The opinion of the court was delivered by: MUIR
I. Introduction and Procedural History.
Currently pending before this Court is a motion for counsel fees and expenses filed by Plaintiffs' counsel on October 15, 1985. This action was initiated as a class action on behalf of all osteopathic physicians in the York, Pennsylvania, medical service area. Malcolm Weiss, named plaintiff and class representative, alleged that Defendants violated Sections 1 and 2 of the Sherman Act, 15 U.S.C. §§ 1 and 2 by adopting a policy to discriminate against osteopathic physicians in obtaining staff privileges at York Hospital. In August of 1982, this case proceeded to trial before a jury of 12 members who returned a unanimous verdict consisting of answers to 42 special verdict questions. On September 30, 1982, following a separate hearing on the issues related to injunctive relief, this Court directed the entry of a judgment on special verdict and entered an injunction against Defendants York Hospital and the Medical and Dental Staff of the York Hospital pursuant to § 16 of the Clayton Act. On November 11, 1982, those Defendants appealed that injunction to the United States Court of Appeals for the Third Circuit.
On September 30, 1982, this Court issued an order directing class counsel to transmit a notice to the members of the class that those members of the class who did not complete a form stating their intention to present a damages claim and return it to the Clerk of Court within 30 days would lose and waive any rights they might have to claim damages. Class counsel complied with that order and in response to the notice, 23 members of the class, including Dr. Weiss, returned to the Clerk of Court claims forms stating their intention to present claims for damages.
On September 27, 1984, 745 F.2d 786, the Court of Appeals affirmed the entry of injunctive relief against the Medical Staff of York Hospital and remanded the case to this Court for further proceedings, including trial of the class members' damage claims and possible modification of the terms of the injunction. After Defendants unsuccessfully sought a writ of certiorari from the United States Supreme Court, the mandate of the Court of Appeals was issued on March 21, 1985.
In June and July of 1985, 14 of the 23 osteopathic physicians who had previously expressed their intention to claim damages moved this Court to dismiss their damages claims with prejudice. By orders dated June 25, June 26, July 1, and July 5, 1985 this Court dismissed with prejudice the damages claims of these 14 osteopathic physicians, leaving 8 osteopathic physicians (hereafter the "claimants") and Weiss as the only members of the class claiming damages.
On July 31, 1985, the parties jointly moved this Court for an order granting them the authority to negotiate settlement regarding attorney's fees and litigation expenses under § 16 of the Clayton Act while discussing settlement of the damages claims of Dr. Weiss and while drafting an agreement to settle the individual damages claims of the remaining class members. On July 31, 1985, this Court granted the motion.
On August 29, 1985, after arm's length negotiations, the claimants, Weiss, Levin and Fishbein, Lewis H. Markowitz, Dusan Bratic, York Hospital and the Medical Staff of York Hospital executed a written settlement agreement (hereafter the "claimants' settlement agreement") which provided for the payment in one lump sum of $400,000.00 to the 8 claimants in full settlement of their damages claims against York Hospital and its Medical Staff. The claimants' settlement agreement provided that Defendants not be responsible for the counsel fees and litigation expenses attributable to the work performed and expenses incurred by counsel in obtaining damages relief for the claimants but that such compensation be payable from the fund created on behalf of the claimants. Plaintiffs' counsel agreed to limit their request for such compensation to $100,000.00. In the claimants' settlement agreement, each of the claimants and Weiss acknowledged that this sum is a fair and reasonable amount for counsel fees and litigation expenses on the claimants' damages claims against York Hospital and its Medical Staff.
Also on August 29, 1985, Weiss, Levin and Fishbein, Lewis H. Markowitz, and Defendants, York Hospital, the Medical Staff of York Hospital, Dr. Ivan Butler, Dr. Thomas Bauer, Dr. Samuel W. Deisher, and Lois Kushner executed a written settlement agreement (hereafter the "Weiss settlement agreement"). This settlement agreement provided for the payment by the Defendants to Dr. Weiss of $1,600,000.00 in four equal installments over a two-year period with no payment of interest in full settlement of Weiss's damages claim against the Defendants. The Weiss settlement agreement provided that the Defendants not be responsible for counsel fees and litigation expenses attributable to the work performed and expenses incurred by Plaintiffs' counsel in obtaining damages relief for Dr. Weiss. The Weiss settlement agreement provided that such compensation and expenses be payable from the fund created for the benefit of Dr. Weiss, and Plaintiffs' counsel agreed to limit their request for such compensation to 25% of the fund. In his settlement agreement, Dr. Weiss expressly acknowledged that $400,000.00 is a fair and reasonable amount to compensate his counsel for the work performed and expenses incurred in obtaining monetary relief for him.
In the Weiss settlement agreement the Defendants also agreed to pay Plaintiffs' counsel an amount which is determined by this Court to constitute reasonable compensation for the time expended and the expenses incurred by the Plaintiffs' counsel in obtaining injunctive relief for Weiss and the class in an amount not to exceed $2,800,000, payable in four equal installments over the next two years. The agreement provided that no interest shall be paid by Defendants on the counsel fees and expenses. Defendants agreed not to contest the right of Plaintiffs' counsel to an award of such fees and costs.
On September 4, 1985, this Court directed Plaintiffs' counsel to file their motion for attorney's fees and expenses on or before October 14, 1985. Our order of September 4, 1985 also scheduled a hearing to take place on December 18, 1985 to consider the motion for attorney's fees and required that Plaintiffs' counsel transmit to all members of the class a prescribed form of notice advising them of the fact that a motion for an award of attorney's fees and litigation expenses would be filed by Plaintiffs' counsel by October 14, 1985, that a hearing would be held concerning the motion on December 18, 1985, and that the class members had a right to object to the award of attorney's fees and expenses sought by counsel and to appear at the hearing and contest the application for fees and expenses. Counsel sent the prescribed notice and no objections to the award of attorney's fees were received.
On October 15, 1985, Plaintiffs' counsel filed a motion for counsel fees and litigation expenses and supporting brief. On December 18 and 19, 1985, a hearing was held regarding the motion.
On December 19, 1985, this Court entered an order approving the terms of the Plaintiffs' settlement agreement and ...