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CHARLES v. GOODYEAR TIRE & RUBBER CO.

September 5, 1997

ERIC CHARLES, on behalf of himself and all others similarly situated, Plaintiffs,
v.
THE GOODYEAR TIRE AND RUBBER COMPANY, Defendant.



The opinion of the court was delivered by: BROWN

 BROWN, District Judge

 This matter comes before the Court on the application of class counsel for an award of attorneys' fees and expenses. For the reasons set forth in this Memorandum Opinion, the Court will grant class counsel's application for attorneys' fees in the amount of $ 1,041,177.75, and expenses in the amount of $ 109,329.85.

 I. BACKGROUND

 The facts and procedural history in this case have been sufficiently set forth on the record previously and the Court will thus only elaborate on them as necessary.

 On December 13, 1996, this Court approved the settlement agreement between plaintiffs and defendant. Following settlement of the merits of the lawsuit, class counsel negotiated with Goodyear for attorneys' fees which would not in any way reduce the recovery for the class. Goodyear has agreed to pay an award of attorneys' fees to be determined by this Court, so long as such an award is not in excess of $ 3.85 million for attorneys' fees and $ 125,000 for all expenses. Goodyear has also agreed to take no position with respect to class counsel's fee application.

 "[A] thorough judicial review of fee applications is required in all class action settlements." See In re General Motors Corp. Pick-Up Truck Fuel Tank Prods. Liab. Litig., 55 F.3d 768, 819 (3d Cir.), cert. denied, 133 L. Ed. 2d 45, 116 S. Ct. 88 (1995) [hereinafter " GM Trucks "]. As the Third Circuit has recognized, "a defendant is interested only in disposing of the total claim asserted against it; . . . the allocation between the class payment and the attorneys' fees is of little or no interest to the defense." See Prandini v. National Tea Co., 557 F.2d 1015, 1020 (3d Cir. 1977). Thus, even when the parties have agreed on an attorneys' fee award, the danger exists "'that the lawyers might urge a class settlement at a low figure or on a less-than-optimal basis in exchange for red-carpet treatment for fees.'" See GM Trucks, 55 F.3d at 820 (quoting Weinberger v. Great Northern Nekoosa Corp., 925 F.2d 518, 524 (1st Cir. 1991)). The Third Circuit has further emphasized "that the court's oversight function serves not only to detect instances of 'the actual abuse [that potential attorney-class conflicts] may cause, but also [the] potential public misunderstandings they may cultivate in regard to the interests of class counsel." See 55 F.3d at 821 (quoting In re Agent Orange Prod. Liab. Litig., 818 F.2d 216, 225 (2d Cir.), cert. denied, 484 U.S. 926 (1987)).

 In the matter at hand, the parties obviated the danger of an actual or apparent conflict of interest on the part of class counsel by not simultaneously negotiating both a class settlement and an attorneys' fees award. The parties entered into fee negotiations only after the settlement agreement was otherwise negotiated. See December 13, 1996 Transcript at 12, Exh. 1 attached to Plaintiff's Appendix.

 "[A] court making or approving a fee award should determine what sort of action the court is adjudicating and then primarily rely on the corresponding method of awarding fees." See GM Trucks, 55 F.3d at 821. However, the decision regarding which method to ultimately use is within the sound discretion of the district court. See id. at 783, 821. As several district courts have noted, "determining an appropriate fee is 'far from an exact science.'" See In re Prudential Ins. Co., 962 F. Supp. 572, 578 (D.N.J. 1997) (citing Matter of Superior Beverage/Glass Container, 133 F.R.D. 119, 128 (N.D. Ill. 1990) ("The best short statement may be that an award should be reasonably arbitrary--meaning that there is no magic in the precise final numbers but that they must be reasonable, which is to say, the result of considered, articulated and fair judgments.")).

 There are two basic methods for evaluating the reasonableness of an attorneys' fees award--the lodestar method and the percentage-of-recovery method. Each method has distinct attributes suiting it to particular types of actions. See GM Trucks, 55 F.3d at 820. Courts generally regard the lodestar method, which uses the number of reasonable hours times a reasonable rate, as the appropriate starting point for statutory fee shifting cases. "Because the lodestar award is decoupled from the class recovery, the lodestar assures counsel undertaking socially beneficial litigation . . . an adequate fee irrespective of the monetary value of the final relief achieved for the class." Id. at 821. The lodestar method has the benefit of relieving the court of the burden of making a subjective evaluation as to the monetary value of the intangible rights often litigated in civil rights actions. "Outside the pure statutory fee case, the lodestar rationale has appeal where as here, the nature of the settlement evades the precise evaluation needed for the percentage-of-recovery method. On the other hand, the lodestar method has been criticized as giving class counsel the incentive to delay settlement in order to run up fees while still failing to align the interests of the class and its counsel, and for not rewarding counsel incrementally for undertaking the risk of going to trial." Id.

 "While the Third Circuit has expressed a preference for use of the percentage-of-recovery method in common fund cases, neither that court nor the United States Supreme Court has held that use of the [percentage-of-recovery] method is exclusive or mandated in such cases." Prudential, 962 F. Supp. at 579. In fact, the Third Circuit has stated that "the ultimate choice of methodology will rest within the district court's sound discretion." GM Trucks, 55 F.3d at 821. "Certainly, the court may select the lodestar method in some non-statutory fee cases where it can calculate the relevant parameters (hours expended and hourly rate) more easily than it can determine a suitable percentage to award. But the court must vigilantly guard against the lodestar's potential to exacerbate the misalignment of the attorneys' and the class's interests." Id. at 822. Although the settlement in the above-captioned matter is of the common fund type, this Court finds that the loadstar methodology is more appropriate for determining class counsel's fee, as the relevant parameters (hours expended and hourly rate) are more easily calculated than a suitable percentage-of-recovery award. *fn1"

 The settlement approved by this Court on December 13, 1996 provides for equitable relief which is to address the alleged deceptive practices averred in plaintiff's complaint. In addition to the remedial measures, Goodyear has agreed to distribute credit vouchers to members of the class, regardless of whether they can show that they were actually damaged. The credit vouchers are: (1) fully transferable; (2) good for 30 months; (3) useable for approximately 86% of Goodyear's products and service sales; and ...


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