted

has careened virtually out of control.

even greater

to

purpose.

squandering

We have, at

grasped

ourselves.

table.

the

See, e.g.,
___ ____

amount of

item

Remanding would invite an

and we are reluctant

of additional

resources for

this

times, with considerably less provocation,

bull

by

the

horns

and

fixed

the

fees

Jacobs v. Mancuso, 825 F.2d 559, 562 (1st

______
_______

Cir. 1987); Grendel's Den v. Larkin, 749 F.2d

_____________
______

1984).

The

to this peripheral

investment in the side dish

sanction the

simply

plaintiffs' claims

945, 951 (1st Cir.

We

attorneys

realize

in

accomplished

for

that dividing

accordance

with

the

the

with surgical precision.

that matter

Fund

POF

We

among groups

method

cannot

of

be

or a district court,

must necessarily traffic in estimates.

Taking

into account all the facts and circumstances, we conclude that we

should

subdivide

again.

We also

Fund to

the

the Fund

ourselves,

rather

than remand

conclude that, on balance, assigning 50%

PSC and

50%

to the

IRPAs

comprises a

yet

of the

fair

and

reasonable allocation.

This

division

reflects

the

district

court's

determination that the PSC contributed handsomely to the creation

37

of the Fund

should

it

is, after all, at the high end of

usually award16

while

at the same

the district court's undervaluation of

what a court

time correcting for

the IRPAs' contributions.

This division also strikes a sensible balance between the equity-

based

common

fund doctrine,

which

guards

against the

unjust

enrichment of free riders, and the need to avoid adding insult to

injury in a

from

situation in

which the court

selects lead

counsel

amidst a group of willing volunteers and thereafter invades

the contingency agreements of

the select few.

with the

the rejected lawyers to compensate

Moreover, this

time records of

division is not

the PSC.

Even if,

incommensurate

as an

uncritical

reading of the record suggests, the PSC spent as many as

hours

on

the

$34,000,000)

tabulation

litigation,17

pays

the

members

of IRPA hours to

50%

well.

allocation

Although

compare with this

time records are still a valid

166,000

(roughly

we

have

no

total, the PSC's

measure of the vast resources its

members expended in the course of the litigation.

One

loose

end

compensation for the IRPAs

As

remains.

It

involves

appropriate

who tried the "representative" cases.

we stated earlier, see supra p.33, their participation in the

___ _____

____________________

16Although
counsel fees

we do

not impose

in common fund

an absolute

ceiling

mass tort cases, cf.

___

on lead

Camden I, 946
________

F.2d at 774-75 (holding that, as a general rule, 50% is the upper

limit in common
which

a court

fund cases
should exceed

in the Eleventh
50% are

Circuit), cases

likely to

in

be hen's-teeth

rare.

17This

figure includes

members themselves but also

time

logged not

only

by the

PSC

by their associates, paralegals, and

law clerks.

38

Phase II trial inured to the benefit of all plaintiffs.

Thus, in

presenting the representative claims,

de facto PSC members.

__ _____

compensation

the

place

It is only

the lawyers were acting as

logical, therefore, that their

for those services be drawn from the PSC's share of

fee Fund.

Since the record

a dollar

value

on these

is inadequate to

services,

permit us to

we leave

it to

the

district court to determine the amount of compensation due to the

non-PSC members who served as representative trial counsel during

the Phase II trial for their services in that capacity,

and then

to order that sum paid out of the PSC's share of the Fund.

VI.
VI.

CONCLUSION
CONCLUSION

We

need

go

no further.

For

the

reasons we

have

expressed, we vacate the order allocating attorneys' fees; direct

that the

fee Fund be divided

equally among the PSC,

on the one

hand, and the IRPAS, on the

other hand; and remand for the entry

of a suitable decree and for

further proceedings consistent with

this opinion.

Costs shall be taxed in favor of the appellants.

It is so ordered.
It is so ordered.
________________

39