United States District Court, Northern District of Illinois, E.D
September 30, 1981
THE BOARD OF EDUCATION OF EVANSTON TOWNSHIP HIGH SCHOOL DISTRICT NO. 202, COOK COUNTY ILLINOIS, ET AL., PLAINTIFFS,
ADMIRAL HEATING AND VENTILATION, INC., ET AL., DEFENDANTS. BOARD OF EDUCATION OF TOWNSHIP HIGH SCHOOL DISTRICT NO. 205, COOK COUNTY, ILLINOIS, ET AL., PLAINTIFFS, V. BORG, INC., ET AL., DEFENDANTS. THE STATE OF ILLINOIS, ET AL., PLAINTIFFS, V. BORG, INC., ET AL., DEFENDANTS.
The opinion of the court was delivered by: Shadur, District Judge.
MEMORANDUM OPINION AND ORDER
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
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
Lead counsel representing Borg has moved to strike those
portions of Section B of the Getschow defendants' Memorandum that
(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,
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.