Appeal from the Appellate Court for the First District; heard
in that court on appeal from the Circuit Court of Cook County,
the Hon. Nathan M. Cohen, Judge, presiding.
JUSTICE WARD DELIVERED THE OPINION OF THE COURT:
This appeal involves the propriety of an award of $100,000 in attorney fees in a class action suit in the circuit court of Cook County. There was a stipulated settlement, under which the class of 12 members recovered approximately $3,000. Under the stipulation the defendants agreed to pay reasonable attorney fees in addition to the damages recovered by the class. The appellate court affirmed. (92 Ill. App.3d 15.) The defendants were given leave to appeal and contend that the award is excessive in light of the size of the damages recovered by the class. The plaintiffs cross-appealed, contending that the attorney fees should have been greater to reflect the substantial amount of time expended and the involved character of the litigation.
Six volumes of the seven-volume record were lost between the time of the filing of the appellate court's opinion and the oral argument before us. Consideration of the issues had to be deferred until the record could be reconstructed by the parties. The clerk of this court has been provided with a condensed two-volume record by the parties, which contains the materials they consider to be necessary for a determination of the questions presented.
On December 5, 1973, the plaintiffs, Faye and H. Haskell Lurie, on behalf of themselves and all others similarly situated, filed a four-count class action complaint in the circuit court of Cook County (hereafter, Lurie I) against the defendants, Canadian Javelin Limited (Javelin), William M. Wismer, and John C. Doyle. Wismer was the president and a director of Javelin. Doyle was the founder, a director, the chief executive officer, and the owner of a controlling interest in Javelin's stock. The complaint alleged common law fraud, violation of section 12 of the Illinois Securities Law of 1953 (Ill. Rev. Stat. 1973, ch. 121 1/2, par. 137.12), and violations of sections 5 and 17(a) of the Securities Act of 1933 (15 U.S.C. § 77e, 77q(a) (1970)). The Luries purported to represent all purchasers of Javelin stock in the period from November 1, 1969, to December 5, 1973, the date of the filing of the complaint.
On the same day, the plaintiffs filed another suit (Lurie II) against the defendants in the United States District Court for the Northern District of Illinois, alleging violations of the Securities Exchange Act of 1934 (15 U.S.C. § 78a et seq. (1970)), under which Federal courts have exclusive jurisdiction (15 U.S.C. § 78aa (1970)). The complaint in Lurie II was based on the same conduct of the defendants as was alleged in the Luries' State court action. The district court stayed proceedings in Lurie II until the State court proceeding would be concluded.
On December 3, 1973, two days before the filing of the Luries' suits, a similar class action against the defendants, Bonime v. Doyle (S.D.N.Y. 1976), 416 F. Supp. 1372, was filed in the United States District Court for the Southern District of New York. The Bonime plaintiffs claimed representation of the class of Javelin shareholders who purchased shares during the period between April 30, 1969, and October 25, 1973. (By order of the Securities and Exchange Commission (SEC), trading in Javelin stock in domestic markets was halted on October 25, 1973.)
In October of 1973, prior to the filing of the suits we have described above, the SEC brought a suit against Javelin, Wismer, and Doyle. (Securities Exchange Com. v. Canadian Javelin Ltd. (S.D.N.Y. July 17, 1974) [1974-1975] Fed. Sec. L. Rep. (CCH) par. 94,720.) The SEC's complaint made allegations similar to those in the subsequent Bonime and Lurie suits and prayed for a permanent injunction and other relief. On March 29, May 29, and July 17, 1974, three separate consent decrees were entered in the SEC action, which enjoined the defendants from engaging in any of the activities complained of and from participating in any future activities which would operate as a fraud on any purchaser of Javelin securities.
It appears that Doyle is no stranger to legal proceedings. According to the record, Doyle was convicted of Federal securities violations in Connecticut in 1965. When his conviction was affirmed (United States v. Doyle (2d Cir. 1965), 348 F.2d 715), he fled to Canada, where he successfully resisted extradition.
In 1976, Canadian authorities brought charges of fraud against Doyle and four others involving common stock of Javelin. It is said that upon the filing of these charges, Doyle fled to and presently resides in Panama. The plaintiffs' brief states that all of the assets of Canadian Javelin have been removed from the United States.
The Bonime action proceeded more expeditiously than Lurie I, and in April of 1974 the Bonime plaintiffs moved for class certification. On February 7, 1975, the Bonime class was certified. It comprised all purchasers, with exceptions not relevant here, of Javelin shares between April 30, 1969, and October 24, 1973. When the parties in Bonime submitted a stipulation of settlement on July 9, 1975, the Luries' attorney, who also represented three of the class members in Bonime, unsuccessfully objected to the proposed settlement. The settlement, which was approved on July 26, 1976, provided that the members of the Bonime class would receive $1,350,000, less attorney fees of $260,000 and costs. The Bonime action was later dismissed on the merits with prejudice.
Meanwhile, the Lurie I plaintiffs had moved for class certification. Extensive briefs were filed by both parties on the question. In July 1976 the court granted the plaintiffs' class-certification motion and issued a 31-page memorandum opinion. The class was to include all those who acquired Javelin common stock in the period from November 1, 1969, to December 19, 1974. When the Bonime settlement was approved in New York 1 1/2 weeks later, the Lurie I class had to be reduced to include only those who were not included within the definition of the Bonime class or who opted out or were rejected, without a requested hearing, from being included within the Bonime class.
On October 12, 1976, the parties in Lurie I submitted to the court a stipulation of settlement under which each member of the Lurie I class was to receive the same proportional recovery of their loss as that which was received by members of the Bonime class. Therefore, the size of the class recovery could not be determined until the size of the Lurie I class and the proportional recovery by the Bonime class were calculated. The defendants additionally agreed in the stipulation to pay attorney fees to the plaintiffs' counsel and certain litigation expenses. The stipulation also provided: "The amount of attorneys' fees to be awarded plaintiffs' counsel in this action shall not, in any manner, be based, directly or indirectly, upon the result obtained or benefit conferred upon the Bonime Class in the Bonime case." If the parties were not able to agree on the amount of attorney fees, the stipulation provided that either party could petition the court to set the fees. The court's decision as to the amount of fees to be paid to the plaintiffs' counsel was not to be reversed or modified unless the court's decision was found to constitute an abuse of discretion. The stipulation provided for the dismissal of both the Lurie I and Lurie II actions.
Over 2,500 claims by shareholders of Javelin were filed, but most of these claimants were excluded because they were within the Bonime class. Of the remaining claims the trustee appointed by the trial court determined that only 12 claimants were within the Lurie I class. The service of the trustee continued to 1979. The court ordered payment of $48,800 to the trustee for his services. The trustee was appointed by the court, and remuneration for his services was, of course, not to be on a contingent basis.
As the parties were unable to agree on the amount of fees to be paid to the plaintiffs' attorneys, that question was submitted to the trial court. The plaintiffs' counsel asked for fees totaling $321,454. Compensation for 2,408 hours of attorneys' time at $125 per hour and 681 hours of law clerks' time at $30 per hour was requested. After briefs had been filed and considered, the court calculated a lodestar figure for attorney fees of $138,750 by multiplying the number of hours spent by the plaintiffs' counsel in the litigation by $75, the hourly rate fixed by the court. The court, however, announced that an award for the lodestar figure as calculated would be incongruous considering the amount of the recovery by the class, and it made a fee award of $100,000. The court later denied the defendants' motion to reduce and the plaintiffs' motion to ...