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IN RE AMPICILLIN ANTITRUST LITIG.

October 29, 1981

In re AMPICILLIN ANTITRUST LITIGATION


The opinion of the court was delivered by: RICHEY

MEMORANDUM OPINION

The Court has before it eleven *fn1" applications for attorneys' fees and costs to be paid from the $ 7,300,000.00 *fn2" fund created from the settlement of the claims of the plaintiff classes composed of cities, counties, states, and other political subdivisions ("CCS") against the defendants, Beecham, Inc., Beecham Group ("Beecham"), and Bristol-Myers. On September 21, 1981, immediately after the presentation of evidence concerning the fairness of the Bristol settlement and the interstate allocation of the funds, the Court heard arguments in support of the fee applications, with no opposition thereto. Having heard no opposition to the settlement, and having determined from the papers and the representations of counsel that the settlement was fair, reasonable and adequate, the Court issued an Order on October 2, 1981, approving the settlement and the interstate allocation of the settlement funds.

 BACKGROUND

 This litigation commenced with the filing of the civil complaint of the United States Department of Justice on March 19, 1970. That complaint alleged that Bristol-Myers Company and the Beecham companies had violated Sections 1 and 2 of the Sherman Act in the manufacture, marketing and sale of ampicillin and other semisynthetic penicillin products. The complaint also challenged the validity of certain patents owned by the defendants and the legality of certain agreements relating to those patents.

 The federal complaint was followed by the filing of private treble damage actions in several jurisdictions. These included actions brought as class actions on behalf of various CCS plaintiffs, on behalf of consumers, and on behalf of wholesale and retail druggists and non-governmental hospitals ("WRPH"), as well as claims filed on behalf of two competitor plaintiffs.

 By Order of July 22, 1970, the Judicial Panel on Multi-district Litigation transferred all of the cases to the District of Columbia for pretrial purposes. Other "tag-along" cases were later transferred here. The cases were originally assigned to former Chief Judge Sirica (now Senior Judge), and were later reassigned to this Judge some three years later.

 On April 16, 1978, Bristol offered $ 6 million for settlement of the claims based on both direct and indirect purchases of the WRPH classes. On June 16, 1978, Beecham offered $ 1.93 million for a similar settlement with the WRPH class. After a hearing on June 16, 1978, the Court approved the proposed form of notice and set September 29, 1978, as the date for a hearing on whether the settlement was fair, reasonable and adequate. The WRPH settlement agreement was found fair, reasonable and adequate and was approved by the Court on October 20, 1978. With the exception of the issues of attorneys' fees and distribution of the settlement fund, that settlement eliminated seven cases from the Ampicillin litigation. None of the parties appealed the settlement and, in an opinion dated November 22, 1978, fees were awarded.

 The attorneys for the WRPH class requested fees totaling $ 1,550,000.00 out of a total settlement fund of $ 11 million (including interest). The Court awarded $ 1,140,000.00 to the Committee of counsel for the WRPH class, as well as costs of $ 33,246.95. This amounted to 10.6% of the settlement fund, with a range of fees from $ 15.00 to $ 200.00 an hour for counsel. The average hourly rate for that award was $ 121.00 before a multiple and $ 181.00 an hour after. In Re Ampicillin Antitrust Litigation, 81 F.R.D. 395 (D.D.C.1978).

 As a result of the Supreme Court's decision in Illinois Brick Company v. Illinois, 431 U.S. 720, 97 S. Ct. 2061, 52 L. Ed. 2d 707 (1977), the consumer claims were dismissed by Court Order of July 5, 1978. This left the CCS plaintiffs and the United States as the remaining principal plaintiffs.

 In the fall of 1978, it appeared to the Court that there was a likelihood of separate settlements of the claims of the CCS plaintiffs and the United States against the Beecham defendants. Accordingly, a preliminary hearing on the proposed CCS settlement was held on November 8, 1978, and the Court determined that the proposed settlement was within the range of possible approval. In addition, the Court ordered a hearing, pursuant to Fed.R.Civ.P. 23(e), to be held on April 6, 1979, for the purposes of determining whether the proposed CCS-Beecham settlement was fair, reasonable and adequate. The form of notice was approved on November 17, 1978, and mailed to all potential members of the litigating CCS class on or before January 15, 1979. The Court approved the CCS-Beecham settlement on May 2, 1979, thereby eliminating Beecham as a principal defendant from the case.

 On September 22, 1980, the Court issued its mode of trial order with respect to the CCS-Bristol case. That Order provided, inter alia, for separate trials of the CCS plaintiffs' section 1 Sherman Act case, the Government's sections 1 and 2 Sherman Act case, *fn3" and finally the Biocraft *fn4" and Zenith *fn5" cases. It set the trial date for May 18, 1981. The trial of the CCS case was bifurcated first into a liability stage with damages to be tried later, if liability was found. In addition, there were only a limited number of representative CCS cases selected for participation in the initial trial. (All CCS entities that were not originally transferred to this district for consolidated pretrial proceedings pursuant to 28 U.S.C. § 1407 were transferred to this district for a consolidated trial with the consent of the parties on October 21, 1980, pursuant to 28 U.S.C. § 1404(a)). Those bellwethers were selected from those CCS entities with relatively complete bid records. On January 7, 1981, the Court selected New York City, Michigan, Washington, Texas, and Minnesota as the bellwethers for the May 18, 1981, trial.

 Jury selection began on May 19, 1981 (one day late) for the commencement of this liability trial. After two weeks of trial under a very strenuous schedule, the parties reached a settlement agreement.

 SETTLEMENT

 The CCS plaintiffs and the Beecham defendants entered into a settlement agreement on November 1, 1978. The Court approved the CCS-Beecham settlement on May 2, 1979. That agreement provided for settlement of claims based on the antitrust violations with regard to ampicillin and other semisynthetic penicillin drugs which have been or might be asserted against the Beecham defendants by the CCS plaintiffs and classes in this litigation, and by potential similar plaintiffs in other political entities of the United States. Beecham gave the plaintiffs certain economic relief and other cooperation in return for its dismissal. Beecham established a fund of $ 2,070,000.00, with interest at the average prime rate from November 1, 1978, on behalf of the classes. That amount was not to be distributed to class members until the settlement or final adjudication of the CCS case against Bristol, so as to preserve the fund against the expense of two separate distributions. The fund continues to earn interest until final distribution. The settlement agreement also contained a most-favored-nations clause, by which the fund would have been reduced proportionally if the CCS plaintiffs had settled with Bristol for less than $ 6.44 million before October 31, 1980, or more than 30 days before a firm trial date. In addition, Beecham assisted the plaintiffs in the prosecution of their case against Bristol, by helping them to obtain the deposition and trial testimony of certain Beecham employees and former employees.

 The settlement agreement with Bristol, approved by the Court on June 18, 1981, provided that Bristol would pay the sum of $ 4 million to the CCS plaintiffs in full and final settlement of all their claims based on the alleged violations of the antitrust laws with regard to ampicillin and other semisynthetic drugs which have been or might have been asserted against Bristol by the CCS plaintiffs and classes in this litigation and by potential similar plaintiffs in other political entities of the United States. Since this was a class action, the Court held three hearings on September 22, 1981, for the purposes of considering: (1) whether the proposed Bristol-CCS Settlement Agreement was fair, reasonable and adequate; (2) what allowances should be made for the fees and expenses of the various attorneys for the CCS class representatives chargeable to the settlement funds generally and the manner in which such allowances should be allocated among the various CCS plaintiffs and classes; and (3) whether the interstate allocation of the settlement funds was fair, reasonable and adequate and thus should be approved. The proposed settlement of the CCS claims and the proposed interstate allocation of the settlement funds were approved by the Court on October 2, 1981, without objection. This leaves only the question of allowances for attorneys' fees and costs, which will be hereinafter discussed.

 DISCUSSION

 The parties have submitted the following schedule in their request ...


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