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United States District Court, Northern District of Illinois

February 11, 1974


The opinion of the court was delivered by: Bauer, District Judge.


This cause comes on an application for the fixing of counsel fees and for reimbursement of out-of-pocket costs.

This application is submitted on behalf of all counsel for the class representatives in the above-captioned consolidated actions. The Settlement Agreement which this Court approved on June 4, 1973, after a full hearing and appropriate notice to the members of the class, specifically provided that applicants were to receive from defendant exchanges their counsel fees and reimbursement of out-of-pocket costs and expenses, all as determined by this Court.

The applicants contend that since the time for appeal from the order approving the settlement has expired and the order has become final, they are entitled to receive such counsel fees and reimbursement of costs and expenses. The applicants request that this Court fix their counsel fees and allow reimbursement of their out-of-pocket costs and expenses as follows:

  Counsel Fees ........................... $2,250,000.00
  Out-of-Pocket Costs
  and Expenses .............................. $14,486.25

The applicants and defendants have submitted memoranda and affidavits in support of their respective positions. On December 7, 1973 a hearing was held on this matter and pursuant to this Court's request at that hearing the applicants have filed more detailed affidavits and memoranda in support of their application. This Court has seriously examined the memoranda and affidavits submitted by the parties in support of their respective positions and carefully weighed the testimony and arguments made at the hearing on December 7, 1973.


It is within the exercise of this Court's informed discretion to decide upon the amount of reasonable attorneys' fees and out-of-pocket expenses. Tranberg v. Tranberg, 456 F.2d 173 (3rd Cir. 1972); Cappel v. Adams, 434 F.2d 1278 (5th Cir. 1970).

Various objective "checklists" have been devised as guidelines for determining a fair award of attorneys' fees. See Hanover Shoe, Inc. v. United Shoe Machine Corporation, 245 F. Supp. 258 (M.D.Pa. 1965), vacated on other grounds, 377 F.2d 776 (3rd Cir. 1967), affirmed in part on other grounds, 392 U.S. 481, 88 S.Ct. 2224, 20 L.Ed.2d 1231 (1968); Colson v. Hilton Hotels Corporation, 59 F.R.D. 324 (N.D.Ill. 1972); Trans World Airlines, Inc. v. Hughes et al., 312 F. Supp. 478 (S.D.N.Y. 1970); In re Osofsky, 50 F.2d 925 (S.D.N.Y. 1931). It is the opinion of this Court that the following factors are important to the proper determination of the amount of reasonable attorneys' fees:

I. The Magnitude and Complexity of the Litigation.

A. The number of parties to the action.

    B. The complexity of the issues contained in the

C. The social effect of litigation.

    D. Whether plaintiffs' or defendants' counsel had
       the benefit of a prior judgment or decree in a
       similar or identical case brought by the
       Government or a private party.

    E. The significance of the litigation and the
       responsibilities undertaken.

II. The Quality of the Services Provided.

    A. The eminence of the attorneys at the bar and in
       the specialty in which they are practicing.

    B. The value of the attorneys' work in the instant
       case as demonstrated by skill involved in
       drafting the pleadings and memoranda, and the
       quality of the arguments before the bench and
       the performance in the courtroom.

III. Time and Labor Spent.

    A. The time which has fairly and properly been used
       in dealing with the case.

IV. The Beneficial Result Achieved.

A. The amount in damages recovered, if any.

    B. Whether the result of the case is a real benefit
       to the client and whether that result was
       possible without the instant litigation.

    C. What it would be reasonable for counsel to
       charge a victorious plaintiff.

  I. The Magnitude and Complexity of the Instant Litigation

As far as the social effect of this litigation, it is clear that this litigation is one of the most significant pieces of litigation pending in the Northern District of Illinois, if not the United States.*fn1 An entire industry has been restructured, an industry which is now one of the most important in the world. Until the time of the approval of the settlement in this case, fixed commission rates were the norm in all exchanges in the United States.*fn2 This is no longer the case. Further, the applicants contend that it may be expected that no exchange in the United States, whether commodities or securities, will escape the effects of this settlement.

Given the number of litigants involved, the number and skill of their attorneys, and the complexity of the issues involved, it is clear that these actions represent a proceeding of the first magnitude. On the plaintiffs' side, the approximately 400,000 class members were represented at various points in these proceedings by more than twenty individual lawyers from eight separate law firms. On the defense side, there were innumerable individual lawyers and separate law firms representing the more than 2,000 members of the defendants' class.

It would be difficult to imagine litigation presenting issues of greater sublety and complexity. All issues were fought out at a legal frontier where no lawyer knew all the answers. The legal posture of all litigants made necessary analysis and arguments of extreme importance to the emerging case law with little guidance from prior court decisions.*fn3

This case is unique in that counsel for plaintiffs not only did not have the benefit of a prior government judgment or decree but there was no government litigation pending or even filed at the time this litigation was commenced. It was not until December 1971, some eight months following the filing of the first of these civil suits, that the anti-trust division became prepared to undertake this type of litigation. The applicants allege that it would be more appropriate to assert that in this case the federal government had the benefit of the plaintiffs' case and not the other way around.*fn4 Regardless of the rectitude of the applicants' contention, it appears certain that they were blazing new legal trails in instituting this litigation.

Plaintiffs undertook to assert the illegality of the long established business practice of fixing commission rates in commodities exchanges on behalf of a class consisting of approximately 400,000 members. The responsibility went beyond the mere representation of clients. At stake was the manner in which billions of dollars of business would continue to be done in the United States. As the parties gradually came closer to a settlement the responsibility of the plaintiffs' counsel for a just result increased. No longer was there to be a trial of issues to be interpreted solely by the Court. Instead, the attorneys representing the plaintiffs and defendants would make recommendations to this Court based upon an assessment of their respective legal positions, the welfare of their clients and the necessities of business practice. At the same time each side was aware that the decisions which they were making would affect the future operation of all exchanges.

An examination of the Master Settlement Agreement discloses the intricacy and subtlety of the decision-making process involved in the instant litigation.*fn5 Negotiation of the Master Settlement Agreement called forth the utmost in legal care, talent and learning. Had plaintiffs' counsel not assumed the responsibility of agreeing to the fundamental settlement embodied in the Master Settlement Agreement, it is quite possible that the plaintiffs' class would not have been certified, causing the death of this broad sweeping litigation and that the institutions and business practices which the complaint attacked would have remained unchanged.

II. The Quality of Services Provided

This Court is hard pressed to find another case in its history which had such a glittering array of legal talent on the sides of both the plaintiffs and defendants. Certainly the attorneys for the plaintiffs as well as the attorneys for the defendants represent the cream of the Anti-trust bar in the United States. Plaintiffs' attorneys are well-known in the anti-trust and securities fields, and have litigated some of the most significant cases to come before the bench in the past decade. Plaintiffs' attorneys include counsel who tried the first of the electrical equipment anti-trust cases resulting in an award after a jury verdict of $29,000,000, Philadelphia Electric Co. v. Westinghouse Electric Corp. 1964 Trade Case, Para. 11, 123 (E.D.Pa. 1964); counsel who accomplished the $29,000,000 settlement in City of Philadelphia v. American Oil Co., Civ. No. 647-68 (D.N.J. 1973); Philadelphia Electric Company v. Anaconda American Brass Co., 47 F.R.D. 557 (E.D.Pa. 1969), and the $26,000,000 settlement in Lindy Bros. Builders, Inc. of Philadelphia v. American Radiator & Standard Sanitary Corp., 341 F. Supp. 1077 (E.D.Pa. 1972).

Full credit must be given to plaintiffs' counsel for the significant result achieved in this litigation. Their standing and prior record of success in major antitrust and class action litigation must have been one of the major factors in the defendants' decision to settle on an industry-wide basis.

Plaintiffs' attorneys, in their presentation of pleadings, memoranda, and the Master Settlement Agreement and in their performance in the courtroom during hearings and settlement negotiations have sincerely impressed this Court with their skill, expertise and dedication to service. The instant Master Settlement Agreement is not only documented testimony of the outstanding performance of plaintiffs' attorneys, but also a well deserved addition to their illustrious careers and their service to the anti-trust bar.

III. Time and Labor Spent

In this litigation plaintiffs were faced with the problem of putting together a case without benefit of prior successful action by the government and in direct contravention of decisional law and business custom and practice of many years duration. After carefully examining the affidavits of the plaintiffs' attorneys in regard to time expended it is clear to this Court that the instant action necessitated many difficult hours of study and preparation before and after the filing of these suits.

After these suits were filed the question of primary jurisdiction was raised by the defendants; briefed and argued by both sides. Depositions were taken, experts consulted and studies made. Since under Rule 23 of the Federal Rules of Civil Procedure it is necessary to have a class determination early in the case plaintiffs apparently proceeded to prepare for that issue by submitting interrogatories and researching and briefing the question.

When finally there were indications that the case might be settled, lengthy, and complicated negotiations were entered into. These negotiations involved innumerable meetings both with representatives of the defense counsel and among the various plaintiffs' attorneys. Whatever differences between attorneys existed from time to time were always harmonized and at no time did plaintiffs' attorneys present anything but a united front. The settlement documents as finally approved went through a multitude of changes as the necessities of the plaintiffs' position and the negotiations required. The Master Settlement Agreement as finally approved by this Court represents the fruition of the labor of both plaintiffs' and defendants' attorneys.

This Court has considered the number of hours spent in this litigation by the plaintiffs' attorneys as well as the manner in which they were spent. See Lindy Bros. Builders v. American Radiator and Standard Sanitary Corp., 487 F.2d 161 (3rd Cir. 1973). It is the opinion of this Court that the vast majority of the time spent by the plaintiffs' attorneys in this litigation was fairly allocated to discovery, legal research, preparation of pleadings, settlement negotiations and general case preparation.

Since the benefit of these actions accrued to all class members, there is no need or basis in the instant litigation to segregate the attorneys' time spent between that spent on behalf of the class members and that spent solely on behalf of the named plaintiffs. All members of the class have benefited as a whole by the services of their attorneys.

A small amount of time which is recorded in the affidavits of plaintiffs' attorneys cannot be allowed as reasonable time spent on this litigation. Thus it is the opinion of this Court after carefully examining the affidavits and supplemental affidavits of the plaintiffs' attorneys that 3,734.50 hours, were properly expended by the plaintiffs' attorneys in this litigation. The following is a breakdown of that total time by attorneys:

   1. Aram A. Hartunian and Charles Pressman   1542.25 hours*fn6
   2. William C. Engelke                         20.00 hours
   3. Steven Goldman                            255.00 hours
   4. Paul Lurie                                 35.50 hours
   5. Jack Joseph                                37.75 hours
   6. Edward A. Berman and Lawrence Walner      295.00 hours*fn7
   7. Jerome S. Wald                            126.75 hours
   8. Perry Goldberg                            694.50 hours
   9. Josef D. Cooper                            17.25 hours
  10. Granvil I. Specks                          14.75 hours
  11. Aaron M. Fine                             152.50 hours
  12. Stuart H. Savett                          238.00 hours
  13. Donald L. Weinberg                         93.75 hours
  14. Arthur M. Kaplan                           50.50 hours
  15. Herbert E. Milstein                        14.00 hours
  16. Michael D. Hausfeld                         3.50 hours
  17. Harold E. Kohn                              3.50 hours
  18. Abraham L. Pomerantz                       60.00 hours
  19. Richard M. Meyer                           35.00 hours
  20. Donald J. Miller                           45.00 hours
                            Total =            3734.50 hours

IV. The Beneficial Result Achieved

A. The Beneficial Result.

At the June 4, 1973 hearing on the settlement, counsel for the Chicago Mercantile Exchange stated: ". . . the plaintiffs feel proud of the settlement and I can say, on behalf of the defendants, we too think that it was a well-workmanlike job achieved, which serves to restructure an entire industry — restructuring it with the tempering device of a phase-out of what has been a practice for over 100 years".*fn8 According to the affidavit of Professor Rubin A. Kessel of the University of Chicago, the effect of the elimination of the fixed rate schedule (the instant settlement) will save the plaintiffs' class an amount which reduced to present value, totals at least an eight hundred million savings.*fn9 Professor Hieronymous of the University of Illinois has grave doubts that the elimination of minimum commissions will lower the general level of rates as predicted by Professor Kessel.*fn10 Professor Cootner of Stanford University has stated that Professor Kessel's estimates of the saving of the instant settlement is too conservative and probably the actual savings is closer to one billion dollars.*fn11 Regardless of whether the actual savings of the instant settlement is far less or far in excess of $800,000,000.00, it is clear to this Court that the beneficial results achieved by plaintiffs' attorneys in the instant settlement is one of the most significant results ever achieved in history by anti-trust litigation.*fn12

B. Reasonable Attorneys' Fees for the Beneficial Result.

It is not necessary to produce "a common fund" or a monetary recovery for fees to be awarded plaintiffs' attorneys. The foundation for the historic practice of granting reimbursement for costs of litigation other than the conventional taxable costs is part of the original authority of the chancellor to do equity in a particular situation. See Mills v. Electric Auto-Lite Company, 396 U.S. 375, 90 S.Ct. 616, 24 L.Ed.2d 593 (1970).*fn13 It must be remembered that the award of attorney's fees in certain cases is necessary to provide an incentive to counsel for the representation of a class.

The value of a lawyer's services is not merely measured by time or labor. The practice of law is an art in which success depends as much as in any other art on the application of imagination — and sometimes inspiration — to the subject matter. See Woodbury v. Andrews Jergens Co., 37 F.2d 749 (S.D.N.Y. 1930); Sampsell v. Monell, 162 F.2d 4 (9th Cir. 1947).

While opinion of the parties may differ as to what it would be reasonable to charge victorious plaintiffs who have been saved allegedly eight hundred million dollars, it should be agreed by all sides that such fees were they charged to a private litigant would bear a substantial relationship to the amount saved that litigant.*fn14 To that consideration should be added the fact that all of the works of plaintiffs' counsel was contingent.

Several courts have considered an appropriate fee based on an hourly rate which takes into account the contingency element involved in the litigation. An award of over $400 per hour was approved in the multi-district litigation involving plumbing fixtures. Philadelphia Housing, et al. v. American Radiator and Standard Sanitary Corporation, et al., No. 41773 (E.D.Pa. 1973). Most recently in multi-district litigation involving the gasoline industry, fees of over $500 per hour were awarded. City of Philadelphia, et al. v. American Oil Company, et al., Civ. No. 647-68, et seq. (N.N.J. 1973).*fn15 In all these instances, the fees approved were larger than the fee being awarded in the instant litigation and benefits achieved for the classes, though immense, were far smaller than the benefit which has been achieved here. Moreover, in no previous situation has the private anti-trust bar achieved a restructuring of the central pricing practices of a major industry. This achievement could well be of great instructive precedent in subsequent litigation.

It is the opinion of this Court after over two years experience with this litigation and after carefully examining and weighing the pleadings, Master Settlement Agreement, memoranda, affidavits and testimony of witnesses that the plaintiffs' attorneys should be awarded an aggregate sum of $1,339,060.00.

This Court has considered what a normal hourly rate would be for petitioning attorneys and there is no question that the fee which this Court deems appropriate in this case may appear excessive if one views this compensation solely in light of an hourly rate, even such an hourly rate as these skilled and experienced trial counsel command.*fn16

Under the unique circumstances of this litigation and the significant result achieved it is clear to this Court that an award of four times the petitioning attorneys normal hourly rate is proper and just and will be the rate allowed by this Court. This is an average rate of $358.56 per hour, which is less than the award of attorneys' fees in many anti-trust cases which have achieved less significant results than the instant litigation. See, e.g., American Radiator & Standard Sanitary Corporation et al., supra; City of Philadelphia et al. v. American Oil Company et al., supra. This represents an award of 1.74% of the alleged savings for one year after the four year phase out.*fn17

When the fee is examined in light of the outstanding result obtained for the members of the class in this complex multi-district litigation which was keenly contested and wherein the counsel for the class were without the benefit of a prior judgment or verdict in a case brought by the government or the benefit of other counsel's work in a prior or companion case this Court is of the opinion that such fee is fair, reasonable and just. If these cases had been tried to verdict, there is no doubt that the number of hours of lawyer's time expended would be more than quadruple the number of hours expended to date. However, the possibility of trial producing a more favorable recovery for the class would be remote,*fn18 and the class would then have risked the many hazards of litigation such as trial error, appeals, verdict uncertainty, delayed results, etc. This Court's award of four times the hourly rate of the plaintiffs' attorneys is meant to adequately compensate them for initiating this significant litigation and negotiating such a beneficial settlement for the class; yet at the same time this award is not meant to provide a wind fall to the plaintiffs' attorneys.

The following is a breakdown by individual attorney of this Court's award of his fee:

                            Number of       Normal     Awarded
                              Hours         Hourly      Hourly
  Name of Attorney           Expended        Rate        Rate          Fee

 1. Aram A. Hartunian
    and Charles Pressman      1542.25        $100        $400      $616,900.00
 2. William C. Engelke          20.00        $60        $240        $4,800.00
 3. Steven Goldman             255.00         $75        $300       $76,500.00
 4. Paul Lurie                  35.50         $80        $320       $11,360.00
 5. Jack Joseph                 37.75         $70        $280       $10,570.00
 6. Edward A. Berman
    and Lawrence Walner        295.00         $75        $300       $88,500.00
 7. Jerome S. Wald             126.75         $75        $300       $38,025.00
 8. Perry Goldberg             694.50        $100        $400      $277,800.00
 9. Josef D. Cooper             17.25         $50        $200        $3,450.00
10. Granvil I. Specks           14.75        $100        $400        $5,900.00
11. Aaron M. Fine              152.50        $100        $400       $61,000.00
12. Stuart H. Savett           238.00         $65        $260       $61,880.00
13. Donald L. Weinberg          93.75         $35        $140       $13,125.00
14. Arthur M. Kaplan            50.50         $40        $160        $8,080.00
15. Herbert E. Milstein         14.00         $70        $280        $3,920.00
16. Michael D. Hausfeld          3.50         $50        $200          $700.00
17. Harold E. Kohn               3.50        $125        $500        $1,750.00
18. Abraham L. Pomerantz        60.00        $125        $500       $30,000.00
19. Richard M. Meyer            35.00        $100        $400       $14,000.00
20. Donald J. Miller            45.00         $60        $240       $10,800.00
                                                  Total =        $1,339,060.00


The plaintiffs' attorneys in their petition have presented a detailed statement of their out-of-pocket costs and expenses which totals $14,486.25. It is the opinion of this Court that these out-of-pocket costs and expenses are proper and just.

Accordingly, it is hereby ordered that the plaintiffs' attorneys are awarded:

  a) $1,339.060.00 in attorneys' fees as specified
     above, and

b) $14,486.25 in out-of-pocket costs and expenses.

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