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E.E.O.C. v. BURLINGTON NORTHERN INC.

September 20, 1985

THE EQUAL EMPLOYMENT OPPORTUNITY COMMISSION, GREGORY JONES, OWEN T. SLOAN AND ROBERT JEFFREY, JR., PLAINTIFF-INTERVENORS, AND WILLIAM E. MCBRIDE, WILLIAM H. BUTLER, LENNO EDWARDS, ALBERT WHITE, BRUNICE MCNEAL, RUBEN MCGAUGHY, WILLIAM FORBUSH, TYRONE COFFEE, HILARY R. JONES, DUBOIS GILLIAM, AND MICHAEL LOVE, ON BEHALF OF THEMSELVES AND ALL OTHERS SIMILARLY SITUATED, PLAINTIFFS,
v.
BURLINGTON NORTHERN INC.; BROTHERHOOD OF LOCOMOTIVE ENGINEERS; UNITED TRANSPORTATION UNION, AFL-CIO; RAILROAD YARDMASTERS OF AMERICA, AFL-CIO; BROTHERHOOD OF RAILWAY, AIRLINE & STEAMSHIP CLERKS, FREIGHT HANDLERS, EXPRESS & STATION EMPLOYEES, AFL-CIO; BROTHERHOOD OF MAINTENANCE OF WAY EMPLOYEES, AFL-CIO; AMERICAN TRAIN DISPATCHERS ASSOCIATION, AFL-CIO; INTERNATIONAL ASSOCIATION OF MACHINISTS & AEROSPACE WORKERS; INTERNATIONAL BROTHERHOOD OF BOILERMAKERS, IRON SHIPBUILDERS, BLACKSMITHS, FORGERS & HELPERS, AFL-CIO; SHEET METAL WORKERS' INTERNATIONAL ASSOCIATION, AFL-CIO; INTERNATIONAL BROTHERHOOD OF ELECTRICAL WORKERS, AFL-CIO; BROTHERHOOD OF RAILWAY CARMEN OF U.S. AND CANADA, AFL-CIO; INTERNATIONAL BROTHERHOOD OF FIREMEN & OILERS, AFL-CIO; BROTHERHOOD OF RAILROAD SIGNALMEN, AFL-CIO, DEFENDANTS.



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

MEMORANDUM

I

This multi-district litigation involves suits, some of them class actions, and intervenor complaints which allege that a railroad corporation and its unions have discriminated against Negroes in employment opportunities. On the day of trial, in a spirit of compromise, cooperation, and amicability, lead counsel for plaintiffs and the class, and the chief lawyer for the railroad, settled all the claims of the plaintiffs and members of the class, a group whose size has been estimated as between 5,000 and 20,000 Negroes. Then, the lawyers agreed on a consent decree which granted plaintiffs, members of the class, and charging parties, monetary recovery and general as well as special relief.

In addition, the railroad agreed to pay the attorney fees of counsel for the private plaintiffs. Later, this court approved the consent decree; and in accordance with its terms, the railroad has paid the fees and expenses of all the lawyers in the case except lead counsel for plaintiffs and the class. Further, without contest, it has paid EEOC the costs which the agency has disbursed in the course of this litigation.

Now, lead counsel have filed petitions asking this court to determine the attorney fees, plus a multiplier, which the railroad should pay them, and the amount of the advanced costs for which they should be reimbursed.*fn1 The petitions have been briefed; and in the course of its written submissions, the railroad concedes that petitioning counsel are entitled to reasonable fees; that the number of hours claimed were worked by counsel and their legal assistants; and that the expenses for which reimbursement is sought were advanced and would be paid by the railroad.

However, the railroad contends that lead counsel seek hourly rates which are at least ten percent to twenty percent too high; and that the lower rates it proposes are equal to those charged by experienced lawyers who defend employment discrimination suits in the communities where petitioning counsel practice. The railroad argues that the fees, plus a multiplier, which petitioning counsel seek, are unreasonable; it insists that the record of this case does not support any enhancement of the lodestar figure to which lead counsel undoubtedly are entitled. Therefore, the parties ask this court to resolve four issues: first, whether the rates per hour at which lead counsel seek attorneys' fees are reasonable; second, whether the fees awarded to lead counsel should bear interest from April 2, 1984, the date this court fully approved the consent decree; third, whether this case was the kind of "exceptional success" that would justify lead counsel being given a multiplier as a bonus for the legal work they have performed; and fourth, whether the defendant unions should be ordered to assume the responsibility for some portion of the fees and expenses which are ordered paid to counsel for plaintiffs and the class.

II

On August 22, 1974, an EEOC commissioner, acting pursuant to Sections 706 and 707 of the Civil Rights Act of 1964, as amended, filed a charge which alleged that Burlington Northern, Inc., a multi-state railroad corporation,*fn2 and thirteen international unions representing BN employees, had been "unlawfully discriminating against Blacks, Spanish-surnamed Americans, orientals, American Indians and women because of their race, color, national origin and sex with respect to recruitment, hiring, job assignment, job classification, discharge, wages, promotional opportunity, training and other terms, conditions and benefits of employment." EEOC propounded interrogatories which were answered by the railroad, demanded documents which were produced, and interviewed or deposed BN officials. This process, which was mainly investigatory, continued for a number of years.

In July 1977, the first of some thirteen or fourteen civil actions was filed against Burlington in the United States District Court for the District of Minnesota. It was a suit by Claude Brown against BN and one of its unions alleging race discrimination in employment opportunities. Thereafter, different suits were filed by other plaintiffs in federal courts in Washington, Nebraska, Missouri, and in this district. All of the complaints alleged racial discrimination in employment, some asserting claims under 42 U.S.C. § 1981, but all invoked Title VII of the Civil Rights Act of 1964. Some of the plaintiffs sought relief only for themselves, others were class suits against BN alone, while others named as co-defendants a number of unions that represented BN employees.

The first of the suits filed in this district was by William E. McBride and William H. Butler, Jr., as a system-wide class action.*fn3 The case was assigned to the docket of Judge John Powers Crowley; the lawyers representing the plaintiffs were from Davis, Miner & Barnhill, a small but experienced Chicago law firm that specializes in civil rights litigation. Among the suits filed in the district court of Minnesota, was a class action by William E. Forbush, against BN and unions representing its employees. Plaintiff and the class in that civil action were represented by Paul C. Sprenger of Sprenger, Olson and Schutes, also a small firm that specializes in civil rights litigation. In both McBride and Forbush the lawyers undertook representation of plaintiffs and the class under contingency fee agreements.

In McBride, plaintiffs moved for class certification to which BN objected. At the same time, EEOC filed a motion to intervene in the case. On December 22, 1978, Judge Crowley granted the plaintiffs' motion for class certification and EEOC's motion to intervene.*fn4 A little more than a month later, January 31, 1979, Sprenger, representing Forbush in the district court in Minnesota, Barnhill, representing McBride and Butler, three attorneys in two other cases pending in this district, and Bruce Elfvin, staff attorney for EEOC, appeared before Judge Crowley and proposed an agreed order "concerning the organization of plaintiffs' Steering Committee, Committee of the Whole, and to the designation of Lead Counsel,. . . ." The proponents stated that their purpose was "to assist the Court in the coordination of this litigation." The duties and responsibilities of the lawyers who were to be lead and co-lead counsel were described and the function of the Steering Committee and Committee of the Whole were defined. Judge Crowley approved the proposed order; it was entered as of the date of its presentation. Sprenger and Barnhill, or Judson Miner of the Barnhill firm, were designated as lead counsel for plaintiffs and the class; Bruce Elfvin was named co-lead counsel.

At the time, the suit in McBride had been on file more than one year. Both Barnhill and Sprenger knew the complexity of the cases, the scope of the allegations and charges made against BN, and the difficulties of proof. The lawyers who accepted the responsibilities of lead counsel knew by then the positions that had been taken by BN in the defense of the charges of race discrimination. Neither at the time the order was presented nor at any other proceeding before Judge Crowley was there any statement made by the designated lead counsel concerning the difficulties of proof, the burdensomeness of the cases with regard to expenses, or the obligations assumed by them under the contingency agreements each had entered with their plaintiffs.

Soon after Judge Crowley certified the class in McBride, prompted by the pendency of a number of cases in other districts, BN moved before the Judicial Panel on Multidistrict Litigation for consolidation of the cases in order to coordinate pretrial proceedings. On April 11, 1979, the panel ordered the cases transferred to this district and assigned to Judge Crowley as In Re Burlington Northern, Inc. Employment Practices Litigation, MDL 374. Thereafter, subsequently filed cases were also transferred to this district as "tagalong actions." Then in June 1979, twelve of the named plaintiffs in six of the cases against BN, together with EEOC, filed a first consolidated complaint in this district under the case number of McBride. This consolidated complaint invoked the provisions of both Title VII and 42 U.S.C. § 1981. The defendants were BN and thirteen unions that represented BN employees.

In the balance of 1979, the parties continued with discovery. Plaintiffs obtained detailed information concerning the railroad's workforce from BN computer tapes and from the Railroad Retirement Board, reflecting BN's yearly reports for the period from the 1970 merger that created BN, to 1980. Based on these tapes, lead counsel caused to be prepared statistical printouts which were served on BN in conjunction with requests for admission and propounded interrogatories. The discovery conducted by lead counsel extended to BN's employment policies and depositions of its regional personnel managers as well as several members of its Human Resources Department staff. Union representatives were also deposed and requests for production of documents were served on defendant unions.

Lead counsel also sought computer tapes and hard copy documents from the unions. These detailed discovery efforts proceeded through the year 1980. During the spring of 1981, Judge Crowley announced he was going to resign from the federal bench, effective as of June 30, 1981. Thereupon, EEOC moved to transfer MDL 374 as the case stood before Judge Crowley to a judge in the United States District Court for the District of Minnesota. The MDL panel ruled in October 1981 that the consolidated cases were to be assigned to this docket for the remainder of the coordinated pretrial proceedings.

These were extensive; typical of litigation like as this one. They included rulings on a multitude of discovery disputes that involved what lead counsel have said were "hundreds of thousands of documents" produced by BN and the union defendants. These documents were stored in two depositories, one in Chicago, Illinois, and one in St. Paul, Minnesota, established by a pre-trial order which Judge Crowley had entered early in the litigation. The depositions involved all of BN's top management personnel, and included responsible officials of the unions. The court was required to rule on a motion filed by BN to redefine the class and one asking for vacature of the order that had permitted EEOC to intervene in the lawsuit. Status hearings were conducted by this court beginning January 22, 1982 and involved the entry of several pretrial orders, one setting out detailed discovery deadlines including dates for exchange of exhibits as well as other matters preparatory to trial. Orders were also entered relating to an appeal from a district court order concerning certain BN witnesses' answers to questions about the railroad's affirmative action program.

By the end of 1982, lead counsel made certain decisions concerning preparation for trial. These included the selection, retention and employment of experts. They decided to retain Dr. Richard Barrett, a well-known testing expert; Dr. Richard Hoyt, an expert in economics who was to testify about the compiled computer data base and on issues of damages; Dr. Stephan Michaelson, a top expert in the interpretation and analysis of race data; Dr. Rebecca Krem, an expert in statistics; Dr. Charlotte Striebel, a Ph.D. in mathematics, who was to testify in rebuttal; and Dr. Herbert Hill, a former NAACP staff member and a recognized student of race discrimination in the railroad industry. Compensation of these experts was assumed by lead counsel in accordance with agreements entered into with each expert.

Throughout the early part of 1983, lawyers for Burlington and lead counsel submitted to the court agreed orders concerning anticipated trial exhibits and other matters. Also, a number of orders were entered allowing intervention of additional plaintiffs, the filing of an amended consolidated complaint, and the transfer to this docket of tagalong cases that had been filed after this court was assigned the multidistrict litigation. In the meantime, the parties proceeded with intensive discovery and final preparation. The case was set to be called for trial on November 7, 1983 and the final pretrial conference was held October 25, 1983. Then, in the early morning hours of the day of trial, a complete settlement was reached. The parties negotiated a consent decree which received the court's preliminary approval on November 22, 1983, and full approval on April 2, 1984.

Under the terms of the decree, BN agreed to pay $10 million, to be held in a fund for those who claimed, and who could establish, that during the designated period, they had been subjected to racial discrimination in hiring, promotion, or discharge. The fund was non-reversionary so that the full $10 million plus interest it may earn, will be paid to qualified claimants under the consent decree. BN retained no interest in the fund and distribution now depends on the number of claims filed and allowed. The $10 million dollars was deposited soon after full approval of the consent decree and has been earning interest since that time.

Class members entitled to make claims against the fund are defined broadly, thus making them eligible for injunctive relief which requires BN to hire Negroes at specified rates for nine years after approval of the decree. For example, each year BN must hire Negroes as officials, managers, and salespeople at two times the Negro national availability for these jobs as determined by relevant census information. In all other jobs which did not have Negroes equal to their availability in the preceding year, each year BN must hire Negroes at rates ranging from 2 to 1.5 times their availability.

Further, by the terms of the decree, BN must promote Negroes from scheduled to exempt jobs at a rate of 1.5 times their availability for such promotions and it must circulate information about job opportunities in a meaningful manner, particularly to Negro organizations. BN agreed to a priority hiring of rejected Negro applicants for jobs and providing neutral references for those it had previously listed as discharged for cause. The decree provides that all persons who have been locked into certain lower paying positions — those jobs to which Negroes traditionally have been assigned — have the right to transfer to higher paying positions, and retain the seniority of their lower paying jobs. BN also agreed to train Negroes to be locomotive engineers at a rate of no less than 15% of the persons trained. In the last subdivision of the decree, BN agreed to pay all lawyers for the plaintiffs and EEOC "their costs including experts' fees, and including (except as EEOC) reasonable attorneys' fees. . . ."

Based on this provision, BN has paid EEOC $512,940.33 of an agreed sum of $675,000 and through agreements approved by this court, it has paid ten lawyers for the plaintiffs in the tagalong and related cases a total of $324,200 for fees and advanced expenses. However, no agreement has been reached with lead counsel for plaintiffs and the class, consequently they have filed separate petitions for fees and for reimbursement of expenses.

Both firms undertake their employment discrimination class actions on a contingency basis, depending on court-awarded fees. As to Charles Barnhill, two judges of this court have recently held that $170 was a reasonable hourly rate for his services and awarded him that basic rate. Between seventy-five and eighty-five per cent of the law firm hours expended by the Sprenger firm were on a contingency basis. When billing fee-paying clients, it has charged $180 or more per hour for Paul C. Sprenger's services and $160 or more per hour for the firm's other two partners. These private clients have included, among others, the Swedish and West German governments, the Smead Manufacturing Company, the American Lutheran Church, and the Minnesota Education Association. Although there is a dispute between the parties concerning the reasonableness of the rates requested by lead counsel, there is evidence that the rates requested by them are consistent with what lawyers of comparable skill and experience charge for similar services in Chicago and Minneapolis, and what lead counsel could charge for their services in other litigation.

Relevant to these facts, it appears that sometime in 1977, William E. McBride and William H. Butler, Jr., went to the offices of Davis, Miner, Barnhill & Galland about the possibility of their representing them in a class action lawsuit against BN. Charles Barnhill, who conducted the initial investigation, interviewed a number of the company's employees, both Negro and Caucasian, and did research concerning the experiences of Negroes with American railroads regarding discrimination in employment opportunities. He concluded that historically BN, as well as other railroad and railway unions, discriminated against Negroes in hiring, promotions, and other employment practices. He noticed that a number of Burlington job classifications were filled by a disproportionate number of Negroes or Caucasians; that many employment practices were subjective and standardless; and that actual hiring or promotion patterns in the years immediately prior to 1977 could not be determined. Consequently, on January 24, 1978, Barnhill filed McBride, et al., etc. v. Burlington Northern, Inc., No. 78 C 269, in this court, the case which became the hub of all the consolidated actions in this multidistrict litigation.

Later that year, on October 17, Paul Sprenger filed William E. Forbush, etc. v. Burlington Northern, Inc., et al., No. Civ. 4-78-461, in the district of Minnesota, one of the cases that was consolidated in this court with McBride. Thereafter, Barnhill and Sprenger, assisted by members of their respective firms, cooperated in handling the two suits. In January 1979, by an agreed order, they were designated lead counsel for plaintiffs and the class. In the six years of litigation from January 1978 to March 31, 1984, they, their partners and associates, worked and adequately documented a total of 12,228.2 attorney hours for which they seek reimbursement in fees. In addition, they ask to be paid for a total of 5,157.8 hours of work by their paralegals. Burlington concedes that the total number of hours claimed is reasonable and properly substantiated. The Barnhill firm advanced $206,672.15 in expenses, the Sprenger firm $925,257.04, which have been properly documented and will be paid by the railroad, subject to its right to seek contribution from the union defendants.

The rates per hour which lead counsel ask this court to award range from $180 for Sprenger, $170 for Barnhill, to $95 per hour for an associate in the Barnhill firm. Each lead counsel asks that the paralegals in his firm be paid $40 per hour. Thus, at the requested rates, the following is the lodestar fee for lead counsel, each lawyer, and paralegals who assisted them in representing plaintiffs and the class.

Hourly         Lodestar
The Attorney          Total Hours    Rates          Fees
Paul C. Sprenger       3,222.25       $180        $580,005.00
Eric L. Olson          1,206.50        160          193,040.00
Robert L. Shutes       3,227.25        160          516,360.00
SO&S Paralegals        3,587.00         40          143,480.00
                                                 -------------
                                                 $1,432,885.00
Charles Barnhill       2,918.50       $170       $496,145.00
Judson S. Miner           97.50        170           16,575.00
George F. Galland          5.00        170              850.00
Briget Arimond         1,267.50        110          139,425.00
Nancy J. Anderson        212.50        135           28,687.50
Paul Strauss              71.20         95            6,764.00
DMB&G Paralegals       1,570.85         40           62,834.00
                                                  ------------
                                                  $751,280.50
Total Lodestar Fees:      $2,184,165.50

Lead counsel request that these fees be subjected to a multiplier. In their original applications, supported by affidavits of two highly respected academic lawyers, those of a number of practitioners in employment discrimination cases, several from experts, and the testimony of experienced trial lawyers, petitioning counsel had asked for a multiplier of 3.5, but after the matter was heard, the multiplier requested was reduced to 2.5. The following is the amount of fees, the lodestar plus the multiplier, which lead counsel are asking for themselves, their partners, associates, and paralegals.

Lodestar      Requested
The Attorney           Fees          Multipliers        Amount
Paul C. Sprenger       $580,005.00     2.5*fn5     $1,347,345.00
Eric L. Olson           193,040.00     2.5             478,340.00
Robert L. Shutes        516,360.00     2.5           1,286,340.00
SO&S Paralegals         143,480.00     1.0             143,480.00
                                                     ...

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