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United States District Court, Northern District of Illinois, E.D

September 30, 1981


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


Plaintiffs in these three consolidated*fn1 class actions charge 22 piping and construction companies and 36 individuals with bidrigging, price fixing and job allocation in the Chicago area from 1956 until 1977 in violation of the Sherman Act. Two sets of defendants (Phillips, Getschow Co., Lee E. Getschow and Roy Getschow, Jr. ["Getschow defendants"] and Economy Mechanical Industries, Inc. and Elmer R. Bruksch ["Economy"]) have filed objections to Magistrate Cooley's May 28, 1981 order (the "Amendment"), which amended Pretrial Order No. 2 (the "Order") to require all defendants to reimburse their designated lead counsel for attorney's fees and other expenses. Defendants Borg, Inc., Jeffrey Berg, Howard Salzman and F.E. Moran, Inc. (represented by the lead counsel) have independently moved to strike portions of the Getschow defendants' April 27, 1981 Memorandum Relating to Motion To Clarify (the "Memorandum") filed before Magistrate Cooley. Finally, in response to this Court's request the parties have commented particularly on the proposed retroactive aspect of the Amendment, and have furnished the Court with statements reflecting the approximate amount of fees involved. For the reasons stated in this memorandum opinion and order:

    (1) Getschow defendants' objection to the Amendment
  is denied, and the Amendment is clarified in certain

    (2) Economy's objection to the Amendment is

(3) Lead counsel's motion to strike is granted.

  Objections to the May 28, 1981 Amendment

On May 16, 1980 Magistrate Cooley entered the Order dealing with various aspects of pretrial management of these actions. Paragraph V established lead counsel for plaintiffs and for defendants and a steering committee for defendants. Lead counsel were directed to engage in three types of coordinating activities and the steering committee in three others, including the briefing and argument of motions and the preparation of joint written interrogatories and requests for the production of documents.

On March 3, 1981 Magistrate Cooley amended Paragraph V to include a provision stating that "it would be unfair and inequitable for only the clients of the named defense counsel to bear the total expenses associated with properly executing . . . [their] functions." Accordingly he directed that "all defendants shall share equally those expenses" effective nunc pro tunc May 16, 1980, the date the initial Order was entered. Upon request for clarification Magistrate Cooley entered the Amendment May 28, 1981, superseding the March 3, 1981 amendment. It enumerated the expenses covered by the Order and the procedure by which a defendant could "opt out" of participation in certain efforts by lead counsel or the steering committee (see Appendix A).

Getschow defendants object to the portion of Amended Paragraph V requiring assessment of attorneys' fees and expenses against all defendants.*fn2 They urge that:

    (1) Problems of allocation of such expenses would
  outweigh any advantages obtained under such an

    (2) Defendants will improperly be placed in
  adversarial positions relative to each other.

    (3) Such an arrangement frustrates a defendant's
  rights under Fed.R.Civ.P. ("Rule") 10(c).

Economy objects to Amended Paragraph V to the extent that it covers expenses incurred before the date of the Amendment.*fn3 Defendants favoring the arrangement*fn4 urge that:

    (1) It facilitates a just apportionment of expenses
  incurred by lead counsel in activities inevitably
  benefiting all defendants.

    (2) Its opt-out clause (embodied in the second
  quoted sentence) permits any defendant to refuse to
  reimburse lead counsel or the steering committee for
  expenses not benefiting that defendant.

This Court concurs with the statement of the American College of Trial Lawyers pertaining to this subject, contained at page 5 of its Recommendations on Major Issues Affecting Complex Litigation (February 27, 1981):

  Liaison counsel*fn5 should not act substantively for
  a party that has not employed him, and the court
  should not expect him to do so. The importance of the
  liaison counsel's position lies in its communication
  and administrative functions. Liaison

  counsel should be reimbursed for time and expense by
  the parties for whom they are acting, for services
  rendered and expenses incurred.

Stated differently, liaison (or lead) counsel should not act on behalf of parties not wishing to use their representation, nor conversely should such parties be required to pay for services they do not employ.

Had the Amendment subjected all defendants to assessment without exception, that principle plainly would be violated. But the Amendment allows a defendant to opt out of the reimbursement obligation where lead counsel's substantive actions do not comport with its own wishes. That arrangement may be viewed as providing each defendant the opportunity to employ lead counsel — by acquiescence in their actions — or not to do so by making the requisite notice of disavowal.

One refinement should be understood in applying the Amendment, however. It would be unfair for a defendant to exercise a nominal opt-out while still deriving the full substantive benefit of lead counsel's efforts. That would not abate the free-rider concerns that led to the Amendment in the first instance. Accordingly it should be understood that an opt-out disavowal will insulate a defendant from cost-sharing only where that disavowal results in the defendant's not sharing the consequences of the legal position taken on behalf of the class.

Under such circumstances Magistrate Cooley's Order appears both fair and consistent with the discretion to employ or not to employ counsel to which defendants are entitled.*fn6 As to the possible "apportionment of expense" problems to which the Getschow defendants allude, if they arise the new Magistrate (or this Court) may of course enter further appropriate orders on proper application. In any case such claimed administrative burdens are purely speculative and insufficient to justify reversal of the Amendment.

In one respect, though, the Amendment cannot be upheld. Despite the strong equities supporting its retrospective effectiveness, the law is to the contrary. It is familiar doctrine that a nunc pro tunc order is not a permissible synonym for retroactivity but rather is limited to current correction of the record to speak an earlier truth: an order made earlier but not formally entered. Crosby v. Mills, 413 F.2d 1273, 1277 (10th Cir. 1969); Rardin v. Messick, 78 F.2d 643, 645 (7th Cir. 1935). Instead then the Court must look for power to assess fees against members of the defendant class. And on that score the American Rule (see Roadway Express Co. v. Piper, 447 U.S. 752, 759, 100 S.Ct. 2455, 2460, 65 L.Ed.2d 488 (1980); Alyeska Pipeline Service Co. v. Wilderness Society, 421 U.S. 240, 257-59, 95 S.Ct. 1612, 1621-22, 44 L.Ed.2d 141 (1975)) bars entry of such an assessment.*fn7

In principal part the denial of retroactive reimbursement serves to benefit non-participating class members as free riders. But the Court is also mindful of some force in the argument, advanced on behalf of some class members, that had they known of the potential of being assessed for lead counsel's fees*fn8 they would have conducted their own handling of the litigation differently. In any case, because of the limitations imposed by existing law the Amendment is hereby modified so as to become effective May 28, 1981, the date of its entry.

        Borg's Motion To Strike Portions of the Getschow
                     Defendants' Memorandum

Lead counsel representing Borg has moved to strike those portions of Section B of the Getschow defendants' Memorandum that state:

    (1) Lead counsel directly benefits from controlling
  the litigation as he sees fit (par. (c)).

    (2) Various defendants do not agree with group
  activities they would finance under the Order (par.

    (3) Various defendants have already acted contrary
  to the decisions of lead counsel (par. (e)).

Counsel claims those statements are false and constitute "scandalous matter" and should therefore be stricken under Rules 11 and 12(f).

Borg's counsel's motion is granted because the complained-of language may be read as impugning the integrity of lead counsel — as an unfair and inaccurate assertion of unprofessional conduct. Getschow defendants have said that was not their intention, but a fair reading of their statements supports the construction that they improperly charge inappropriate motivations to lead counsel. So that the record may be entirely clear on that score without having to refer to a disclaimer found only in a later-filed separate document, the offending language will be stricken. Getschow defendants are ordered (and given leave) to withdraw their original Memorandum from the file and submit for filing a revised memorandum without the language objected to by Borg, such submission to be made by October 19, 1981.


Getschow defendants' objections to Magistrate Cooley's May 28, 1981 order are denied. Economy's objection is sustained in that the provision for sharing of expenses is made effective May 28, 1981 rather than May 16, 1980. Borg's counsel's motion to strike portions of Getschow defendants' Memorandum is granted and Getschow defendants are directed to comply with the immediately preceding paragraph of this opinion.


  For purposes of this order, the term "total expenses"
  includes: (a) customary administrative (office-type)
  expenses; (b) reasonable fees and expenses for
  attorneys and paralegals engaged in performing
  administrative functions (telephoning, letter
  writing, and other similar coordinating activities);
  and (c) reasonable fees and expenses for attorneys
  and paralegals engaged in the research and
  preparation of joint briefs and joint discovery
  responses that inure to the benefit of all
  defendants. All defendants will share equally fees
  and expenses of type (a) and (b). No defendant will
  be exempt from the obligation to share equally type
  (c) fees and expenses, unless such defendant, in a
  formal pleading filed with the court within 7 days of
  the filing date of a joint brief or joint discovery
  response, specifically disavows all or part of such
  joint brief or joint response. If such defendant
  disavows the whole of such joint brief or joint
  response, such defendant will not be obliged to share
  any part of type (c) fees or expenses related
  thereto. If such defendant disavows only a portion of
  such joint brief or joint response, such defendant
  shall share equally the type (c) fees and expenses
  connected with the undisavowed portion of the joint
  brief or joint response.

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