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January 14, 1987

In Re: National Student Marketing Litigation

Barrington D. Parker, Senior District Judge.

The opinion of the court was delivered by: PARKER

(Enjoining State Court Proceeding - Title 28 U.S.C. § 2283)

 Barrington D. Parker, Senior District Judge:

 Relying upon the relitigation exception of the United States Judicial Code, 28 U.S.C. § 2283, the Pomerantz Levy Haudek Block & Grossman ("Pomerantz Levy") law firm has moved for an order enjoining a proceeding commenced in the New York State Supreme Court by the representative of the Estate of Eric J. Klinger. In the New York proceeding, the representative of the estate seeks to enforce an alleged agreement between Pomerantz Levy and Mr. Klinger. The alleged agreement provided that Mr. Klinger would be paid 20 percent of the total award of attorney fees recovered by the firm in securities class action proceedings in which Klinger rendered accounting services. If such relief was granted by the New York court, it would, in effect, nullify and set aside the determination and award of attorney and accounting fees finally adjudicated by this Court in the National Student Marketing litigation.

 That litigation was a consolidation of several security fraud class action and individual complaints brought by shareholders charging certain corporate officers, their attorneys and an accounting firm with violations of federal securities laws. The consolidated proceedings, known as the National Student Marketing Litigation, were assigned to this Court in 1972 by the Judicial Panel on Multidistrict Litigation. The matter was partially concluded by a judgment entered in February 1983 approving the last of several negotiated settlements between the various parties. However, the Court retained jurisdiction so as to determine and authorize disbursement of the settlement proceeds to the eligible claimants and to award fees to the plaintiffs' attorneys and their accountant.


 Pomerantz Levy, a New York law firm, served as general counsel for the plaintiffs in the class action complaint. *fn1" Eric J. Klinger, now deceased, assisted and provided accounting services for the firm in prosecuting the claims of the class plaintiffs. On February 13, 1984, an order was entered awarding compensation to Pomerantz Levy and several co-attorneys who were involved from the commencement of the litigation. On June 15, 1984 the Klinger estate was awarded the sum of $636,496 as "fair and adequate compensation" for the accounting services rendered by Mr. Klinger. Fourteen months later, in August 1985 Mrs. Charlotte Klinger, as executrix of her deceased husband's estate commenced a suit in the New York State Supreme Court seeking additional compensation and fees from Pomerantz Levy. That law suit triggered an application to this Court by Pomerantz Levy for an order enjoining the prosecution of the executrix' claim before the New York court.

 The executrix's claim for additional compensation is based on an alleged 1960 oral agreement between her deceased husband and Abraham Pomerantz, also deceased. Mr. Pomerantz was a founding partner of the law firm which bears his name. Mrs. Klinger claims that the oral agreement between her husband and Mr. Pomerantz provided for a pooling arrangement. Under the agreement, Mr. Klinger was promised 20 percent of the total fees recovered by Pomerantz Levy in securities holders and class action proceedings prosecuted by the law firm and in which Klinger performed accounting services. The executrix claims that the Student Marketing litigation was covered by the oral agreement which she also claims was entered into for the indefinite future. Pomerantz Levy was awarded a total fee of $5,657,006.37 as compensation for services rendered in the Student Marketing proceeding by their firm and three other plaintiffs' attorneys.

 In his original application before this Court, Mr. Klinger requested a fee award of $852,450. He was awarded a lesser amount of $636,496. Mrs. Klinger seeks to enforce the alleged oral contract and augment her husband's fee award by $622,204 to total 20 percent of the final fee awarded the law firm.

 Mr. Klinger had been a practicing lawyer in Vienna, Austria; however, he was not admitted to the practice of law in this country. At the time he rendered services in this litigation, he had been a certified public accountant in the State of New York for a number of years.

 He testified on two occasions before this Court as to the services rendered and as to his fee application. Prior to those appearances, he submitted a detailed 49-page affidavit together with time sheets setting forth the full extent of services rendered. He placed a value of and claimed a total of $ 568,300 (5,683 hours x $100 per hour) for his services. To the base hourly rate, he sought a multiplier of 1.5, resulting in a total fee award of $ 852,450. He testified and alleged in his affidavit that $100 per hour was his usual charge for accounting services. *fn2" After considering his testimony and affidavit, various supporting documentation, relevant portions of the record, this Court determined that the sum of $636,496 was justified, fair and reasonable. An order was entered confirming an award in that amount.


 The authority and the equitable power to enjoin a proceeding in a state court is restricted and limited by Title 28 of the United States Code. Section 2283 of that Title prohibits a federal court from enjoining proceedings in a state court, "except as expressly authorized by Act of Congress, or where necessary in aid of its jurisdiction or to protect or effectuate its Judgments ' (emphasis added). Pomerantz Levy invokes the third exemption. It is also recognized as a general rule that "Any doubts as to the propriety of a federal injunction against state court proceedings should be resolved in favor of permitting the state courts to proceed in an orderly fashion to finally determine the controversy." Atlantic Coastline R.R. Co. v. Bhd. of Locomotive Engineers, 398 U.S. 281, 297, 26 L. Ed. 2d 234, 90 S. Ct. 1739 (1970). However, federal injunctive relief may be appropriate to prevent a state court from interfering with a federal court's disposition of the case which seriously impairs that court's authority to decide the case. Id. at 295. When a final judgment has been rendered in a federal court on the same matter asserted in the state court suit, the federal court is empowered to protect that judgment by granting injunctive relief. Woods Exploration and Production Co. v. Aluminum Company of America, 438 F.2d ...

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