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August 29, 1973

Slimp Kiser, on behalf of himself and all other similarly situated plaintiffs, Plaintiff,
Arnold R. Miller et al., Defendants.

Richey, D.J.

The opinion of the court was delivered by: RICHEY

Memorandum Opinion of United States District Judge Charles R. Richey


 This case is before this Court on remand from the Court of Appeals for the District of Columbia, to determine the question of appropriate counsel fees to be awarded to the attorneys for the Kiser class and the attorneys for the two groups of intervenors, the Adkins group and the Moore group.

 The matter of counsel fees is a subject of great controversy, with the eye of storm fixed on the standards by which the fee is regulated and set. No standard can be applied in a vacuum. Therefore, before turning to the merits of the award, the Court believes it will be helpful to establish a framework of facts and events which produced the posture of this case.

 I. History of Litigation

 This case commenced as a personal suit by Slimp Kiser, a Kentucky coal miner, against the former Trustees of the United Mine Workers of America Welfare and Retirement Fund of 1950. The original complaint was later amended to include all miners who had retired after February 1, 1965 and who had been denied pension benefits because they did not meet the last signatory employment requirement which the defendant trustees enacted in Resolution No. 63 on January 4, 1965. The Court determined that a valid class existed by Order entered August 6, 1971 which was later amended on January 4, 1972. The Kiser suit was consolidated with the suit of Edwin Moore, James Walker, and Estill Smith versus the defendant Fund (C.A. 2088-71). And subsequently Messrs. Milford Adkins, James Hensley and Albert Madden were granted leave to intervene in the consolidated action.

 The suit sought to compel the Defendants to pay the Plaintiffs their pensions. The defendants had denied the Plaintiffs' pension applications on the ground that they had not worked in the coal industry as an employee of an operator signatory to the National Bituminous Coal Wage Agreement of 1950 for at least one full year immediately prior to permanent retirement. In a Memorandum Opinion of January 19, 1973 this Court held that the last signatory employment requirement was invalid as a basis upon which to deny the Plaintiffs their pensions. See, Memorandum Opinion of January 19, 1973, 353 F. Supp. 736, et seq., for a complete discussion of the issues and the Court's decision.

 The defendant trustees moved for reconsideration of this Court's January 19 decision. Upon reconsideration, the Court entered a Supplemental Opinion and Order on February 6, 1973 which reaffirmed the Court's decision with respect to the invalidity of the last signatory employment requirement. However, the Court did amend its original order by deleting the requirement that the trustees pay interest at 6% per annum on the total amount of the accrued pension, and further provided that the payment of accrued pensions should be from the first day of the month following the date of denial rather than from the actual date of denial.

 The Defendants appealed. On July 23, 1973 the United States Court of Appeals for the District of Columbia Circuit entered an order authorizing this Court to rule on Plaintiff-Appellees' request for counsel fees and further directed that ". . . (2) the appellant Fund is directed forthwith to pay to those members of the plaintiff class who have been entered upon the pensions rolls of the Fund as a result of this Court's Order of May 24, 1973 an amount equal to two-thirds of the total amount due said pensions; (3) the appellant Fund is directed to place the remaining one-third of the amount due members of the plaintiff class who have been placed on the pension rolls into an interest bearing account with a recognized banking institution in the District of Columbia until further order of this court or final disposition of this appeal on the merits; . . ."

 In view of the foregoing, the Court undertook an in-depth consideration of the matter of appropriate attorney's fees. All counsel presented requests that the defendant fund pay their attorney's fees. They each also presented various contingent fee agreements.

  The Moore counsel requested $23,000 in fees plus $891.32 in costs and expenses from the Fund. They showed 130 hours spent on the case. In the alternative, they informed the Court that counsel fees would be provided by the contingent fee agreements between themselves and their three clients. Under the agreement Mr. Moore would pay 35% of his total recovery ($8,400) and Messrs. Smith and Walker would pay 25% of their respective total recoveries ($6,500 each).

 Counsel for the Adkins group petitioned for $14,485.83 in fees and $97.26 in costs to be taxed to the Defendants. Alternatively, they requested that the Court honor their contingent fee agreements which sought a percentage of only the accrued (past) pension benefits rather than out of future benefits. The agreements provided for a flat fee of $1,500 from each client out of their accrued pensions plus 33 1/3% of the accrued pension over $1,500 from Mr. Adkins ($2,400) and 50% of the accrued pension over $1,500 from Messrs. Madden and Hensley. The Adkins group's attorney expended 286 hours on the case, according to their counsel's affidavit.

 The Kiser attorneys also had a contingent fee agreement with the original Plaintiff, Mr. Kiser, for one-third of his accrued pension. As partial compensation for the 2,065 hours logged as class counsel, the Kiser attorneys seek 33 1/3% of each class miner's accrued pension to be deducted from the total recovery of accrued benefits plus 10% of each miner's future pension and benefits ($1,600,000) to be paid by the Fund from general revenues over the next ten years. Counsel has informed the Court that 401 miners have signed a "fee agreement" consenting to this contingent fee formula.

 The "consents" to Kiser attorneys fees has caused some confusion in the record. The consent forms were mailed to the members of the class on January 22, 1973, several days after the judgment was entered in this case and the Court informed counsel that it would determine the question of attorneys fees. The form was attached to a covering letter describing the successful judgment. In the last paragraphs of the three-page letter, counsel informed class members of the fee formula and urged the members to sign the agreement.

 It is alleged that shortly after the original Opinion of the Court on January 19, counsel for all parties met with the Court in Chambers, and it is further alleged that the letter was discussed. The Court does not recall such discussion as to any contingent fees, etc. and neither do the attorneys for the Defendant Fund. The record discloses that one day after that meeting, the Kiser petitioners mailed the letter with the proposed fee agreement to the class members. When the fact of this letter came to the Court's attention, the matter was promptly set down for a hearing on February 15, 1973; and while the transcript will speak for itself, Kiser petitioners did not dispute at any place therein the following:

 (a) the Court did not countenance a contingent fee agreement of the kind contemplated by Kiser's attorneys in this particular case; and

 (b) the Court wanted a new notice sent out to all members of the class; and

 (c) counsel were directed to submit an order for a new notice to the Court for its approval with an opportunity on the part of the defendants to object.

 Counsel for Defendant Trustees did not submit the Order requested, and none was entered. In any event, and in order to set the record straight, this Court at no time ever approved a contingent contract in the manner set forth in the aforementioned letter sent out by the Kiser attorneys to the class members.

  II. The Class Action Standard of Reasonable Attorney's Fees Must Consider Time, Effort, Skill, Complexity, Risk, Results, Incentive, and Public Service in Light of the Attorney-Class Relationship, and Not Solely a Flat Percentage

 The facts of this case exemplify the inherent controversy and problems attendant with the question of counsel fees in class actions. The fundamental concern has been that the attributes of the class action -- speed and efficiency in the administration of justice -- will be obliterated if certain factors are left uncontrolled. The potential for abuse lies in the area of unreasonable charges for attorney fees and improper solicitation of such fees from actual or potential class members. As a preventive measure for such abuses, it has been strongly recommended that the matter of attorney's fees be left to the determination of the Court using a standard applicable to the unique situation of a class action. § 1.41 "Preventing Potential Abuse of Class Action," Manual for Complex Litigation, 1 Moore's Federal Practice Part I at 27-28 (1973).

 The standard used to determine class action attorney's fees must meet the problem on two levels. On the first level, it must weigh the following factors: (1) time and effort expended; (2) the novelty and difficulty of the issues; (3) the skill required to perform the legal services properly; (4) the amount of duplication of other counsel's work; (5) the amount of risk involved; and (6) the nature and amount of the results obtained. *fn1"

 On the second level, the standard must include three considerations unique to the class action. They are: (1) The Attorney-client Relationship -- The representation of the class is not the result of private enterprise but the result of judicial determination; (2) Public Service Element -- an element of public service is involved in seeking and accepting employment as counsel for the class; and (3) Incentive Factor -- the policy of the law in class actions is to provide a motive to private counsel to represent the public and enforce the law. See, § 1.47 "Control of Attorneys Fees and Expenses in Class Actions," Manual for Complex Litigation, supra at 62-64.

 These class action standards in the preceding paragraph incorporate several of the factors used to judge the reasonableness of the fee charged for services to an individual client, but consider them in a different perspective. As the form, nature and substance of the relationship between the class members and class counsel are different from those which characterize the relationship between counsel and an individual party capable of contracting for the payment of attorney's fees, so also is the standard measuring the attorney's fees different.

 The question of appropriate counsel fees has been tied to apron strings of the contingent fee percentage for too long. In saying this, the Court is not unmindful that contingent fees in many instances, as a practical matter, have a long tradition in the legal profession, and have served and will serve a useful public purpose. However, in class actions, under Rule 23, it is incumbent upon the bar and bench to apply their imagination to a solution for this pressing problem. As Judge Decker in Illinois v. Harper & Row Publishers, 55 F.R.D. 221 (N.D. Ill. 1972) has warned:


". . . If Rule 23 is to be preserved against deserved criticism, some attempt must be made by the court to suit the award of fees to the performance of individual counsel in light of the size of the settlement. Otherwise, the attorneys who are taking advantage of class actions to obtain lucrative fees will find themselves vulnerable to the criticism expressed in the Italian proverb, 'A lawsuit is a fruit tree planted in a lawyer's garden.'" at 224.

 Thus, while a fee awarded in a class action suit might reflect a percentage of the total recovery, this selected percentage cannot be the primary determinate. After counsel has been adequately compensated, including a premium to provide a motive for class representation, no further incentive is needed. Therefore, though the amount recovered bears consideration, the primary focus should be upon the time and effort expended, the skill needed (papers which are merely repetitive work of others count for little), the risk involved, the nature of the benefits recovered and the effect of the award on the public interest and reputation of the courts. § 1.47 Manual on Complex Litigation, supra, at 64. As the Manual goes on to state succinctly:


"In no event should representation of a judicially determined class be allowed on the same basis as in a contingent fee contract between competent contracting counsel and client." Id, at 64.

 To justify the contingent fee percentage in class actions on the grounds that the recovery is a "windfall" to the class, and, therefore, there should be a "windfall" award to the attorney is without logical merit. The initial premise is faulty, i.e., to say that the recovery, when prorated to its sub-subsistence sum of $1,800 per year, is windfall, is to disregard today's economic realities. Furthermore, the second premise implies a selfishness unbecoming to the legal profession. This thinking is all the more unacceptable when one remembers that the purpose of the suit was to restore the rights of a deprived class. In such circumstances, a sizable diversion of the recovery for attorney's fees would merely constitute a substitution of one fiduciary wrongdoer with another.

 III. The Foregoing Standard Must Be Applied to the Individual Facts of Each Case

 There are certain facts in this case which are relevant to the application of the class action standard in this case. They are as follows:

 (1) This case was decided on a question of law in a Motion for Summary Judgment; and

 (2) The principle issue in the case was not novel, having been determined in a number of earlier suits; *fn2" and

 (3) Nor was the issue involved complex. The defendants basically contested only the required period of signatory service at oral argument. The Petitioners filed a three-page memorandum of points and authorities citing only two key cases: Roark II and DePaoli, supra ; and

 (4) Kiser counsel logged approximately 2,065 hours on the case since its inception in 1969 on behalf of the original plaintiff, Mr. Kiser. The diaries of counsel show little time was necessary for legal research. The papers filed are brief relying primarily on the logic of the facts in this case. In fact, nearly one-half of the bulk of the papers filed in this case pertain to the question of attorney's fees. In addition, no discovery or litigation was necessary in the case; and (5) The total amount of recovery is still debatable as the actual number of miners in the class has not been resolved. Kiser counsel claim there are 666 members of the class and defendants claim 356 are validly enrolled as of August 10, 1973. Thus 310 miners or their estates are still in dispute. Accordingly, minimum and maximum benefits to the Kiser class are as follows: 1(a) Maximum retroactive benefits (666 miners) $2,797,200.00 1(b) Minimum retroactive benefits (356 miners) 1,485,200.00 2(a) Maximum prospective pensions 11,812,642.00 2(b) Minimum prospective pensions 6,314,372.00 3(a) Maximum welfare benefits 1,301,364.00 3(b) Minimum welfare benefits 695,624.00 (666 miners maximum) TOTAL $15,911,206.00 (356 miners minimum) TOTAL n3 $8,495,193.00


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