was contingent upon the success of the proceeding, this case does not quite present that feature. As soon as the award of the Railway Labor Board was entered, it was reasonably certain that a fund would sooner or later come into existence, and although the work of bringing it into being, determining the parties entitled and providing for distribution was sure to prove, and did prove, an arduous task, these petitioners did not have to start from scratch.
On the whole, I think that an allowance of $ 15,000 out of the fund in addition to the $ 15,000 already allowed would be fair compensation for the services rendered to the class as a whole.
A form or order in accordance with the foregoing may be presented.
On Motion to Vacate Order of Court Approving Compromise Settlement
For a complete understanding of the nature of this case, reference may be had to the two opinions of this Court filed, respectively, March 7, 1958, and June 24, 1958.
In brief, the suit was a class action in which the plaintiffs, employees of the Pennsylvania Railroad Company appearing in behalf of themselves and others similarly situated, sought, among other things, to compel the Railroad Company to pay an award, made by the National Railroad Adjustment Board, of overtime pay to certain of its employees. The complaint was filed on June 8, 1956. The Railroad, the union and the chairman of the System Board of Adjustment, named as defendants, appeared by counsel.
On September 7, 1957, the case was settled by a stipulation of counsel, approved and put into effect by order of this Court dated the same day, in pursuance of which the Railroad paid into court the sum of $ 300,000 for disbursement among claimants entitled and $ 25,000 to cover costs, and the action was dismissed as to it. The stipulation further provided that 'the Court by appropriate proceedings will determine the claimants entitled to share in the $ 300,000 fund'.
On March 7, 1958, the Court filed its opinion defining the class of persons entitled to share in the fund. Since April 18 of this year, the Court, through an administrator, had been engaged in locating and notifying the individuals constituting that class.
Before the attorneys began this action, they obtained powers of attorney from 782 employees authorizing them to institute and prosecute it and agreeing in each case to pay a contingent fee of one-third of the amount obtained. However, as a result of the Court's determination of what employees were entitled to share in the award, not only was a total of more than 3,000 employees included, but a large proportion of the 782 were excluded. The opinion of March 7, 1958, thus adjudicated what persons were 'similarly situated' with the record plaintiffs and, hence, identified the class for whom the record plaintiffs brought the action.
This motion, which is, to say the least, an extraordinary one, is to vacate the Court's order of September 7 and is based on the assertion of these attorneys that they entered into the stipulation, which it approved, without any knowledge on the part of their clients whom they designate as 'the plaintiffs' and that the parties in question considered the stipulation 'as outside the scope of the authority granted to their attorneys'.
As I understand the current contention of the attorneys, it is that when they brought the suit they were of the opinion that the class of persons 'similarly situated' represented by the plaintiffs consisted of the 782 who had given them powers of attorney; that they brought the suit in behalf of those persons and no others; that they had authority to accept $ 300,000 and settle the case if, and only if, their clients got the whole award; that, as soon as the Court decided that a large number of other persons constituted the class of 'persons similarly situated' represented by the record plaintiffs, their authority to make the settlement became void ab initio. In other words, they now assert that they represented an artificial class, different from that which the Court found to constitute the 'persons similarly situated'; that they had no authority to enter into a settlement which might turn out unfavorably for their artificial class; and that they had no authority of any kind from the 3,000 or more whom the Court found to be entitled because they never represented them.
It will be noted that the order and the stipulation upon which it was based really consist of two parts (1) an agreement that the Court will determine by appropriate proceedings the persons entitled to share, describing them in general terms consistent with the cause of action. No artificial class is set up in the stipulation, and those who are entitled to share in the fund are those who would have been entitled to recover had the lawsuit run its normal course. (2) An agreement at to the amount to be paid by the Railroad in full settlement of its obligation under the award.
It is not suggested that these attorneys filed this complaint by inadvertence, and it cannot be questioned that they were fully authorized to do so. Although the complaint is filed for the record plaintiffs and all similarly situated persons, I will assume for the purposes of this discussion that the attorneys believed at that time that the only similarly situated persons entitled to share were the 782.
(1) Now, as to the part of the stipulation which provided for the determination by the Court of the claimants, it cannot be argued that an attorney employed to prosecute a civil lawsuit is not fully authorized by the nature of his employment and without consulting his client to agree that certain issues shall be submitted to the Court without a jury, even with the understanding that the findings or award will be final and conclusive. 7 C.J.S. Attorney and Client § 91. In this regard the agreement was binding upon the parties represented by the attorneys, whoever they might have been, without the necessity of their express authorization or even of their knowledge.
(2) As to the part of the stipulation agreeing to accept $ 300,000 in full settlement of all claims, it is argued that it is not within the implied scope of authority of an attorney employed to prosecute a lawsuit to accept a figure in full settlement and discharge of his client's rights without the knowledge or consent of the client. That may be true, but counsel have stated to the Court on half a dozen occasions, the last one being in a letter received as late as July 21, 1958, that the 782, referred to variously as 'the plaintiffs' and 'our client', specifically authorized them to accept the $ 300,000.
The attorneys began this suit as a class action. The class they represented was necessarily made up of all persons entitled to share in the award of the Adjustment Board. They have consistently asserted that they were authorized to settle by representatives of the class. The fact that what they had in mind was an artificial class set up by themselves consisting only of persons from whom they held powers of attorney, many of whom were ultimately determined not to be members of the class, does not affect the situation. In fact, if their authority was so limited, their signing of the stipulation accepting the settlement on behalf of the entire class to be determined by the Court would have been a misrepresentation of their authority and an imposition upon the Court. These attorneys still represent the record plaintiffs who in turn represent the entire class determined by the Court to be entitled to share in the award. These persons having assented to the settlement and having obtained for their counsel a partial allowance of $ 15,000 (as to which no offer to repay has been forthcoming) cannot now disavow their authority to settle and successfully press this motion. As a matter of fact, no one has come forward to protest the settlement other than those represented by these attorneys.
It is further to be observed that, since shortly after April 18, the administrative work of ascertaining the whereabouts of individuals entitled to share and notifying them has been going on through an administrator appointed by the Court and a staff of employees. Over $ 5,000 has been spent in this work and additional obligations have been incurred amounting to at least one-half of that amount. All of this activity and expense was incurred with the full knowledge and acquiescence of the plaintiffs' attorneys and, under the circumstances of this case, their failure to notify their clients as to the exact manner in which the settlement was being carried forward might or might not be a matter of dispute between attorney and client, but the acquiescence of the attorney must be imputed to the client.
I will not, on the motion of these attorneys, undo what has been done, accepted and acquiesced in and the final implementation of which has gone a long way toward completion.
The motion is denied.