Opinion
MDL Docket No. 1203, Civil Action No. 99-20593.
June 4, 2004
MEMORANDUM AND PRETRIAL ORDER NO.
Before the court is the petition of attorney Andrew Hutton for attorneys' fees and costs for securing the claim of claimant Charles J. Craig, now deceased (Doc. No. 205472). Mr. Craig was awarded a gross Matrix Compensation Benefit under Matrix A, Level III in the amount of $757,142.00. As provided for in the attorney-client agreement, Mr. Hutton seeks 33.3 percent of that award, or $252,092.60, plus costs in the amount of $674.53 for a total of $252,767.13.
Under the Settlement Agreement, nine percent is deducted from all payments to claimants receiving benefits from Fund B. This percentage is paid to Class Counsel, whose role was crucial in crafting the Settlement Agreement, and who continue to work on behalf of all claimants. See Settlement Agreement § VIII.E.1.b. The amount paid to the individual class member's attorney is the total attorney's fee due under the contingency agreement less nine percent of the total Matrix payment due to the class member before any deductions. Id. Mr. Hutton's fee agreement with Mr. Craig provided that he would be entitled to 33.3 percent of the award in addition to the nine percent which would go to Class Counsel. Total counsel fees were thus 42.3 percent.
Under Rule 41.2 of the Local Rules of Civil Procedure for the United States District Court for the Eastern District of Pennsylvania, "[n]o counsel fee, costs or expenses shall be paid out of any fund obtained for a minor, incapacitated person or such decedent's estate as a result of a compromise, settlement, dismissal or judgment unless approved by the Court." In Pretrial Order ("PTO") 2580, we approved the Rules for Review of Attorneys' Fee Petitions and Other Compromises by Representative Claimants, Minor Claimants, and Other Claimants ("Rules for Review of Attorneys' Fee Petitions"). The Rules for Review of Attorneys' Fee Petitions apply "in all instances where a statute or other provision of law requires the Court to approve a petition for attorneys' fees or costs arising from a claim" for benefits paid from Fund B of the Trust's Funds as established by the Settlement Agreement. Rules for Review of Attorneys' Fee Petitions, § II. Because the claimant is now deceased, we must review the attorneys' fees to be deducted from his award.See Local Rules of Civil Procedure for the United States District Court for the Eastern District of Pennsylvania, Rule 41; Rules for Review of Attorneys' Fee Petitions, § II.
The Nationwide Class Action Settlement Agreement with American Home Products will be referred to as the "Settlement Agreement."
An attorney filing a petition for fees must include with the petition:
(a) a proposed form of Order; (b) the terms of the attorney's agreement with the Claimant for the payment of fees and costs, a copy of which shall be attached; (c) a citation of authority that states any limits on or presumptions or guidelines relating to contingent fee agreements in the jurisdiction(s) governing the contractual relationship between the attorney and the Claimant; and (d) an explanation of why the attorney's fees and costs requested are reasonable.
Rules for Review of Attorneys' Fee Petitions, § II.3. The explanation must include:
(1) The amount of work performed;
(2) The character of the services rendered;
(3) The difficulty of the problems involved;
(4) The importance of the litigation;
(5) The degree of responsibility incurred;
(6) Whether the fund involved was "created" by the attorney;
(7) The professional skill and standing of the attorney in his or her own profession;
(8) The results the attorney was able to obtain;
(9) Such further information the attorney views as pertinent.
Id. After the petition is filed, the claimant has twenty days to file an opposition or other response stating his or her position. If no response is filed within twenty days, the court may proceed solely on the basis of the petition. Rules for Review of Attorneys' Fee Petitions, § II.5. The court may then schedule a hearing or may decide the matter on the written submissions alone. Rules for Review of Attorneys' Fee Petitions, § II.7.
As noted above, Mr. Hutton seeks fees in the amount of 33.3 percent of Mr. Craig's award of $757,142.00, in addition to the nine percent which must be paid to Class Counsel. Therefore, under Mr. Hutton's contingency agreement, the portion of the claimant's benefits award allotted to attorneys' fees is actually 42.3 percent.
The memorandum in support of his petition reflects that Mr. Hutton's firm is responsible for approximately 178 hours of work on Mr. Craig's case since April 21, 2002. He argues that the legal issues presented in his case are somewhat difficult and novel and points out that he was able to avoid individual litigation by establishing that Mr. Craig was eligible for benefits under the Settlement Agreement. Further, Mr. Hutton was a member of the discovery committee of the Plaintiffs' Management Committee, and he maintains that his responsibilities and efforts exceeded that of other counsel and benefitted all claimants, not just Mr. Craig.
The Settlement Agreement provides that "[t]he amount to be paid to the Class Member's attorney shall be the total attorney's fee due under the terms of the contingency fee arrangement less nine percent (9%) of the total Matrix payment due to the Class Member before any deductions." Settlement Agreement § VIII.E.1.b. Mr. Hutton emphasizes that under Kansas law, an attorney's fee that is one-third of a client's recovery is fair and reasonable. Grayson v. Grayson, 334 P.2d 341, 344 (Kan. 1959). We agree with Mr. Hutton and the Supreme Court of Kansas that an attorney's fee of 33.3 percent is generally fair and reasonable. However, the proposed percentage for attorneys' fees totals 42.3 percent, not one-third.
Here, as stated above, claimant Charles Craig is now deceased. The court is therefore charged with a fiduciary duty to protect the interests of his estate. See Local Rules of Civil Procedure for the United States District Court for the Eastern District of Pennsylvania, Rule 41.2. As stated above, "[n]o counsel fee, costs or expenses shall be paid out of any fund obtained for a minor, incapacitated person or such decedent's estate as a result of a compromise, settlement, dismissal or judgment unless approved by the Court." Id. Rules such as 41.2 have been adopted in order to lift the interests of certain classes of litigants above other conflicting interests. See Fancsali v. Univ. Health Center of Pittsburgh, 761 A.2d 1159, 1162 (Pa. 2000); In the Matter of Estate of Wise, 890 P.2d 744, 749-50 (Kan. 1995). Competent adults freely may enter contingent fee contracts that do not necessitate court approval. However, when we have responsibility to protect the beneficiaries of an estate who did not enter into the contingent fee agreement, we must ensure that an unfair and unreasonable fee is not extracted.See Local Rules of Civil Procedure for the United States District Court for the Eastern District of Pennsylvania, Rule 41.2.
After considering the submission provided by Mr. Hutton, we have determined that under the circumstances, 42.3 percent is an unreasonable amount for attorneys' fees. The attorneys' fees should not exceed a total of 33.3 percent of the award. The nine percent due Class Counsel will be deducted from that 33.3 percent. Mr. Hutton is therefore entitled to his costs of $674.53 and 24.3 percent of the claimant's award after deduction of said costs, rather than 33.3 percent. This still leaves Mr. Hutton with a generous fee.
Mr. Hutton is directed to submit a form of order in conformity with this Memorandum and Pretrial Order.
PRETRIAL ORDER NO.
AND NOW, this day of June, 2004, for the reasons set forth in the accompanying memorandum, it is hereby ORDERED that the petition of attorney Andrew Hutton for attorneys' fees and costs (Doc. No. 205472) is DENIED without prejudice to his right to submit a form of order in conformity with this memorandum and pretrial order.