Illuminating Company. The impropriety underlying these investments was discussed in the prior opinion. 329 F. Supp. at 1105, 1106.
Plaintiff's theory of computing damages, which on this aspect of the case would be assessed only against Miss Roche and the Union, is to reject the investments as of August 4, 1966, the Court-imposed cut-off date for damages, and to reinvest the sums involved in three-to five-year governments. By this method, which attempts to take advantage of the three-year statute of limitations, plaintiffs arrive at a damage figure in the neighborhood of $2 million. This approach is inconsistent with established theories of damages in cases of this kind. The investment must be rejected at the time of purchase, not at an artificial statute of limitations cut-off date. Then a comparison should be made of dividends received and increase in fair market value of the securities, with the legal rate of interest during the entire period the stock was held. 3 Scott on Trusts, § 210 (3d ed. 1967). On this basis, in fact, the Fund did substantially better than it would have done if the investment had been treated as rejected from the time of purchase.
It would be inequitable and improper to permit plaintiffs to accept the investment up to the start of the three-year period while the fair market value was increasing and then to reject the investment only when the fair market value began to go down. The plaintiffs cannot have it both ways. The Court's three-year limitation period cannot be utilized to provide an undeserved bonus. Accordingly, no damages will be awarded on this aspect of the case.
C. Attorneys' fees
As to the matter of attorneys' fees, the Court after hearing argument and considering briefs has concluded that inasmuch as this action is in the nature of a derivative action, attorneys' fees should be assessed against the Fund for the recovery accomplished, which is in the interest of all the beneficiaries. Plaintiffs' counsel have maintained elaborate, careful records of time logged and expenses incurred and have presented these by appropriate applications which have been thoroughly reviewed. Since the fees are to be awarded against the Fund, no objection is raised by the Union or the Bank to the amount claimed. The records have been reviewed by counsel for the Fund. The Fund does not question the amount of time logged, the reasonableness of the time charges used or the propriety of the disbursements. The Court is also entirely satisfied as to the reasonableness and accuracy of these figures.
The Court has been informed that disbursements for expenses have amounted to $94,304 and there is no doubt these disbursements were reasonably and necessarily made. Plaintiffs are only entitled to their taxable costs, however, and no award for disbursements will be made beyond such costs, which in this instance shall include cost of transcripts for all depositions and trial, witness and process fees, filing fees, and reasonable travel costs and disbursements to attend depositions scheduled by any defendant. As for attorneys' fees, 14,886 hours were logged which at time charges applied amounts to legal fees of $661,000, or about $45 per hour. Plaintiffs believe that regular time charges would not be equitable because of the monetary and equitable benefits obtained and the complex and somewhat novel issues of this case. The Court agrees. Counsel have shown skill and diligence and time charges are but one measure of the reasonableness of a fee. Since time logged on the equitable phases of the case was intimately related to the damage recovery and since the recovery was substantial, the Court has fixed a reasonable fee at $825,000 for services performed to date. These fees are to be paid when the damages here assessed are paid to the Fund. A larger award could easily be justified by applying standards that have been used in comparable situations. The fact of the matter is that plaintiffs' counsel have not sought to profit unduly by their undertaking, which has gone forward in an effort to assist a widely scattered group of pensioners and other beneficiaries, none of whom are shown to have any financial substance. This approach to the fee question is commendable.
D. Form of Judgment
The form of the judgment must now be considered. Counsel for Miss Roche points to various findings of the Court to the effect that Miss Roche did not profit personally from the breach of trust and suggests that the Court should limit her liability to a specific sum, giving consideration to various equities in the situation, including her age and present health. It is of course obvious that where individuals and large entities engage collusively in a breach of trust the impact of any judgment may be far more severe on an individual than it is on an entity such as the Bank or the Union. Some of the considerations advanced with respect to Miss Roche have lesser but still pertinent application to Mr. Colton.
Miss Roche was directly involved in the breach from the outset. By throwing her vote as neutral trustee on the side of the Union, she enabled the Union and the Union's Bank to profit to the detriment of the beneficiaries. Mr. Colton was also personally involved as the findings show. The United Mine Workers of America moved on November 5, 1971, to amend its answer to set forth a claim for contribution against defendants Colton, Roche and National Bank of Washington. These three latter parties have indicated similar cross-claims will be filed against the Union and the other damage defendants. The Union's cross-claim may be filed but no answer will be required and all parties are granted leave to cross-claim against others for contribution by a date to be set following appellate review of this damage judgment.
There is no authority which authorizes the Court at this stage to apportion in variable amounts the damages among the four participants.
Nor is it proper for the Court to attempt to resolve at this time the intricacies of the law of contribution as it may apply to various facets of this case. The judgment must be entered jointly and severally as to each and will be entered in this form with provision for simple interest at the rate of six percent.
At the time defendants asked for a stay of the equitable relief previously ordered, the Court in refusing the stay indicated that different considerations would prevail as far as a stay of money judgment is concerned. The equitable relief has been allowed to stand preliminarily by the Court of Appeals and a comprehensive compliance report has since been filed by the trustees. But there is no reason in this instance, given the solvency of the Union and the Bank, not to stay the money judgment, without bond, if this is desired, so long as it is clearly understood that simple interest will continue to run.
Accordingly, an appropriate form of order consistent with these findings and conclusions shall be submitted within five days. Plaintiffs shall have their costs.