The opinion of the court was delivered by: GESELL
One hundred thirty-eight community mental health centers, certified by the Court as a class under Rule 23(b)(1) and (b)(2) of the Federal Rules of Civil Procedure, prevailed in this action to set aside an impoundment order. As a result, the Secretary of Health, Education and Welfare released previously withheld appropriations amounting to $52 million which Congress had previously authorized for fiscal 1973. National Council of Community Mental Health Centers, Inc. v. Weinberger, 361 F. Supp. 897 (D.D.C.1973). Shortly after the appeal from that order was abandoned, various related petitions were filed asking the Court to order that Jerome A. Wagshal, Esquire, attorney for the named representatives of the class, be compensated by H.E.W. or the class for his services. Voluminous papers, including affidavits, were filed, testimony was taken and notice given by mail to all members of the class.
The original complaint and applications by both the class and Mr. Wagshal ask attorney's fees on behalf of the class from the Government defendants. The law is settled that, in the absence of specific statutes to the contrary, attorney's fees may not be awarded against the Government. 28 U.S.C. § 2412; United States v. Chemical Foundation, 272 U.S. 1, 20, 47 S. Ct. 1, 71 L. Ed. 131 (1926); United States v. Worley, 281 U.S. 339, 50 S. Ct. 291, 74 L. Ed. 887 (1930); Pyramid Lake Paiute Tribe v. Morton, 163 U.S. App. D.C. 90, 499 F.2d 1095 (D.C.Cir.1974), cert. denied 420 U.S. 962, 95 S. Ct. 1351, 43 L. Ed. 2d 439 (1975). This rule applies with equal force in cases nominally brought against officers of the Government relating to their official duties. See 6 J. Moore, Federal Practice (2d ed. 1971) para. 54.75.
While it would be equitable in this instance to require the Government to compensate the members of the class for their legal expenses incurred in a suit to obtain appropriated funds wrongfully withheld by the Executive Branch, the Court lacks the power to do so since there is no authorizing statute.
In another application, Mr. Wagshal asks the Court to assess attorney's fees for his personal benefit against the members of the plaintiff class in personam. The Court also lacks the power to do this. Unlike an action in rem, where control of the res coupled with mail notice has been held to satisfy due process, Mullane v. Central Hanover Trust Co., 339 U.S. 306, 70 S. Ct. 652, 94 L. Ed. 865 (1950), the power of a court to render binding in personam judgments depends on personal jurisdiction which is usually acquired via service of process. See Pennoyer v. Neff, 95 U.S. 714, 24 L. Ed. 565 (1878). However, in class actions, it has been recognized that the power of the Court to render binding in personam judgments consistent with due process finds its source in the presence of adequate representatives of the class before the court even though no process was served. Hansberry v. Lee, 311 U.S. 32, 61 S. Ct. 115, 85 L. Ed. 22 (1940). In such circumstances, however, the Court must "carefully scrutinize the adequacy of representation." 3B J. Moore, Federal Practice (2d ed. 1974) para. 23.07 at 23-357; Eisen v. Carlisle & Jacquelin, 391 F.2d 555, 562 (2d Cir. 1968) (Eisen II). This is particularly true in a case such as the present one where the class was not structured as a (b)(3) class, and class members were never given an opportunity to opt out of the litigation. See Appleton Electric Co. v. Advance-United Expressways, 494 F.2d 126, 140 (7th Cir. 1974).
While it is true that the Court earlier certified the named plaintiffs as adequate representatives of the class under Fed.R.Civ.P. Rule 23(b)(1) and (b)(2) for purposes of the merits of the original action, that phase of the action presented quite different questions. The Court was not advised or aware at the time of certification that attorney's fees would be sought from benefiting class members.
See Fed.R.Civ.P. Rule 23(c)(4)(A), Rule 23(c)(1); Local Rule 1-13(a)(2)(ii).
The Court in its discretion has determined that the representation of class members here has been inadequate to support in personam judgments for attorney's fees against the class members. None of the community mental health centers originally named as plaintiffs and certified as representatives of the class has appeared by separate attorney in the portion of the case relating to Mr. Wagshal's fee applications. See 3B J. Moore, Federal Practice, supra. P 23.07 at 23-360, n. 39. While the National Council did eventually retain separate counsel in the fee proceedings, it has expressly disclaimed the ability to represent the class. Moreover, it is not a member of the class since it received no funds released by this litigation, see Bailey v. Patterson, 369 U.S. 31, 32-33, 82 S. Ct. 549, 7 L. Ed. 2d 512 (1962), and its interests are antagonistic to those of the class on several issues because, among other things, it is seeking return of the fees it has already advanced to Mr. Wagshal as front money. See 3B J. Moore, Federal Practice, supra. Paras. 23.07, . No adequate representative of the interests of the class being present in this proceeding, the Court is unwilling and unable to enter in personam judgments against the members of the class.
Payment of attorney's fees is also sought through still another route. The record discloses that a portion of the money released by the litigation remains unused. The amount is more than sufficient to pay any reasonable attorney's fee in this situation and is still subject to the Court's control as a result of orders entered during the proceedings, even though the precise accounting as to this sum must await final auditing.
It remains, therefore, to determine whether attorney's fees can be assessed against this unexpended fund held by H.E.W. The law is settled that where a fund has been created in litigation with the Government, and the Government stands as it does here in the position of a stakeholder required to pay over that fund to qualified beneficiaries, the Court may award a portion of it to the attorney for the beneficiaries as "costs between solicitor and client." Lafferty v. Humphrey, 101 U.S.App.D.C. 222, 248 F.2d 82, cert. denied sub nom., Benton County v. Lafferty, 355 U.S. 869, 78 S. Ct. 118, 2 L. Ed. 2d 75 (1957); Emmet v. Whittier, 164 F. Supp. 563 (D.D.C.1958). See also, United States v. Anglin & Stevenson, 145 F.2d 622, 629 (10th Cir. 1944). Thus the Court has authority to reimburse the actual plaintiffs or their lawyer for their efforts on behalf of the class by assessment for attorney's fees against the fund.
Paris v. Metropolitan Life Ins. Co., 94 F. Supp. 792 (S.D.N.Y.1947); Lafferty v. Humphrey, supra.
The applications may fairly be construed to include an application by the named plaintiffs to be reimbursed for legal expenses incurred by them as representatives of the class in creating a fund for the benefit of the class as a whole. Fed.R.Civ.P. Rule 8(f). Since such a fund still exists, the applications viewed in this light will be granted for it is clear that the representatives of the class incurred legal expenses in creating the fund for the benefit of all class members. Trustees v. Greenough, 105 U.S. 527, 26 L. Ed. 1157 (1882); Mills v. Electric Auto-Lite Co., 396 U.S. 375, 389-397, 90 S. Ct. 616, 24 L. Ed. 2d 593 (1970); Hall v. Cole, 412 U.S. 1, 93 S. Ct. 1943, 36 L. Ed. 2d 702 (1973); Annot., 38 A.L.R.3d 1386 (1971); J. Dawson, "Lawyers and Involuntary Clients: Attorney Fees from Funds," 87 Harv.L.R. 1597 (1974).
It is recognized that this will reduce the fund by the amount of the fee awarded and that under the budget and accounting procedures of H.E.W. this may affect the sum available in the next fiscal year for similar grants. Nothing herein shall be taken in any way to restrict or to limit the right of H.E.W. to reduce future grants to members of the class by their pro rata share of the fee paid from the fund.
The substantial material received from members of the class following notice and presentations by new counsel for the National Council as well as Mr. Wagshal provide sufficient basis for the Court to proceed to fix a fee.
This litigation involved a fairly narrow controversy. It was resolved without trial by motions over a period of a month and a half, although Mr. Wagshal spent additional time in legislative efforts involving this and other cases. Mr. Wagshal's clients were and are well satisfied with his professional efforts and as far as his work on the merits is concerned, it was of high quality. He seeks a fee of $1 million. The National Council suggests an additional fee of $43,979; some members of the class opposed any fee, while some indicated a willingness to pay a pro rata share of a fee that would range upwards somewhat beyond $100,000.
Mr. Wagshal strenuously urges that he not be compensated on a time basis. He contends that he took the retainer, after several other attorneys had refused, primarily on a contingent basis and since the contingency eventuated he should be paid solely in relation to the sum released from impoundment, here approximately $52 million. There is no merit in this suggestion. See Ratner v. Bakery & Confectionery Workers Union, 122 U.S.App.D.C. 372, 354 F.2d 504, 506 (1965) (rejecting a "pro forma scale" for fixing attorney's fees on a quantum meruit basis). The amount released was determined by Congress, not by the litigation. The only contingency was whether or not the plaintiff class would win or lose. In other words, his work contributed in no way to the amount of the award but only to the fact of the award itself. If he lost he ...