(D.C. Civil No. 88-cv-02548); (D.C. Civ. No. 91-cv-01041)
Before: Sloviter and Roth, Circuit Judges, and FULLAM,*fn1 District Judge
The opinion of the court was delivered by: Sloviter, Circuit Judge.
On Appeal from the United States District Court for the Western District of Pennsylvania
Counsel for Jean E. Brytus and seven other named plaintiffs, who filed a successful class action against plaintiffs' former employer Spang & Co. for violating the Employee Retirement Income Security Act of 1974, 29 U.S.C. § 1001 et seq. (ERISA) by failing to distribute the plan surplus to retired workers, filed a motion for attorneys' fees from the common fund they had created. The district court initially denied the motion on the ground these counsel were entitled to and would receive counsel fees to be paid by Spang under the statutory fee provision for prevailing parties under ERISA, and therefore were not also entitled to recovery from the common fund. In its on reconsideration, the court maintained essentially the same position but added that it was exercising its equitable powers in reaching its decision. Counsel appeals from that order. The threshold issue before us is whether we have jurisdiction to consider this interesting issue at this time.
In 1995, the district court, relying on our prior decision in Delgrosso v. Spang & Co., 769 F.2d 928 (3d Cir. 1985) (relating to a similar pension fund at a different Spang plant), found that Spang had wrongfully acquired the surplus assets of an ERISA-protected retirement fund instead of distributing the surplus proportionately to the retirees, see app. at 172-91; app at 193-97, and we affirmed the judgment of the district court. See 79 F.3d 1137 (3d Cir. 1996) (unpublished table decision), cert. denied, 117 S.Ct. 70 (1996). After the district court's order on the merits, two of the counsel for the plaintiff class, Daniel P. McIntyre and William T. Payne (referred to as "counsel"), sought reasonable attorneys' fees under the fee-shifting provision of ERISA and also "invoke[d] the common fund doctrine as warranting a recovery of fees out of the fund they have recovered on behalf of the class." App. at 219. By 1995, when counsel filed this motion, the "common fund" consisted of approximately $11.5 million dollars.
Spang did not contest the counsel's right to a reasonable attorneys' fee as a prevailing party under ERISA, but did contest the hourly rates to be applied and the costs claimed. In particular, Spang objected to the request of Payne and McIntyre for a total of $467,833, app. at 243, because that request was based on Payne's rate at $275 per hour and McIntyre's rate at $300 per hour. Spang argued that the appropriate fee was approximately $380,082, based on hourly rates of $260 per hour for McIntyre, and $220 per hour for Payne. App. at 363. Although the district court assured counsel that they would receive a reasonable rate for every hour worked, it did not resolve the dispute over the hourly rate.
The United Steelworkers Association ("the Union"), as intervenor, opposed counsel's request for a fee award of approximately 20-30% of the $11.5 million recovered, or approximately $2,300,000 to $3,450,000. It argued that all of counsel's reasonable fees would be paid by the wrongdoing employer, and contended that it would be inconsistent with ERISA policy to permit diminution of the employees' fund. The district court denied counsel's request for attorneys' fees from the common fund, finding "that because this action was brought under a fee-shifting provision of ERISA and was litigated to judgment, the attorneys' fees to be awarded in this action are to be governed according to the principles of awarding fees under the fee-shifting provision." Memorandum Order, July 14, 1997 at 5-6. In its subsequent reconsideration order, the court also stated that "[c]onsidering the fact that the result in this case is principally driven by ERISA, the Court, in the exercise of its equitable powers, finds that under the totality of the circumstances, an award of reasonable attorneys' fees based on an unenhanced lodestar formula plus expenses is the only reasonable method of compensating Plaintiff-Participants' counsel for their services." Memorandum Order, August 15, 1997 at 5-6. Counsel for plaintiffs now appeal the order denying the request for a fee award from the common fund.
The parties have focused their principal briefs on the merits of the district court's order denying counsel fees from the common fund created from their efforts. Counsel note that the great bulk of the $12 million fund will go to class members other than those they represented who will receive from the fund four times more than their then total pension, that they invited the district court to reduce any fees they might receive from the common fund by the amount of statutory fees awarded, and that only by awarding them a share of the fund they produced will they be able to be compensated for the risks they faced and the success they achieved.*fn2 They cite to cases in other courts that have allowed both an ERISA statutory fee and an award from the common fund, arguing that without this incentive ERISA plaintiffs may not be able to secure competent counsel who will assist them in gaining access to the courts to secure their rights under the statute.
The Union counters that the ERISA cases in which counsel recovered from the common fund are cases that were settled rather than litigated to judgment, as here. The Union also argues that it would be contrary to the remedial provisions and purposes of ERISA to require plan participants to give up pension assets to enhance the income of counsel who will receive reasonable fees from the defendant employer. The Union treats the district court's order as one that was within its discretion, a discretion it argues we should not disturb.
These are provocative arguments that have not yet been addressed by this court. Both parties believe we have jurisdiction, and gave the matter no attention until we directed briefing on the issue. They still maintain we have jurisdiction, treating the district court's order as a ...