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Powell v. Pennsylvania Railroad Co.

May 27, 1959

ROBERT POWELL, ET AL., PLAINTIFFS,
v.
PENNSYLVANIA RAILROAD COMPANY, ET AL., DEFENDANTS. ROBERT POWELL AND ELIZABETH W. LAWRENCE, APPELLANTS IN NO. 12,696 AND APPELLEES IN NO. 12,721, V. BROTHERHOOD OF RAILWAY AND STEAMSHIP CLERKS, FREIGHT HANDLERS, EXPRESS AND STATION EMPLOYEES, APPELLEE IN NO. 12,696 AND APPELLANT IN NO. 12,721.



Author: Egan

Before KALODNER and HASTIE, Circuit Judges, and EGAN, District Judge.

EGAN, D.J.: The principal question presented by these appeals is whether the amount allowed by the Court below to counsel for plaintiffs in a class action is inadequate to compensate them for the services performed.

On June 8, 1956 the individual plaintiffs, employees during the years 1944 to 1948 of the Pennsylvania Railroad Company and at the same time members of The Brotherhood of Railway and Steamship Clerks, Freight Handlers, Express and Station Employees, brought a class suit on behalf of themselves and others similarly situated against the two last named and another,*fn1 to collect for loss of overtime which they claimed was due under an award*fn2 made in their favor in January 1949 by The National Adjustment Board.

On the complaint of The Brotherhood, the Adjustment Board found, in substance, that during the month of March 1944 and thereafter until March 1948, the Railroad wrongfully and in violation of the Collective Bargaining Agreement between the parties dated May 1, 1942, retained the Pilot Contracting Company, a private labor contractor, to supply employees for work at the Philadelphia Transfer Freight Station, the South Philadelphia Freight Station and other facilities of the Philadelphia Terminal Division. The Board also ordered the Railroad and the Brotherhood to determine which of the Railroad employees were available and had been deprived of the right to work, and after such determination, to pay them.

From January 1949 to June 1956, comparatively little was done to bring about an adjustment of the matter except that the Railroad offered $5,000 in settlement to The Brotherhood and it was rejected.

After an abortive attempt to settle the case out of Court because The Brotherhood would not agree to the terms, the plaintiffs brought this suit in June 1956 against The Brotherhood and the Union for wilful failure to effectuate the Award. Further negotiations were carried on and this time terms of settlement were agreed upon and a written stipulation dated September 9, 1957 was entered into by counsel for all remaining parties to the action.

Under its terms, the Railroad agreed to and did pay $300,000 into Court in settlement of the class action, plus $25,000 (any unused portion of which was to be recaptured) to cover expenses; and the Court undertook to determine who were the members of the class.

Pursuant to stipulation, the action against the Railroad was dismissed with prejudice but the action against The Brotherhood and its named officers remained open pending payment of the determined sums to the employees entitled to share.

After the matter was thus concluded by stipulation, the attorneys for the plaintiffs requested the allowance of counsel fees and the reimbursement of expenses. Presumably the latter was accomplished and is not an issue here, unless there is an unpaid balance properly due. Following a hearing, the Court awarded plaintiffs' counsel $30,000 less $15,000 paid during the proceedings. The latter, having claimed $100,000 (one-third of the fund) were disappointed, filed exceptions thereto and filed this appeal by permission of this Court (No. 12,696).

The Brotherhood, arguing that the counsel fee of $30,000 is more than ample and that the allowance is final and non-appealable under the stipulation, filed its cross appeal (No. 12,721).

Appellants in No. 12,696 seemed to indicate in the Court below and in their brief in this Court that they were basing their claim on a contractual basis because they had received several hundred valid powers of attorney from among as many claimants in the class affected that the latter would be willing to pay to counsel one-third of the amount recovered, aside from expenses. They changed this at the argument on appeal when they said they were basing their claim on equitable principles and that they regarded the one-third amount stated in such powers of attorney as evidence of what the affected employees - or a large number of them at any rate - regarded as a measure of fairness.

This latter theory is consistent with that set forth in the complaint.*fn3 "As a result of defendant Brotherhood's wilful failure to comply with said award and order plaintiffs (and) all other(s) similarly situated were compelled to retain counsel to enforce the said award and accordingly retained (the named appellants) as such attorneys. Plaintiffs have promised and agreed to pay the said attorneys a sum of money equal to the fair and reasonable value of their legal services, and said attorneys are entitled to such compensation under the provisions of Section 3(p) of the Railway Labor Act,*fn4 and plaintiffs and others similarly situated are entitled to have such attorneys' fees taxed and collected as part of the costs of the suit, if they should prevail in this action."

The lower Court based its findings on equitable rather than contractual principles.

The landmark case on the subject in American Jurisprudence is Trustees v. Greenough, 105 U.S. 527. There Mr. Justice Bradley, speaking for the Court (pp. 532, 3) said:

"* * * It is also established by sufficient authority that where one of many parties having a common interest in a trust fund, at his own expense takes proper proceedings to save it from destruction and to restore it to the purposes of the trust, he is entitled to reimbursement, either out of the fund itself, ...


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