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LOCAL 56, UNITED FOOD & COMMER. WORKERS UNION v. C

February 24, 1997

LOCAL 56, UNITED FOOD AND COMMERCIAL WORKERS UNION, et al., Plaintiffs,
v.
CAMPBELL SOUP COMPANY, et al., Defendants.



The opinion of the court was delivered by: BROTMAN

 BROTMAN, J.

 Presently before the court are petitions by counsel for plaintiffs for an award of attorneys' fees and reimbursement of litigation expenses. Counsel for the plaintiff class filed a Joint Petition of Plaintiffs' Counsel for an Award of Attorneys' Fees and Reimbursement of Litigation Expenses (hereinafter "Joint Petition") requesting $ 3.5 million: attorneys' fees in the amount of $ 3,239,373 and expenses in the amount of $ 260,627.16. *fn1" Subsequently, counsel for plaintiffs Locals 56 and 911, United Food and Commercial Workers, and individual plaintiffs Joseph Capitanio and Wynetta Capitanio, Fred W. Ramsay and Kathleen D. Ramsay, Henry Arkema, Jr., Donald Brown, Ivan F. Mather, and William Wise, Sr. (hereinafter "Separate Petitioners") filed a separate, additional Supplemental Memorandum of Law on Award of Attorneys' Fees (hereinafter "Supplemental Petition"). *fn2" The Supplemental Petition requests an award of attorneys' fees and costs not to exceed $ 2.5 million. *fn3"

 I. BACKGROUND

 A. Generally

 The requests for attorneys' fees and costs derive from a multi-million dollar class action settlement involving more than 12,000 former employees of Campbell Soup Company (hereinafter "Campbell") and their eligible spouses and dependents (hereinafter "Retirees") who participated in Campbell's Medical Plan for Retired Employees. In the original action, various groups of Retirees consolidated a series of individual lawsuits against Campbell, claiming that Campbell had violated their rights under the Employee Retirement Income Security Act of 1974 (hereinafter "ERISA"), 29 U.S.C. § 1001 et seq. and the Labor Management Relations Act, 29 U.S.C. § 141 et seq., by reducing the Retirees' medical plan benefits.

 Settlement, consummated on November 26, 1996, was achieved after four years of hotly contested litigation. After providing notice to class members and holding a hearing on January 10, 1997 pursuant to Fed. R. Civ. P. 23(e), the court approved as "fair, reasonable, and adequate" a settlement figure in the amount of $ 114,500,000. In so doing, the court took into account the factors set forth in Girsh v. Jepson, 521 F.2d 153, 157 (3d Cir. 1975). See also In re General Motors Corp. Pick-Up Truck Fuel Tank Products Liab. Litig., 55 F.3d 768 (3d Cir. 1995). At this post-settlement juncture, the court must consider the related issues of attorneys' fees and reimbursement of expenses.

 B. The Settlement

 In particular, further to the terms of the settlement, Campbell will pay the actuarial present value of $ 114.5 million toward the cost of continued medical coverage for the Retirees for the rest of their lives. That figure will grow each quarter at the fixed interest rate of 7.75% as applied to the unspent balance of the settlement amount. In addition, reasonable contributions from the Retirees will supplement the settlement amount. Altogether, the money will fund a continuing program of medical benefits for the Retirees for their lifetimes--an unprecedented guarantee of coverage.

 Moreover, while Campbell will administer the benefits plan, an advisory committee of Retirees will monitor and enforce the company's compliance with the settlement; thus, class members will maintain a continuous ability to ensure that they actually receive the benefits their counsel negotiated on their behalf. Any disputes that arise and are not resolved in the course of the implementation of the settlement will ultimately be subject to this court's jurisdiction. Finally, the court notes that the settlement provides an array of alternative benefit plans in an attempt to accommodate regional differences in the quality of health care. In other words, the settlement anticipates systemic pitfalls and attempts to provide workable, economic alternatives that will secure benefits for class members.

 II. ATTORNEYS' FEES

 A. The Law Governing Common Fund Cases

 Attorneys who represent a class and create a settlement fund are entitled to recover for their legal services from that fund under the common fund doctrine. General Motors, 55 F.3d at 820 n.39. To calculate reasonable counsel fees in common fund cases, courts may use two different methods: the lodestar method or the percentage-of-recovery method. Under the former, a court first considers the attorneys' time records and determines whether these and the billing rates are reasonable. *fn4" Lindy Bros. Builders, Inc. v. American Radiator & Standard Sanitary Corp., 487 F.2d 161, 167 (3d Cir. 1973). Then, the court multiplies the number of hours expended by the hourly rate to calculate the fee "lodestar." General Motors, 55 F.3d at 819 n.37. This figure may not be "enhanced" by applying a multiplier to account for the contingent nature of the success of the ...


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