APPEAL from the Circuit Court of Cook County; the Hon. NATHAN
M. COHEN, Judge, presiding.
MR. JUSTICE JIGANTI DELIVERED THE OPINION OF THE COURT:
Rehearing denied January 29, 1981.
The plaintiffs, Faye Lurie and H. Haskell Lurie, on behalf of themselves and all others similarly situated, and the defendants, Canadian Javelin Limited, William M. Wismer, then president of Canadian Javelin, Limited, and John C. Doyle, founder and owner of the controlling interest of Canadian Javelin Limited, all appeal from an order of the circuit court of Cook County which required the defendants to pay $100,000 in attorneys' fees to the plaintiffs' attorney. The plaintiffs argue that the amount of the award is insufficient. The defendants argue that the trial court's award is excessive. The defendants have also appealed from an order granting fees to the trustee and an order expanding the class. However, these orders are no longer at issue on appeal, because subsequent to the filing of this appeal the defendants have agreed to pay the trustee and the order expanding the class has been vacated.
On December 5, 1973, the plaintiffs filed a four-count class action complaint in the circuit court of Cook County alleging common-law fraud, violation of Illinois securities laws, and violation of Federal securities laws. Two days later, the plaintiffs filed an action in the United States District Court for the Northern District of Illinois against the same defendants as named in this action alleging violation of Federal securities laws.
Two days prior to the filing of the instant action, a similar class action, Bonime v. Doyle (S.D.N.Y. 1975), 416 F. Supp. 1372, was filed in the United States Court for the Southern District of New York. The Bonime complaint was based upon similar misconduct, brought against the same defendants, and grounded in similar legal theories as the instant action.
The Lurie class was certified in the circuit court on July 16, 1976, 2 1/2 years after the filing of the complaint. On October 12, 1976, the parties filed a stipulation of settlement with the court. The proposed settlement was approved by the court on April 11, 1977.
The scope of the class and the extent of recovery as set forth in the stipulation of settlement was closely tied to the scope of the class and extent of recovery in Bonime. The Bonime class included, with some exceptions, all persons who purchased Canadian Javelin, Ltd. common stock between April 30, 1969, and October 24, 1973. Pursuant to a settlement which had been approved by the court, the Bonime action was dismissed on the merits with prejudice. All persons who did not opt out of the Bonime class were enjoined from continued prosecution of the defendants.
The Lurie class was described in the stipulation of settlement as all persons who opted out of the Bonime settlement, all persons whose claims were rejected in Bonime without proper notice, and all United States residents except "insiders" who purchased Canadian Javelin, Ltd., common stock between October 25, 1973, and December 19, 1974. According to the stipulation of settlement, Lurie class members entitled to recover would recover the same proportion of his or her loss as is recovered by the plaintiffs in Bonime. The Bonime plaintiffs are to share in proportion to their losses in a fund consisting of $1,350,000 less attorneys' fees and costs.
The Lurie stipulation of settlement provided further that the defendants would pay the plaintiffs' attorneys' fees. Counsel for the parties were to attempt to agree on the amount of attorneys' fees to be paid, but upon the failure to agree either party could petition the court to set the amount. The court's decision would be appealable but "shall not be reversed or modified unless the court's decision thereon is found to constitute an abuse of the court's discretion."
The parties further agreed that the plaintiffs would move that the action filed in the Northern District of Illinois be stayed. Upon the payment of claims to the Lurie class members, the plaintiffs are to move that the Federal action be dismissed.
In June of 1977, plaintiffs' counsel petitioned for fees totaling $321,454. He sought compensation for 2408 hours of attorneys' time at $125 per hour and 681.8 hours of law clerks' time at $30 per hour. He also requested that a multiplier be applied.
Included in the hours for which the plaintiffs' counsel sought compensation were 375.5 hours of attorneys' time and 66.8 hours of law clerks' time spent in connection with the Bonime action. The plaintiffs' counsel had filed objections to the Bonime settlement and argued against the approval of the settlement. These objections were ultimately rejected by the Bonime court. Counsel's fee petition also included a request for compensation for 181.3 hours of attorneys' time and 45.5 hours of law clerks' time expended in connection with the suit filed in the Northern District of Illinois.
There was a hearing on the fee petition on November 30, 1978. The court determined the reasonable hourly rate to be $75 per hour. This determination is not disputed by either party on appeal. The court determined that the plaintiffs should be compensated for 1850 hours of the 2408 hours requested. The 1850 hour figure was reached by excluding the attorney time and law clerk time expended in connection with the Bonime case and Illinois Federal court case and by excluding all of the law clerk hours expended in connection with the instant action. By multiplying $75 per hour by 1850 hours the court determined the "lodestar computation" to be $138,750. The court ordered the defendants to pay $100,000 of the $138,750 lodestar computation.
In making its decision on the fee petition the court discussed several factors. It noted first that although fees of $321,454 were requested, the total possible recovery to the class if no claim were rejected would be approximately $30,800. The court stated that measured against the small recovery even ...